Creating Mutual Fund Transparency: The Elimination Of Deceptive Communication

While the SEC debates the overall merits of forming mutual fund company boards with an independent chairman to go along with 75% make-up of independent board members, I question how this is going to create more transparency for the individual investor.  The real culprit is the flexibility given to mutual fund companies in allowing them to set fees as permitting trading within funds has confused the true cost to the consumer and has added insult to injury.  Dr. Edward O’Neal at Wake Forest states that “the average fund managers cannot recoup these expenses in the form of better performance.”  Gaspar, Massa and Matos (2006) brilliantly show that mutual fund families tend to charge various levels of fees on its member funds, forcing different funds to contribute unequally to the total profit.  They found that during the January 1991 to July 2001 time period, high value funds (i.e., high fees or high past performance) are favored inside fund families by 6-28 basis points of extra net-of-style performance per month (.7% - 3.3% per year) relative to the low value funds (i.e., low fees or low past performance), based on the criteria they used (i.e., fees or past performance).  How can all these deceptive practices be eradicated?  The author proposes a five-step “absolute” process in order to create mutual fund transparency:  the elimination of all soft dollar arrangements; creation of a mutual fund separateness statue to eliminate what Gaspar, Massa and Matos (2006) call the strategic Cross-Fund Subsidization; terminate all 12-B1 fees; eliminate all “rolling performance periods” by forcing one-year calendar performance periods with mandatory fee return to investors if the manager underperforms; and outlaw all front-end and back-end loads, thus forcing marketers to charge a direct commission.  The goal of any transparent system is to protect the consumer, and the individual investor can only be protected by implementing “absolute standards” that will allow no “wiggle room” for mutual fund companies

A Multivariable Statistical Approach to Managing United States Coast Guard Small Boats

The Coast Guard has developed several systems to measure the performance of its engineering and logistics organizations. The development of these measures is based upon the need to show where and how the organization meets the American taxpayer’s needs. The use of multivariable regressions and determining the statistical distributions of the variables will show the adequacy of the measures and processes currently used. They will also determine a better way to measure the performance of the Coast Guard Small Boat Fleet. This research will analyze the 47 Motor Life Boat and 25 Response Boat-Small data from fiscal year 2011 to 2013. The focus will be on improving the measure used by the engineering and systems managers of the Coast Guard to manage assets and resources, as well as making recommendations on how to improve the processes involved in managing a robust engineering and logistics system

Integration Of Information Technology And Simulation For Managing Manufacturing-Logistics Network

This paper helps investigate the integration of information technology (IT) and simulation in order to help understand how to set reliable delivery dates in manufacturing-logistics networks.  This integration is necessary to assist organizations involved in the network to help plan and control their operations more efficiently.  The authors reviewed previous work in the areas of IT-oriented logistics, real time simulation, and due date assignment.  We describe a general architecture for a real-time simulation-based system and create a prototype based on our architecture.  An application of the prototype in a small manufacturing company is employed.  The prototype implemented was for a local manufacturer of made-to-order safety windows with three manufacturing plants and a one office location, all within a 50-mile radius.  The prototype for this company was developed utilizing a Boreland’s Delphi 3 application development tool.  The reason that a distributed simulation model was not implemented was that we focused on validating the most critical components of our architecture using a simple prototype as our initial validation effort.  The following possible advantages of our architecture were identified: *        The architecture can use the most up-to-date operational data to make decisions regarding delivery date assignment and network management.*        The architecture can support both central and distributed environments. *        The prototype developed based on the architecture could assign tight delivery dates.*        The prototype could be used to maintain or increase the level of on-time deliveries by monitoring the operations.*        The prototype could generate options on delivery dates and cost based on routings/priority and transportation service options.&nbsp

Surprising Comparison Of Risk And Return Factors Between Real Estate Investment Trusts (REITs) And The S&P 500 Index During The 2000-2011 Time Period

We composed and contrasted stock returns for large capitalized companies (S&P 500) with returns of real estate investment trusts using the Financial Times equity, mortgage and composite indexes. The time period which was chosen was 2000 through 2011. This period is significant because up until the crash of 2008, the real estate bubble was forming. Major real estate problems were already in force in 2007, but serious deflation really did not fully commence until the stock market crash in the late summer and early fall of 2008. With such heavy doses of deflation, one would think real estate was doomed. We found that average returns for the S&P 500 during this time period was 2.44% vs. a 13.73% average return for the composite Real Estate Investment Trusts (REIT) index. We calculated the geometric returns of .0054% for the S&P 500 vs. 11.21% for the composite REIT. This geometric return calculation was necessary because of many negative returns over a short period of time. The real surprise came when we risk adjusted our numbers using coefficients of variation. Using average returns, we found that the S&P 500 took 7.9959 units of risk for each unit of return, while the composite REIT composite only took 1.6497 units of risk per return. Even the SE Mortgage index only took 2.4914 units of risk per unit of return, while the Equity REIT index took on 1.5744 units of risk per return. Utilizing geometric returns or compounded rates of return, we found a coefficient of variation (CV) of 9.755 for the S&P 500, where the composite REIT experienced a 2.0205 CV and the FTSE Mortgage index showed a 4.0023 CV. Even though mortgage REITs took a greater hit than equity REITs, we still found a favorable relationship of risk and return vs. investment in common stocks. Money managers, who were properly diversified, rode out the financial storm much more comfortably with REITs as part of their diversification parameters

Assessing the Usefulness of Different Feature Sets for Predicting the Comprehension Difficulty of Text

Within English second language acquisition there is an enthusiasm for using authentic text as learning materials in classroom and online settings. This enthusiasm, however, is tempered by the difficulty in finding authentic texts at suitable levels of comprehension difficulty for specific groups of learners. An automated way to rate the comprehension difficulty of a text would make finding suitable texts a much more manageable task. While readability metrics have been in use for over 50 years now they only capture a small amount of what constitutes comprehension difficulty. In this paper we examine other features of texts that are related to comprehension difficulty and assess their usefulness in building automated prediction models. We investigate readability metrics, vocabulary-based features, and syntax-based features, and show that the best prediction accuracies are possible with a combination of all three

Evolving American Investing Attitudes: The Hybrid Shift In Mutual Fund Distribution

This paper studies the dramatic evolution in the way American investors choose to invest in the mutual fund industry. The industry’s change from direct-to-shareholder model to a third-party distribution model is discussed, as well as the implications for future mutual fund investors. Ever since the first recorded asset and debt managers arose in the 14th and 15th centuries in Europe, investing has grown into a tug-and-pull type of system that the human mind seems drawn to. The way that Americans choose to invest their money is changing as we enter the 21st century and the new methods and procedures are having a greater impact than many of us realize. In the U.S., trillions of dollars each year are invested in mutual funds, but more and more investors are taking a less-involved route by allowing financial analysts to choose where their money is invested. In the following pages, we will take a closer look at the mutual fund market and its basic components, the ways that mutual funds have been viewed and traded in the past, and the revolutionary changes that are happening right under our noses that the average American may not even be aware of. With the help of many credible sources, such as the Investment Company Institute, Reflow Investments LLC, and the Financial Planning Journal, the change from direct-to-shareholder mutual fund distribution to third-party intermediary distribution will be explained and the effects these changes has on the average investor will be explored

An Upgrade To Competitive Corporate Analysis: Creation Of A Personal Finance Platform To Strengthen Porters Five Competitive Forces Model In Utilizing

This paper aims to achieve three main objectives. First, it aims to assess the current general public perception regarding the financial services industry and states reasons for a client orientation business model. Second, it will discuss ways to make use of available data on the World Wide Web to discover a new client base and improve new market penetration, customer services, and relationships with customers. Finally, it will talk about a new Personal Finance Platform Software and propose a new model which will integrate Big Data into the service delivery process of the financial industry. The new Personal Finance Platform Software will ultimately be incorporated into a competitive corporate analysis. Competitive analysis applies modern management and economic principles to study a firms strategic position. Competitive analysis develops insights such as the firms strategic position, industrial organization, management structure, capabilities, competitor identification, rivalry, commitment, cooperation and economic principles. In conclusion, the authors will integrate the new Personal Finance Platform Software into corporate analysis by overlaying Porters five competitive forces model in order to create a competitive advantage. Ultimately, these companies who implement the Personal Finance Platform Software can expect to increase their total industrys competitiveness within a global milieu

Comprehensive Income Options: A Detriment To Transparency

The Financial Accounting Standards Board (FASB) in 1997 compromised its belief that comprehensive income (CI) should be listed either in a combined statement of net income and CI or in a separate statement of CI and allowed corporations to choose using the statement of changes in stockholders’ equity (SCSE).  Of course, the latter option implies just as Jordan and Clark (2002) suggest, that CI is not a measure of financial performance.  Studies incorporating professional analysts by Hirst and Hopkins (1998) and a study of nonprofessional investors by Maines and McDaniel (2000) both conclude that format presentation matters and behaviors can be affected.  We believe that FASB should revisit the format structure of CI and eliminate the SCSE option, which was their initial intent before they compromised with corporate managers in 1997.  In addition, we believe that all items of other comprehensive income (OCI) – foreign currency translation adjustment, pension value adjustments and adjustment to securities-for-sale should be presented on an after-tax basis only in order to prevent investors from being forced to comb through the footnotes

Global Mutual Fund Industry Comparisons: Canada, The United Kingdom And The United States

The concept of mutual funds is older than many believe, originating in Holland over 230 years ago.  Through the years, mutual funds have evolved by allowing investors to invest their capital in various venues.  The structure of mutual funds in Canada, the United Kingdom, and the United States possess similar configurations.  The majority of funds in all three nations are invested in the equity market.  Although the structure may be the same, the size in terms of assets varies by these three countries.  This is not the only difference though; the expense ratio is greatly differentiated, dramatically affecting the amount of return that the investor will anticipate over time.  Assuming identical returns, the authors illustrate that over a hypothetical ten-year time period, your funds would grow the most in the United States, followed by the United Kingdom and finally Canada.  This analysis assumes comparable contemporary expense ratios of 1.4% for the United States, 1.63% for the United Kingdom, and 2.1% for Canada.  In addition, we make the assumption that these comparison countries are having investors procure funds in no-load mutual funds

Equivalent roles of marine subsidies and island characteristics in shaping island bird communities

AimSpecies distributions across islands are shaped by dispersal limitations, environmental filters and biotic interactions but the relative influence of each of these processes has rarely been assessed. Here, we examine the relative contributions of island characteristics, marine subsidies, species traits, and species interactions on avian community composition.LocationCentral Coast region of British Columbia, Canada.TaxonTerrestrial breeding birds.MethodsWe observed 3610 individuals of 32 bird species on 89 islands that spanned multiple orders of magnitude in area (0.0002–3 km$^{2}$). We fit a spatially explicit joint species distribution model to estimate the relative contributions of island physical characteristics, island‐specific inputs of marine subsidies, species' traits, and biotic interactions on species distributions. Biogeographic characteristics included island area, isolation, and habitat heterogeneity, while marine influence was represented by forest‐edge soil δ$^{15}$N, wrack biomass, shoreline substrate, and distance to shore. This approach also allowed us to estimate how much variation in distributions resulted from species' biological traits (i.e. body mass, feeding guild, feeding height, and nesting height).ResultsBird species distributions were determined almost equivalently by island biogeographic characteristics (23.5% of variation explained) and marine influence (24.8%). We detected variation in species‐specific responses to both island biogeographic characteristics and marine influence, but no significant effect of any biological trait examined. Additionally, we found evidence that habitat preferences were a more important driver than competitive interactions.Main ConclusionsAlthough most island biogeographic studies focus only on islands' physical characteristics, we found evidence for an equivalent role of marine subsidy in structuring island bird communities. Our study suggests that for small islands, disentangling the effects of island biogeographic characteristics, marine inputs, and biotic interactions is a useful next step in understanding species distributions