The introduction of a new bill moves investors one step closer to having exchange traded fund (ETF) options available in 401(k) plans. In the HR 3185 bill revealed in late July by Rep. George Miller, D-Calif., 401(k) plan administrators would be required to disclose all fees charged to plan participants, according to Investment News. The legislation would require better upfront details about investment strategies, risks and returns and potential conflicts of interest.
The new bill’s proposition should help investors and plan providers understand that mutual fund options are more expensive than ETFs, especially since most have underperformed their benchmarks. By requiring increased disclosure, plan providers will have more pressure to offer funds with greater transparency and lower fees, such as ETFs.
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