Investor distrust is plaguing the mutual fund industry, and perhaps we’ll find some of them jumping ship into the exchange traded fund (ETF) realm instead.
The survey conducted by Ignites fund that 36% said increasing investor wariness of equity and fixed-income funds is the biggest threat to the industry. Another 25% believe that a Democratic presidency will be a threat, as Sen. Barack Obama has raised eyebrows with his plan to increase capital gains taxes. The current rate is 15% to 20%, to even more for top earners, reports Gregory Shulas for Ignites.
Knee-jerk regulation and government meddling also poses a threat to funds. On the other hand, Sen. John McCain has proposed not to raise capital gains taxes if he is elected. Layoffs are already under way at Fidelity and Janus, while share prices of large managers have plummeted between 45%-70% over the past three months.
These layoffs, combined with increasing outflows, could lead to more pain for the industry down the road.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.