My pal, Josh Brown has six ideas on how to save the mutual fund industry. If the industry were smart (if!), they’d implement these immediately. I’ll summarize them.
Idea One: Don’t play no game that you can’t win. There should be an industry-wide moratorium on new large cap US stock funds.
Idea Two: Exclusivity sells. Everyone wants what they can’t have.
Idea Three: Ask more of your investors. Behavior is the single biggest determinant of investor success – not manager tenure or how many analysts you have or how many Morningstar stars you accumulate.
Idea Four: Benchmarks are bullsh*t. Benchmarks are not handed down from God on Mount Sinai and they do not appear in nature.
Idea Five: (Read if for yourself).
Idea Six: Shrink! There’s been some consolidation among the big asset management firms and fund families. There should be more. Bill Miller said that 70% of all managers are essentially benchmark-huggers.