Mutual fund crisis hits US corporates
The mutual fund crisis in the US is affecting corporates as a recent survey by Finance Executives International (FEI) shows. Almost half of the surveyed CFOs believe funds held within their 401(k) plans are involved in the recent mutual fund scandal.
As a result of the scandal, linked to ?market timing' and the buying and selling of funds by providers to capitalize on discrepancies in market share price, three-quarters of CFOs have already made changes to pension plans or are planning to do so. Even those corporates whose funds lie outside the sphere of the market timing debate have been influenced, with half considering a change in their plans.
Legal concerns are prompting CFOs to redirect their energies to pension plan organisation while 15% of the corporates to make pension plan changes are doing so due to employee influence.
"The 401(k) landscape is shifting beneath our feet and the ramifications for retirement plan investors and providers are profound," says Colleen Sayther, president and CEO of the FEI. "Clearly, a reputation untarnished by allegations of improper trading will give mutual fund companies a leg up in the competitive market place."