Compliance May 22, 2008

SEC Proposes Making Mutual Fund Comparisons Easier

The SEC proposed a rule requiring mutual funds to label their public files in order to enable investor comparison shopping.
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The Securities and Exchange Commission (SEC) proposed a rule that mutual fund investors get access to key information about fees, performance, and strategies through interactive data, according to an SEC press release. The proposal would permit comparison shopping among more than 8,000 funds via online searching.

“This exciting new technology will enable investors to instantly analyze and compare not just two or three mutual funds, but hundreds or even thousands, and to quickly focus on the particular funds that are right for them,” said SEC Chairman Christopher Cox, in the news release. “Investors will no longer need to wade through lengthy documents to find the relevant details needed to compare funds one at a time.”

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Mutual funds have already been voluntarily submitting information to the SEC in interactive data format, the SEC said. The new rule proposal, voted unanimously by the SEC, would require all mutual funds to provide data-tagged information beginning with registration statement filings that become effective after Dec. 31, 2009. The mutual fund also would be required to post the data on its Web site, if it has one.

The interactive mutual fund data can be test driven at the Mutual Fund Reader on the SEC Web site.

Last week, the SEC proposed a similar rule to require public companies to provide financial information using interactive data beginning next year for the largest companies and within three years for all public companies, the SEC said.

The SEC is accepting public comment on the proposal until August 1.

Data & Research May 21, 2008

The Rise of the New Mass Affluent

The population of affluent Americans now makes up the top 19% of American households, according to a study by Nielsen Company.
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The so-called “new mass affluent’ are amassing in size in recent years, with a 23% increase from a decade ago (after inflation adjustment). Some 22 million households now earning over $100,000, which might seem like a modest amount compared to some high earners, but is still more than double the mean national income of around $49,000. The group controls more than $22 trillion in assets, the study says.

The report points out that while there are more higher-earning Americans than ever before, they are underserved by financial institutions that have not recognized the changing wealth landscape. The class of investors are also sophisticated do-it-yourself types of investors who might be managing their own wealth, the study says.

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“There are more higher-earning Americans than ever, signaling a growing opportunity for many business sectors to capitalize on reaching this market,’ said Jane Crossan, Vice President of the Financial Services Group at Claritas, Nielsen’s marketing information provider, which conducted the analysis. Crossan and Mike Mancini, Claritas Vice President of Data Product Management, co-authored the analysis of America’s changing wealth landscape, titled Affluence in America.

“Now more than ever, companies need a sophisticated understanding of the new mass affluent class—who they are, where they live, what products they prefer and how best to market to them,” Crossan said. “To win over the new mass affluent, marketers need to develop new products and services, differentiated messages, and varied channels to reach these under-the-radar customers.”

While you might expect to find these affluent Americans dwelling in New York City and Chicago, the reality is that most of them are saturated outside the heart of big cities in lesser-known cities. The report locates the top 20 areas for households with at least $100,000 in assets. Los Alamos, New Mexico, was the number one ranked market. Connecticut is also a popular place for the affluent, with the area on the outskirts of New York City holding the number two spot. Cities on the list that might seem unlikely are number 10, Juneau, Arkansas; number 20, Easton, Maryland (a small town turning into a retirement community); and number nine, Trenton, New Jersey.

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