Today's fund news:
You've probably never heard of the Valley Forge fund, a large-value fund with only about $15 million of assets under management. It's run by 89-year-old Bernard Klawans, who has never had any formal training in finance or money management. He's simply a retired aerospace engineer who enjoys managing money. The fund has beaten most of the competition over the past 10 years and is now U.S. News's top-ranked large-value fund.
[See How A One-Man Fund Beat All the Rest from U.S. News.]
Now, some news concerning one of the powerhouses of the fund industry. Bloomberg reported Wednesday that bond giant PIMCO sees about $1 billion in inflows each week. Also, in a radio interview, PIMCO cofounder and co-CIO Bill Gross reiterated his belief that we're entering a "new normal" in the markets—meaning investors should expect annual returns closer to 4 or 5 percent as opposed to the 10-plus percent returns that many investors have become accustomed to in the past. Gross also says he prefers emerging markets debt over higher-yielding, riskier securities like those of Greece and Spain. That's why he's upped his stake in emerging markets debt to 10 percent in the PIMCO Total Return fund.
The Web is still buzzing with analysis from the SEC's announcement to examine 12b-1 fees. Last year alone, these fees, which cover everything from advertising to broker compensation, drained $9.5 billion from investors' accounts. Now everyone is wondering whether the change could tempt brokers to make more frequent changes to their clients' portfolios to make up for the money they wouldn't receive in fees. On the other hand, the rule could lead to more competition in the industry and potentially drive down prices. Or maybe we'll be left with something in between. It's not clear whether investors will benefit from these changes in the long run.
[See U.S. News's Mutual Fund Fee Reform: A Multibillion-Dollar Sleight of Hand?]
Investment News: 12(b)-1 proposal may hurt investors, advisers contend