A few years ago, fund companies took heat for letting large, special status customers quickly buy and sell swaths of stock to capitalize on small movements in price. So-called market timing, watchdogs warned, hurts those investors who buy and hold their funds, typically the little guys.
But a recently released independent analysis of trading activity at
Individuals who traded through their company-sponsored 401(k) retirement accounts accounted for roughly $120 million of that, while the nine companies Columbia had brokered deals with cost long-term investors $30 million.
Although the trading does not benefit long-term holders, it is not illegal. The
Results of the study were surprising to some because it showed that timing by investors was far more common and widespread than previously thought.
"What you see is the marketplace at work," said Thomas Theobald, an independent trustee for some Columbia Funds. Since the scandals of 2003, many companies have cinched the loopholes timers relied on. "In my opinion, it's inconceivable that this sort of thing can happen again," said Theobald.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.