New Lipper data shows at least one in four international and global mutual fund companies partake in market timing, Financial Times reports.
The report surveyed 126 funds, and 29 of them admitted that churn rates exceeded 100%, well above the 24% industry average. Without quick in-and-out buying, anything near 100% would be almost impossible to attain.
A 700% churn rate was discovered in the Dreyfus Premier Worldwide Growth fund, while the ING International Growth Fund and Evergreen International Equity Fund each came in above 400%. On the other hand, Fidelity, American Funds and Templeton all had low churn levels.
Stanford business professor Eric Zitzewitz told the Financial Times, "If a fund has a turnover ratio much above 100%, thats when I would start to question whether there is [market timing] going on."
Since the heavy inquiries into mutual fund practices began, the Securities and Exchange Commission has said that half of the 88 funds it contacted have admitted to market timing, a legal but frowned-upon practice that many argue gives unfair advantages to certain investors.