After suffering an "enormous body blow," Manning said, MFS is restoring investors faith by concentrating on performance, offering a more diversified lineup of funds beyond growth and enforcing best practices ahead of new regulations. Ceasing soft-dollar arrangements with fund distributors is costing the firm $35 million a year, but has enabled the firm to bring down trading costs from five cents a share to four cents, saving $75 million, he noted.
"We set the standard in best practices in the industry," he attested, adding, "We want to run a balanced book of business [and prove once again that] people like doing business with MFS. Were a humble company."
The CEO also predicted the markets will return to their historical levels of 6% to 9% annual returns, and with that, investors will gravitate back to actively managed mutual funds, in hopes of beating those averages.
As for the recent surge in hedge fund assets, Manning dismissed it as a fad that is "going to blow up. Youll read about big funds filing for bankruptcy and 25-year-old kids losing a lot of [other peoples] money." He further charged that hedge funds fee structure is "ridiculous," in some cases eating up 60% of returns.
