In a new study, Financial Research Corp. predicts new SEC regulations will lead to a major shakeup for the mutual fund industry. FRC indicates that some mutual fund companies could pass on the costs of new regulations prompted by the far-reaching investment scandals by increasing shareholder expenses up to $125 per year.
According to the study, which surveyed marketing officials at roughly 20 investment firms, mutual fund companies are on the cusp of providing more transparency into previously opaque practices, such as revenue sharing and 12b-1 fees.
Pressure from industry regulators on mutual fund companies to lower management fees is also expected to exact a toll on future profits. If the proposed management fee reductions are adopted, experts predict that profits at mutual fund companies could plummet by 4.5% to 15.6%.