PALM DESERT, Calif.-Eileen Rominger, in her first appearance before a gathering of members of the mutual fund industry's largest trade group, said that compliance with existing and forthcoming rules as well as robust regulation of these is essential to achieving and maintaining the trust and confidence of investors.

Appearing by video link from Washington, the director of the division of investment management at the Securities and Exchange Commission, said derivatives can be used effectively for either hedging risks or accentuating them and that other relatively new products such as exchange-traded funds bring new complexities to investment markets that need to be monitored closely to protect investors.

Her comments were made to attendees of the 2011 Investment Company Institute Mutual Funds and Investment Management Conference.

Rominger said the SEC supports the creation of the Financial Stability Oversight Council. Reforms that are being worked out are in their second phase of development, she said, and should lead to greater stability and liquidity for key types of financial products, such as money market funds.

The SEC also will be looking at how to maintain or increase investor confidence in exchange-traded funds, which now have $1 billion in assets, and target-date funds, which may need to supply additional information to investors to reduce confusion, she said. Also meriting attention she said are the annual marketing and expenses of 12b-1 fees.


Funds Vote 90% of TimeWith Management

PALM DESERT, Calif.-Registered investment companies vote in favor of management proposals more than 90% of the time, according to a study of 3.9 million proxy ballot items. This is "in line with what you read in media" reports, according to Sean Collins, senior director of industry and financial analysis, for the Investment Company Institute.

But it also is "about in line with what proxy advisory firms also are recommending," Collins said, at the 2011 ICI Mutual Funds and Investment Management Conference.

Funds, however, also voted about 50% of the time in favor of proposals by shareholders, he noted. In 2008, Collins noted, funds only voted in favor of approximately 35% of shareholders' proposals.

The biggest slice of management proposals are compensation related.


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"The conditions over the last few years have proven that traditional approaches may not be enough and that there is a need for investors to employ new strategies, potentially including alternative investments."

-Gurinder Ahluwalia


Genworth Financial Wealth Management

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