While small-time investors are able to invest more often and safely, some caveats in mutual fund regulations have prevented them from maximizing their returns, according to a Milken Institute Review article.
The article, written by Professor Eugene White of
"As the market for funds grew and became more sophisticated," White wrote, "opportunities exploiting the governance structure and liquidity rules appeared. Conflicts of interest arising from incentive structures and the diversity of fund activities led investment advisers to pay less attention to the interest of fund shareholders."
On the mutual fund trading scandal, White added, "No magic bullet would prevent late trading and market-timing arbitrage."
