Money magazines October issue charges that for more than a decade through 2002, Wilshire Associates engaged in far-reaching fund timing that resulted in fat returns.
On any given day, Wilshire traded more than $100 million worth of mutual funds, typically in funds with at least $1 billion in assets. This suggests that some of the biggest fund companies in the nation allowed the investment advisor to engage in fund timing, even though most fund prospectuses explicitly forbid such trades. If this is true, then New York Attorney General Eliot Spitzers investigation into late trading and market timing in funds could be even more widespread than he originally thought.
Long-term fund investors footed the bill for the trading expenses and performance drag of Wilshires hedging strategies, Money charges. Its possible that fund companies wanted to curry favor with Wilshire, as it is one of the leading consultants to 401(k) plan sponsors and pensions in the nation, the magazine theorizes.