The Securities and Exchange Commission voted unanimously yesterday on a proposal that would require mutual funds to provide risk/return, fee and strategy information using the same new digital data tagging system as the 500 largest U.S. corporations.

In essence, it would empower investors to be able, at the click of a mouse, to “comparison shop” the 8,000 mutual funds in existence--potentially rejecting an offering because of a fraction of a higher price or lower performance.

Last week, the SEC proposed that the largest 500 corporations start filing data in XBRL, or “eXtensible Business Reporting Language,” by early 2009. Under the Wednesday proposal, mutual funds would face the same requirements—for their summary information—by Dec. 31, 2009. They would also have to post the information on their websites.

“Today there are over 8,000 mutual funds for investors to choose from,” said SEC Chairman Christopher Cox. “That’s a great thing, but how does an individual investor know where to start?”

“This exciting new technology will enable investors to instantly analyze and compare not just two or three mutual funds, but hundreds or even thousands, and to quickly focus on the particular funds that are right for them,” Cox said.

Cox said XBRL “will be a direct benefit to mutual fund investors [that] will allow investors to do their comparison shopping in ways that were never before possible.”

“There has already been heavy interest in the Mutual Fund Prospectus Viewer we created for the SEC,” said Mike Rohan, president of Rivet Software. “An interactive data standard is gaining widespread interest since it allows investors to easily compare risk and return information and fund objectives across multiple funds.”

However, SEC Commissioner Kathleen Casey, demurred on her vote, voicing concerns over compliance costs; only 20 large mutual funds participated in the pilot program, she said.

The proposal will have a public comment period before it is considered for adoption.

The Investment Company Institute has yet to issue a comment, but Andrew Donohue, director of the SEC’s Division of Investment Management said: “This proposal would, if adopted, create an interactive database of key mutual fund information that will enable investors to more easily analyze and compare cost, performance and other key information across the more than 8,000 available mutual funds.”

Donohue added that in combination with the idea of the summary prospectus, a proposal he and two of his counterparts at the SEC have floated a total of three times in the past decade, “This proposal has the potential to transform information access for mutual fund investors.”

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