Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

Sialm09022008

VIEWS: 1 PAGES: 5

									Does One Size Fit All?
Mutual Funds as Investment Vehicles for Retirement Savings


         Clemens Sialm
         University of Texas at Austin and NBER

         Prepared for the Conference on
         “Financial Innovation and Retirement Security: From
         Ideas to Implementation”

         September 12, 2008
Mutual Fund Structure

   Assets in mutual funds have grown
    dramatically over the last decades.
   The expansion of tax-qualified retirement
    savings opportunities has contributed to the
    growth of the mutual fund sector.
   38 percent of mutual fund assets are held in
    retirement accounts.
   Many mutual funds have mixed clienteles and
    are held in both taxable and tax-qualified
    retirement accounts.
                                               2
Distribution of Proportion of Mutual
Fund Assets Held in DC Accounts
                                   0.08

                                   0.07
      Proportion of Observations




                                   0.06

                                   0.05

                                   0.04

                                   0.03

                                   0.02

                                   0.01

                                     0
                                          0.00   0.10   0.20    0.30   0.40   0.50   0.60   0.70   0.80   0.90   1.00
                                                                   Proportion of DC Assets



                                                               Sialm and Starks (2008)
                                                                                                                        3
Investment Needs

   Investment needs differ between clienteles
       Different taxation
           Realization of capital gains and losses
           Dividend yield
           Dilution of capital gains overhang
           Asset location between taxable and tax-qualified
            accounts
       Different distribution channels
       Different investment horizons and trading styles
   Cross-subsidization between clienteles
                                                               4
Financial Innovation

   It is surprising that the mutual fund industry offers
    roughly the same savings vehicles for investors with
    very different objectives.
   Catering more closely to investor needs and their
    tax circumstances creates a substantial value
    added.
   Recent financial innovations, such as life-cycle
    funds and exchange-traded funds are valuable
    products, but there is still a lot of scope for financial
    innovation.
   One size does not fit all!

                                                                5

								
To top