Fund Investors Show Little Concern For Recent Scandals

April 20, 2004 ( - The mutual fund scandals may have grabbed many headlines in the plan sponsor world in recent months, but most fund investors have no particular concern about the issue.

More than half of mutual fund investors (57%) have no particular concern about the scandals currently roiling the industry.   Further, 59% of 401(k) investors showed no concern, according to a survey conducted by SpectremGroup, a consulting firm specializing in the affluent and retirement markets.  

Even asking about the specific scandalous issues of the day, investors were not troubled.   Only 37% of all investors – 40% of 401(k) investors – said they were “concerned” or “very concerned” about mutual fund market timing and late trading.

Not surprisingly, given the relatively low level of concern among mutual fund investors, more than two-fifths (44%) of all fund investors and 41% of 401(k) participants, admit to having little knowledge about the allegations of improper trading practices.  

Overall, investors – both generically and in 401(k) plans – are happy with their mutual fund companies, with 62% of both groups saying they have “high” or “very high” confidence in the fund companies with which they invest.   Asked if they would transfer investment in retirement plans out of mutual funds offered by any of the companies mentioned in the allegations to different mutual funds companies and only 29% said they would.

“Mutual fund investors have demonstrated a surprising lack of concern about the scandals that have rocked the industry, and when they do express anxiety it involves pocketbook issues such as fees and overall return,” Catherine McBreen , managing director of Spectrem Group said in a news release.  

In fact, when asked about the disclosure of fees, 58% of investors and 401(k) participants said they were “concerned” or “very concerned” and if the lawyers ever came knocking, 62% of all investors and 55% of 401(k) investors said they would participate in a class action lawsuit involving any of their mutual fund providers found guilty of improper behavior.   

The survey comprises responses from 402 mutual fund investors, including 168 who invested through retirement plans, contacted by telephone in February 2004. The margin of error for the entire survey group is plus or minus 4.9 percentage points.