By now you've surely heard of the massive scandals swirling around many of the most well-known mutual fund companies. We've covered this topic many times in the past, and we even recently released a new newsletter to help ensure investors pick the best funds and never fall prey to improprieties.
The good news resulting from the scandals is that many funds are surely cleaning up their acts now, not wanting the negative publicity and loss of investor capital that comes with disgrace. There's some less good news, too. According to a recent Boston Globe article, many mutual fund companies are tacking on disclaimers to their disclosures in an attempt to protect themselves against lawsuits.
The Globe cited the example of FleetBoston Financial
Is this entirely bad? Not really. After all, it is unlikely that any fund could completely prevent every instance of market timing or other no-nos. So, you might view the disclaimers as simply pointing out to investors that they can't assume that everything will always be aboveboard. Still, critics view the disclaimers merely as self-protection. Massachusetts Secretary of State William F. Galvin said, "There is no excuse for this.... It shows me they've learned nothing at all from their recent experience, and they're unrepentant."
If you're dismayed by mutual fund scandals and not sure what to do with your investing dollar, consider the glorious index fund, which we've long recommended for many investors. Index funds have outperformed the vast majority of stock mutual funds over many time periods. An investment in an S&P 500 index mutual fund, for example, will have you instantly invested in 500 major American companies, such as PepsiCo
Of course, if you'd like to do even better than that, there are reputable fund families out there, with talented managers and admirable track records. Shannon Zimmerman, the editor of Motley Fool Champion Funds, is constantly separating the wheat from the chaff and delivering promising fund recommendations each month. Check out a free issue.
Longtime Fool contributor Selena Maranjian owns shares of Pfizer.