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The Naughty Fund Family List



If you think most fund families have been involved in late-trading or market-timing investment malpractices, you're wrong. Of the roughly 400 mutual fund families in the open-end fund universe, only a small fraction of them have participated in such practices.

Ever since last September---when the first story broke about a hedge fund's alleged illegal market-timing and late-trading practices surfaced---the amount of ink attributed to the shenanigans in the open-end fund world has been enough to give the impression that the entire mutual fund industry was ripe with thieves and robbers all more than happy to steal from the little guy's mutual fund investment. In reality, however, of the nearly 400 mutual fund families around (not hedge funds but open-end mutual fund families), less than 20 have been included in this crisis of investment confidence.

"There's just no evidence of it (market-time or late-trading problems) as being rampant within the industry, " says Andrew Clark, a senior research analyst at Lipper, Inc. "There's no proof of that."

As of late February, about 17 fund families had been included in late-trade or market-timing scandal. And according to Clark, Lipper research suggests there may be another 20 families to come. If the latter proves true, that would bring the tally to roughly 40 fund families---or about 10 percent of the fund family universe. As the numbers stand today, the rats only represent about 5 percent.

For investors uncomfortable with owning shares of a family indicted of investment malpractice charges, or subject to those allegations, Clark says: "If you feel that you cannot work with a firm that has been found guilty, or, you think will be found guilty of some of the malpractices that they've been accused of, take your money out. Then, put it somewhere else. But be aware of the tax consequences of doing so."

Great advice---especially the "tax consequences" part.

Here's an alphabetical listing of the fund families that have been named in the industry's late-trading and

or market-timing scandal: Alger; AllianceBernstein; Columbia: Excelsior; Federated: Franklin: Heartland: Invesco: Janus: MFS; Nations; One Group: PBHG: Putnam: Scudder: Seligman: and Strong.


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