Fund statements improving, says researcher

(May 26, 2004) Mutual fund statements have become clearer and easier to understand over the past three years, according to Dalbar’s 2004 Investor Statement Analysis.

“Companies today are generally using more personal language in their statements — they’re speaking directly to the customer rather than referring to them in the third person,” says Mark McDonald, client relationship manager at Dalbar’s Toronto office. “They’re also avoiding legalese and avoiding giving customers information they really don’t need.”

Not only did the analysis team look at readability and clarity, but also at delivery options. One third of the fund companies examined offered statements via e-mail, compared to none in the 2001 Dalbar study.

Some of the companies even offered better information on the electronic version in an effort to convert clients to switch to the more cost effective format. For instance, Fidelity allows the user to not only view their standard statement, but also set a customized date range for performance data.

The study rated 18 mutual fund companies on various aspects of their investor statements and scored them out of a possible 100 points. Mackenzie Financial received the highest score, with 79.25. Account statements from Investors Group, AIM Trimark and RBC Asset Management also ranked in the top quartile.

“When you look at a Mackenzie statement, you have most of your questions answered immediately — you don’t have to go searching for information,” says McDonald. “The statement was very clean and provided pretty much all of the information an investor would want to get without bombarding them with irrelevant stuff.”

He also praises Mackenzie statements for defining jargon which might not be understood by the typical fund investor.

The fund statement review report was not entirely positive though, with Dalbar calling on fund companies to include features such as a percentage rate of return for the portfolio, or an investment commentary.

“For the companies that do provide a rate of return to the investor, they maybe don’t provide as much context as they could,” McDonald says.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com