Edited by William A. Birdthistle and John Morley
Chapter 12: Free funds: retirement savings as public infrastructure
The chapter explores the possibility of a new public or eleemosynary infrastructure to support private investment in funds. Specifically, it proposes and explores the concept of an investment fund provided to citizens as a service with zero investment advisory fees. The viability and advisability of free funds turn on three large questions: first, whether mutual funds with no fee are financially viable; second, whether they ought to exist; and third, who or what entities should serve as their sponsor. The chapter argues that free funds are theoretically plausible, inasmuch as funds with very low expense ratios could offset remaining net expenses with revenues from operations such as securities lending. In light of the central role of private investing today, it argues for experimentation with pilot fund, under the aegis of a nonprofit or governmental sponsor.
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