jacob wrote:I'm talking about the ways DCA benefits the fund-managers, not the ways DCA benefits the retail side. The key point with DCA from the traders' and brokers' perspective is its predictability and volume. The "scheme" lies in exploiting this predictability. Eliminating the fiduciary rule makes this easier. It also allows for bad execution---if you don't have the best interest of your client at heart, you can fire the block traders... I mean who cares about getting fair prices if you don't have to... and so on.
So really, it's simply the phase (relative to calendar months) of periodic purchases you are talking about, not DCA per-se. Got it. I think most people are stuck with payday contributions (fortunately many are paid weekly or biweekly), but I think most would have the option to direct contributions to a money market or stable value fund and could manually avoid buying on the handful of days surrounding the new month, but I'd guess that is far more trouble than most people would be willing to go to. I'm surprised that phenomenon hasn't been "arbitraged away" by now seeing as these plans have been around nearly 40 years.
Better fund companies often assign preferred shares (e.g., lower cost "institutional" versions) to retirement plan investors because of that inflow predictability and relative stability of people's holdings. That is, if the plan administrator cares and negotiates for it.
There is no fiduciary rule today, nor has their ever been one applicable to retirement accounts. Elimination of the pending rule would only allow business as usual to continue unhindered.
I don't know if retail mutual funds would be directly subject to the standard anyway. The onus falls more on plan administrators and trustees in the selection of the palette of options that employees have available in their retirement plans. Relatively crappy options can still exist in plans as long as there are good options alongside them. Of course that would cause more competition in the retirement plan market space, which should drive any manager who wants part of that market to behave better.
The nice thing about outfits like Vanguard is that anything they can exploit via trading is passed to the shareholder as increased return/lower fees.