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This page was last updated on February 6, 2001. Articles by Fund Democracy: Archives Despite SEC Efforts, Accuracy in Fund Names is Still Elusive, TheStreet.com (Jan. 30, 2001). View the full text of this article. Abstract: For many, the name Legg Mason Value Trust calls to mind the only stock mutual fund that beat the S&P 500 index in each of the past 10 years. For others, however, the fund's name is a harsh reminder of the elasticity of fund names and the concept of value investing. Notwithstanding its value moniker, Legg Mason Value invested and performed like a growth fund during the 1990s. According to Morningstar, at the end of 1999 its price-to-book ratio was 178% higher than the value category average, and its price-to-earnings ratio was 45% higher than average. The Securities and Exchange Commission, which has long been frustrated by funds with misleading names, adopted a rule this month that purports to ban them. The problem is that it contains some large loopholes and may not apply funds such as Legg Mason Value. The SEC is reluctant to apply the rule to names that suggested commonly accepted meanings, such as value, but which arguably are susceptible to alternative interpretations. Further, the rule only applies under "normal circumstances, which gives funds far too much investing leeway. |