While working on the white paper featured in the "Exclusively for Members" section of our FiduciaryNews.com monthly newsletter, I trolled the internet to see if I had missed any peer-reviewed research papers on the subject of mutual fund conflict-of-interest. Admittedly, there have been many and I've reported on quite a few of them, but, scientist that I am, I always suspect there remains at least one stone unturned. And I was right.

And what a rock of insight it was. Here was an academic paper – as far as I can tell not published anywhere – by a couple of professors from the least likely places: Iowa and Australia. This conflict-of-interest is so hidden, the two authors had to construct their own metric to identify it. And here's the most amazing part – the data they used did not come from the fund prospectus, its Statement of Additional Information or, indeed, any other fund document. Instead, they found it in several of the standard questions on the FORM ADV of the fund's investment adviser. For the full story on the issue – called "cross trading" – including comments from one of the authors of the paper, read "New 401k Plan Sponsor Fiduciary Worry: Study Reveals Previously Unpublicized Conflict of Interest Can Harm Mutual Fund Performance" (FiduciaryNews.com, April 1, 2014).

My point is this. The paper has a date of February 28, 2014. The University of Iowa, where one of the authors resides, has a press release on it (which is how I found it in Google). This paper has a really salient point on an underreported technically legal (aren't they all) mutual fund conflict-of-interest. Their research shows investors, in the worst case, can lose 1% per year in investment performance as a direct result of cross trading. And yet, not an ounce of ink has been spilled over it.