Superficial article as typical of financial writers that mixes facts with fantasy. Unicorns are under threat but nothing to do with mutual funds or their valuation practices.
1. Mutual funds amongst money from Russian "mobs" and Chinese transfers made Unicorns possible.
See my earlier post explaining how unicorn valuations come about
http://www.mutualfundobserver.com/discuss/discussion/25268/the-story-of-unicorns
The late stage funding arrangements have very little to do with valuations but rather the terms of the funding.
2. The mark-to-market that mutual funds have done have very little correlation with the valuation of companies which is determined by the next funding event or IPO. Because each funding round has its own terms including liquidation preferences, a new round can come in at an even higher valuation than before if the terms are right. This may lead to earlier round investors having to take a write-off on their investments to mark to market as they go down the pecking order of preferences or get diluted with new shares issued.
3. Unicorns are facing potential down rounds recently but this has nothing to do with mutual funds investing in them. It is all about the exit potential with IPOs becoming dimmer and the perception that the era of free money with increasing rates is coming to an end to raise even more funds.
If Theranos, the $9B unicorn health care darling of Silicon Valley (and the media darling because of the photogenic founder) which has over-promised and under-delivered, falls down in its own hubris, it will bring down many unicorns more than anything else. It has no mutual fund investors.

On the topic of fiduciary responsibility:
There has never been a fiduciary responsibility for 403(b) plans as far as I am aware.
Read here if interested:
How non-profit employers must structure their plans to avoid having their 403(b) plan subject to ERISA
https://asppa.org/Resources/Publications/Plan-Consultant-Online/PC-Mag-Article/ArticleID/5202
I found this out when my paycheck was dinged for making a bi-weekly 403(b)(7) contribution and yet it took over 45 days for those funds to make it into my 403(b)(7) account. I inquired and discovered that a 401K plan have a fiduciary responsibility to make "timely contributions for the employees", no such language exists with 403(b) or 403(b)(7) plans.

FYI: A number of mutual fund managers who dumped their shares in energy companies before oil slid to 12-year lows now see themselves avoiding the sector for years to come rather than picking up shares trading at their cheapest levels in years.
Regards,
Ted
http://www.reuters.com/article/energy-funds-idUSL2N1552J0

Just a follow up, vkt. Thanks for your post. It seems logical that west coast pols would use the two you named, since both Charles Schwab and Bank of America (who owns Merrill) are headquartered in San Francisco.

A popular misconception (vkt is right - PR spin can be pretty powerful).
BofA "merged" with NationsBank (keeping NationsBank's CEO as CEO and Chairman) in 1998. For PR purposes, it retained the BofA moniker. Still headquartered in Charlotte, though.
Similar to SBC acquiring AT&T but keeping the AT&T name.

I learned very early on in my teaching career there was a big difference between a 40b(b) (IRA deferred annuity with loads, riders and fees) and a 403b(7) (IRA mutual fund account at low cost places like vanguard).

I think you mean 403b(1), not 40b(b).
In any case, it seems you're confusing implementation with requirement. That is, each vehicle allows for a variety of different plans, good and bad. 403(b)(7) plans allow for load funds (not necessarily load-waived). And 403(b)(1) plans allow for very cheap, noload, straightforward annuities.
One really can't talk about 403(b)(1) plans without looking at the elephant in the room, TIAA-CREF. You're not going to get a stable value option paying 4% in any 403(b)(7). You're probably not going to have a loan option with a 403(b)(7), at least according to this description of 403(b) plans provided by New York State United Teachers (NYSUT).
A CREF VA is pretty much plain vanilla, no loads, and inexpensive (including the annuity fee) totaling less than 40 basis points for actively managed funds in some plans. Here's their prospectus (expenses are on p.8, pdf p. 11):
http://www.tiaa-cref.org/public/prospectuses/cref_prospectus.pdf
That's not to say that all the wannabe annuity plans don't charge an arm and a leg, or that 403(b)(7) plans are typically high priced. Just that it's more the provider than the type of plan that matters. Even a Fidelity 403(b)(7) will likely cost more than a TIAA-CREF 403(b)(1).

it may be a distinction without a difference, but while Dodd Frank is a statute that calls for regulations to be written, the DOL regulations are just that - the next level of refinement (written regulations). In addition, the DOL regulations were subject to a three month public comment period (publication date April 20, 2015; comments closed July 21, 2015).
So while a comparison with Dodd Frank may not be apples and oranges, IMHO it's not a great comparison either.

FYI: (IBD's Website has a new look.)
2006, when now-retired Chip Burke spotted the first hints of the financial crisis that would slap America deep into recession, he shifted his portfolio to Fidelity’s online brokerage.
Burke never worked at Fidelity, but he knew the financial firm from his decades in the asset management industry, which included stints as a bond trader, floor trader and COO of a market maker-specialist firm. “Fidelity was always old school — well-run, well-funded, conservative,” said 61-year-old Burke, who still invests for himself and his family.
Regards,
Ted
http://www.investors.com/news/special-reports/fidelity-repeats-at-top-of-ibd-online-broker-survey/
IBD Top 5 Online Brokers:
http://www.investors.com/best-online-brokers-2016/
Does Your Online Stock Broker Meet Your Needs?:
http://www.investors.com/news/special-reports/best-online-stock-brokers-2015-top-5-lists/

One thing to keep in mind: the many kinds of deferred annuities "guaranteeing" 5, 6, 7% are not "bought" by consumers. Consumers are SOLD these things.

I learned very early on in my teaching career there was a big difference between a 40b(b) (IRA deferred annuity with loads, riders and fees) and a 403b(7) (IRA mutual fund account at low cost places like vanguard).
Vanguard never brought me lunch in the teacher's lunch room, but they continue to help fund my post-retirement parties.

One thing to keep in mind: the many kinds of deferred annuities "guaranteeing" 5, 6, 7% are not "bought" by consumers. Consumers are SOLD these things. They are way too complicated for anyone to just go out and request one. The opposite extreme are immediate, fixed annuities, which do have a place in some folks cash flow plans. And someday, these will have attractive rates once again. And also keep in mind that while the proposed regs have been written, the interpretation of the regs has not even begun yet. Just like the thousands of pages in the Dodd Frank act, it could take our friends in Washington months, if not years, to issue the how-to for this one.

Either I'm reading the DOL proposal wrong or the news article is an insurance industry PR piece.
If you want a "short" summary, here's the DOL fact sheet:
http://www.dol.gov/ebsa/newsroom/fsconflictsofinterest.html
My two line summary: Fiduciary responsibility will now generally apply to advice on IRAs (so if brokers intend to avoid that responsibility, they'll have to stop selling IRAs altogether, which won't happen), and virtually nothing gets special treatment or singled out. If annuities lose market share, it's because they are often not the best investments (especially inside of IRAs), not because they're being picked on.
I'm still wading through the proposal - which is long and takes several readings to appreciate. With that qualification (i.e. I may not know what I'm talking about), here are some responses to the article:
- "annuity retirement accounts [would be added] to the list of investments for which brokers [have to act as fiduciaries]"
Sure, and so would mutual funds, and anything else in an IRA. What's being changed is that if you get individualized advice on an IRA (or 401(k)), the adviser would now be considered a fiduciary, regardless of the investment. The proposal says:

Today, ... many ...advisers have no obligation to adhere to [fiduciary standards], despite the critical role they play in guiding ... IRA investments. Under [the Internal Revenue] Code, if these advisers are not fiduciaries, they may operate with conflicts of interest that they need not disclose and have limited liability under federal pension law for any harms resulting from the advice they provide. Non-fiduciaries may give imprudent and disloyal advice ...
With this regulatory action, the Department proposes ... a definition of fiduciary investment advice that better ... protects plans, participants, beneficiaries, and IRA owners from conflicts of interest, imprudence, and disloyalty.

The proposal goes on and on about how high cost funds are costing IRA investors a percent or more a year. I don't see any similar criticism of retirement annuities.

The underperformance associated with conflicts of interest--in the mutual funds segment alone--could cost IRA investors more than $210 billion over the next 10 years and nearly $500 billion over the next 20 years. Some studies suggest that the underperformance of broker-sold mutual funds may be even higher than 100 basis points, possibly due to loads that are taken off the top and/or poor timing of broker sold investments

- "The extra work required by the new rules ... would likely push brokers away from selling annuities and toward mutual funds and other fee-based investments"
The extra work imposed by the new regulations would apply to all IRA investments, so annuities wouldn't be disadvantaged. As a result of industry comments, DOL streamlined the regulations to reduce the overhead. DOL acknowledges compliance costs:

The Department nonetheless believes that these gains alone would far exceed the proposal's compliance cost.... For example, if only 75 percent of the potential gains were realized in the subset of the market that was analyzed (the front-load mutual fund segment of the IRA market), the gains would amount to between $30 billion and $33 billion over 10 years.

- "They feel the government is favoring mutual fund companies like Vanguard over insurers"
The proposed regs allow advisers to keep their front end loads, their wrap fees, etc. so long as they are reasonable under the circumstances.

Investment advice fiduciaries to IRAs could still receive commissions for transactions involving non-securities insurance and annuity contracts, but they would be required to comply with all the protective conditions [that apply to mutual funds]

For the full set of DOL docs, see: http://www.dol.gov/ebsa/regs/conflictsofinterest.html

I'll nearby where the real deal is served up daily:

"The 20 Hamburgers You Must Eat Before You Die"
theletub.com/news.asp

@rlyke12
Indicators of size...hmm, that's a toughy. And I would agree with msf that unrealized CGs (and, for that matter, unrealized losses) aren't very useful either. However, there is a situation where you can tell, if you notice sizeable CGs building up in a fund and are using that as a reason to get out or not invest in it, whether concern about a large CG distrubution is warranted. But you have to be willing to do the homework!
Let's say a fund has a bad year, or has a so-so year, with some or a lot of capital losses but no CGs realized. Rather than let the realized losses go to waste, mutual funds can "carry them forward," for many years (up to 5?), but they have to designate to the IRS how much and in which years they will be used. So, let's say a fund's bad year was 2010, with realized losses of $200M; they designate future usage of $50M for 2013, $70M for 2014, and $80M for 2015. You come along as an interested new investor in the fund in 2015, but see that fund has had a good 4 yr run and appears to be in harvesting mode, i.e. realized CGs are up to $50M, and it's only June. Maybe you should wait until Jan., you think, to avoid the tax hit. After all, why should you pay tax on someone else's CG?
And that is where all that minutia, in the SAI and in the back pages of the annual and semi-annual reports becomes quite relevant to your concern. Losses carried forward to what years are listed in detail there. So, in the above example, you go to the SAI, find this "old history" of which you were unaware, and find out that CGs tax is not one of the variables in play for deciding whether you should invest now or wait--- for 2015, most all of it is gonna be cancelled out at year's end.

IMHO the only somewhat reliable indicator is if there's been a management change to a new manager with a different investing style. For example, I'd expect a larger distribution with a management change at Fidelity than at T. Rowe Price where there's an effort at smooth transitions and continuity.
The larger distributions this year (2015) were not unexpected, because the market went up so much in 2014 and funds didn't seem to distribute much that year. That meant they were sitting on securities that had gone up a lot, and so were candidates to be sold off in 2015.
But ... while funds tended to have larger than average distributions, there were some funds with outsized gains, and I couldn't even guess at any common factor. So I'll beg off regarding indicators of size, beyond what I've already described.
More generally, you can look at figures like M*'s tax cost ratio to get a sense of a fund's typical distributions. That should correlate somewhat with turnover. I don't find a fund's unrealized capital gains particularly predictive - a fund may own the same appreciated securities for many years, even as it trades in and out of others.

@heezsafe,
Well said. Barron's 2015 prediction and stock pick were mostly wrong. Here we goes again for another round of expert picks for 2016 - no thanks.

Kent, Kent, Kent. There you go again. We must have been trained to read tea leaves differently.
FSUTX 1-yr return = -13.15% (dial it back one day to exclude Friday's 2.26% pump, and we're lookin' at -15.41%)
Defensive?

My takeaway is to watch whether Berwyn Income Fund, with current AUM in the neighborhood of $1.7B, will become an asset gatherer for the acquiring firm.
Most striking was a phrase in the TriState Capital Holdings (TSC) release that its subsidiary, Chartwell, hoped to "meaningfully accelerate growth in client assets..."
That's never a good sign. (Remember, Berwyn Income Fund closed in 2010-2011, when it could not find new investment opportunities)
As for Berwyn, it says neither the objectives, invest team or process will change. And it says "total fund expenses are to remain unchanged for two years."
***
Also, the offerings of Berwyn and Chartwell appear somewhat redundant.
Chartwell's two mutual funds: small cap value (CWSIX-$1.7B market cap) and short duration (CWFIX- mostly BB-rated corporate bonds).
Berwyn: Berwyn (BERWX-$620m market cap) and Berwyn Income (BERIX- >%50 corporate bonds, BBB to B )
I presume the acquisition settles succession issues for the boutique firm - Berwyn CEO and president Robert Killen, and the principals are well acquainted, only a few miles apart out on the Main Line of Philadelphia.

How come? It is allowed to hedge 50% of its portfolio. So it should be done 50% of the rest.
Aaah...someone at Fortune had a article quota to complete...and convinced some rookie at M*...

Seems to me to tend to the slightly less risky, based on my uninformed historical lookbacks and comparisons. (How's that for handwaving?) Its past performance looks not bad when it comes to slumps (bond portion w Gundlach sauce), and its general outperformance (less so vs CAPE etf, which you might want to look at) at every increment since inception is interesting. 50-50 w PONDX looks similarly appealing when you backtest it, though I would probably do 60-40 since DSENX has this special bondish component.

David, is there any way to tell which sectors it's invested in, except fairly distantly in the rearview mirror? (For now, the only source I can find is a couple of lines of text in the 9/30 report, which was apparently out two months after quarter end. And you can't really tell anything by looking at portfolio holdings.)
M* shows the 1y up/down capture as 110/93. If those figures are indicative, it's been coming in better on both reward and risk than the index, but so far at least not what you'd call a defensive fund, if that's what anyone's looking for.
That etn CAPE: the tiny, tiny, tiny trading volume is an absolute disqualifier for me. I once looked into etn structure, but don't recall much about it except it had risks of its own - I think issuer risk is one of them.

@msf, thanks for getting back. I went back and read the article again to refresh myself and it would appear we have been misinterpreting the situation. The lawyer made no public statements, it is not something he wrote to the media as I interpreted nor did he repeat what he had written in the briefings. The article dug it out of the briefings from a case and was a bit ambiguous about it. So I take back my comment that someone needs to get fired!
As I said before I have no opinion on it being the defense strategy and you cannot avoid newspapers digging that up but I stand by my PR implications of it if he had made it as a direct statement written or oral to the media. A competent lawyer would never do that (kind of a statement to the media even if it is already in the filings). If you believe otherwise, then I beg to disagree. It just becomes a matter of opinion based on our experiences (or lack of it).
In fact, lawyers often construct their legal briefings with PR awareness. The construct I was objecting to is a very common one in PR to avoid. For example, from
http://profootballtalk.nbcsports.com/2015/11/04/washingtons-federal-trademark-defense-good-legal-strategy-bad-p-r-move/
I quote a similar opinion on the Tom Brady deflategate filing.

It’s why, for example, Tom Brady and the NFL Players Association resisted couching the argument against a four-game suspension this way: “Even if he did it, they can’t suspend him for it.” Although it’s common in legal filings for lawyers to make assumptions for the sake of argument, the average non-lawyer would look at that and say, “So he’s admitting he did it.”

That is exactly the point I was making here.
And this is precisely the difference between thinking like a lawyer and a PR person. A lawyer often makes a case that an average person will think the way he/she does to prevail in his viewpoint. The PR person does just the opposite, it is not what he thinks or knows to be true but what an average Joe on the street who doesn't have a clue about subjunctive moods or even be literate thinks when they read a statement. Very different ball games.
It has been a fun discussion. Thanks for your usual well thought out inputs.