Fundsters, you have a new enemy, and he's armed with a pen and an SMA that accepts accounts as small as $25,000.

Ken Kim, a professor who serves as chief financial strategist at San Rafael, California-based TAMP EQIS, co-authored the new book Mutual Funds Exposed with his colleague William Nelson, EQIS' chief investment officer. Be prepared to have an advisor or investor or two toss the book or some of its arguments at you, fundsters.

The book begins by pulling together all the different criticisms of mutual funds that have been voiced over the years. Transparency issues (related to the divulgence of portfolio holdings), fees and tax efficiency are among the points Kim and Nelson bring up. Then they bring in recent academic research, highlighting worries like "window dressing" (where a mutual fund PM manipulates how their quarterly holdings look by buying or selling right before the reporting date) and incubation issues (involving only a small fraction of the funds that firms seed ever coming to the public).

The book is geared towards average investors, not financial professionals. Kim, who is on leave from SUNY Buffalo, says he used the same principles that drive his teaching style.

"It tried to make this very easy to understand," Kim tells MFWire. "It's very accessible. I tried to make it entertaining."

Kim says they put together the book now because, unlike in the past, there are now alternative vehicles available to the masses. He points to ETFs and to separately managed accounts (SMAs). His firm, EQIS, specializes in the latter, working with advisors and then investing individuals (with as little as $25,000) into SMAs that use 20 different asset classes and mirror strategies from a host of different asset managers. They charges 80 basis points for their SMAs and work with about $1 billion, up from $100 million three years ago.

"The problem with separate accounts historically is you have to be a very wealth person to invest in a separate account," Kim says. "Because of technology, separate accounts are now easily accessible." 

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