401(k) honchos could do better by doing less

(MoneyWatch) The 401(k) plan was introduced in 1981. By 2006, the total assets in these defined contribution plans had grown to over $1 trillion. The explosive growth has been fueled not only by the tax benefits they provide, but also by the demise of defined benefit plans -- the kind that many corporations had historically provided. Given the amount of assets in these plans, as well as the fact that for over 60 percent of participants their 401(k) plan represents their sole financial asset outside of bank accounts, the actions of plan administrators are vitally important.

Given the importance of these plans (and similar plans such as profit sharing plans), investors should be aware of how well plan administrators select mutual funds. The study "Participant Reaction and the Performance of Funds Offered by 401(k) Plans" provides us with insight to mutual fund selection and other questions to ponder.

The authors examined the performance of all 401(k) plans that filed 11-K reports in 1994 and used publicly available mutual funds as choices offered to participants. They traced the sample through 1999. This database provided a sample of 289 plan years, representing 43 plans, most of which had seven years of data. Over these 289 plan years, 215 funds were added and 45 were dropped. The following is a review of their findings.

Fund Selection Skills

On average, administrators select funds that outperform randomly selected funds of the same type. That provides an appearance of skill. However, because the alphas (performance versus benchmark) for the average plan were negative, performance would have improved if passive funds (such as index funds) had been substituted for the active funds that were selected. The outperformance versus the random sample is likely the result of the fact that plans generally choose only funds from well-known fund families with significant amount of assets under management. Mutual funds have economies of scale. Thus, funds with more assets can charge lower fees.

Please don't do something, stand still

It seems that plan administrators ignore the SEC disclaimer about past performance not being a predictor of future performance. As one would expect, when administrators change offerings, they choose funds that did well in the past. After all, who would choose a fund that had performed poorly? Funds that were added to plans had positive alphas for both one- and three-year periods prior to the change. And, unsurprisingly, managers fire poorly performing funds.

Funds that were dropped had negative alphas for both one- and three-year periods before they were dropped. The funds that were added had an alpha above those that were dropped of 2.8 percent per year for three years before the change and 2.3 percent in the year before the change (note the declining alpha). Unfortunately for investors, when a plan deleted a fund and replaced it with a fund with identical objectives, the deleted funds outperformed the ones they replaced by about 2.5 percent per annum over the next three years.

The authors also examined what happened when a plan replaced all of their offerings from one fund family and added funds from a new fund family. Not surprisingly, they found that the past Sharpe Ratios (a measure of return relative to risk) were higher for the portfolio of added funds than for the portfolio of dropped funds. After replacement, the future Sharpe Ratios were higher for the portfolio of dropped funds than for the funds that replaced them. Once again, inaction would have proved better for investors than action.

Do individual investors make rational decisions?

The authors found that investors in 401(k) plans were "returns chasers." Exhibiting a herd mentality, they increase cash flows to prior period top performers and decrease them to prior period underperformers. Instead of maintaining their portfolio allocations (by rebalancing their portfolios), they change their allocation decisions in a way that exacerbates the changes in allocation caused by returns.

Before concluding, it is worth noting that the findings of the study on the performance of 401(k) plans are very similar to the findings of studies on the performance of pension plans.

The performance of pension plans

The 2007 study, "The Performance of U.S. Pension Plans," covered 716 defined benefit plans (1992-2004) and 238 defined contribution plans (1997-2004). The authors found that their returns relative to benchmarks were close to zero. They also found that there was no persistence in pension plan performance. And they also concluded that "the striking similarities in performance patterns over time makes skill differences highly unlikely."

Another 2005 study, "The Selection and Termination of Investment Management Firms by Plan Sponsors," examined the selection and termination of investment management firms by plan sponsors (public and corporate pension plans, unions, foundations, and endowments). The authors, Amit Goyal and Sunil Wahal, built a dataset of the hiring and firing decisions by approximately 3,700 plan sponsors from 1994 to 2003. The following is a summary of their findings:2

Plan sponsors hire investment managers after large positive excess returns up to three years prior to hiring. The return chasing behavior does not deliver positive excess returns thereafter.Post-hiring excess returns are indistinguishable from zero.Plan sponsors terminate investment managers after underperformance, but the excess returns of these managers after being fired are frequently positive.If plan sponsors had stayed with the fired investment managers, their returns would have been larger than those actually delivered by the newly hired managers.

It is important to note that the above results did not include any of the trading costs that would have accompanied transitioning a portfolio from one manager's holdings to the holdings preferred by the new manager. As we saw was the case with 401(k) plans, all of the activity was counterproductive.

It is also important to keep in mind that these pension plans, because of their size, are generally able to negotiate significantly lower management fees than the fees paid by investors inside of 401(k) plans. Yet, even with the benefit of lower costs, the pension plans were unable to generate above market returns.

Conclusions

The study on 401(k) plans, the first of its kind, found that, in general, plan administrators are doing a very poor job of serving their clients. They make poor selection choices in the first place. Then they compound their mistakes when hiring and firing--the investors would have been better served if the plan administrators were "Rip Van Winkles," asleep and unable to make changes in plan offerings. And, investors in the plans compound the problems by chasing returns.

These findings demonstrate that investors would be better served if plan administrators limited their offerings to low-cost index funds and if investors put their portfolios on autopilot--setting the portfolio to rebalance on a regular (e.g., quarterly or annual) basis. As Pogo said: "We have met the enemy and he is us."

Image courtesy of Flickr user 401(K) 2013.

View the original article here

401(k) honchos could do better by doing less

(MoneyWatch) The 401(k) plan was introduced in 1981. By 2006, the total assets in these defined contribution plans had grown to over $1 trillion. The explosive growth has been fueled not only by the tax benefits they provide, but also by the demise of defined benefit plans -- the kind that many corporations had historically provided. Given the amount of assets in these plans, as well as the fact that for over 60 percent of participants their 401(k) plan represents their sole financial asset outside of bank accounts, the actions of plan administrators are vitally important.

Given the importance of these plans (and similar plans such as profit sharing plans), investors should be aware of how well plan administrators select mutual funds. The study "Participant Reaction and the Performance of Funds Offered by 401(k) Plans" provides us with insight to mutual fund selection and other questions to ponder.

The authors examined the performance of all 401(k) plans that filed 11-K reports in 1994 and used publicly available mutual funds as choices offered to participants. They traced the sample through 1999. This database provided a sample of 289 plan years, representing 43 plans, most of which had seven years of data. Over these 289 plan years, 215 funds were added and 45 were dropped. The following is a review of their findings.

Fund Selection Skills

On average, administrators select funds that outperform randomly selected funds of the same type. That provides an appearance of skill. However, because the alphas (performance versus benchmark) for the average plan were negative, performance would have improved if passive funds (such as index funds) had been substituted for the active funds that were selected. The outperformance versus the random sample is likely the result of the fact that plans generally choose only funds from well-known fund families with significant amount of assets under management. Mutual funds have economies of scale. Thus, funds with more assets can charge lower fees.

Please don't do something, stand still

It seems that plan administrators ignore the SEC disclaimer about past performance not being a predictor of future performance. As one would expect, when administrators change offerings, they choose funds that did well in the past. After all, who would choose a fund that had performed poorly? Funds that were added to plans had positive alphas for both one- and three-year periods prior to the change. And, unsurprisingly, managers fire poorly performing funds.

Funds that were dropped had negative alphas for both one- and three-year periods before they were dropped. The funds that were added had an alpha above those that were dropped of 2.8 percent per year for three years before the change and 2.3 percent in the year before the change (note the declining alpha). Unfortunately for investors, when a plan deleted a fund and replaced it with a fund with identical objectives, the deleted funds outperformed the ones they replaced by about 2.5 percent per annum over the next three years.

The authors also examined what happened when a plan replaced all of their offerings from one fund family and added funds from a new fund family. Not surprisingly, they found that the past Sharpe Ratios (a measure of return relative to risk) were higher for the portfolio of added funds than for the portfolio of dropped funds. After replacement, the future Sharpe Ratios were higher for the portfolio of dropped funds than for the funds that replaced them. Once again, inaction would have proved better for investors than action.

Do individual investors make rational decisions?

The authors found that investors in 401(k) plans were "returns chasers." Exhibiting a herd mentality, they increase cash flows to prior period top performers and decrease them to prior period underperformers. Instead of maintaining their portfolio allocations (by rebalancing their portfolios), they change their allocation decisions in a way that exacerbates the changes in allocation caused by returns.

Before concluding, it is worth noting that the findings of the study on the performance of 401(k) plans are very similar to the findings of studies on the performance of pension plans.

The performance of pension plans

The 2007 study, "The Performance of U.S. Pension Plans," covered 716 defined benefit plans (1992-2004) and 238 defined contribution plans (1997-2004). The authors found that their returns relative to benchmarks were close to zero. They also found that there was no persistence in pension plan performance. And they also concluded that "the striking similarities in performance patterns over time makes skill differences highly unlikely."

Another 2005 study, "The Selection and Termination of Investment Management Firms by Plan Sponsors," examined the selection and termination of investment management firms by plan sponsors (public and corporate pension plans, unions, foundations, and endowments). The authors, Amit Goyal and Sunil Wahal, built a dataset of the hiring and firing decisions by approximately 3,700 plan sponsors from 1994 to 2003. The following is a summary of their findings:2

Plan sponsors hire investment managers after large positive excess returns up to three years prior to hiring. The return chasing behavior does not deliver positive excess returns thereafter.Post-hiring excess returns are indistinguishable from zero.Plan sponsors terminate investment managers after underperformance, but the excess returns of these managers after being fired are frequently positive.If plan sponsors had stayed with the fired investment managers, their returns would have been larger than those actually delivered by the newly hired managers.

It is important to note that the above results did not include any of the trading costs that would have accompanied transitioning a portfolio from one manager's holdings to the holdings preferred by the new manager. As we saw was the case with 401(k) plans, all of the activity was counterproductive.

It is also important to keep in mind that these pension plans, because of their size, are generally able to negotiate significantly lower management fees than the fees paid by investors inside of 401(k) plans. Yet, even with the benefit of lower costs, the pension plans were unable to generate above market returns.

Conclusions

The study on 401(k) plans, the first of its kind, found that, in general, plan administrators are doing a very poor job of serving their clients. They make poor selection choices in the first place. Then they compound their mistakes when hiring and firing--the investors would have been better served if the plan administrators were "Rip Van Winkles," asleep and unable to make changes in plan offerings. And, investors in the plans compound the problems by chasing returns.

These findings demonstrate that investors would be better served if plan administrators limited their offerings to low-cost index funds and if investors put their portfolios on autopilot--setting the portfolio to rebalance on a regular (e.g., quarterly or annual) basis. As Pogo said: "We have met the enemy and he is us."

Image courtesy of Flickr user 401(K) 2013.

View the original article here

401(k) honchos could do better by doing less

(MoneyWatch) The 401(k) plan was introduced in 1981. By 2006, the total assets in these defined contribution plans had grown to over $1 trillion. The explosive growth has been fueled not only by the tax benefits they provide, but also by the demise of defined benefit plans -- the kind that many corporations had historically provided. Given the amount of assets in these plans, as well as the fact that for over 60 percent of participants their 401(k) plan represents their sole financial asset outside of bank accounts, the actions of plan administrators are vitally important.

Given the importance of these plans (and similar plans such as profit sharing plans), investors should be aware of how well plan administrators select mutual funds. The study "Participant Reaction and the Performance of Funds Offered by 401(k) Plans" provides us with insight to mutual fund selection and other questions to ponder.

The authors examined the performance of all 401(k) plans that filed 11-K reports in 1994 and used publicly available mutual funds as choices offered to participants. They traced the sample through 1999. This database provided a sample of 289 plan years, representing 43 plans, most of which had seven years of data. Over these 289 plan years, 215 funds were added and 45 were dropped. The following is a review of their findings.

Fund Selection Skills

On average, administrators select funds that outperform randomly selected funds of the same type. That provides an appearance of skill. However, because the alphas (performance versus benchmark) for the average plan were negative, performance would have improved if passive funds (such as index funds) had been substituted for the active funds that were selected. The outperformance versus the random sample is likely the result of the fact that plans generally choose only funds from well-known fund families with significant amount of assets under management. Mutual funds have economies of scale. Thus, funds with more assets can charge lower fees.

Please don't do something, stand still

It seems that plan administrators ignore the SEC disclaimer about past performance not being a predictor of future performance. As one would expect, when administrators change offerings, they choose funds that did well in the past. After all, who would choose a fund that had performed poorly? Funds that were added to plans had positive alphas for both one- and three-year periods prior to the change. And, unsurprisingly, managers fire poorly performing funds.

Funds that were dropped had negative alphas for both one- and three-year periods before they were dropped. The funds that were added had an alpha above those that were dropped of 2.8 percent per year for three years before the change and 2.3 percent in the year before the change (note the declining alpha). Unfortunately for investors, when a plan deleted a fund and replaced it with a fund with identical objectives, the deleted funds outperformed the ones they replaced by about 2.5 percent per annum over the next three years.

The authors also examined what happened when a plan replaced all of their offerings from one fund family and added funds from a new fund family. Not surprisingly, they found that the past Sharpe Ratios (a measure of return relative to risk) were higher for the portfolio of added funds than for the portfolio of dropped funds. After replacement, the future Sharpe Ratios were higher for the portfolio of dropped funds than for the funds that replaced them. Once again, inaction would have proved better for investors than action.

Do individual investors make rational decisions?

The authors found that investors in 401(k) plans were "returns chasers." Exhibiting a herd mentality, they increase cash flows to prior period top performers and decrease them to prior period underperformers. Instead of maintaining their portfolio allocations (by rebalancing their portfolios), they change their allocation decisions in a way that exacerbates the changes in allocation caused by returns.

Before concluding, it is worth noting that the findings of the study on the performance of 401(k) plans are very similar to the findings of studies on the performance of pension plans.

The performance of pension plans

The 2007 study, "The Performance of U.S. Pension Plans," covered 716 defined benefit plans (1992-2004) and 238 defined contribution plans (1997-2004). The authors found that their returns relative to benchmarks were close to zero. They also found that there was no persistence in pension plan performance. And they also concluded that "the striking similarities in performance patterns over time makes skill differences highly unlikely."

Another 2005 study, "The Selection and Termination of Investment Management Firms by Plan Sponsors," examined the selection and termination of investment management firms by plan sponsors (public and corporate pension plans, unions, foundations, and endowments). The authors, Amit Goyal and Sunil Wahal, built a dataset of the hiring and firing decisions by approximately 3,700 plan sponsors from 1994 to 2003. The following is a summary of their findings:2

Plan sponsors hire investment managers after large positive excess returns up to three years prior to hiring. The return chasing behavior does not deliver positive excess returns thereafter.Post-hiring excess returns are indistinguishable from zero.Plan sponsors terminate investment managers after underperformance, but the excess returns of these managers after being fired are frequently positive.If plan sponsors had stayed with the fired investment managers, their returns would have been larger than those actually delivered by the newly hired managers.

It is important to note that the above results did not include any of the trading costs that would have accompanied transitioning a portfolio from one manager's holdings to the holdings preferred by the new manager. As we saw was the case with 401(k) plans, all of the activity was counterproductive.

It is also important to keep in mind that these pension plans, because of their size, are generally able to negotiate significantly lower management fees than the fees paid by investors inside of 401(k) plans. Yet, even with the benefit of lower costs, the pension plans were unable to generate above market returns.

Conclusions

The study on 401(k) plans, the first of its kind, found that, in general, plan administrators are doing a very poor job of serving their clients. They make poor selection choices in the first place. Then they compound their mistakes when hiring and firing--the investors would have been better served if the plan administrators were "Rip Van Winkles," asleep and unable to make changes in plan offerings. And, investors in the plans compound the problems by chasing returns.

These findings demonstrate that investors would be better served if plan administrators limited their offerings to low-cost index funds and if investors put their portfolios on autopilot--setting the portfolio to rebalance on a regular (e.g., quarterly or annual) basis. As Pogo said: "We have met the enemy and he is us."

Image courtesy of Flickr user 401(K) 2013.

View the original article here

How to make better decisions about retirement income

(MoneyWatch) One of the most important and complex retirement planning decisions you'll make is how to generate reliable, lifetime retirement income from your IRA, 401(k), and retirement savings. This post suggests a methodical approach for sorting out which retirement income generator (RIG) or combination of RIGs might work best for you.

As background for this post, you may want to review my recent post, "3 ways to turn your IRA and 401(k) into a lifetime retirement paycheck," which summarized the three methods of generating retirement income:

Each RIG has its pros and cons, and each RIG generates a significantly different amount of retirement income. As a result, when deciding how to generate your retirement paycheck, it's essential to understand the important tradeoffs you'll face when choosing your specific RIG or combination of RIGs. Some of these tradeoffs focus on the degree of control you want over your retirement savings vs. the certainty that your retirement paycheck will last the rest of your life, no matter how long you live and no matter what happens in the economy.

When deciding how to use your money to generate retirement income, it's important to understand two cold, hard truths: You'll most likely need to make some tradeoffs between the goals described below. And these tradeoffs will have a significant impact on the amount of retirement income you'll receive.

Some people will opt for a retirement income with lifetime guarantees that aren't subject to the risk of poor investment performance. Others might be willing to live with some uncertainty about their investments in exchange for the ability to have some control over and access to their retirement savings, and for the potential to leave a legacy to their children or charities.

Let's look a little deeper at the possible goals you'll set when it comes to your RIGs. I call these the LIFE goals:

Most people want to maximize the amount of their retirement income and satisfy as many of these goals as possible with their RIGs. Unfortunately, you get what you pay for when it comes to addressing these goals. What I mean is, the more of these goals you want to meet, the lower your initial retirement income will be.

When selecting a specific RIG, you'll need to make a trade-off between the LIFE goals and the amount of retirement income you need. For example, a 65-year-old with $500,000 in retirement savings can reasonably expect to generate an annual retirement income of between $15,000 and $30,000, depending on the RIG(s) they use and how many goals they want to address. These net figures correspond to initial annual retirement incomes equaling 3 percent and 6 percent of savings, respectively -- these percentages are often called the "payout rates."

The $15,000 amount meets the most number of LIFE goals and gives you maximum control over your retirement investments. The $30,000 amount addresses the fewest number of LIFE goals and gives you the least control over your retirement investments, but it also maximizes the certainty of your retirement income.

Here's a slide from one of the retirement planning workshops that I show participants to help them rate how important each of the LIFE goals are for them.

Deciding which goals are most important to you will help you develop your strategy for generating retirement income. Many people may decide that a combination of RIGs might best meet their circumstances, giving them the advantages of each while mitigating the disadvantages of each.

Stay tuned for my next post, which describes how the various RIGs meet the different LIFE goals.

This post is an edited excerpt from my recent book, Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.

Steve Vernon On Twitter » >> View all articles

For more than 35 years, consulting actuary Steve Vernon helped large employers design and manage their retirement programs. Now he's a Research Scholar for the Stanford Center on Longevity, where he helps collect, direct, and disseminate research that will improve the financial security of seniors. He also delivers retirement planning workshops and has authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

View the original article here

How to make better decisions about retirement income

(MoneyWatch) One of the most important and complex retirement planning decisions you'll make is how to generate reliable, lifetime retirement income from your IRA, 401(k), and retirement savings. This post suggests a methodical approach for sorting out which retirement income generator (RIG) or combination of RIGs might work best for you.

As background for this post, you may want to review my recent post, "3 ways to turn your IRA and 401(k) into a lifetime retirement paycheck," which summarized the three methods of generating retirement income:

Each RIG has its pros and cons, and each RIG generates a significantly different amount of retirement income. As a result, when deciding how to generate your retirement paycheck, it's essential to understand the important tradeoffs you'll face when choosing your specific RIG or combination of RIGs. Some of these tradeoffs focus on the degree of control you want over your retirement savings vs. the certainty that your retirement paycheck will last the rest of your life, no matter how long you live and no matter what happens in the economy.

When deciding how to use your money to generate retirement income, it's important to understand two cold, hard truths: You'll most likely need to make some tradeoffs between the goals described below. And these tradeoffs will have a significant impact on the amount of retirement income you'll receive.

Some people will opt for a retirement income with lifetime guarantees that aren't subject to the risk of poor investment performance. Others might be willing to live with some uncertainty about their investments in exchange for the ability to have some control over and access to their retirement savings, and for the potential to leave a legacy to their children or charities.

Let's look a little deeper at the possible goals you'll set when it comes to your RIGs. I call these the LIFE goals:

Most people want to maximize the amount of their retirement income and satisfy as many of these goals as possible with their RIGs. Unfortunately, you get what you pay for when it comes to addressing these goals. What I mean is, the more of these goals you want to meet, the lower your initial retirement income will be.

When selecting a specific RIG, you'll need to make a trade-off between the LIFE goals and the amount of retirement income you need. For example, a 65-year-old with $500,000 in retirement savings can reasonably expect to generate an annual retirement income of between $15,000 and $30,000, depending on the RIG(s) they use and how many goals they want to address. These net figures correspond to initial annual retirement incomes equaling 3 percent and 6 percent of savings, respectively -- these percentages are often called the "payout rates."

The $15,000 amount meets the most number of LIFE goals and gives you maximum control over your retirement investments. The $30,000 amount addresses the fewest number of LIFE goals and gives you the least control over your retirement investments, but it also maximizes the certainty of your retirement income.

Here's a slide from one of the retirement planning workshops that I show participants to help them rate how important each of the LIFE goals are for them.

Deciding which goals are most important to you will help you develop your strategy for generating retirement income. Many people may decide that a combination of RIGs might best meet their circumstances, giving them the advantages of each while mitigating the disadvantages of each.

Stay tuned for my next post, which describes how the various RIGs meet the different LIFE goals.

This post is an edited excerpt from my recent book, Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.

Steve Vernon On Twitter » >> View all articles

For more than 35 years, consulting actuary Steve Vernon helped large employers design and manage their retirement programs. Now he's a Research Scholar for the Stanford Center on Longevity, where he helps collect, direct, and disseminate research that will improve the financial security of seniors. He also delivers retirement planning workshops and has authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

View the original article here

‘Mitotic spindles’ could help develop better chemo drugs

Dr Steve Royle

Yesterday, we published a story on our newsfeed about research on how cells divide.

In an article for The Conversation, republished below, CRUK researcher Dr Steve Royle, explains the significance of his team’s findings.

Cells use a tiny machine called the mitotic spindle to share genetic material equally between cells when they divide. But when this process goes wrong it can lead to cancer.

For many years we’ve been interested in how the spindle divides up genetic material accurately. When a cell divides it must make sure that each daughter cell receives just one copy of each chromosome, which carries DNA to the new cell. Defects in this process can lead to cells having the wrong amount of chromosomes, which can lead to cancer or birth defects.

Anti-cancer drugs have been developed which target the mitotic spindle and destroy dividing cells in tumours. But these drugs have significant side effects. In my lab, we’re trying to understand how the mitotic spindles work in order to develop drugs that are more targeted and have fewer side effects.

Mitotic spindle: chromosomes in blue, microtubles in green. Credit: Wikimedia Commons/Afunguy

Colleagues and I at Warwick Medical School have shown in a paper published in The Journal of Cell Biology that a team of three proteins – called the TACC3–ch-TOG–clathrin complex – work to hold the spindle’s microtubules together and stabilise the bundle through a system of “bridges”.

Drugs such as Taxol (Paclitaxel) have been used very effectively in chemotherapy because they poison microtubles and inhibit the mitotic spindle. This stops cancer cells from dividing and causes them to die.

However, the disadvantage is that microtubules are needed for many functions in non-cancerous cells. This means that existing treatments don’t discriminate between cancerous and normal cells. So the use of Taxol and others in its family, for example, cause side effects such as nerve damage.

If we could target the mitotic spindle proteins, rather than microtubules, we may be able to develop effective anti-cancer drugs with far fewer side effects.

We’ve found that in cancer cells, the amount of the protein complex is either too low or too high. This suggests that these proteins could be targeted for potential anti-cancer therapies in the future.

Our research group, together with Richard Bayliss‘ lab at the University of Leicester, have recently described how the proteins in the TACC3–ch-TOG–clathrin complex bind to one another. In turn this led us to understand how the complex binds to microtubules. By taking out the TACC3 protein, the clathrin loses its function and is no longer able to create some of the bridges that bind the microtubles.

It’s important as we can use this information to think of ways to break the complex apart or to prevent it binding microtubules. From this, we may be able to disrupt the function of the protein complex in dividing cells and inhibit the sharing of chromosomes during mitosis, causing the death of cancerous cells.

The research is in the early stages, but we have also discovered that an enzyme called Aurora A kinase controls the assembly of the protein complex. Aurora A is often amplified in tumours and clinical trials into inhibiting its role are already underway into drugs that cause the TACC3-ch-TOG-clathrin complex to fall apart and actually break away from the mitotic spindle altogether.

When treating cancer we still often cause damage in other areas. Understanding and controlling the action of the mitotic spindle could help us to better target treatment by directly shutting down defective cells.

Steve Royle is a Senior Fellow for Cancer Research UK which funds his lab at Warwick University.

View the original article here

‘Mitotic spindles’ could help develop better chemo drugs

Dr Steve Royle

Yesterday, we published a story on our newsfeed about research on how cells divide.

In an article for The Conversation, republished below, CRUK researcher Dr Steve Royle, explains the significance of his team’s findings.

Cells use a tiny machine called the mitotic spindle to share genetic material equally between cells when they divide. But when this process goes wrong it can lead to cancer.

For many years we’ve been interested in how the spindle divides up genetic material accurately. When a cell divides it must make sure that each daughter cell receives just one copy of each chromosome, which carries DNA to the new cell. Defects in this process can lead to cells having the wrong amount of chromosomes, which can lead to cancer or birth defects.

Anti-cancer drugs have been developed which target the mitotic spindle and destroy dividing cells in tumours. But these drugs have significant side effects. In my lab, we’re trying to understand how the mitotic spindles work in order to develop drugs that are more targeted and have fewer side effects.

Mitotic spindle: chromosomes in blue, microtubles in green. Credit: Wikimedia Commons/Afunguy

Colleagues and I at Warwick Medical School have shown in a paper published in The Journal of Cell Biology that a team of three proteins – called the TACC3–ch-TOG–clathrin complex – work to hold the spindle’s microtubules together and stabilise the bundle through a system of “bridges”.

Drugs such as Taxol (Paclitaxel) have been used very effectively in chemotherapy because they poison microtubles and inhibit the mitotic spindle. This stops cancer cells from dividing and causes them to die.

However, the disadvantage is that microtubules are needed for many functions in non-cancerous cells. This means that existing treatments don’t discriminate between cancerous and normal cells. So the use of Taxol and others in its family, for example, cause side effects such as nerve damage.

If we could target the mitotic spindle proteins, rather than microtubules, we may be able to develop effective anti-cancer drugs with far fewer side effects.

We’ve found that in cancer cells, the amount of the protein complex is either too low or too high. This suggests that these proteins could be targeted for potential anti-cancer therapies in the future.

Our research group, together with Richard Bayliss‘ lab at the University of Leicester, have recently described how the proteins in the TACC3–ch-TOG–clathrin complex bind to one another. In turn this led us to understand how the complex binds to microtubules. By taking out the TACC3 protein, the clathrin loses its function and is no longer able to create some of the bridges that bind the microtubles.

It’s important as we can use this information to think of ways to break the complex apart or to prevent it binding microtubules. From this, we may be able to disrupt the function of the protein complex in dividing cells and inhibit the sharing of chromosomes during mitosis, causing the death of cancerous cells.

The research is in the early stages, but we have also discovered that an enzyme called Aurora A kinase controls the assembly of the protein complex. Aurora A is often amplified in tumours and clinical trials into inhibiting its role are already underway into drugs that cause the TACC3-ch-TOG-clathrin complex to fall apart and actually break away from the mitotic spindle altogether.

When treating cancer we still often cause damage in other areas. Understanding and controlling the action of the mitotic spindle could help us to better target treatment by directly shutting down defective cells.

Steve Royle is a Senior Fellow for Cancer Research UK which funds his lab at Warwick University.

View the original article here

‘Mitotic spindles’ could help develop better chemo drugs

Dr Steve Royle

Yesterday, we published a story on our newsfeed about research on how cells divide.

In an article for The Conversation, republished below, CRUK researcher Dr Steve Royle, explains the significance of his team’s findings.

Cells use a tiny machine called the mitotic spindle to share genetic material equally between cells when they divide. But when this process goes wrong it can lead to cancer.

For many years we’ve been interested in how the spindle divides up genetic material accurately. When a cell divides it must make sure that each daughter cell receives just one copy of each chromosome, which carries DNA to the new cell. Defects in this process can lead to cells having the wrong amount of chromosomes, which can lead to cancer or birth defects.

Anti-cancer drugs have been developed which target the mitotic spindle and destroy dividing cells in tumours. But these drugs have significant side effects. In my lab, we’re trying to understand how the mitotic spindles work in order to develop drugs that are more targeted and have fewer side effects.

Mitotic spindle: chromosomes in blue, microtubles in green. Credit: Wikimedia Commons/Afunguy

Colleagues and I at Warwick Medical School have shown in a paper published in The Journal of Cell Biology that a team of three proteins – called the TACC3–ch-TOG–clathrin complex – work to hold the spindle’s microtubules together and stabilise the bundle through a system of “bridges”.

Drugs such as Taxol (Paclitaxel) have been used very effectively in chemotherapy because they poison microtubles and inhibit the mitotic spindle. This stops cancer cells from dividing and causes them to die.

However, the disadvantage is that microtubules are needed for many functions in non-cancerous cells. This means that existing treatments don’t discriminate between cancerous and normal cells. So the use of Taxol and others in its family, for example, cause side effects such as nerve damage.

If we could target the mitotic spindle proteins, rather than microtubules, we may be able to develop effective anti-cancer drugs with far fewer side effects.

We’ve found that in cancer cells, the amount of the protein complex is either too low or too high. This suggests that these proteins could be targeted for potential anti-cancer therapies in the future.

Our research group, together with Richard Bayliss‘ lab at the University of Leicester, have recently described how the proteins in the TACC3–ch-TOG–clathrin complex bind to one another. In turn this led us to understand how the complex binds to microtubules. By taking out the TACC3 protein, the clathrin loses its function and is no longer able to create some of the bridges that bind the microtubles.

It’s important as we can use this information to think of ways to break the complex apart or to prevent it binding microtubules. From this, we may be able to disrupt the function of the protein complex in dividing cells and inhibit the sharing of chromosomes during mitosis, causing the death of cancerous cells.

The research is in the early stages, but we have also discovered that an enzyme called Aurora A kinase controls the assembly of the protein complex. Aurora A is often amplified in tumours and clinical trials into inhibiting its role are already underway into drugs that cause the TACC3-ch-TOG-clathrin complex to fall apart and actually break away from the mitotic spindle altogether.

When treating cancer we still often cause damage in other areas. Understanding and controlling the action of the mitotic spindle could help us to better target treatment by directly shutting down defective cells.

Steve Royle is a Senior Fellow for Cancer Research UK which funds his lab at Warwick University.

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