Portfolio

While the financial services industry largely embraced most of the Obama administration’s financial services overhaul, the idea of removing money funds’ $1 net asset value is causing widespread concern in the mutual fund industry.“If you float the value of a money fund, you’ve essentially destroyed the product,” said Investment Company Institute President Paul Schott Stevens. “We’re going to explain clearly why we believe a fluctuating [NAV] is a very bad idea.”The Securities and Exchange Commission is expected to propose new money fund rules next week, including a floating NAV for money funds. Another idea is disclosing the $1 NAV to the third decimal, which the ICI also opposes.But the Obama administration believes a floating value for money funds, along with imposed limits on risk, capital requirements and access to emergency liquidity facilities from private sources, will prevent a run on money funds that could endanger the entire capital markets, as what occurred last September when the Primary Fund broke the buck. In addition, the administration is calling on the President’s Working Group on Financial Markets “to assess whether more fundamental changes are necessary and to address systemic risk more directly.”The administration is asking for the Working Group to prepare its report by Sept. 15.At the same time, it warns that additional regulations on money funds, which are vital to the capital markets system and the day-to-day operations of corporate America, could have the opposite effect of driving investors into unregulated or less regulated money market investment vehicles.

Ninety percent of American investors are frustrated about financial losses in the past year, according to “Make the Move,” a survey by the Charles Schwab Corp. One in four is considering leaving their current financial services firm and/or financial adviser.

A U.S. district court has given investors in the Reserve Funds’ Primary Fund until July 22 to object to the Securities and Exchange Commission’s plan to distribute assets on a pro rata basis. Of the fund’s original $63 billion in assets, $4.55 billion has yet to be returned to investors.

The rapid increase in bankruptcies in the U.S. could result in more abandoned retirement plans, which occurs when a company goes out of business and assets in a defined contribution plan are left at a custodian or mutual fund company that is not authorized to distribute the monies.

With Putnam Investments, Legg Mason and Invesco AIM recently rolling out absolute-return funds that promise an upside regardless of the market’s condition, some wonder if that is possible.

Congress once again is scrutinizing 401(k)s this week, this time through two bills that would disallow advice through an interested party and require clear disclosure of fees.

For most Baby Boomers, even younger ones, the recession has done such a number on their retirement savings that they are gearing up to work longer, set aside more now and live a more modest lifestyle in their so-called golden years, USA Today reports.

While there have been reports of portfolio managers easing back into stocks, one-third of them are still sitting on record amounts of cash, SmartMoney reports.

As the Chinese middle class becomes increasingly familiar with investing, and the nation’s markets open up to international trading, its mutual fund industry is likely to experience incredible growth, Wall Street & Technology reports.

At the hearing on target-date funds that the Department of Labor and the Securities and Exchange Commission is holding tomorrow, the focus is likely to be on better disclosure of holdings.