Portfolio

WASHINGTON --Mutual funds remain a sound investment choice, and will, once again, grow through the perseverance of American ingenuity. Investment firms must stress this to investors to restore their faith.

The Securities and Exchange Commission has filed fraud charges against the Reserve Primary Fund and its officers for failing to disclose the fund’s vulnerability to Lehman Brothers, as it filed for bankruptcy, instead falsely assuring investors that it would support the fund’s $1 net asset value.

Market turmoil has spurred investors’ appetite for advice, and nowhere can this be seen more clearly than in mutual funds sold through brokerages or financial planners, according to Strategic Insight.

The current regulation that allows hedge funds and other advisers with fewer than 15 clients not to register with the Securities and Exchange Commission is a “gap [that] doesn’t make sense,” said Andrew Donohue, director of the division of investment management, speaking before the Mutual Fund Directors Forum.

As investors have grown more conservative, fund companies are rethinking their entire product lineups, Dow Jones reports.

The Securities and Exchange Commission is considering better disclosures for target-date funds, particularly their glide paths and asset allocations, SEC Chairman Mary Schapiro told the Mutual Fund Directors Forum.

Legg Mason lost $325.1 million in the fiscal fourth quarter ended March 31, or $2.29 per diluted share, compared to a loss of $255.5 million, or $181per diluted share, in the fourth quarter of fiscal 2008.

Despite their growing popularity in recent years, target-date funds are grossly misunderstood, according to a survey by Envestnet Asset Management.

Investors who have been laid off or who have switched jobs may be in for a rude awakening when it comes to their 401(k). Not only has its value declined steeply, but the investment advisor may not honor redemptions in funds whose assets are tied up in any type of risky, illiquid investment, The Wall Street Journal reports.

With so many Wall Street investment banking powerhouses and hedge funds closing, and regulators pressuring them to rein in risk, many of these executives are returning to the game, setting up, you guessed it, hedge funds, Reuters reports.