Portfolio

The "Show Me" State of Missouri is about to show the 529 college savings plan marketplace just how innovative it can be.

The Department of Labor estimates that automatic enrollment in 401(k) plans, as protected under the Pension Protection Act, will add between $45 billion to $90 billion a year to the plans, which had $3.6 trillion in assets under management in 2006, according to the Investment Company Institute.

So-called target-date and target-risk asset allocation funds portend to make investing easier for 401(k) participants, but the proliferation of these products in recent years can make choosing which to offer a headache for sponsors.

Competition, if nothing else, keeps companies constantly looking for the next innovative product or strategy that will bring more assets to their firm. That is why many asset management firms are choosing to offer the increasingly popular 130/30 strategies as the benefits of shorting stocks can outweigh the benefits of going long, according to the report "130/30: From Rationale to Implementation" by New York-based Merrill Lynch.

The Department of Labor estimates that automatic enrollment in 401(k) plans, as protected under the Pension Protection Act, will add between $45 billion to $90 billion a year to the plans, which had $3.6 trillion in assets under management in 2006, according to the Investment Company Institute.

General American Settles With SEC for $3.3M

Merger and acquisition (M&A) activity in the asset management industry is booming, and demand is not likely to stop anytime soon, nor are the competitive prices buyers are willing to pay for the deals. However, market turmoil and a more challenging leveraged finance environment could temporarily cool the enthusiasm of some private equity shops for asset managers and derail initial public offerings,

The acquisition of CheckFree Corp. of Norcross, Ga., by Fiserv of Brookfield, Wis., announced on Aug. 2, has raised questions as to whether CheckFree's investment services division will stay or go, perhaps being independently sold off to the highest bidder. The unit provides the separately managed account (SMA) technology, including client reporting and portfolio management, for investment managers and broker/dealers.

While mutual fund companies and investment banks have had meteorologists on their trading desks for almost 30 years, the practice apparently is increasing-affecting portfolio managers' trading decisions not only of commodities, power, utilities, agriculture and energy securities, but also consumer goods, transportation, construction, infrastructure, shipping and leisure. In addition, in the past 10 years, the insight of meteorologists on the trading floor has led to the development of weather risk management tools-futures, derivatives and insurance.

With a new Internal Revenue Service requirement about to require 403(b) sponsors to assume fiduciary duty, much as 401(k) sponsors do, and pare back the number of offerings, the sponsors are inevitably going to scrutinize their plan administrators.