Portfolio

Nearly one-quarter, or 23%, of employers have eliminated 401(k) matches, according to a study by CFO Research Services for Charles Schwab. And 35% don’t expect to reverse the elimination, according to a separate survey by Watson Wyatt.

The mutual fund industry is willing to cooperate with the Securities and Exchange Commission and the Financial Industry Regulatory Authority on point-of-sale disclosures to investors, as President Obama has proposed, said Investment Company Institute President Paul Schott Stevens.

After having raised only $500 million in the past two years, Fidelity Equity Partners, a private equity subsidiary, will be closed next month.

The Securities and Exchange Commission will continue to focus on mutual fund oversight, Chairman Mary Schapiro told the New York Financial Writers Association.

As fund companies continue to look to streamline their operations to cut costs, even with the market recently rising, they will most likely merge additional funds, experts say. Some, particularly asset managers held by banks, will look to be sold.

The recession is over, Loomis Sayles’ Dan Fuss told Reuters.

At the hearing on target-date funds Thursday, target-date fund managers, along with the Investment Company Institute, asked the Securities and Exchange Commission to butt out of asset management.ICI General Counsel Karrie McMillan said interfering in the mix of assets would be unprecedented: “In the 70-year history of mutual fund regulation, the government has never regulated the investment choices of mutual funds. Nor should it start now.”“We strongly oppose any efforts to regulate the glide paths or other aspects of the investment design or construction of target-date funds,” concurred John Ameriks, a Vanguard principal.Fund executives also said they were opposed to labeling target-date funds conservative, moderate or aggressive, based on the mandate of their glide path and current holdings.But SEC Chairman Mary Schapiro countered that target-date fund losses last year ranged from minus 3.6% to minus 41%, with an average loss of 25%. “These varying results should cause all of us to pause and consider whether regulatory changes, industry reforms or other revisions are needed with respect to target date funds.”Financial planners who testified Thursday tended to agree with the SEC that a target-date fund’s name should give some indication of its level of equity and other risk exposure. “The name of each fund must bear some relationship to the way the fund is managed, that is, its glide path,” said Joseph Nagengast of Target Date Analytics, which provides benchmarks for target-date funds. “If a fund labeled 2010 is really targeted to land at 2040, it should be relabeled as a 2040 fund.”

In light of increased investor interest in money market funds and fixed income investments, Northern Trust has introduced the Northern Tax-Advantaged Ultra-Short Fixed Income Fund and the Northern Ultra-Short Fixed Income Funds.The funds are designed to offer higher yields than money market funds but less volatility than short-duration bond funds, and will invest in securities with maturities of six to 36 months. They have a minimum initial investment of $1 million and are designed for investors looking for a time horizon of at least one year. Both will make dividend distributions monthly.“As we continue to face uncertainty regarding an economic and financial market recovery,” said Colin Robertson, managing director of fixed income investments at Northern Trust, “investors have become increasingly interested in the potential benefits of having fixed income assets in their investment portfolios. For investors looking to get back into the market, the new funds are designed to provide opportunity for both higher yields than money funds and capital appreciation with minimal volatility.”

A significant number of older workers 50 or older, 44%, have decided to delay their retirement age, and 34% overall have upped their target date for leaving the workforce, Watson Wyatt found in a February survey of 2,200 employees. By comparison, only 25% of those under age 40 have changed their plans for years in the workforce.Nonetheless, among all workers 65 is still the average age at which they expect to retire.Among the older workers, when asked what factors have impacted their decision to delay retirement, 76% said declining 401(k) balances, followed by 63% citing high healthcare costs and 62% pointing to high costs of living.“The economic crisis has affected many workers’ retirement plans and nest eggs, but those nearest to retirement have been especially hard hit,” said Dvid Speier, senior retirement consultant at Watson Wyatt. “Older workers do not have the time to offset declining retirement account values, either by recouping their investment losses or significantly increasing their savings rate. For many, the only choice is to delay retirement.”With older workers remaining on the job longer, that could present hiring issues for employers along with higher benefits costs, noted Lisa Canafax, another senior retirement consultant at Watson Wyatt. For that reason, employers might want to reconsider defined benefit plans.

Ivy Funds has introduced the Ivy Municipal High Income Fund, to be managed by Michael Walls, who has been with the firm for the past 10 years.“We believe that the tax relief potential, coupled with the income potential that accompanies higher-yielding municipal bonds, makes this category an attractive one for investors building a diversified portfolio,” said Thomas W. Butch, president and CEO of Ivy Funds Distributor.In selecting investments for the fund, Walls said, he studies the macro-economic environment and credit risk associated with issuers. “We also look at interest risk and call risk as we attempt to maximize the potential reward for a given level of risk,” he said.Ivy Funds also noted that municipal bonds have structural characteristics that are different from other types of fixed income securities, and respond differently to changes in market conditions, such as changes in credit quality and interest rate policy—which help to reduce a portfolio’s volatility if properly diversified. Also, because the credit rating of municipalities is lower than the federal government, municipal bonds have a capacity to deliver higher yields.