Money Management Executive Latest News

Neuberger Berman Names Non-Executive Chair, CEO

The Securities and Exchange Commission has received an emergency court order to halt a suspected Ponzi scheme targeted to Haitian-American investors.

SEC May Investigate Reserve Fund

Among my predictions for 2008 was the subpoenaing of Eliot Spitzer's e-mails to prove his smear campaign against New York State Republican Majority Leader Joseph Bruno. And we all know what happened to the disgraced former governor of New York.

While the news about the economy and the markets continues to be bad, some in the business are taking heart.

Most executives wouldn't consider themselves "fortunate" if they took over one of the largest fund companies weeks before an historic market collapse.

Three months ago, financial experts were concerned that the Securities and Exchange Commission was on the verge of eliminating or making major revisions to 12b-1 fees for marketing and distributing mutual funds. A lot has happened since then.

Mutual fund managers Tom Forester and David Ellison stood out from the crowd last year with the two best-performing funds, even though they both lost money in 2008.The Forester Value Fund was down 0.82% for the year, thanks to investments in stocks that typically do well during recessions, such as Kraft Foods Inc., Johnson & Johnson and H.J. Heinz Co. The average decline for the year in the value fund category was 38%, according to Morningstar Inc.Ellison's FBR Small Cap Financial Fund was second among financial sector funds, losing just 10% of its value, compared to an average decline of 45% in its category.While Forester and Ellison may want to adjust their portfolios as market conditions improve, they are continuing to attract new clients and new assets for now. Forester said his fund's assets have grown fivefold in 2008 to $55 million."I'll probably be in some of the same stocks for the first six months or so of 2009," Forester told the Associated Press. "And then as I see things getting better, I'm going to shift out of the real defensive things, and get more constructive on the more cyclical stocks that can grow quite well as we come out of this period."Ellison's fund is invested primarily in low-risk small banks and in cash. He said he plans to keep it there until the economy starts to show broader signs of recovery."I think unaffordable mortgages are still going to chew on the economy for a while," he said.

A 38% drop in the Standard & Poor's 500 index last year seems almost rosy compared to the abysmal performance of three big mutual funds that all lost more than 60%.Legg Mason heavyweight manager Bill Miller - who once beat the S&P 15 years in a row - has gone from best to worst, with his Legg Mason Opportunity Trust fund down a staggering 65% for the year.According to Morningstar Inc., the second-worst performer was the Winslow Green Growth Fund, down 61%, followed by the Legg Mason Growth Trust fund, down 60%."[Miller] continued to try to position the fund for a recovery," Morningstar fund analyst Greg Carlson told The Wall Street Journal, adding that Miller kept holding on to stock in Amazon (down 45%), Expedia (down 74%) and Yahoo (down 48%) as well as Freddie Mac and American International Group Inc.Winslow manager Jack Robinson said the fund's losses were due to its concentrated portfolio and focus on green energy companies."We also made a couple of mistakes," Robinson said. "We stayed with some companies that had sound fundamentals but which had debt. We're going to be sticking with our investment philosophy for the long term."Morningstar's analysts are optimistic that Legg Mason's Growth fund, managed by Robert Hagstrom, is well positioned for an upswing in the markets, whenever that happens."Legg Mason Growth will soar again," Morningstar senior fund analyst Bridget Hughes. "We're confident that the fund will perform well in an upswing. In fact, since mid-November, it has gained more than 7.5%, putting it near the category's top."The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Despite the rough economy in 2008, U.S. households continued to place their trust and their investments with mutual funds, according to a study by the Investment Company Institute."2008 marked the fifth consecutive year of growth in mutual fund-owning households," said Sarah Holden, ICI Senior Director of Retirement and Investor Research. "The survey finds about 4 million investors were added to mutual fund ownership ranks in 2008-up to 92 million from 88.2 million in 2007."Shareholder views of mutual funds continued to track stock market performance, with favorability declining from 77% in 2007 to 73% in 2008, and "more seasoned" investors tended to give mutual funds higher ratings than younger investors did.