Money Management Executive Latest News

Although some employers, including General Motors and Delphi, have caved into pressure to pare down the number of options in their 401(k) plans to boost participation levels, often replacing a menu of choices with target-date funds, that may be a disservice to sophisticated investors, The Wall Street Journal reports.

The NASD barred Brian J. Kelly, a Maryland broker who worked at several well-known firms, from the industry for life after excessively churning a client’s account, according to the Baltimore Sun.

House Education and Labor Committee Chairman George Miller (D-Calif.) submitted legislation Thursday that would require 401(k) administrators to disclose fees to investors each year, clearly and simply, along with any potential conflicts of interest.

The Investment Company Institute issued a report Wednesday indicating that at the end of last year, Americans had $16.4 trillion in retirement savings, with about half of it in 401(k)s and other company-sponsored retirement accounts, as well as individual retirement accounts.

A new Vanguard exchange-traded fund, the Vanguard Europe Pacific ETF, begins trading on the American Stock Exchange today. With 1,134 holdings, it is the most broadly diversified ETF on the market, Vanguard said, and with an expense ration of 15 basis points, it is the lowest-cost ETF tracking the MSCI EAFE Index, which has holdings in companies in 21 countries. The new offering is a share class of the $2.3 billion Vanguard Tax-Managed International Fund.

In releasing its annual report on the state of the 401(k) industry, Fidelity Investments stressed that while automatic enrollment in 401(k)s is still not widespread, it has a significantly positive effect on participation, savings rates and diversification.

Legg Mason reported a healthy 22% increase in its profits in the first fiscal quarter, ended June 30, to $191 million, or $1.32 a share, up from $156 million, or $1.08 a share, in the first fiscal quarter a year ago, Reuters reports. Those earnings were on a 16% rise in revenue, to a record $1.21 billion, and beat Wall Street estimates of $1.24 a share.

Waddell & Reed reported that it returned to profitability in the second quarter of this year, taking in $29.7 million, or 36 cents per share, in earnings, the Associated Press reports. In the second quarter of 2006, the company lost $33 million, or 40 cents per share.

Yesterday, on the eve of today’s open meeting at the Securities and Exchange Commission to explore the possibility of putting limits on “advisory” proxy resolutions, which by some estimates have accounted for 95% of shareholder proposals over the last 35 years, two investor groups promised to put up a fight.

As Wall Street Journal blogger Nathan Koppel put it yesterday, the scandal engulfing New York Governor Eliot Spitzer’s office probably has some in the mutual fund industry gleefully dancing in the aisles.