Money Management Executive Latest News

Hedge funds are finding out it’s hard to be all things to all people, as they have been reducing their risk exposure in an attempt to appeal to conservative pension plans, yet disappointing other investors looking for astronomical returns, BusinessWeek reports.

Investors in mutual funds in Europe are not of a single mind, the Financial Times reports. While the U.K., France and most of the nations in Eastern Europe are doing a brisk business, outflows are strong in Italy, Germany and Switzerland.

Mutual funds, pensions and other large shareholders that rely on two large proxy advisory firms, Glass Lewis and Institutional Shareholder Services, are concerned that new ownership at the businesses might be affecting the quality of the advice they impart, The Wall Street Journal reports.

With the prices of U.S. homebuilding stocks falling for the past two years, particularly since the beginning of the year, managers of real estate investment trusts are turning their attention overseas, principally to Japan, Germany and China, Bloomberg reports. The Standard & Poor’s 500 Real Estate Index is down 16% since Feb. 7 and the 16 homebuilders in various S&P indexes declined 44% since July 20, 2005.

The Supreme Court said it will hear a case in its next term this fall that could drastically impact both the municipal bond market and 529 college savings plans, law.com reports. At issue is whether states can exempt municipal bonds issued in their own state from taxes yet levy taxes on municipal bonds issued by other states.

Merrill Lynch will acquire a minority stake in GSO Capital Partners, an $8 billion hedge fund run by Bennett Goodman. It is Merrill’s second investment in a hedge fund in the past eight months.

Many mutual funds are investing heavily in stocks outside of the U.S., Bloomberg reports. Funds at BlackRock, Goldman Sachs and Waddell & Reed Financial, in particular, are loading up on global stocks.

Investors in China continue to pour money into the stock market, disregarding warnings from securities regulators that the market may be overheated, the Associated Press reports. With the Shanghai Composite Index more than double what it was a year ago, investors opened 8.56 million new equity accounts in the first quarter of the year, compared with 5.38 million in all of 2006. Publicly traded companies’ earnings grew 44% in 2006 and the economy expanded 11% in the first quarter.

As the $144.5 billion playing field for target-date, or lifecycle, funds continues to get more and more crowded-last year fund companies introduced 302 target-date funds and assets soared 61%-the funds are diversifying their holdings to distinguish themselves. Others are extending their equity exposure with the goal of equipping longer-living retirees with enough money to last throughout their lifetimes.

In its monthly survey of fund managers, interviewing 201 investors overseeing $586 billion in May, Merrill Lynch found that they are less concerned about corporate profits, The Wall Street Journal reports.