Money Management Executive Latest News

Although fund companies continue to bring exchange-traded funds to market, most of the new offerings fail to gather significant assets, the Associated Press reports.

Morgan Stanley Investment Management has acquired all the assets of Affinity Investment Advisors, an independent investment advisor that specializes in disciplined large-cap equity investing, and hired its investment team yesterday, according to an internal memo from Morgan Stanley.

New default options that 401(k) providers can use when investors fail to select investments on their own will “significantly” improve investors’ returns, according to Dallas Salisbury, president and chief executive officer of the Employee Benefit Research Institute.

A labor activist group called CtW Investment Group, the investment arm of the Change to Win federation of labor unions, is pressuring mutual fund companies to vote their proxies to rein in excessive executive compensation, Investment News reports.

Fidelity Investments has opened a back-office operation in China, in a port city in the northeast by the name of Dalian, becoming the first foreign fund company to do so, Financial Times reports.

Vanguard is planning to launch an exchange-traded share class of an existing bond fund, the Vanguard Inflation-Protected Securities Fund, The Wall Street Journal reports. The share class is awaiting approval by the Securities and Exchange Commission.

In their zeal to cash in on the latest investment craze, fund companies all too often have displayed a lack of originality and bad timing when launching new funds. Since exchange-traded funds have taken all of the major indexes, those that have come late to the ETF rage have come out with incredibly narrow niche and enhanced index funds that defy logic.

Fidelity is aiming to hit the bullseye in the British retirement market with target-date funds, according to London’s CityWire. Fidelity’s funds will be a first-of-their kind for U.K. investors, who are adjusting to retirement savings, as the pension crisis in that country deepens. Richard Skelt will manage the seven funds, which have target dates in five-year intervals running between 2015 and 2040. Like their U.S. counterparts, the further away the date of maturity, the more equity-heavy the funds will be. At maturity, funds are then rolled into the Fidelity Retirement Income Fund, which is 70% fixed income. Although the philosophy and structure of these funds is essentially the same as in the U.S., the fee system is a graduated rate. Fidelity will sell the funds through individual financial advisers. Investors pay 3.5% for their initial investment, and then annual fees of 1.5%. Financial advisers get 3%. Five years prior to retirement, the annual fee drops by another 25 basis points. 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.

In an overcrowded commodity market, hedge funds are exploring new markets and unusual metals such as cobalt, vanadium and molybdenum, Reuters reports. “There are a lot more people in the metals business, and people are looking for unexplored, unsaturated markets,” said Daniel McConvey of Rossport Investments, a New York-based commodity trading adviser, which invests in the metals. The bulk of money in metal investments has gone to copper, nickel and other key industrial commodities this decade. However, the amount of money poured into these metals has made it harder for fund managers to make a return, so they are looking at other materials, said Keith Dunleavy, a trader a London-based Stratton Metals. Dunleavy has sold cobalt, which is similar to nickel, to hedge funds, and he anticipates prices to rise well past their current 11-year high of $30 per pound. “They started getting into cobalt at $22 and $24. We started badgering them to take profit at $28, but they are not interested,” he said. The metal could grow to $40 per pound, according to Credit Suisse. Cobalt is not traded on an exchange, and, therefore, the market can be opaque and accurate pricing data difficult to find. Another option instead of buying the metal itself is to buy stock in a company that products cobalt, said Marcus Edwards-Jones, managing director at Lloyd Edwards Jones. The rising price of metals is due to the use in products such as flat screen televisions, aircraft parts and car exhaust catalysts. “Lots of these metals are hi-tech, and with the explosion in hi-tech, minor metals are going to feel some sort of that explosions,” said McConvey. However, one complicated aspect is investors trying to close down their position without freeing a large amount of metal onto the market, which would cause prices to fall. 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.

Ontario Securities Commission, one of Canada’s regulatory watchdogs, is looking into launching new initiatives this summer to protect investors, according to the Financial Post. “The investor has to know that someone is working to keep the playing field level,” said David Wilson, OSC chairman, at a conference this week. “That someone has to be the regulator.” In the past, investors have criticized Canada’s regulators for not being vigilant enough. OSC’s new efforts include a two-page point-of-sale disclosure document to help simplify investment options for mutual and segregated funds. “Achieving full and appropriate disclosure is seriously, perhaps fatally, compromised if the disclosure is so cumbersome and so complex that investors don’t read it, or if they do read it, they don’t understand it,” Wilson said. Also, a new “anti-scam unit” will launch in June or July, Wilson noted, with a mandate to fight fraud illegal distributions, including boiler rooms. “With globalization comes the proliferation of even more sophisticated cross-border frauds,” he said. “Scam artists have taken the old cons and juiced them up using new technology.” “I believe that people behave differently when they know that someone is checking their conduct,” he added. 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.