Money Management Executive Latest News

The Bush administration pledged on Tuesday to improve fee disclosure in 401(k)s, the Associated Press reports. Beginning today, the Department of Labor’s Employee Benefits Security Administration will begin accepting ideas on how to do so from the public and the investment management industry. The deadline for comments is July 24.

The NASD issued an investor alert Monday warning investors about e-mails, faxes and even cellphone text messages touting low-priced China stocks that, the messages say, promise tremendous returns. Many of these stocks, NASD said, are not even related to China.

Investor Education Fund, a not-for-profit organization dedicated to informing investors that the Ontario Securities Commission launched in 2000, has revamped its website, adding additional tools, resource links, retirement case studies and worksheets.

Federated Investors announced Monday that it has reached an agreement to acquire the $321 million Rochdale Atlas Portfolio, an international mutual fund, from Rochdale Investment Management.

Co-Op America, a not-for-profit advocacy group, is urging mutual funds to vote in favor of climate change proxy resolutions. The organization has sent out 10,000 e-mails and letters to the nation’s 100 largest mutual fund companies. Visitors to the website can send out an e-mail of their own to Fidelity, American Funds and Vanguard urging them “to re-think your strategy on climate change issues and take seriously the impact that global warming will have on your funds.”

Following Fidelity Investments’ management shake-up last week, industry insiders are speculating on who will succeed Edward “Ned” Johnson as chief executive officer, The Economic Times reports.

U.K. Treasury Minister Ed Balls said that Britain will propose that financial regulators share information on investors’ exposure to hedge funds, Reuters reports.

They may be late to the party, but they seem to be making up for lost time.

Charles Schwab announced Friday that it has reduced the minimum for its brokerage and retirement accounts to $1,000 and is waiving the minimum for those who commit to automatically depositing at least $100 a month. In addition, Schwab will not impose fees on accounts whose balances have fallen below the minimum.The minimum for brokerage and custodial accounts had been $2,500, and $2,000 for IRAs and college savings accounts.

Investors in taxable mutual funds might see their tax bill rise next year, according to the Chicago Tribune. The chance is waning for fund managers to offset capital gains from selling winners in a portfolio with losses from having sold losers during the market tumble earlier in the decade. “The last four years, we have been on a tax holiday of sorts, and the party is over,” said Tom Roseen, senior research analyst at Lipper. The turnover of portfolios has increased as active managers buy and sell in order to beat market benchmarks. Also, higher interest rates and increased dividend payments by many companies increased the amount of capital gains and income distributions paid by mutual funds to their investors. Taxable-mutual fund investors, who hold funds outside the tax-deferred savings accounts, such as IRAs and 401(k)s, saw a 56% increase in taxes from 2005 to 2006, to $23.8 billion, according to a Lipper report. Many mutual fund investors reinvest income and capital gains. However, they still have to pay the tax, even though they have a buy-and-hold investment strategy, Roseen said. So-called tax loss carry-forwards from the years of the market slide are being used up or expiring, he noted. “The idea of the tax holiday is interesting,” said Roy Weitz, a mutual fund critic who operates the FundAlarm website. “That is not the way investors think.” Tax losses have a “tremendous impact” because they can offset capital gains when a fund sells securities at a profit, Weitz said. “Once those are gone, you have gains without any offsetting losses,” he said. The level of taxes, as a percentage of an investment, might now be significantly greater than the level of expenses charged by the manager, the study found. On a positive note, the cut in capital gains and dividend income tax rates has been a boon to taxable-mutual fund investors,” said Roseen. Equity income funds may grow in popularity, which pay tax advantaged dividend income instead of fully taxable interests income, predicts Roseen. “People are in a pay me now attitude,” he said. “They want to see that current income.” However, mutual fund analysts and Roseen warn against buying a fund because it advertises tax efficiency. “Tax-managed funds have gotten very little attention” said Weitz. “I tend to think of them as fringe investments.” 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.