Money Management Executive Latest News

A TD Ameritrade survey of 674 investors indicated that half of retail investors see the best returns in 2007 coming from markets outside of the United States, the company’s Chief Executive Joe Moglia said during an interview with CNBC last Thursday. Moglia dismissed concerns that markets in hot areas such as China and India may soon implode. “There are going to be corrections in China,” he said. “By the same token, if you—if everybody just sold a couple of toothbrushes to everybody in China, you’re got a reasonable growth business,” Moglia said. India, likewise, has been an area where some say investors hoping to win big fast might get burned. “They’re places you want to be long term,” Moglia said. “That doesn’t mean there’s not going to be any risk. But in terms of long-term growth prospects, I think you’ve got to be there.” Sixty percent of survey respondents—perhaps emboldened by a strong start to the year, inflation that seems to be under control and reports of strong productivity—expect returns between 6% and 12%, he said. Respondents also felt far less confident in the consumer sector, perhaps driven by news in the automobile industry. Set in the context of Wells Fargo’s decision to offer 100 free trades each year to clients with more than $25,000 in deposits or loans, Moglia said that while everyone appreciates free stuff, he said, it’s customer service that will keep clients, he said. Moglia also emphasized the importance of educating consumers about 401(k)-type defined benefit plan participation. 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.

While American consumers are accustomed to traveling by air and buying new cars, travel and leisure sectors have become a real growth area in many developing countries, and a trend Putman’s Shigeki Makino and Bradford Greenleaf bet will continue, according to MarketWatch. The co-managers of the Putnam Global Equity Fund have $2.1 billion, or roughly half of their portfolio, invested in U.S. companies, with the remainder abroad, mirroring the MSCI World Index. Only a small portion, 4%, is invested in emerging markets. Lipper data shows the fund has gained 14.6% on average annually in the past three years, compared to 13.7% among its peers. In the past 12 months, the portfolio’s A-shares are up 23.5%, compared to 20.6% average gains among its peers. Makino likes Air France-KLM airlines, which had many routes between Europe and various emerging markets. “Their planes are very full, and the outlook for supply and demand is positive,” he said. “We like all airlines around the world, and Air France-KLM is one of the largest with a strong balance sheet, and the company is bringing down costs and is one of the cheapest on valuation,” Makino said. The fund also has a stake in Petroleum Geo-Services, a geo-physical company in Norway that makes seismic maps used by oil drillers. “Oil prices are high, and with the lack of previous exploration, companies are now scrambling for new reserves,” he said. Likewise, automobile companies, which have been struggling here in the U.S., are enjoying better growth abroad. Suzuki Motors, for example, he said, depends upon emerging markets including India and Indonesia for about half of all sales, he said. 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.

Wells Fargo has joined the free trade wars, offering up to 100 online trades of stock or no-load mutual funds at no extra cost to U.S. customers with more than $25,000 with the bank, according to the San Francisco Chronicle.

Ameriprise Financial launched Active Portfolios last week, designed of portfolios of mutual funds managed on a discretionary basis by professional money managers.

E*Trade Financial Corp. is upgrading its website to make it easier for Americans to buy and sell non-U.S. shares online, taking advantage of the growing of interest of investors in foreign stocks, according to the Wall Street Journal.

Eleven years ago today doctors gave John C. “Jack” Bogle a new heart.

Mortgages did not fare well last year, but this year they seem to be on the right track, according to USA Today. Mutual funds and other institutional investors have little interest in owning individual mortgages. Instead, they buy securities backed by large pools of mortgages. Well-known ones are put together by Freddie Mac and Fannie Mae. Of the $13 trillion in the U.S. mortgage debt today, about $6.5 trillion is in the mortgage-baked securities. Mutual funds typically don’t hold the worst mortgage pools, says Eric Jacobson, analyst at Chicago-based Morningstar. Many of them stick to high-quality Fannie Mae and Freddie Mac mortgage pools. The best time to invest in mortgage funds is when rates are stable, said Michael Garrett, a co-portfolio manager of the Vanguard GNMA fund, and for this year “we don’t see a dramatic shift.” If rates suddenly fall, many homeowners will refinance, giving a fund manager huge chucks of principal to reinvest, at lower rates. If rates suddenly fall, few people will refinance and the fund manager will have less money to reinvest at higher rates. Some analysts expect the Federal Reserve to cut short-term rates this year. If so, mortgage–backed funds could look a bit better in comparison to money funds, especially if long-term rates remain stable. 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.

Barclays Global Investors has been leader in the exchange-traded funds business, but it also actively engages in another lucrative aspect of the business—securities lending, which in Barclays case, involves loaning out the stocks and bonds in its iShares ETF portfolios, according to The Wall Street Journal. The loans bring in millions of dollars a year for Barclays in addition to the fees it gets for managing the fund. The practice is not new, but it is growing more common in the industry, and it as has particular appeal for ETF providers. The profits can boost an ETF’s returns, and a small amount of additional income can make performance appear significantly better. Barclays’ loans boost its profit from some of the index-tracking funds by double-digit percentages, typically near 10%. For ETF investors, the income that iShares funds receive from lending generally increases returns by .01% to .15%, according to Barclays. Barclays says it runs its program in the interest of fund shareholders and complied fully with Securities and Exchange Commission rules when setting up its lending process. It splits proceeds 50-50 between the fund-management company and its iShares ETFs. 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.

Minot, N.D.-based Integrity Mutual Funds inked a deal to acquire the assets of United Heritage Financial Services in Meridian, Idaho, Friday. United’s 120 independent registered representatives will now join Capital Financial Services, the retail brokerage division of Integrity, bringing the total sales force to 400. The deal allows United to focus on its insurance business, said United’s president, Jack Winderl. “We intend on maintaining a business relationship with [Capital] for our own investment services needs as well,” he said.

Bear Stearns must pay nearly $160 million to investors in a hedge fund for failing to properly supervise the activities of the fund before it collapsed in 2000, according to The New York Times. The case involved Manhattan Investment Fund and its Austrian-born manager Michael Berger. Four hundred million dollars of investors’ money was lost by making bad bets on Internet stocks during the technology boom of the late 1990s. The year before the fund collapsed, suspicions grew among executives at Bear Stearns, which was the fund’s prime broker, that Berger was providing fake account statements to investors. Berger transferred $141.4 million to the fund’s account at Bear Stearns to meet increased margin requirements and continue selling stocks short, betting that they would decline in value, court filings state. A federal bankruptcy judge ordered $121.1 million of the transferred payments be returned to investors with interest. Judge Burton R. Lifland, in an opinion issued last month, said that Bear Stearns, which made $2.4 million in profits from executing transactions for the funds, “failed to act diligently in a timely manner,” noting that individuals inside the investment bank may have been aware of the fraud dating back to 1998. “We are disappointed with the bankruptcy’s court’s decision, and believe that it is not supported by either the law or the fact’s,” Bear Stearns said in a statement. The investment bank plans to appeal the decision. The judge’s decision surprised many on Wall Street, who said that if it stands on appeal, prime brokers may no longer be able to argue they have a hands-off business of simply executing trades for funds. Some said that Wall Street firms may need to strengthen their market surveillance programs to catch odd transactions or false statements. 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.