Money Management Executive Latest News

Once again, the performance of the stocks of publicly traded asset management firms is besting the average equity mutual fund, Bloomberg reports.

Banc of America Securities, Bank of America’s investment arm, is spinning off its European buyout division and its North America venture capital division to reduce its direct exposure to private equity.

The Securities and Exchange Commission announced Monday it has named John T. Dugan associate district administrator for enforcement in its Boston office, responsible for overseeing enforcement throughout New England.

Morgan Stanley is considering beefing up its hedge fund business by acquiring a stake in $10.5 billion Avenue Capital Group and all of $6 billion FrontPoint Partners Dow Jones reports.

The companies that acquire MFS Investments and Putnam Investments may very well drop the names due to the fact many investors still associate them with the trading scandal, financial executives tell the Boston Herald.After all, they reason, the purchasers of Bank of Boston, Shawmut and Fleet dropped those names, too, even though they were considered to be quite venerable. Instead, the companies that acquire MFS and Putnam are likely to give the companies a complete makeover.

The NASD announced Monday it has fined Citizens Bank’s broker/dealer subsidiary, CCO Investment Services, $850,000 for not properly supervising sales of 529 college savings plans and annuities to ensure that the products were suitable for investors. The bank also didn’t adequately supervise telemarketing calls to make sure that employees didn’t call consumers who had registered their names on federal do-not-call lists, the NASD said.

Once again, Standard & Poor’s scorecard on indices versus active funds has shown that the S&P 500 outperformed 80.3% of actively managed large-cap funds during the third quarter. The S&P SmallCap 600 outperformed 50.8% of small cap funds. Actively managed mid-cap funds were the exception, with 70% of them beating the S&P MidCap 400 during the third quarter.Year-to-date through September, indices led actively managed large-cap and small-cap funds. In the first three quarters of the year, the S&P 500 has outperformed 71.5% of large-cap funds, while the SmallCap 600 has outpaced 66% of small-cap funds.

Make greater way for hedge funds. The Bank of New York and Casey, Quirk & Associates estimate that hedge funds will go from $360 billion in invested assets to over $1 trillion by 2010. The number might seem on the high side, but in 2004 BoNY estimated a five-fold increase by 2006, and the estimate for this year is now leaning towards a six-fold increase from $60 billion to $360 billion.A driving force in the forecast is pension funds in the U.S. “Broadening acceptance of alternative investments coupled with lower expected returns from traditional investments are driving demand for hedge funds among global institutional investors,” said Brian Ruane, executive vice president at the Bank of New York.

The loosely regulated hedge fund market presents a risk to the financial market and economists fear that another Amaranth Advisors situation could occur, but on a larger scale with more impact, The Wall Street Journal reports, based on its monthly survey of 50 economists.

Mutual funds are experimenting with their strategies a bit, borrowing from the hedge fund world, and testing risky investment strategy “130/30,” according to the Wall Street Journal. The strategy is a way to place bets that stock prices will fall, in hope of profiting from those declines. Mutual funds typically shy away from betting on falling prices, although a handful have tried the technique.As hedge funds and other loosely regulated investments attract piles of investors’ money, more mutual funds are switching their game.