Money Management Executive Latest News

Market-timing woes continue to pervade the mutual fund industry, as even smaller shops are getting caught in the act.

Exchange-traded funds (ETFs) are definitely gaining wider appeal. But financial service providers, once happy to welcome predominantly institutional investors to these products, are now busily focusing efforts to entice long-term investors.

To prove to its investors that it is working tirelessly to regain a once solid reputation, Putnam Investments has begun to disclose to the Securities and Exchange Commission how much money its fund managers, employees and trustees invest in the company's funds. The admission signals a preemptive move by Putnam, since a new SEC rule requiring managers to disclose their holdings does not take effect until February.

Assets in exchange-traded funds rose 20% in the last nine months through September, buoyed, perhaps, by the continuing fallout from the mutual fund scandal. In its monthly report on ETFs, the Investment Company Institute found that assets grew to $180.8 billion compared to $151 billion at the end of 2003. The $180.8 billion represents a 3.6% increase from August, when ETF assets stood at $174.5 billion.

A U.S. subsidiary of Dutch financial services firm ING Group indicated in an SEC filing that the NASD has made a preliminary recommendation that an enforcement action be brought against the affiliate and one of its registered agents. ING Insurance Co. of America said that ING Funds Distributor had received a notice from the regulatory agency and it has an opportunity to respond before NASD staff makes a final recommendation. At issue are three arrangements dating back to 1995, 1996 and 1998 in which the administrator to the then-Pilgrim Funds allowed frequent trading. The Pilgrim Funds later became part of the ING Funds. In September, ING said that an internal review of its mutual fund trading operation showed only isolated incidents of impropriety.

Morningstar's Rekenthaler, Reinkemeyer in New Jobs

After months of anticipation and uncertainty, incumbent George W. Bush managed to squeak out a victory over Sen. John Kerry to earn a second term as U.S. commander-in-chief, a decision that drew applause from Wall Street last week. Now that the dust has cleared, the question is what does a Bush win portend for the market and the economy?

In a move industry insiders say indicates that consolidation of the money market fund industry is a sure bet, Federated Investors of Pittsburgh last week announced it was buying $29 billion in money market funds sponsored by Alliance Capital Management of New York. As of Sept. 30, Alliance had $487 billion in assets, while Federated had $178 billion.

The troubles that have shaken the mutual fund industry since 2003 have left many scrambling to understand and address a host of proposed changes. Although the regulatory environment has changed significantly, the fact is that the role of transfer agents has changed less than some might think. True, there are many more regulations to work with, since a dozen new proposals have been put forth by the Securities and Exchange Commission in the past 14 months.

In most circles, the name Domini is synonymous with socially responsible investing. But for many broker/dealers, the Domini name represents a laudable, but not personally profitable, investment philosophy.