NEWS SCAN

Mutual Funds Top $1B in Outflows

Mutual funds dropped $1.19 billion for the week ended Wednesday, August 1, according to data from the Investment Company Institute.

Equity funds bled $6.89 billion for the week, compared to estimated outflows of $3.00 billion in the previous week. Domestic equity funds had estimated outflows of $5.68 billion, while estimated outflows from world equity funds were $1.22 billion.

ETFs Top $16B in July

US ETF assets totaled $1.19 trillion as of July 31-up 13.8% year-to-date, according to the latest ETF Snapshot report from State Street Global Advisors.

In July, investors added $16.2 billion more to ETFs than they withdrew, as large cap and small cap ETFs attracted $5.6 billion and $1.7 billion of inflows respectively. Year-to-date, ETFs have attracted over $88 billion of inflows

Is Schapiro Set to Float Money Funds?

Mary Schapiro, chairman of the Securities and Exchange Commission, is looking to turn the $2.6 trillion money-market mutual-fund industry on its head.

The SEC has set a public vote for Aug. 29 in an effort to force all five commissioners to take a public position on the much-anticipated reforms over money funds, the Wall Street Journal reports.

RESEARCH

Alts, EM to Fuel Industry Growth

Operating margins in the global asset management industry have recovered from their 2009 lows, at a median 32% in 2011, yet they remain below pre-crisis levels, according to new research by U.S. Institute, McLagan and Casey, Quirk & Associates.

The research also revealed that alternatives and the expansion of professional money management in new markets will provide substantial growth opportunities for the industry. In fact, by 2016, alternatives-including hedge funds and funds of hedge funds, private equity, real estate, and commodities-will represent 40% of total asset industry revenue and 17% of assets under management, according to the research.

PRODUCTS

Emerald Reincarnates Genesis Fund

Emerald Asset Advisors has restructured its flagship allocation fund, formerly dubbed the EAS Genesis Fund, to a more focused alternative investment mandate. The revamped EAS Alternatives Fund, which previously made bets on alternative investments and long US and global equities, will now pursue a purely liquid alternative investment strategy.

Specifically, the restructured fund will employ a variety of hedge-like bets on commodities; convertibles; currencies; emerging market bonds; high yield; equities; futures; Master Limited Partnerships and real estate.

FocusShares Bails Out of ETFs

One exchange-traded fund provider is calling it quits after deciding to pull the plug on its external PR efforts. FocusShares last week said that the Board of Trustees of the FocusShares Trust will liquidate the FocusShares family of ETFs as of August 30.

The 15 funds, which launched last March, had approximately $100 million in aggregate assets as of July 31.

The funds' board determined the inability of the funds to attract "significant market interest since their inception" as a major hurdle that it could not overcome and decided to liquidate the offerings and cut its losses. The firm's decision to exit the ETF business follows a sudden cancellation of a media meet-and-greet last month by Erik Liik, chief executive of FocusShares, in New York City.

Russell Rethinks ETF Initiative

Et Tu, Russell?

On the same day that FocusShares announced its exit from the exchange-traded fund business, Russell Investments announced that it is "conducting a strategic review of its direct U.S. ETF business in an effort to focus more exclusively on its core competency."

RiverNorth Offers Dual Strat Fund

RiverNorth Capital Management has launched the RiverNorth/Manning & Napier Dividend Income Fund (RNDIX, RNMNX). The fund will be sub-advised by Manning & Napier Advisors.

The fund will employ two strategies: a tactical closed-end fund equity strategy, which will primarily invest in equity closed-end funds, and a dividend-focus strategy, which will primarily invest in dividend-paying common stocks of mid-to-large cap companies (generally companies with market caps of more than $2 billion). It is managed by Patrick Galley.

Eagle Snatches Sentinel's Managers

Sentinel Investments' chief executive Christian Thwaites last week saw four members of his investment team walk away from their posts.

The four portfolio managers, including Charles Schwartz, Betsy Pecor, Matthew McGeary, and Matthew Spitznagle, had managed Sentinel's Small Company Fund, Mid Cap Fund, Mid Cap II Fund, and Sustainable Mid Cap Opportunities Fund.

ARRIVALS

MoFo Adds Ex-Janus, SEC Legal Eagles

Morrison & Foerster has added two lawyers to its Denver office.

Kelley Howes joins the firm from Janus Capital Group, where she was most recently general counsel. Brian Neil Hoffman joins the firm from the Securities and Exchange Commission, where he was a senior attorney in the Division of Enforcement.

Hatteras Sales Vet Rejoins Firm

Hatteras Funds has rehired Michael Hutten as an executive director, responsible for leading sales initiatives in the Western U.S. region, focusing on investment consultants, Registered Investment Advisors, and broker/dealers.

Hutten, who is based in Santa Barbara, Calif., served as western regional director at Hatteras from August 2006 until March 2011. Most recently, he had a short stint on the sales team of JP Morgan Asset Management from March 2011 to July 2011.

Buffalo Funds Roams for Sales Help

Buffalo Funds is looking to expand reach of its family of 10 no-load mutual funds with the addition of Tony DeMarino as Head of Global Distribution in June. He formerly served as National Sales Director of Intermediary Markets at Scout Investments.

The firm is also looking to expand its coverage of the Intermediary channel in the Midwest and Eastern regions. The Western U.S. is currently handled by Ned Meloni and Dwight Twillman will continue in his role of sales consultant for the institutional/pension plan investors.

Pioneer Boosts RIA Sales Team

Pioneer Investments is boosting its coverage of Registered Investment Advisors with the addition of Brian Kilar as a wholesaler for the RIA Channel. He is located in Chicago and covers the Midwest/Southeast region.

Kilar joins Pioneer from Managers Investment Group in Chicago, where he covered the RIA market in the Mid Atlantic and Southeast Region.

DEPARTURE

Segal's Founder Passes Away

The Segal Company last week lost its founder and Chairman Emeritus, Martin Segal, who passed way. He was 96 years old.

Segal founded the consulting shop in 1939 and served as its president from 1939 to 1967.

STATISTICS

$1.19T is the total amount of exchange-traded fund assets under management as of July 31, 2012 - up 13.8% year-to-date.

In July, investors added $16.2 billion more to ETFs than they withdrew, as large cap and small cap ETFs attracted $5.6 billion and $1.7 billion of inflows respectively. Year-to-date, ETFs have attracted more than $88 billion of inflows.

SOURCE: State Street Global Advisors ETF Snapshot: July 2012

1.0% is the share of Defined Contribution Plan participants who stopped contributing to their plans in the first quarter of 2012.

That is compared with 1.0% during the first quarter of 2011 and 1.1% in the first quarter of 2010.

SOURCE: Investment Company Institute

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