- Fed Reports Risks In ETF, Real Estate Markets
Potential misperceptions of liquidity with ETFs, declining credit standards in certain loan markets and high valuations in commercial real estate pose real market risks, the Federal Reserve said in a report citing specific threats, such as fire sales and runs in some mutual-fund products, Bloomberg reports.
"As mutual funds and ETFs may appear to offer greater liquidity than the markets in which they transact, their growth heightens the potential for a forced sale in the underlying markets if some event were to trigger large volumes of redemptions," the Federal Reserve Board said in its semi-annual report to Congress.
Despite improvements of high-yield, high-risk loans, the Fed went as far as to warn about the potential for runs on prime money market funds with fixed net asset values in the event that they see a dip in the price of securities.
Although the report noted recent improvements in the job market, it cited a low rate of workforce participation, indicated by the unemployment rate. The report also notes a potential global dispersion of goods and services due to declining oil prices.
- Emerging Market Bets Turn Sour for Pimco
Even while Pimco's emerging markets group lured more money than anyone else last year, clients are defecting at an unprecedented rate from its developing-nation mutual funds, according to reports.
Investors pulled nearly $10 billion since the start of 2013, or 20% of Pimco's emerging-market dedicated assets and triple the industry average, losing ground to rivals Goldman Sachs Asset Management and HSBC Global Asset Management, Bloomberg reports.
"A lot of their long-term investment preferences have hurt them over the last few years," Morningstar analyst Karin Anderson tells Bloomberg. "They're able to take really big bets versus the index and some of them didn't go their way recently."
- 401(k) Investment Fees Decline at Smaller Plans
While the average total cost for a small retirement plan (defined as 50 participants with $2,500,000 in assets under management) has gone unchanged at 1.44% in the last year, underlying investment fees have declined, according to the newly released 15th Edition of the 401K Averages Book. The average small plan is .43% to 1.88%, while a large plan is 0.31% to 1.38%, the report said.
"We saw a year over year decline for eight of the nine investment categories we track," said David Huntley, co-author of the 401k Averages Book. "For example, large U.S. equity fees declined from 1.40% to 1.38% and target date funds from 1.35% to 1.32%."
- Exchange Operator BATS Names New CEO
BATS Global Markets announced that its current president Chris Concannon will assume the position of CEO as of March 31, succeeding the current CEO Joe Ratterman.
Concannon has nearly 20 years of experience as an exchange executive, regulator and industry participant, BATS said. He was also partly responsible for the Hotspot FX acquisition announced on Jan. 16, the firm noted.
Prior to joining BATS as president in December 2014, Concannon was a broker for roughly four years at Virtu Financial and five years with Nasdaq Option Services and Nasdaq Execution Services, according to SEC filings.
Ratterman will replace Paul Atkins as chairman of the BATS board, BATS said in a release. After serving the last eight years as CEO, Ratterman has agreed to remain close to the company during the transition and continue to represent BATS, and the industry's diverse participants broadly, as a member of the SEC Equity Market Structure Advisory Committee, the firm said.
