Fidelity's New Campaign Focuses on Regular People
Fidelity Investments is running three new TV ads that depict people talking about their finances, rather that former Beatle Paul McCartney. One spot features a couple where the husband talks about taking his retirement savings and putting it through a "rollover, turnover, whatever."
"The more people talk about their finances, the more successful they are," Claire Huang, Fidelity executive vice president for marketing, told The Boston Globe. "The normal financial services ads show babies, brides and super-Boomers who surf or skydive. We're about regular people trying to engage in conversation."
Fidelity will air the ads, created by Arnold Worldwide, on 18 shows during prime time, including "American Idol" and "Lost." Print ads will follow.
Although Fidelity declined to reveal how much it spent on the broadcast ads, an advertising industry executive estimates it was about $5 million.
John C. Verret, a professor with Boston University who studies media, said the ads should resonate with investors because they show that Fidelity "understands the consumer."
BISYS Sale: Parts More Valuable Than the Whole?
BISYS hopes that buyers will have an appetite for bite-size bits of the company, after efforts to sell itself whole yielded little interest, according to TheDeal.com.
The multi-faceted company, which said it would sell itself as one big block in order for investors to reap a tax advantage, expected an offer between $1.5 billion and 2 billion. The company announced its sale plans last August, after a strategic overview conducted by Bear Stearns. At the same time, Russell Fradin resigned the chief executive post.
At the end of a second round of bids in February, Welsh, Carson, Anderson & Stowe, The Carlyle Group and The Blackstone Group were all rumored to be on the short list of suitors.
But a source described the process as "tortured," and several others confirmed that some suitors are looking only at part of the company. The top contender now, according to unnamed sources, is Brussels-based Fortis. Blackstone appears to have bowed out, meanwhile.
Some have suggested the disparate functions of the company-half provides back-office, third-party services for fund complexes, retirement plans, hedge funds and private equity, while half centers on life, commercial property-casualty and long-term care disability insurance products-turns buyers off.
A federal investigation alleging the firm provided kickbacks to 27 fund companies, coupled with several shareholder lawsuits, only further diminished marketability. "There is not a person alive who wanted to [acquire] the whole company," a source said.
As Wealth Builds in Asia, Fund Firms Expand Offices
As the markets throughout Southeast Asia continue to deliver strong performance-stunning returns averaging 31% a year over the past five years-they are creating more affluent investors and appealing to investment managers around the world, The Financial Times reports. For fund companies that have already extended operations in China and Japan, the region is fertile hunting ground, said Shiv Taneja, the Asia head of Cerulli Associates.
"Southeast Asia has tended to have a justifiably bad reputation because of market volatility, political instability and a willingness to take the nationalistic view at the drop of a hat," Taneja said. "However, the wealth that is being created has become too hard to ignore."
In fact, locally domiciled mutual fund assets are up 155% from $27 billion in 2002 to $69 billion at the end of 2006. The boom extends throughout Thailand, Malaysia, Indonesia, South Korea and Taiwan. However, to put the assets in perspective, they are but a mere fraction of the total $1.2 trillion Asian mutual fund market.
Experts Warn Investors About Single-Country ETFs
The original exchange-traded funds, based on broad-based indexes such as the S&P 500 and the Nasdaq 100, gave investors wide exposure to a multitude of stocks. But as the market has become more crowded, investment advisory firms anxious to jump on the bandwagon have been offering narrower and narrower slices of the market.
The newest to come on the scene is single-country ETFs-a bad idea, according to Gary Gordon, a certified financial planner and president of Pacific Park International. Many of these are focused on emerging-markets, perhaps the riskiest of all.
Even many supposedly diversified international ETFs invest as much as 25% of their assets in a single stock. Funds guilty of this include the MSCI Mexico Index Fund and MSCI South Korea Index Fund.
Advocacy Group Pressures Funds on Global Warming
Co-Op America, a not-for-profit advocacy group, is urging mutual funds to vote in favor of climate change proxy resolutions. The organization has sent out 10,000 e-mails and letters to the nation's 100 largest mutual fund companies. Visitors to the website can send out an e-mail of their own to Fidelity, American Funds and Vanguard urging them "to re-think your strategy on climate change issues and take seriously the impact that global warming will have on your funds."
The campaign comes on the heels of a report from Ceres indicating that none of these fund companies voted in 2006 to support climate-related shareholder resolutions.
"With more than $1 trillion in investor assets, these three giant mutual fund families control 70% of the U.S. mutual fund market," said Co-Op America Climate Change Program Director Todd Larsen. "Getting them to vote in favor of resolutions to address climate change would make a tremendous difference both for the bottom lines of investors and the long-term health of the environment."
Free Enterprise Fund Has Doubts on Global Warming
The Free Enterprise Action Fund plans to push for further debate on global warming on fears that new "global warming regulations could devastate economic growth and jeopardize the earnings of companies in the fund's diversified portfolio without having any discernible impact on global temperatures."
The fund's management said that some companies are "fueling global warming hysteria by supporting activist environmental organizations and lobbying for government regulations."
While the United Nations and Hollywood celebrities take global warming on face value, the Free Enterprise Action Fund believes there aren't necessarily adequate scientific facts. The fund maintains that CEOs and corporate boards owe it to shareholders to examine the financial consequences of new regulations.
Report: G7 Should Take a Look at Hedge Funds
In the interest of being clear with investors about risk, financial institutions should disclose their holdings in hedge funds, according to a recently released report commissioned by the G7, Reuters reports. The leaders of the industrialized nations were urged to consider the impact the $1.5 trillion industry has on global financial stability.
"It is important to recognize the inherent limitations of summary data in capturing the complex counterparty exposures of many dealer firms to hedge funds," according to the draft version prepared by the Financial Stability Forum.
The forum stops short of suggesting direct oversight, instead promoting strengthening the existing system, whereby dealer firms would report how much they have in hedge funds. Once those risks were identified, regulators would want to see that risk management measures were in place.
Hedge funds' proclivity toward corporate takeovers makes regulators and central banks especially uneasy.
German Chancellor Angela Merkel has said she wants an agreement on increased supervisions before the end of the year. The United States and Great Britain, the places most populated by hedge funds, have objected, noting that hedge funds provide better liquidity for the central banking systems. The report also called for more benchmarks for hedge fund performance.
"Investors should demand and obtain information on risks and returns that enables them to make informed investment decisions," the report said.
Meanwhile, last week U.K. Treasury Minister Ed Balls said that Britain will propose that financial regulators share information on investors' exposure to hedge funds. Speaking at a conference of the Financial Services Authority, Balls said, "We believe that the quality of prudential supervision of hedge fund activity would be enhanced if there were greater cooperation between the key regulators in monitoring the main counterparties' exposures to hedge funds."
One idea would be to share the findings of the FSA's six monthly inquiries with other regulators, he said.
NASD Warns Investors About China Stock Scheme
The NASD issued an investor alert last week warning investors about e-mails, faxes and even cellphone text messages touting low-priced China stocks that, the messages say, promise tremendous returns. Many of these stocks, NASD said, are not even related to China.
One fax, for instance, was headlined "Grabbing massive profits in China has never been easier than right now!"
The senders' goal is to drive up the price of the stock and sell out for a huge profit that ends up draining the value of the stocks held by the duped investors.
"The fact that a company has China' in its name can be misleading, especially since most of the companies being peddled are not even incorporated in China," said NASD Chairman and CEO Mary L. Schapiro. "The best way to avoid being taken in by a scam is to ignore these unsolicited stock recommendations or at the very least investigate the company and its claims before investing."
Kinetics to Launch Water Infrastructure Fund
Kinetics Asset Management is planning to launch the Water Infrastructure Fund, Dow Jones reports. It will invest in U.S. and foreign companies that supply water infrastructure and related natural-resources businesses.
There are, in fact, a number of other water-focused funds, primarily due to a United Nations resolution to provide at least 50% of the people who currently don't have safe drinking water this valuable resource by 2015. The UN estimates this will cost governments $10 billion to $30 billion above and beyond what they already spend on purifying water.
"Anytime that amount of money is being spent, there are going to be profits," said Ian McPherson, president of Criterion Investments, a VenGrowth Asset Management affiliate, which debuted the Criterion Water Infrastructure Fund in February. The largest fund is the Euro Pictet Water Fund, which has $4.2 billion in assets. There's also Sextant Capital Management's Global Water Fund, a hedge fund, and Powershares' Water Resources Portfolio, an exchange-traded fund that tracks the Palisades Water Index.
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