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Investors to Continue Seeking Fixed Income, Other Safe Funds

Nearly every asset class saw robust performance in the second quarter, but the initial elation at the lack of terrible news has worn off as investors brace for a tough second half, according to Lipper's review of the second quarter.

While mergers and acquisitions among asset management companies were down significantly during the first half of 2009, many M&A experts predict this decline will flatten out or reverse by the end of the year, driven by renewed faith in the profitability of asset firms and banks' continued need to raise capital.

Despite the best performing returns for mutual funds in the second quarter in the past six years, investors appear unsure that the market is actually turning around because they don’t see sustained strength in the economy or corporate earnings. In fact, some fear the recession could get worse.

After 56% of fund managers cut their equity exposure in the first five months of the year, in June, 32% said they would increase their equity investments, and 14% said they would hold them steady, according to a survey by the U.K.’s Association of Investment Companies.

iShares has introduced the iShares S&P Emerging Markets Infrastructure Index Fund. The timing is auspicious, as in May, emerging market ETFs attracted $6 billion, 40% of the $14.9 billion that investors placed in ETFs. And the trading volume of iShares emerging markets funds has increased 119% this year.

National Financial has enhanced its brokerage platform, Streetscape, with wealth management tools and Thomson ONE market data. The platform previously offered only account, trading and risk management capabilities.

Total assets of money market mutual funds climbed $4.36 billion to reach $3.668 trillion for the week ending July 8, according to the Investment Company Institute.

Despite the volatile markets of late 2008 and early 2009, investor participation remains fairly stable, according to a review of retirement markets by Dublin-based Research and Markets.

After only two years as president of Fidelity Investments, Rodger Lawson may be looking for a new job soon, The Wall Street Journal reports.

Hedge funds experienced their best six months during the first half of this year since 1999, according to Hennessee Group, a hedge fund advisory firm. The Hennessee Hedge Fund Index rose 11.74% through June 2009, second only to gains of 14.81% a decade ago.

Alternative investment manager Hattaras Funds has entered into a definitive agreement to acquire a controlling interest in Alternative Investment Partners, which offers a line of open-end hedge funds-of-funds called AIP Mutual Funds.

MainStay Investments has adopted the mutual fund family of Epoch Investment Partners, which consists of four funds with $750 million under management, and will become the primary distributor of Epoch’s separately managed accounts.

The Treasury Department tapped nine fund managers, including five mutual fund companies as well as private equity and hedge funds, to help implement its Public-Private Investment Program, established to address legacy real estate assets.

Whereas in previous recessions, companies that suspended 401(k) matches always brought them back, this time around, consultants to defined contribution plans tell the Associated Press, companies are thinking about doing away with the matches forever or reducing them drastically from the typical 50 cents match for the first 6% an employee puts in.

Institutional investors are looking for better risk models for investments and overall management, Northern Trust found. Ninety percent of those surveyed rated risk as an “important” or “primary” consideration in their decision making.

Putnam Investments has launched a new advertising campaign with the tagline, “This is Putnam Today.”

When a 401(k) participant goes to the trouble of selecting investment choices, they don’t expect them to shift over to a default option, but that’s exactly what happens frequently when a sponsors switches recordkeepers or provider, The Wall Street Journal reports. Because the offering lineup is not the same as the old plan, the only logical thing to do is to place the money in a safe default.

Long-term mutual funds netted $8.34 billion in inflows in the week ended July 1, the Investment Company Institute said, marking the 16th straight week of inflows, which total $160 billion.

Citing a steep decline in the pace of redemptions, Man Group said that a year-long exodus of client money is slowing. Assets fell only 7.5% in the second quarter, from $46.8 billion to $43.3 billion, whereas at the end of the second quarter of 2008, assets were 45% high, at $79.5 billion.