Special Program Root Tag

Rather than bemoan the market’s abysmal performance, investors’ skepticism and the fact that their own revenues declined an average of 40% in 2008, financial advisers overwhelmingly are viewing the economic crisis as a time to strengthen client relationships, SEI found. And most believe they will be able to expand their client base, with 51% expecting the market to rebound as early as the second quarter.

Standard Chartered’s Hong Kong division has agreed to reimburse $320,000 to 1,000 investors who were allegedly disadvantaged by the firm’s permitting Stone Castle, a Millennium Partners subsidiary, to market time 24 mutual funds managed by ACM Funds and Scudder Global Opportunities Funds.

The average U.S. stock fund declined 37.9% in 2008, slightly worse than the Dow Jones Industrial Average’s 33.8% loss. It was the Dow’s worst year since 1931, when it declined by more than 50%. Meanwhile, the Standard & Poor’s 500 Index fell 37%, its worst performance since 1937.

Talk about leaving with an impression. The likely legacy of Securities and Exchange Commission Chairman Christopher Cox, when he steps down this year after taking on the position in 2005, is likely to be that of ineffectiveness during the worst economic period since the Great Depression, The Wall Street Journal reports.

Fidelity Investments has named former Evergreen Investments Chief Executive Officer Peter Cieszko to become the president of Fidelity Investments Institutional Services Company.

In recent years, smart investors have diversified their portfolios into alternative investments such as real estate and commodities, to buoy their holdings in times of market stress. But 2008 proved to be an anomaly, with those asset classes falling right down along with stocks. The average real estate and commodity mutual fund fell 40% to 50% last year, The Wall Street Journal reports.

More than 40 inverse exchange-traded funds run by Rydex Investments and ProFunds are passing on sizable capital gains to investors. For those who hold those funds in taxable accounts, the taxes they will owe will range from 50% to even as high as 80% of assets, The Wall Street Journal reports.

Paul Mazzilli, formerly executive director and head of the exchange-traded fund research team at Morgan Stanley, has joined IndexIQ as senior advisor, in charge of developing products for high-net-worth investors.

Sponsors of 401(k) plans worry that investors will either invest too heavily in risky equities, or too conservatively in money market funds, but in 2007, at least, target-date funds allocated investors’ money wisely across the board, Vanguard found.

Renaissance Institutional Futures, a $3 billion hedge fund run by James Simons, is foregoing management fees for 2009 as a response to poor performance in 2008.

Long-term U.S. government funds yielded 22.5% in the fourth quarter of 2008, for a three-month performance of 27.1% year to date, according to data from Morningstar Inc., as investors flocked to safety.

Neuberger Berman Names Non-Executive Chair, CEO

The Securities and Exchange Commission has received an emergency court order to halt a suspected Ponzi scheme targeted to Haitian-American investors.

SEC May Investigate Reserve Fund

Among my predictions for 2008 was the subpoenaing of Eliot Spitzer's e-mails to prove his smear campaign against New York State Republican Majority Leader Joseph Bruno. And we all know what happened to the disgraced former governor of New York.

While the news about the economy and the markets continues to be bad, some in the business are taking heart.

Most executives wouldn't consider themselves "fortunate" if they took over one of the largest fund companies weeks before an historic market collapse.

Three months ago, financial experts were concerned that the Securities and Exchange Commission was on the verge of eliminating or making major revisions to 12b-1 fees for marketing and distributing mutual funds. A lot has happened since then.

Mutual fund managers Tom Forester and David Ellison stood out from the crowd last year with the two best-performing funds, even though they both lost money in 2008.The Forester Value Fund was down 0.82% for the year, thanks to investments in stocks that typically do well during recessions, such as Kraft Foods Inc., Johnson & Johnson and H.J. Heinz Co. The average decline for the year in the value fund category was 38%, according to Morningstar Inc.Ellison's FBR Small Cap Financial Fund was second among financial sector funds, losing just 10% of its value, compared to an average decline of 45% in its category.While Forester and Ellison may want to adjust their portfolios as market conditions improve, they are continuing to attract new clients and new assets for now. Forester said his fund's assets have grown fivefold in 2008 to $55 million."I'll probably be in some of the same stocks for the first six months or so of 2009," Forester told the Associated Press. "And then as I see things getting better, I'm going to shift out of the real defensive things, and get more constructive on the more cyclical stocks that can grow quite well as we come out of this period."Ellison's fund is invested primarily in low-risk small banks and in cash. He said he plans to keep it there until the economy starts to show broader signs of recovery."I think unaffordable mortgages are still going to chew on the economy for a while," he said.

A 38% drop in the Standard & Poor's 500 index last year seems almost rosy compared to the abysmal performance of three big mutual funds that all lost more than 60%.Legg Mason heavyweight manager Bill Miller - who once beat the S&P 15 years in a row - has gone from best to worst, with his Legg Mason Opportunity Trust fund down a staggering 65% for the year.According to Morningstar Inc., the second-worst performer was the Winslow Green Growth Fund, down 61%, followed by the Legg Mason Growth Trust fund, down 60%."[Miller] continued to try to position the fund for a recovery," Morningstar fund analyst Greg Carlson told The Wall Street Journal, adding that Miller kept holding on to stock in Amazon (down 45%), Expedia (down 74%) and Yahoo (down 48%) as well as Freddie Mac and American International Group Inc.Winslow manager Jack Robinson said the fund's losses were due to its concentrated portfolio and focus on green energy companies."We also made a couple of mistakes," Robinson said. "We stayed with some companies that had sound fundamentals but which had debt. We're going to be sticking with our investment philosophy for the long term."Morningstar's analysts are optimistic that Legg Mason's Growth fund, managed by Robert Hagstrom, is well positioned for an upswing in the markets, whenever that happens."Legg Mason Growth will soar again," Morningstar senior fund analyst Bridget Hughes. "We're confident that the fund will perform well in an upswing. In fact, since mid-November, it has gained more than 7.5%, putting it near the category's top."The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.