Special Program Root Tag

Legg Mason recently took a $44 million venture capital investment in Ning, a social-networking startup looking to compete with Facebook and MySpace, The Baltimore Sun reports.

Nasdaq today is set to launch a new, private stock market called the Portal Market for super-wealthy investors with $100 million or more in assets, the Washington Post reports.

The strategy known as 130/30, whereby a fund takes both long and short positions, can produce strong results but is highly dependent on the skills of the portfolio manager, Dow Jones reports, citing a study by Merrill Lynch.

Pensions are becoming rarer and rarer in the United States, the Los Angeles Times reports. Two-thirds of employers that offer pensions plan to freeze them to new hires or eliminate them altogether over the next two years, according to a survey by the Employee Benefit Research Institute and Mercer Human Resources Consulting.

William Blair Investment Management has hired Patrick J. Sheppard as chief operating officer. He comes to the firm from The Boston Company Asset Management, where he held the same title.

John Hancock College Savings has launched a “back-to-school” campaign to promote its John Hancock Freedom 529 plan.

Funds are divesting holdings of companies in Sudan, and activists credit their campaign to persuade them to do so, Reuters reports. However, institutional investors and mutual funds still have billions of dollars invested in companies that do business in Sudan, or have ties to companies that do.

The Securities and Exchange Commission has distributed $55.6 million to 200,000 Banc One investors who were harmed by fraudulent market timing.

After making a name not only for Fidelity but the entire mutual fund industry in the 1980s, the $42.8 billion Magellan Fund is, once again, beating its peers under the management of Harry Lange, The Wall Street Journal reports. So far this year, it has beaten 83% of its growth peers, returning 9.9%--a full 6.3 percentage points ahead of the S&P 500. In fact, 63% of Fidelity’s funds are beating their peers so far this year, compared to only 46% a year ago.

While mutual fund companies and investment banks have had meteorologists on their trading desks for almost 30 years, the practice apparently is increasing-affecting portfolio managers' trading decisions not only of commodities, power, utilities, agriculture and energy securities, but also consumer goods, transportation, construction, infrastructure, shipping and leisure. In addition, in the past 10 years, the insight of meteorologists on the trading floor has led to the development of weather risk management tools-futures, derivatives and insurance.

After almost five years, American Century Ultra fund manager Wade Slome will leave the Kansas City firm, according to the Kansas City Star. Slome, 37, plans to open his own investment firm in California. His resignation is effective Aug. 31. Stephen Lurito, who joined American Century last month after 22 years with MUUS Asset Management and Warburg Pincus Asset Management, will head the $12 billion fund until a successor is chosen. The Ultra fund is the Kansas City-based company’s largest. Ted Telfords, an 11-year American Century Veteran, will remain with Ultra, along with Investment analysts Bill Monroe, Terry Foster, Tim Miller and Matt Weight. The 26-year-old ultra fund is a large-capo growth portfolio. 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.

Star manager Lu Jun left the China International Fund Management Co., a Shanghai-based venture 49% controlled by JP Morgan Asset Management, for “personal reasons,” according to Dow Jones. The state-controlled news said that Lu plans to launch his own business. A strong market in China has lured many mutual fund managers away from their investment companies and toward private investment funds. With Lu as the skipper, the China Advantage Fund saw a four-fold increase in funds. Yang Anle and Liang Jun will replace Lu. Meanwhile, a recent report form Research and Markets in Dublin predicts growth in among funds in China. The report notes that the 20% gains among Chinese funds in 2006 has piqued interest and driven flows in 2007. Chinese mutual funds account for about $30.2 billion under management. The market’s growth has attracted interest from foreign investors. There are now eight fund management joint ventures in China, and two in development. The report predicts more firms to launch funds there. 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

The departure of Roel Campos from the Securities and Exchange Commission, one of two Democrats on the commission, could sidetrack a controversial proposal to give shareholders a greater say in electing directors, according to The Wall Street Journal. Campos, who is leaving the agency next month, voted in favor of the shareholder-friendly proposal, leaving the commission split on the issue. The controversial push “went from iffy to negligible with Campos”’ exit, said John Olson, a corporate governance lawyer with Gibson, Dunn, & Crutcher in Washington. Last month, the SEC approved two strikingly different proposals on the question of proxy access. Both were 3-2 votes with SEC Chairman Christopher Cox as the swing vote. One proposal, backed by the Republican commissioners and business, would allow companies to refuse any election-related shareholders proposals. The second proposal is supported by Democrats and would permit shareholders with 5% stakes to propose changing company rules in a way that would allow shareholders to nominate directors. Cox stated that he favors the proposal that would give shareholders access and that he wants the issue finalized by next year. There are other changes on the horizon at the SEC, as well. Commissioner Annette Nazareth’s term expired this year. Under the law, she is able to continue to serve as long as 18 months after her term expires. Commissioner Paul Atkins term expires next year. Luis Aguilar, a partner at Atlanta law firm McKenna Long & Aldridge, is a possible candidate to replace Campos, according to people familiar with the situation. Other senators on the committee are reviewing potential candidates. 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.

The Retirement Income Industry Association has released a Statement of Principals for the industry when developing retirement income calculators, tools and illustrations that promote retirement income products and strategies. “A significant number of retirement income projection models have been introduced into the marketplace over the years, and RIIA believes that many of these models may need improvements in disclosing key underlying assumptions or limitations,” said Richard Fullmer, chair of RIIA’s Methodologies Committee and senior portfolio strategist for Russell Investment Group. The principals seek to promote the use of clear and effective modeling techniques, explanation and communications through complete disclosure of assumptions and the use of consistent terminology. The methodologies committee is also going to provide a set of guidelines to the principals that will give guidance on how to meet the standards. Also, as set of “calibration points” will be devised by which model developers can compare their assumptions and results against the standards.

Target-date and target-risk funds, which have enjoyed blockbuster success in terms of sales, might deliver lackluster results for 401(k) participants, according to Dow Jones. The “set-and-forget” appeal of these funds, which investors choose based on anticipated retirement date, or perceived risk tolerance, have brought incredible inflows in the past two years. In 2006 alone, the category saw $303 in inflows, a surge of 50%, following a 57% increase in 2005, according to data from the Investment Company Institute. “These funds are for those who want to take the easy way out,” said Susan Black, director of financial planning at eMoney Advisor in Conshohocken, Penn. However, the same thing that draws investors to these seeming silver-bullet funds may compromise their portfolios later. The problem is that because the funds focus on only one element, age or risk level, investors who use them may not be building well enough diversified portfolios, some warn. Good planning should take into account not just one element, but several including risk, age, tax concerns and overall objectives. “You really need to look at everything,” said Black. “The reality is that people really need holistic planning.” Another problem target-date and target-risk investors encounter is holdings overlap. If the average investor has 60% of his investments in stocks and 40% in bonds, between qualified and taxable retail accounts, he will have to calculate the proportion of his target-date holdings that are stocks to determine how much he should invest in other stock funds. Still, she said, these packaged fund-of-funds are better than not investing at all, or choosing extremes. Another danger is that the funds make broad assumptions about investors of a certain risk tolerance or age level. This is an especially important point if the funds do, in fact, become the qualified default investment alternative (QDIA) under the automatic enrollment provisions of the Pension Protection Act. “As far as QDIA, I think the big issue will be sustainability,” said Louis Harvey, president of Boston-based qualitative fund ranker Dalbar. “The older, wealthier employees are almost always better off with a fiduciary advisor who will do serious pre-retirement planning,” said Harvey. For investors, another tricky issue is deciphering the differences between similarly names funds. After all, what one company might consider moderate risk, compared to another company’s definition can vary significantly. “With target-date funds, you should do more than simply find the date that matches your age at 65, for example, and buy that fund,” said Christine Fahlund, vice president and senior financial planner at T. Rowe Price. “If it is currently too high or low in equities for your taste, it is important that you realize that and find a target date that matches your personal needs—both now and as it glides to other asset allocations in the future,” Fahlund said. Diligence is critical, even in such so-called worry-free funds, said Sheryl Garrett, who wrote “Garrett’s Guide to Financial Planning.” “No one should ever invest in anything and forget about it,” she said. “These target strategies do transfer the re-allocation work to the fund manager; but that reallocation will not include how the investor’s other investments are positioned,” she said. And that may mean a little more legwork up-front, said Fahlund. “Do your homework before you make your selection, and you’ll be a much happier investor over the long term,” she said. 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.

The Securities and Exchange Commission is examining Wall Street brokerage firms and banks to make sure they aren’t hiding loses in the subprime mortgage meltdown, according to the Globe and Mail. The SEC wants to make certain that companies are calculating the value of the subprime mortgage assets in their own inventory, as well as assets held for customers such as hedge funds, according to people familiar with the matter. The SEC is concerned that firms may not be marking down their inventory as aggressively as assets held by clients. The issue is sensitive to the market. Large Wall Street firms have not reported any huge fallouts despite the big subprime losses and turmoil that has been going around the markets. Goldman Sachs and Merrill Lynch are the first firms targeted for checks, sources said. The checks may give some information about whether hedge funds themselves have reported their results accurately to investors, according to one person knowledgeable about them. Some firms “don’t come clean” about such losses in earnings reports, said David Trone, an analyst at Fox-Pitt Kelton. “You don’t know when people take losses; it’s buried.” Regulators are looking at marketing methods used by Wall Street divisions that make loans to customers such as hedge funds and money managers. The SEC’s market regulation division has been in contact with all big brokerage firms to ensure their risk management systems are up to speed in light of the quick deterioration in the subprime market. 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.

With a new Internal Revenue Service requirement about to require 403(b) sponsors to assume fiduciary duty, much as 401(k) sponsors do, and pare back the number of offerings, the sponsors are inevitably going to scrutinize their plan administrators.

The Pension Protection Act ushered in far-reaching changes to 401(k) plans, including fiduciary protection for providers using automatic enrollment and default investments, and making permanent higher contribution levels and catch-up contributions for older workers.

Hedge funds must learn to open up a little while clamping down on operational risk management, according to a recent web presentation by Deloitte & Touche Tohmatsu.

Implementing automatic enrollment and auto-escalation in 401(k) plans is a start in the effort to push employees to prepare for retirement, but it may not be enough.