Special Program Root Tag

Janus’ second-quarter earnings jumped 57% to $48.8 million, or 27 cents a share, up from $31.1 million, or 15 cents a share, in the second quarter of 2006, Reuters reports. This beat analysts’ forecast of 24 cents a share.

Although some employers, including General Motors and Delphi, have caved into pressure to pare down the number of options in their 401(k) plans to boost participation levels, often replacing a menu of choices with target-date funds, that may be a disservice to sophisticated investors, The Wall Street Journal reports.

The NASD barred Brian J. Kelly, a Maryland broker who worked at several well-known firms, from the industry for life after excessively churning a client’s account, according to the Baltimore Sun.

House Education and Labor Committee Chairman George Miller (D-Calif.) submitted legislation Thursday that would require 401(k) administrators to disclose fees to investors each year, clearly and simply, along with any potential conflicts of interest.

The Investment Company Institute issued a report Wednesday indicating that at the end of last year, Americans had $16.4 trillion in retirement savings, with about half of it in 401(k)s and other company-sponsored retirement accounts, as well as individual retirement accounts.

A new Vanguard exchange-traded fund, the Vanguard Europe Pacific ETF, begins trading on the American Stock Exchange today. With 1,134 holdings, it is the most broadly diversified ETF on the market, Vanguard said, and with an expense ration of 15 basis points, it is the lowest-cost ETF tracking the MSCI EAFE Index, which has holdings in companies in 21 countries. The new offering is a share class of the $2.3 billion Vanguard Tax-Managed International Fund.

In releasing its annual report on the state of the 401(k) industry, Fidelity Investments stressed that while automatic enrollment in 401(k)s is still not widespread, it has a significantly positive effect on participation, savings rates and diversification.

Legg Mason reported a healthy 22% increase in its profits in the first fiscal quarter, ended June 30, to $191 million, or $1.32 a share, up from $156 million, or $1.08 a share, in the first fiscal quarter a year ago, Reuters reports. Those earnings were on a 16% rise in revenue, to a record $1.21 billion, and beat Wall Street estimates of $1.24 a share.

Waddell & Reed reported that it returned to profitability in the second quarter of this year, taking in $29.7 million, or 36 cents per share, in earnings, the Associated Press reports. In the second quarter of 2006, the company lost $33 million, or 40 cents per share.

Yesterday, on the eve of today’s open meeting at the Securities and Exchange Commission to explore the possibility of putting limits on “advisory” proxy resolutions, which by some estimates have accounted for 95% of shareholder proposals over the last 35 years, two investor groups promised to put up a fight.

As Wall Street Journal blogger Nathan Koppel put it yesterday, the scandal engulfing New York Governor Eliot Spitzer’s office probably has some in the mutual fund industry gleefully dancing in the aisles.

Citigroup’s Smith Barney division has agreed to pay $50 million to settle market-timing charges from the New York Stock Exchange and New Jersey regulators. NYSE Regulation also charged the company with failure to supervise trading of mutual funds and variable annuity sub-accounts and improper books and records.

Shortly after Barclays announced that it was filing with the SEC to offer the first-ever municipal bond exchange-traded fund, so did State Street Global Investors, the New York Daily News reports.

Asset management firms, including Merrill Lynch, Goldman Sachs and JPMorgan, have created a new type of product called hedge fund “clones,” or “synthetic” hedge funds, which employ hedge fund strategies without charging the typically high fees or imposing long lock-in periods or high investment minimums, The Wall Street Journal reports. Some are tied to hedge fund indexes, while others use more complex strategies.

The Hartford Financial Services Group reached a $115 million settlement with regulators in Connecticut, New York and Illinois over charges it conspired with Marsh & McLennan to submit false bids on property and casualty insurance, paid hidden fees to brokers and permitted some investors to market time mutual fund sub-accounts in its variable annuities.

We've got to hand it to the board of directors at AIM Investments for acting responsibly and in direct response to a profound change in public sentiment.

Chester Spatt, chief economist and director of the Office of Economic Analysis at the Securities and Exchange Commission, will leave for a post at Carnegie Mellon University in Pittsburgh, according to US Fed News. Spatt took leave from the university, where he had worked since 1979, to serve the SEC in 2004. During his tenure at the SEC, Spatt led analysis of the impact of issues including options expensing, option grants and backdating, mutual fund late trading and market timing and executive compensation, among others. “His exceptional background, expertise and judgment concerning the economic underpinnings of our securities markets have been invaluable resources to the Commission,” said SEC Chairman Christopher Cox. “He has been a strong leader of a very talented staff, and all of us at the Commission are deeply indebted to him for his personal and professional contributions to the nations’ markets and investors.” 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 subprime loan fiasco will actually boost the returns of hedge funds holding instruments that take advantage of distressed debt, or inefficiencies in the market, AFX International Focus reports. But hedge funds holding credit default swaps, a form of credit protection, will suffer, industry insiders said.One fund that will benefit is the $13 billion Paulson Credit Opportunities

Since many 403(b) plans offered at non-profits have had little or no employer oversight, the Internal Revenue Service is going to require their sponsors to assume fiduciary duty, much as 401(k) sponsors to, The Baltimore Sun reports. The IRS wants these plans to pare pack offerings, which sometimes number into the hundreds, and offer lower-cost choices. Although the IRS said it would make the changes two years ago, it now says it will issue new guidelines this coming year, perhaps as early as January. The changes will require employers to be more involved in managing their 403(b)s, said Michael Beczkowski, a senior consultant with Bolton Partners, a benefit consulting firm. “The more egregious products will be weeded out,” he said. That could mean fewer annuities, as today, 80% of the $652 billion in 403(b) plans is in annuities, according to Spectrem Group. Sponsors of 403(b)s will have to supply the plans’ rules in writing, along with the names of the investment companies in the plan, and they will have to notify people when they are eligible to participate in the plan. “Schools have done a horrible job of letting eligible people know,” said Dan Otter, founder of 403bwise, a 403(b) information center. However, while 403(b) participants may currently invest in any investment company, whether it’s listed in the plan or now, under the new guidelines, they will lose that flexibility, Otter 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.

Facing a weakening dollar, U.S. investors are increasingly using exchange traded-funds to access overseas markets, according to Dow Jones. International equity ETFs gained $25 billion in the first half of 2007, compared to $13 billion for domestic stock funds. Compared to 2006, that is a 61% increase, from $80.8 billion to $129.8 billion for the period, according to State Street Global Advisors. Senior Managing Director James Ross attributed the increased popularity to a weak dollar and strong international market performance. The State Street SPDR Dow Jones Wilshire International Real Estate Fund has attracted $939 in assets between January and June. The Dow Jones Euro STOXX 50 Fund has won $191 million during the same time period. The SPDR Russell/Nomura Small Cap Japan Fund enjoyed $159 in inflows for State Street year-to-date. The SPDR S&P BRIC 40, which invests in the biggest public companies in emerging markets including Brazil, Russia, India and China, has raised $17 million between its June 22 launch and the end of that month. Next on the agenda for State Street are international and global bond ETFs, especially those related to government debt and international treasury-inflation-protected securities, said Ross. 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.