Special Program Root Tag

The Free Enterprise Action Fund announced Tuesday that it 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 Bush administration pledged on Tuesday to improve fee disclosure in 401(k)s, the Associated Press reports. Beginning today, the Department of Labor’s Employee Benefits Security Administration will begin accepting ideas on how to do so from the public and the investment management industry. The deadline for comments is July 24.

The NASD issued an investor alert Monday 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.

Investor Education Fund, a not-for-profit organization dedicated to informing investors that the Ontario Securities Commission launched in 2000, has revamped its website, adding additional tools, resource links, retirement case studies and worksheets.

Federated Investors announced Monday that it has reached an agreement to acquire the $321 million Rochdale Atlas Portfolio, an international mutual fund, from Rochdale Investment Management.

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.”

Following Fidelity Investments’ management shake-up last week, industry insiders are speculating on who will succeed Edward “Ned” Johnson as chief executive officer, The Economic Times reports.

U.K. Treasury Minister Ed Balls said that Britain will propose that financial regulators share information on investors’ exposure to hedge funds, Reuters reports.

They may be late to the party, but they seem to be making up for lost time.

Charles Schwab announced Friday that it has reduced the minimum for its brokerage and retirement accounts to $1,000 and is waiving the minimum for those who commit to automatically depositing at least $100 a month. In addition, Schwab will not impose fees on accounts whose balances have fallen below the minimum.The minimum for brokerage and custodial accounts had been $2,500, and $2,000 for IRAs and college savings accounts.

Investors in taxable mutual funds might see their tax bill rise next year, according to the Chicago Tribune. The chance is waning for fund managers to offset capital gains from selling winners in a portfolio with losses from having sold losers during the market tumble earlier in the decade. “The last four years, we have been on a tax holiday of sorts, and the party is over,” said Tom Roseen, senior research analyst at Lipper. The turnover of portfolios has increased as active managers buy and sell in order to beat market benchmarks. Also, higher interest rates and increased dividend payments by many companies increased the amount of capital gains and income distributions paid by mutual funds to their investors. Taxable-mutual fund investors, who hold funds outside the tax-deferred savings accounts, such as IRAs and 401(k)s, saw a 56% increase in taxes from 2005 to 2006, to $23.8 billion, according to a Lipper report. Many mutual fund investors reinvest income and capital gains. However, they still have to pay the tax, even though they have a buy-and-hold investment strategy, Roseen said. So-called tax loss carry-forwards from the years of the market slide are being used up or expiring, he noted. “The idea of the tax holiday is interesting,” said Roy Weitz, a mutual fund critic who operates the FundAlarm website. “That is not the way investors think.” Tax losses have a “tremendous impact” because they can offset capital gains when a fund sells securities at a profit, Weitz said. “Once those are gone, you have gains without any offsetting losses,” he said. The level of taxes, as a percentage of an investment, might now be significantly greater than the level of expenses charged by the manager, the study found. On a positive note, the cut in capital gains and dividend income tax rates has been a boon to taxable-mutual fund investors,” said Roseen. Equity income funds may grow in popularity, which pay tax advantaged dividend income instead of fully taxable interests income, predicts Roseen. “People are in a pay me now attitude,” he said. “They want to see that current income.” However, mutual fund analysts and Roseen warn against buying a fund because it advertises tax efficiency. “Tax-managed funds have gotten very little attention” said Weitz. “I tend to think of them as fringe investments.” 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.

In the interest of being clear with investors about risk, financial institutions should disclose their interests 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. 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.

A few Wall Street firms and stock exchanges have launched luxury indexes, or “blingdexes,” that track stocks of companies that cater to the wealthy. Proving that the rich really are getting richer, these indexes are booming, The Wall Street Journal reports. Although the indexes are new to the market, most of their sponsors have backtracked their performance. Between 2001 and 2006, most of these luxury indexes would have returned an average of at least 13% a year. Looking at another barometer, high-end department stores, analysts note that same-store sales for Saks Fifth Avenue and Barneys are double the retail sector’s average, while their profit margins and revenue are also outpacing the broader markets. Last week, Merrill Lynch launched a luxury index of its own, called the ML LifeStyle Index. “The common denominator for all the stocks selected in our sample is they benefit from the increasingly hedonistic and eclectic consumption patterns,” said Antoine Colonna, an analyst with Merrill Lynch who helped create the index. Comprised of 15 to 20 stocks, it currently includes BMW, Porsche, LVMH, Bulgari, Coach, Burberry, Tiffany, Sotheby’s and Julius Baer. Backtracking the index’s performance, it was up 23% in 2005, 12.5% in 2006, compared to the MSCI World Consumer Discretionary Index’s respective 14% and 7% rise. Another recent entrant is Citibank, with its Plutonomy Index that launched in 2005. Citi also retroactively calculated the index’s performance and found that it would have risen an average of 17.8% a year over the past 20 years. However, the index’s creator, Ajay Kapur, recently left the firm to start a hedge fund, and Citi has since discontinued the index. “Today, the good life is defined by the assets you have,” said Margaret Mager of Goldman Sachs, which runs the Goldman Sachs High-End Consumer Index. “It’s your homes, your cars, how you look, what you wear, who you socialize with, what you eat and drink and, ultimately, how important your art collection is. This is definitely fueling the growth in the luxury market and these indexes.” 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.

Corporate lawyers are seeing a boom in business as proxy fights , primarily fueled by hedge funds, increase, according to The New York Times. “The resurgence of shareholder activism is a direct result of the growth of hedge funds,” said Marc Weingarten, a partner at Schulte Roth & Zabel. Law firms that advised hedge funds from the get-go, such as Schulte Roth, Akin Gump Strauss Hauer & Feld, and Seward & Kissel, are racking in money from the resurgence, as well as traditional corporate finance practices like Skadden, Arps, Slate, Meagher & Flom, Sidley Austin and Willkie Farr & Gallagher. “In the early days, the legal representation of hedge funds was all about organizational documentation, getting the private placement memo prepared and get the offering done,” said Kenneth Raisler of Sullivan & Cromwell. That business, he said, didn’t suit his firm’s lawyers, better known for their mergers-and-acquisitions skills, because it was a “relatively commoditized business with low margins.” But today, his firm represents a number of hedge funds. Firms are hesitant to disclose profits, but hedge fund business makes up around a third of total revenue, said Alan Waldenberg, a partner at Schulte Roth. Lawrence Barshay, a partner at Fried, Frank, Harris Shriver & Jacobson, said, “Revenues have gone from being negligible eight to 10 years ago to a very significant part of our revenue and profitability.” Some firms have looked to acquire hedge fund practices. John Tavss, a partner at Seward & Kissel, says he is “approached by firms every week or two, particularly from non-New York or international firms” looking to expand by acquiring or merging with his 150-lawyer firm. His firm has never been enticed by the offers, and will remain independent he 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.

Financial service provider BISYS hopes that buyers will have an appetite for bite-size bits of the company, after efforts by the Roseland, N.J.-based firm 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. In March, on source told the paper, “There is not a person alive who wanted to do it for the whole company.” 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.

NEW YORK-Fund companies can anticipate fewer lawsuits from shareholders over what they claim are excessive fees, according to panelists at the Practising Law Institute's "Investment Management Institute 2007" here.

NEW YORK-Soft dollars stay at the top of the "to do" list for examiners at the Securities and Exchange Commission in 2007, said Gene A. Gohlke, associate director of the SEC's Office of Compliance Inspections and Examinations.

NEW YORK-Portfolio managers can buy all the algorithms they want, but ensuring best trade execution starts with investing in an order management system sophisticated enough to handle them, according to panelists at Financial Markets World's second annual "Buyside Technology Forum" here last week.

The key to a successful marriage is communication, and planning for retirement is no exception. As it turns out, this is yet another bone of contention between husbands and wives.

They may be late to the party, but they seem to be making up for lost time.