Special Program Root Tag

The Securities and Exchange Commission will almost assuredly approve proposed rules that will increase the minimum assets an investor must have to partake in a hedge fund, Reuters reports. Currently, that’s $1 million, inclusive of the value of one’s home. The SEC wants to make that $2.5 million, exclusive of homes, and will most likely succeed, Jennifer McHugh, a senior adviser in the SEC’s division of investment management, told the Council of Institutional Investors.

At Least 288 exchange-traded funds have registered with the Securities and Exchange Commission and are awaiting its approval, The Wall Street Journal reports. If approved, it would boost the 460 or so ETFs currently on the market by more than 60%.

Charles Schwab has launched a fund with a target retirement date of 2050, bringing now to five its total lineup of target-date funds tied to 2010, 2020, 2030, 2040 and 2050. Rounding out the family is the Schwab Managed Retirement Trust Fund—Income.

Although it is only at the very early stage, Barclays is considering acquiring ABN Amro, a person familiar with the talks tells Bloomberg, while The Wall Street Journal says a number of companies, including BNP Paribas and Societe Generale, are looking into acquiring ABN Amro.

The debate over whether hedge funds are market stabilizers or disrupters is about to be put to a new test: the fallout from the subprime loan industry, Bloomberg reports.

Stock and bond mutual funds netted $110 billion in flows in January and February, the largest amount they have ever taken in during the first two months of the year, Strategic Insight reports.

Utah Department of Commerce’s securities division has filed a petition against First Western Advisors, two of its current and two of its former brokers for securities fraud.

Although the market was hammered last week by subprime loans, individual mutual funds aren't likely to have much exposure to the volatile sector. Most sub-prime lenders are small-cap companies, and, as such, funds won't have large amounts of cash invested in them. In addition, most mutual funds are diversified.

What mutual fund investors don't know could hurt them, especially if it's that the manager running their money also operates a hedge fund. Some in the industry believe it's time shareholders be made aware of these potential conflicts of interest.

Eight years ago, cocktail parties were less social occasions and more trial-by-fire for Jim Tracy.

Although Americans are saving more for retirement, they are still falling short of being adequately prepared due to rising healthcare costs, longevity and dwindling pension funds.

You've got to hand it to Morningstar for sending a strongly worded comment letter to the Securities and Exchange Commission on the validity of independent fund board chairmen-especially as SEC Chairman Christopher Cox appears ready to capitulate on the long-contested issue.

OppenheimerFunds CIO To Also Serve as President

Legg Mason Launches Corporate Branding Ads

Environmental and human right issues have sparked a renewed interest in socially responsible investing (SRI), and, as a result, assets in these funds will reach $2.5 trillion this year, up 10% from $2.3 trillion in 2005. Over the last decade, assets in SRI funds have grown 12.3% on average per year.

Think all of the interesting international equity sectors have already been tapped? Not so fast, says Ted Pollak, founder and chief investment officer of EE Fund Management of San Francisco. His firm has created the first international equity index focused on the electronic entertainment/video game industry, which has come a long way since the industry's first, now-primitive, game Pong.

Susan M. Olson has been named senior counsel of international affairs at the Investment Company Institute. Olson replaced Bob Grohowski, senior counsel of securities regulation, who moved to his new post a few months ago. Olson will serve as ICI’s lead counsel on a broad range of global issues facing mutual funds. She is set to represent the Institute and the industry before the World Trade Organization, the International Organization of Securities Commissioners and foreign regulators and legislators. Additionally, she will lead ICI’s efforts to help U.S. mutual funds comply with anti-money laundering regulations. Olson, a 10-year veteran at the Securities and Exchange Commission, most recently served as senior counsel in the international branch of the SEC’s office of the chief counsel. She worked on resolving issues arising under the Investment Company Act and the Investment Advisers Act and provided guidance for trade negotiations. Prior to the SEC, Olson worked for the Washington, D.C. office of McGuireWoods.

Mutual funds are utilizing popular and successful investment strategies from hedge funds more and more, according to the Economist. There are three types of mutual funds that show hedge fund like characteristics that Todd Trubey, an analyst at Chicago-based Morningstar distinguishes. “Market-neutral” funds aim to make money in bad times as well as good; however, Trubey notes that it is hard to squeeze worthwhile returns from such a strategy without the leverage hedge funds have. The “equity long-short” strategy is much more ambitious and involves bets on the direction of individual stocks. Shorting stocks is a risky game that can have offer huge returns for some or be unsuccessful for others. Lastly, “funds-of-funds” approach combines a number of strategies in a one product. Several invest in different hedge funds and some mutual fund managers can gain access to unique accounts set up for them special by hedge-fund managers. However, financial specialty comes at a price and the high fees of hedge funds are seeping into the mutual-fund arena. So far, the specialty products account for a tiny share of the $20 trillion global mutual fund market. The overlap can only go so far though as the two products appeal and are marketed to different audiences. Mutual funds are heavily regulated and are geared towards retail investors. As hedge funds target the ultra-rich and institutional 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.

Gold has typically been able to hedge against losses in times of financial crisis, or economic uncertainty, but traders’ views on the metal might be shifting, according to MarketWatch. “The gold market has thus far been frustratingly unable to summon its historical safe-haven attributes,” said Jon Nadler, an analyst at Kitco Bullion Dealers. “When you have bullion moving in tandem with equities, you have to scratch your head,” he said. And “the last thing the traditional buyers want from gold is for it not to perform when the going gets tough in paper assets,” he said. The way gold is bought and sold has expanded, and the diversity has been good and bad, feeling a very volatile trading environment. Options have increased and “today investors have a wide variety of exchange-traded-funds, hedge funds, mining shares and a myriad of futures and options contracts all the globe,” said Kevin Kerr, editor of Global Resources Trader. However, “what’s happened is that gold has moved from being a beneficiary of a stock market sell-off to a victim,” he said. “The apparent quest for liquidity among global investors has made gold a victim to its on recent success,” Nadler said. But, Amaury Conti, an equity trader at San Antonio, Texas-based Austin, Calvert & Flavin, doesn’t believe the view of gold has changed, it’s the way to trade it that’s different. “Gold will go up in uncertain times as it usually does, but now the ability for a trader to sell the ETF and go short has changed the liquidity and risk dynamics of the asset,” 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.

The recent market turbulence will put to the test theories of whether hedge funds actually cause bigger swings, or whether the unregulated entities can truly offer safe harbors within a storm, according to Bloomberg columnist Chet Currier. “If credit turmoil spreads from the carnage in the subprime mortgage business, hedge funds stand to become the featured players in a heroes-or-villains drama,” he worte. “Should the shake-up that began in late February turn into a messy, drawn-out affair, hedge funds are handy candidates for blame.” Hedge funds have a reputation as so-called carry trades, through which they borrow money someplace cheap—for example the Japanese money market—and invest it for a higher return elsewhere. If, on the other hand the storm passes quickly, hedge funds could be the heroes, since they can act quickly and play the market unfettered from all sides, Currier said. Also, unlike the typical investors, hedge fund managers burned by market swings don’t get market shy; they get active. The 1.4 trillion industry pales in comparison to the $10.5 trillion U.S. mutual fund market, but mutual funds are far more fettered and unable to make the same types of big, quick moves as hedge funds. In fact, data from the Investment Company Institute shows that the average mutual fund has only 4% of its assets in liquid cash. Likewise, private-equity funds draw mainly from borrowed money, and that money disappears during credit crises. Also, hedge fund managers are rarely subject to the security loyalty that plagues many other investors, especially those with securities they may have had for decades. “Hedge-fund managers have often been portrayed not merely as dispassionate, but as pitiless self-seekers wielding frightening amounts of power,” wrote Currier. “A measure of cold calculation may be just what is wanted when most investors get caught up in the emotions of a turbulent market. While the herd is stampeding in one direction, nobody is better equipped than hedge funds to get a little movement going the other way.” 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.