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Janus CFO, Counsel Plan To Step Down in March

An exemptive relief that the Securities and Exchange Commission granted last week to Rule 22c-2 is welcome news for mutual fund companies, as it will pave the way for the use of an alternate system of identifying foreign investors who are market timing mutual funds.

Faced with the difficult task of managing assets to last them the rest of their lives, current retirees are doing a reasonably good job.

Ever wonder why fund executives flock to mutual fund industry conferences? If you said golf and spa treatments at luxury resorts, you are correct. But if you said to learn about strategies to help their firms better compete and grow, you are also correct.

The Greatest Generation appears to be leaving less to their Baby Boomer children than expected, according to a Dow Jones report. While Boomers were expected to inherit roughly $10 trillion, experts have ratcheted those estimates down by about 80% to $2.1 trillion. For those between the ages of 42 and 60, this could mean more emphasis on saving, and growing, their money now, rather than expecting supplemental help later. Besides the apparent reduction in wealth, Boomers are also expected to live longer than their parents. For example, women who are now 50 will likely live to 81.8, while men of the same age, on average, are expected to reach 79.9. Although those are medians, some financial planners are urging clients to plan as though they will live to 100. Evaporating inheritance pools also mean later retirements. For someone earning $100,000 before taxes who wants to maintain his or her lifestyle in retirement, it will take $2 million in savings, according to experts. That means Boomers who are closer to retirement than they are to collecting $2 million in savings, may need to focus on more aggressive, income-bearing investments in retirement. Furthermore, Boomers, more so than prior generations, are also more likely to be supporting their children’s educations, or help cover the cost of their own parents’ health care. In a recent statement, the American Association of Retired Persons said, “Inheritances, despite wishful thinking and optimistic projections, are not likely to bail out the Boomers.” 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.

Sun Life Financial profits jumped last week and much of the good numbers were attributed to its U.S.-based mutual-fund unit MFS Investment Management, which it once had considered selling, according to The Toronto Star. Sun Life decided not to sell MFS and has said it has made improvements to the unit. MFS boosted profits to $71 million, a significant 58% increase from $45 million a year ago, due to asset growth. Sun Life raised its quarterly dividend by 2 cents to 32 cents per share last week as it posted a 14% revenue increase and a profit of $545 million in the fourth quarter. Earnings per share rose to 94 cents from 83 cents. Revenue was $6.1 billion, up from $5.3 billion and significantly above the average projection of $5.5 billion among analysts surveyed by Thomson Financial, who were expecting earnings of 93 cents per share. 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.

Fortress Investment Group is the first U.S.-based hedge fund to become a publicly traded company and open the doors on the usually private industry, according to the Los Angeles Times. The initial public stock offering allows any investor to potentially get a piece of the large profits that are being generated by the business. Investors are buying a stake in the company, not in its funds. “It’s the natural evolution,” said Charles Gradante, a principal at Hennessee Group, which helps investors pick hedge funds. He expects more large hedge funds to follow with stock sales of their own. However, some analysts think that Fortress’ willingness to go public stems from industry concern about continuing to attract capital from its traditional base of wealthy investors. “These are very smart guys. If they’re selling, I probably don’t want to be buying,” said Steven Persky, head of Dalton Investments, a $1.1 billion hedge fund in Los Angeles. Fortress raised $630 million by selling 34 million shares to investors who had placed orders for the stock last week. The shares were $18.50 each, which Fortress had hoped to get. Fortress’ stock performance will depend on how well the company can keep its clients satisfied. As a stockholder “you’re paying the principals in advance for a cut of the fees they hope to make,” said Adam Sussman, an analyst with Tabb Group in New York. However, some people think that since Fortress is now forced to disclose information on its financial dealings, it might lose the ability to act under the radar. “Once you have public investors, life is different,” said Christopher Whalen, an analyst at Institutional Risk Analytics in New York. That may become more of an issue as competition increases in the hedge-fund and private-equity businesses and genuine bargains in stock, bond and other markets become harder to find, Whalen 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.

Barclays Global Investors’ bond exchange-traded-funds, introduced in 2002 and 2003, opened the low-cost, but hard-to-get into U.S. government bond market to the masses, according to the Financial Times. Barclay’s fixed-income iShares started as funds that tracked Treasury bills of various maturities, one tracking Treasury inflation-protected securities (TIPS), one tracking corporate bonds, and one tracking an investment-grade bond index. The products have proven so popular Barclays released eight new bond ETFs, making a total of 14 bond funds, and already has plans for at least two more. For individual investors, fixed-income investing is hard, since large institutions control much of the $4 billion Treasury bonds in circulation. ETFs help by offering a low-cost way to buy into a ready-made index. “If an individual goes through a brokerage account, they can pay between 50-100 basis points to trade a U.S. Treasury security, and much of that cost is hidden from view,” said Matt Tucker, head of U.S. fixed income solutions at BGI. “But if BGI does that same transaction through an iShares fund, we as an institution can trade at a fraction of the cost,” he said. ETFs also have lower expense ratios than fixed-income mutual funds, for example 15 or 20 basis points for a BGI ETF, compared to more than 100 for a mutual fund. “The idea is to provide one-stop shopping for the investor who wants diversified exposure present in a broad benchmark, and also allow the more sophisticated investor to customize exposures to meet their risk and return targets,” said Tucker. 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.

Four men pleaded guilty Thursday to opening a hedge fund based sheerly on information gathered from illegal, insider-trading tips, according to the Washington Post. Zvi Rosenthal, a 62-year old former vice president at Hawthorne, N.Y.-based Taro Pharmaceuticals, admitted to passing at least 24 nuggets of confidential information about the company to his sons, Amir, 29, and Ayal, 26, between 2001 and 2005. Along with family friend David Heyman, 29, the group then opened a hedge fund, Aragon Partners, which they used to hide the root of the trades from regulators. They further obscured the connection between Rosenthal and Taro by devising options contracts. SEC Northeast Regional Director Mark K. Schonfeld called Aragon, “a family business based on insider trading.” Aragon engaged several attorneys and accountants from PriceWaterhouseCoopers, who SEC Assistant Regional Director Bruce Karpati called people “who had every reason to know better.” Zvi Rosenthal was already on probation for making false claims to the Defense Department with respect to a contract for making military uniforms. He agreed in 2000 to a $20,000 fine and three years’ probation and pled guilty to a single felony. The Aragon four pled guilty in the U.S. District Court in Brooklyn. Each faces up to five years in prison and a $250,000 fine. Sentencing is scheduled for May. Amir Rosenthal, formerly a corporate attorney, received at least $6,300 for a plasma television, and $66,000 from Bahram Deshad, 55, his father-in-law, in exchange for giving the tips. In all, the family and friends gleaned $1.5 million through the scheme. 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.

Participation in employer-sponsored retirement plans—both pension and defined contribution plans—by heads of families declined two percentage points in 2004 to 46.1% from 48.7% in 2001, according to findings by the Employee Benefit Research Institute, the Associated Press reports.

After two months of not approving any new products to quell sharp increases in stock prices, the China Securities Regulatory Commission has approved five new mutual funds. Industry sources have told a number of news outlets that the funds will bring in $3.9 billion. According to reports, the funds are being offered by: CCB Principal Asset Management, First State Cinda Fund Management, China Universal Asset Managemetn, Zhonghai Fund Management and Huafu Fund Management

Merrill Lynch has launched a hedge fund replication index, HedgeWorld reports.

Analyzing the culture at Fidelity Investments, Morningstar unlocked three key elements. The first is star portfolio managers who are allowed to conduct their own brand of investment management and given flexible mandates—but are grounded by such technical criteria as a stock’s price momentum and trading volume.

The NASD issued an investor warning on Thursday, advising senior citizens to think twice about selling their life insurance policies to a third party. While such deals typically bring in a larger sum that the policy’s cash surrender value, they are typically less than its net death benefit, the NASD said.

Former Securities and Exchange Commission Chairman Arthur Levitt told a RiskMetrics conference of institutional investors that Wall Street’s, Treasury Secretary Henry Paulson’s and President Bush’s to scale back corporate reforms—most notably Sarbanes-Oxley—will ultimately hurt the markets, Forbes.com reports.

Impressed by the long equity strategy and returns of an intercollegiate investment club mutual fund, Warren Buffet recently invited the directors of the fund, to meet with him, The New York Sun reports. Called Global Platinum Securities and with $250,000 in assets under management, it is the only intercollegiate fund in the U.S. in which students invest their own money and conduct their own research. Returning 8.6% in 2006, the fund not only beat the S&P 500 Index last year, but also the Nasdaq Composite, the Lehman Bond Composite and Fidelity Magellan, and, as a result, the students are looking to keep the fund running after their graduation.

Concern over the volatility of China’s stock market coupled with unscrupulous brokers and a growing confidence in the expertise of mutual fund managers is prompting many of the nation’s investors to move their money from stocks to funds, the International Herald Tribune reports. In fact, assets in Chinese mutual funds jumped 83% to $110 billion in 2006, helping to boost performance.

Evergreen Investments has a number of aggressive plans for growth, Chief Executive officer and President Dennis Ferro tells Reuters in an interview.

As part of Power Financial’s deal with Marsh & McLennan to acquire Putnam Investments, Power agreed to give a large portion of Putnam’s stocks to top executives and investment managers to give them an incentive to stay with the company, The Wall Street Journal reports. The hope is that will help stem the outflows that have dogged the company for the past five years.

The state of Massachusetts has sued Phillip Goldstein of Bulldog Investors, along with related funds and affiliates, for soliciting unqualified investors through the hedge fund’s website, HedgeWorldNews reports.