Special Program Root Tag

As a result of an internal probe, Fidelity Investments agreed to repay $42 million, plus interest, to funds whose traders and portfolio managers steered trades to Jefferies & Co., which lavished them with gifts. A final settlement, however, with the Securities and Exchange Commission is still pending.

The widely reported, but not yet announced, $3.9 billion sale of Putman Investments to Montreal-based Power Corp. could mean the end of a bumpy road for the Boston-based investment firm and its New York-based parent, Marsh & McLennan.

While the Securities and Exchange Commission's new rule requiring greater transparency in the costs of funds-of-funds is geared at protecting those saving for retirement, it could mean more headaches for managers of smaller, non-proprietary funds.

Of all of the cliches about men and women, one of the most indelible is that men are best left in charge of household finances.

Evergreen Investments agreed to pay a $4.2 million civil penalty to the NASD over directed-brokerage practices by its broker/dealer distributor. At question in such practices is brokerages' acceptance of trades from mutual fund complexes in exchange for promoting their funds, without revealing the practice to investors.

An arbitration panel organized by the NASD found a unit of Ameriprise, Securities America, and one of its stockbrokers guilty of steering three retired airline pilots into high-fee mutual funds.

Concerned that investment banks looking to curry trading and prime brokerage business with hedge funds are renting out office space to them at a discount, regulators are reportedly beginning to take a close look at so-called "hedge fund hotels."

Sentinel Financial Services Names Cronin President

An overwhelming majority of financial advisers are not steadfastly selling 529 college savings products, missing out on a viable opportunity to establish stronger client relationships and sales of other products.

Without question, the separately managed account industry is undergoing an evolution, led in large part by the industry's own initiatives to move toward the standardization of operating technology. But where are we right now, and what challenges lie ahead on that evolutionary track?

In preparation for introducing a new family of real estate funds, Charles Schwab has acquired Global Real Analytics, a real estate analytical firm that also creates real estate indexes. “With approximately $2 trillion invested worldwide, commercial real estate securities represent an important sector for investors,” said Evelyn Dilsaver, president and CEO of Charles Schwab Investment Management. “Global Real Analytics is a well-established firm with a solid track record. The capabilities they bring will provide Schwab with a unique advantage in delivering powerful real estate research, insights and investment choices to our clients.” Schwab has already filed a registration statement for the first real estate fund it is planning, the Schwab Global Real Estate Fund. 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.

Small-company stocks are booming causing a growing debate in the industry that hedge funds and exchange-traded funds are playing an unbalanced role in the market, according to The Wall Street Journal. Mutual funds that invest in small-company stocks saw double-digit returns last year, even though some experts predicted the run would end. However, some investors don’t think that all the gains can be attributed to the underlying companies fairing well. They state that cash pouring in from hedge funds and the increased use of ETFs may be strong factors in the companies’ returns. Safer investments such as government bonds have not been offering high returns lately and investors are switching to riskier alternatives such as small stocks. The effect on stock prices there can be overstated, as every dollar invested in a small company represents a higher percentage of its market size, as compared with a large company. ETFs focused on small stocks have also become popular. Barclays Global Investors’ iShares Russell 2000 Index ETF has attracted more than $12.6 billion in assets since its inception in 2000. Nonetheless, some analysts do not believe that the money from hedge funds and ETFs is enough to affect stock prices. Some of the small-cap ETFs have been around long enough for the market to absorb their flows without creating any disproportionate impact, said Paul Mazzilli, director of ETF research at Morgan Stanley. 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.

Nick Maounis, the founder of the miserably flopped Amaranth Advisors, might be looking to get back into the Wall Street game, according to The Wall Street Journal. Amaranth lost $6.4 billion in a few days, in what is known as the worst disaster in the industry’s history. Maounis is thinking about starting a firm with some former colleagues from Amaranth, people close to the matter say. The new company would manage money for investors directly, or help other funds run their businesses. However, it is unclear how much interest Maounis has in the endeavor. If a new company is launched, rather than distancing himself from the Amaranth name, two new possible names for the firm could be “Continuum” and “Segue,” sources say. Despite the huge blowup, in private, Maounis has expressed pride in the hedge fund’s risk management tactics, stating that the fund’s problems stemmed from an unexpected tumble in natural-gas futures prices. Talk of a new firm possibly launching doesn’t surprise some people. “There was a strong camaraderie at Amaranth,” says Sandy Gross of Pinetum Partners, a recruiter for hedge funds, who once headed human resources at the fund. However, Maounis faces regulatory and legal scrutiny. The Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Energy Regulatory Commission have been conducting interviews with Amaranth personnel and various parties on Wall Street. It is unknown if any regulatory action will be taken. 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.

Hedge funds are increasingly being scrutinized by different watchdogs. However, the differences in the way the groups want to regulate funds may generate more talk than action, according to The Wall Street Journal. Hedge funds are loosely regulated pools of capital. and many regulators and central banks worry that hedge funds may pose a considerable risk to the global financial system and could precipitate or worsen a monetary crisis. However, countries cannot seem to coordinate on the efforts. In Europe, officials are pushing for more disclosure of hedge fund portfolios or a rating system. German officials have been very aggressive, using their chairmanship of the Group of Eight leading nations. The U.S. may propose a Securities and Exchange Commission rule that limits the investors who qualify to invest in hedge funds. Both the British and the U.S. are taking a hands-off approach and are supporting additional study. Hedge funds felt victory from a U.S. appeals-court ruling that stopped an initial attempt by U.S. regulators to force hedge fund advisors to register with the SEC last year. Nonetheless, hedge funds are bracing for increased inquiries, which may include congressional hearings in the U.S. Lisa McGreevy, a former lobbyist with the Financial Services Roundtable, was recently hired at the Managed Funds Association. “We are trying to work with the policymakers to help them understand what the asset managers are doing because the big question here is: ‘Who are they and what are they doing’,” McGreevy said. SEC enforcement officials have said they expect to bring several enforcement actions against hedge funds in the near term. Hedge funds are adamant about not having regulation, arguing that providing details of their business could cause them to lose their competitive edge and hurt returns. 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.

Janus managers are shoring up their funds, and the firm has begun to show signs of recovery from the punishing outflows the tech-focused company faced with the burst of the Internet bubble, and fines related to regulatory actions. The $9.8 billion Denver-based Janus Twenty Fund, which lost 69% of its value between March 2000 and Oct. 9, 2002 compared to 47.37% for the S&P 500, had recovered 17.75% as of Jan. 3, compared to 17.35% for the S&P, according to Investor’s Business Daily. During 2006 alone, the fund, managed by Scott Schoelzel, gained 12.3%, while other large-caps gained only 5.6% on average, according to data from Chicago-based research company Morningstar. Schoelzel has trimmed positions in energy, a sector he says has “played itself out.” He recently sold Occidental Petroleum, British Petroleum and Exxon. Oil companies, he said, will grow not through exploration, but acquisition, he said. The manager has also shed some bigger large caps for ones with smaller market capitalization values, which, he said, offer greater overall growth potential. Agricultural stocks, especially companies that sell hearty seeds in a globally drought-ridden environment, have also served the fund well. Likewise Goldman Sachs, which the fund has owned since its 1999 initial public offering, and Research in Motion, maker of the BlackBerry, have both done well, as Goldman had a record-breaking year, and RIM settles patent challenges in court. Meanwhile, over on the east coast, Janus’ Palm Beach, Fla.-based INTECH unit has introduced international stocks in its risk-managed portfolios, according to MarketWatch. Janus owns an 82.5% stake in the company, which sells mostly to institutional investors, and the subsidiary serves as a bright spot in an otherwise grim few years for the firm. INTECH founder Robert Fernholz described the company’s investment strategy as “enhanced indexing.” INTECH offers a retail fund, but Janus has not yet decided whether to launch a retail version of the new internationally diverse strategy, according to company spokeswoman Shelly Peterson. Some analysts suggest that as institutional investors turn to active managers in the hunt for alpha, INTECH’s inflows will be stifled. Janus Chief Executive Gary Black said that ebbs and flows in the market are inevitable, but his model will persevere. “Performance is very strong on a long-term basis,” 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.

Osbert Hood, chief executive of the U.S. division of Pioneer Investments announced last week that he will leave the Boston-based fund shop for a position in New York, according to MarketWatch. Some speculate that Hood’s departure is related to failure of Pioneer’s parent, UniCredito Italiano SpA, in acquiring Boston-based Putnam Investments. Montreal-based Power Corp. confirmed stories Friday that it is in acquisition talks with Putnam-parent Marsh McLennan Co. of New York. In a terse statement announcing Hood’s resignation, Pioneer said it has begun the search for a successor. In the interim, Deputy Chief Executive Officer Giordano Lombardo will take control. Analysts credited Hood with helping the company’s assets reach $72 billion, mainly through acquisition of companies including Vanderbilt Capital Advisors and the mutual fund division of Safeco. The Boston Globe reported that Hood will head to New York Life Investment Management’s McKay Shields. Geoff Bobroff, a fund consultant in East Greenwich, R.I. noted that McKay is “in an acquisition hunt,” and that Hood’s skills could serve the company well. 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.

Vanguard announced plans to consolidate its retirement business operations under one new unit, according to the Philadelphia Inquirer. The new Institutional Strategic Consulting Group, led by U.S. Department of Labor Assistant Secretary Ann Combs, will now oversee the Valley Forge, Pa.-based giant’s retirement research and plan consulting groups. The new team of 50 will include researchers and planners who will help plan sponsors determine which type of program best suits their employees, according to Bill McNabb, managing director of the Institutional Investor Group. The division will also devise policies for helping clients achieve a secure retirement. Vanguard managed more than $400 billion through its 401(k) and other defined contribution, defined benefit and other institutional plan business. 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.

While there has been much talk about consolidation in the mutual fund industry, that isn’t likely to occur among mid-size firms with $150 billion to $300 billion in assets, according to Robert Manning, chief executive officer of MFS Investment, the Financial Times reports.

Of the 780 new funds brought to the market in the past two years, few are true innovations and many proved to be poor choices, The Wall Street Journal reports.

While Power Corp. has been known to swoop in as a white knight in some corporate auctions, its $3.9 billion acquisition of Putnam Investments has taken many in Canada by surprise, given the weak financial condition of the firm, The Globe and Mail reports.