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Morgan Stanley announced Tuesday that it has reached an agreement to acquire FrontPoint Partners, a $5.5 billion hedge fund that specializes in absolute returns. Morgan expects to close on the deal in December. The company didn’t disclose what it is paying for the firm but said that it plans to continue to expand its alternative investments capabilities.

Goldman Sachs analyst Marc Irizarry recently issued a report calling Janus shares expensive, and as a result, has downgraded the stock from “neutral” to “sell,” the Associated Press reports.

Mutual fund companies have largely developed robust online transaction capabilities, according to a new, 116-page report from Corporate Insight. Called “Transaction Interfaces: Money Management at Your Fingertips,” the report is based on Corporate Insight’s analysis of 18 websites. The company also rated each website for transaction accessibility, options, help resources and policy explanations.

During the 2004 presidential election, 46% of voters identified themselves as investors, and of this group, 61% voted in favor of George Bush, a Zogby International poll found, U.S. News & World Report notes.

Royal Bank of Canada has formed an agreement with China Minsheng Banking Corp. to form a joint venture mutual fund company.

Speaking at the Securities Industry Association’s conference in New York Monday, Rep. Richard Baker (R-La.) said the minimum investment for hedge funds-of-funds should be raised to protect unsophisticated investors, Dow Jones reports.

One of the 27 fund companies the Securities and Exchange Commission is investigating as to whether they accepted kickbacks from BISYS and other fund administrators is JPMorgan Chase. The company issued a statement saying its One Group Funds unit has been contacted by the SEC. AmSouth Bancorp is the only other company to have acknowledged that it is part of the inquiry, having disclosed this last summer.

The 401(k) market might not see immediate asset inflows from the pension-reform law as the industry might have initially thought. The dismal forecast comes from Lord Abbett Funds Chief Economist Milton Ezrati, The Wall Street Journal reports. The Pension Protection Act of 2006 passed in August was designed to encourage wider participation in defined contribution plans such as 401(k)s. The law also makes it less risky for employers to choose a default 401(k) investment option for their plan and allows employers to increase a participant’s contribution level by one percentage point each year after automatic enrollment up to a maximum of 10%. The industry says, “‘Oh, this is wonderful. They’re going to force these people into the plans and this money is going to flow onto Wall Street,’” said Ezrati. “Let’s not get too optimist about this, guys. It’s going to take some time to develops and it’s not going to be the tidal wave of money you seem to expect.” While some studies have suggested there would be a “tremendous percentage increase in the number of people involved, the dollar flow would be considerably less” than might be expected,” he said. “Our experience with 401(k) plans is that those who don’t participate are either short-time or very new employees, and they tend to be at the low end of the pay scale,” Ezarti said. “There are also people who just allow the minimum, they don’t any extra into the plan.” Ezrati is not suggesting that the new provisions will not eventually benefit the industry, just that it might take a long time for them to have a significant effect on savings and asset flows.

A new slew of exchange-traded funds meant to appeal to the Baby Boomer demographic by investing in the diseases and health concerns of older Americas is on the way, BusinessWeek reports. Investors can plunk their money into specific disease-category funds, which run the gamut from cancer, to eye maladies and over-active bladders. They will begin trading on the New York Stock Exchange in a few weeks, after the Securities & Exchange Commission gives the OK. The funds are called HealthShares and were developed by Ferghana Wellspring in New York. Some investment theorists state that investing in diabetes, via the metabolic-endocrine disorders ETF, or finding new remedies for baldness, will help investors generate low-risk returns by owning a piece of every asset class available. Ferghana Managing Director William Kridel states that HealthShares can get investors in early on up-and-coming biotechs, unlike broader funds that may be over-weighted with slow-growth companies. Large pharmaceutical and biotech companies will be knocked out as the upper limit on market capitalization of HealthShares companies will range from $10 billion to $20 billion, depending on the fund. The negative aspect is that these ETFs may be too risky to experiment with without a professional advisor on hand. Investors eager to advance cures and do well in the market might be better off donating some of their money research foundations and investing the rest in something safer than biotech, ETF analysts noted.

What do pesticides and hedge funds have in common? Trade secrets and intellectual property protection, according to Philip Goldstein, managing member of Full Value Advisors, a hedge fund headquartered in Pleasantville, N.Y. Goldstein, the one-man hedge fund activism band who won a court ruling that ended with nullification of the Securities and Exchange Commission’s hedge fund registration act, has taken up another cause, which he says he expects to also end in court, according to Lipper’s Hedge World. At issue is section 13f-1 of the Securities Exchange Act of 1934. Goldstein last week field a 19-page document with the SEC arguing for exemption of his fund form the rule, which requires hedge fund managers to report portfolio holdings. The SEC argued that the disclosure is critical to investor protection. Goldstein disagrees. “As administered, there is no rational relationship between the disclosure scheme of [section] 13f-1 and any legitimate government interest,” he said. The hedge fund manager said he plans to wait a few weeks before following-up with regulators, but ultimately expects that his objections will work their way into the court system in the form of a lawsuit. Goldstein’s concern is that if hedge funds report their largest portfolio holdings, others will mimic those plans and start competing funds of their own. He cited companies including GuruFocus and Big Money Watch whose business models, essentially, are to follow 13f-1 filings to tell investors what hedge funds are doing. Jumping ahead to the court case, Goldstein points to precedent. In the 1984 case of Ruckelshaus v. Monsanto Co., the Supreme Court ruled in favor of pesticide company Monsanto, which argued that adhering to Environmental Protection Agency demands to publish the list of toxins used in its products would be akin to publishing its recipe for bug killer. Rather than comply, the company invoked Fifth Amendment rights, which the court upheld. In 2000, Phillip Morris argued that a Massachusetts statue requiring tobacco companies to publish the ingredients of all of their products would only serve to give competitors an advantage. In Phillip Morris v. Reilly, the court agreed. But others are not as certain Goldstein would have a rock-solid case this time around. “Unlike patents or trademarks or copyrights, trade secrets aren’t filed or registered with the federal government, or the state government,” said Robert J. Tosti, a partner and a member of the intellectual property practice at Edwards Angell Palmer & Dodge in Boston. “The issue is that it has value because of its secrecy and the company is taking reasonable measures to protect that secrecy. I don’t know if this meets those standards,” he said. “The information they’re being asked to disclose is old information. It’s what you’ve bought and sold over a certain period, not your investment strategy or philosophy.” David Marder, a partner at Robins, Kaplan, Miller and Ciresi in Boston agreed, adding that the disclosures to which Goldstein objects could be useful to regulators for the purposes of protecting investors. “I think the government has a compelling interest,” he said. “In order to regulate you need information—the most compelling information in this case is what are the holdings, and how much is there? Armed with that information, [the SEC] can do a lot of things, and all of these things are done with the interest of protecting the markets,” Marder said. “The SEC is more than within its right,” he said. “I think Mr. Goldstein has been emboldened by his victory in June, and now he thinks he can beat the SEC anytime he wants.”

Sun Life Financial plans to breathe new life into it Boston-based subsidiary, MFS,focusing on expanding the company’s institutional and international reach, according to executives. The plans, outlined during a conference call reporting the Toronto-based parent company’s third quarter earnings, came days after Sun Life announced MFS is no longer for sale. “We will focus on improving fund performance and profit,” said Don Stewart, chief executive at Sun Life. “MFS is a premium brand. We are confidant that the course we are pursuing is the right one.” Stewart added that the immediate future is not especially rosy, given damage done by media speculation about the MFS sale, but he is confidant the company will recover. “We remain committed to the asset management business in the U.S.,” he said. Despite the commitment stateside, much of the division’s expected growth will come from overseas, said MFS Chief Executive Officer Robert Manning. “We have the categories, products and streams that the global market wants,” he said. Furthermore, MFS has established offices and clients overseas. Already, MFS manages $35.5 billion for clients outside of the United States, but the firm believes that share can and will grow. “Our global platform has been a key competitive advantage that will allow us to have sustainability,” Manning said. The MFS offices in Japan began turning profits this year for the first time, after years of bleeding profits. Likewise, the company opened an office with three employees in Australia, and expects continued growth in India, China and Indonesia. MFS is also focused on deepening its institutional business. “We’ve been able to shift the business to a better balance,” Manning said. Five years ago MFS was mainly a retail shop, he noted. Today, most of the company’s assets are in institutional accounts, such as variable annuities. Manning noted that institutional money, while less profitable per transaction, and is advantageous because it is “stickier.” The division’s profits rose 37% in the third quarter, testifying to the success of the newly directed focus, he said. “We are trying to be more provocative in how we approach the market,” Manning added. For the first time, the company will begin distributing other companies’ products through its channels, and rebranding those that fit niche needs that MFS presently lacks funds to fill. The company said it plans to reduce costs by 200 basis points in 2007, compared to 300 basis points per share in the third quarter.

At the request of the chairman of the Senate Finance Committee, the General Accountability Office will review two divisions of the Securities and Exchange Commission—the enforcement unit and the office of compliance, inspections and examinations, The New York Times reports.

Mutual fund assets surpassed the $10 trillion mark for the first time, reaching $10.32 billion, data from Bobroff Consulting and Lipper shows.

Once upon a time, mutual fund complexes were the cash cows of their annuity company parents. Not anymore.

While the cost of a college education increases every year, far too few parents are saving for their children's future. As a result, more mutual fund companies, recognizing the need for parents to prepare, are training advisers to discuss college savings plans with parents and grandparents.

NEW YORK-Fidelity Investments is playing with-and off-investors' emotions. And when it comes to retirement planning, more often than not, those emotions are negative.

While automatically enrolling workers in a 401(k) plan typically results in 90% participation, up from 68%, workers tend to keep contribution rates at the default level-and as a result will be ill-prepared for retirement. This is according to an analysis of 2.6 million 401(k) participants by Hewitt Associates.

Transamerica Retirement Services has added 50 investment options to its retirement platform, the largest number it has ever added at one time. In so doing, the platform now has a total of 144 options from 30 investment companies, Transamerica said, creating "one of the most robust retirement plan solutions for small- to mid-size businesses."

Envision Promotes Kan to President, Jones to EVP

A little discussed provision of the Pension Protection Act of 2006, which President Bush signed into law this past August, has investment management firms scrambling to understand its full ramifications.