Special Program Root Tag

Envision Financial has promoted Tim Kan from chief technology officer to president, a position in which he will focus on legal, financial and administrative issues. Satnam Gambhir, formerly president and chief executive officer, will retain the title of CEO. Kan and Gambhir founded the company in 1994.

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-sized businesses.”

Sun Life Financial has decided not to sell its MFS Investments subsidiary, the company announced Monday. Improved profits and assets changed the company’s decision; revenue rose 8.7% in the first half of the year, leading to a profit of $92 million, up 29% from $71 million in the first half of 2005.

The U.S. Treasury Department is looking like a hotbed of prospective hedge fund managers, according to reports from Dow Jones. Former Treasury Secretary John Snow and former Secretary Lawrence Summers accepted positions with Cerberus Capital Management and D.E. Shaw & Company, respectively, last week. “It is an honor to have a person of Secretary Snow’s stature,” said Cerberus Chief Cxecutive Stephen Feinberg. Snow brings an veritable Rolodex of political and businesses contacts to the company, which specialized in corporate buyouts and restructuring. Snow served as Treasury Secretary under President George W. Bush from February of 2003 until June of this year. Prior to that, he was chief executive at Jacksonville, Fla.-based rail and cargo-giant CSX Corp. and sat on the boards of directors for Johnson&Johnson and Verizon. “We will benefit enormously from his vast experience in the business operations as well as his keen insights on economic trends and forces,” said Feinberg. Summers served as Secretary under President Bill Clinton between January of 1999 and Clinton’s Jan 2001 exit from office. After working in Washington, Summers headed to Cambridge, Mass., to become president of Harvard University, where he served a controversial term. Summers will be a managing director at New York-based D.E. Shaw, working part-time to advise the $25 billion firm on strategy, portfolio management and operations, according to the company.

Nationwide Financial Services has made it easier for investors to assess whether they are prepared for retirement with its RetireAbility Check. The free tool, available on Nationwide’s website, allows users to generate a single number, their R-score, to measure their retirement readiness. RetireAbility Check is simple and anonymous and can be completed in less than eight minutes. Users are guided through the process and answer questions, while also receiving factoids and tips on how to improve their score. The score represents how prepared users are to meet their retirement needs. A score of 56 would mean an investor is on track to have 56% of what they need to maintain their current standard of living if they retire at age 65. Nationwide research shows nearly half of Americans go online to search for financial planning resources and information, yet 44 % believe financial service providers are missing the mark on ease and use of content.

To make the $9.5 billion merger with Merrill Lynch work, BlackRock is looking overseas not only for customers but for money managers, too, according to The Wall Street Journal. “Global capital markets are growing faster than in the U.S.,” said BlackRock founder and Chief Executive Laurence Fink, citing an increase in overseas initial public offerings and buyouts. “It can’t be an American-dominated culture, or you will fail,” he said. Announced seven months back, the BlackRock-Merrill deal guaranteed BlackRock, famous for its management of bonds and institutional investments, control over Merrill Lynch Investment Management, shooting the company with $464 billion under management to among the top dozen biggest managers in the world. For Merrill, the deal meant 49.8% ownership in a company that would bring with it experienced money managers and well-established distribution channels for its products, which its own brokers were reluctant to sell, fearing conflict-of-interest concerns. Fink said that U.S. firms typically treat non-U.S. branches as satellite offices, rather than giving the executives in these offices adequate authority. Merrill Lynch Investment Managers has avoided this pitfall to become the fastest-growing mutual fund provider in Europe, also establishing footholds in Australia and Asia. Still, BlackRock and Merrill face the same challenges of any merging investment companies, including retaining staff, blending corporate cultures and communicating effectively with customers. “People can walk, assets can walk,” said Robert Kapito, head of portfolio management and BlackRock co-founder. Merrill saw that happen after its $5.3 billion acquisition of Mercury Asset Management in 1998, after which several key Mercury executives marched. Merrill is determined not to revisit the experience. A small portion of Merrill groups have experienced layoffs, specifically in the taxable bond and institutional investment sales areas. BlackRock, meanwhile, has aimed to make Merrill employees feel wanted and welcome. Weeks after the merger announcement last February, Kapito was on vacation with his family, when an executive at Merrill called to say two Merrill managers in Australia had resigned. Rather than call the remaining staff to assure them no major cutbacks were in the cards, Kapito left his family and flew to Melbourne to meet with staff in person. BlackRock leaders have “put in some serious time making people comfortable,” said Robert Fairbairn, head of the Merrill European and Asian businesses, and newly appointed BlackRock vice chairman.

The $4.2 billion Janus Worldwide Fund has been in a prolonged slump for the past six years, notes MarketWatch columnist Chuck Jaffe. The fund lost 17% in 2000, 23% in 2001 and 26% in 2002. Although it rebounded with returns of 24% the following year, that performance was in the bottom 7% of its peer group. The fund hasn’t done any better the past two years, as it remained mired in the bottom 10% of its peer group. It’s no wonder, then, that Janus has changed the fund’s portfolio manager three times in the past three years. Janus Worldwide’s original manager, Helen Young Hayes, retired in 2003 and was replaced by her assistant, Lawrence Chang, who in turn was replaced the following year by Jason Yee. Yee, known to be a contrarian who likes value stocks, had acknowledged that his early bet to sell energy and emerging markets stocks was a wrong call. But he says he believes he can do better, and, in fact, has half of his own net worth invested in Janus Worldwide. “My strengths come from trying to consistently deliver good absolute returns over time,” Yee said, “and I know that when emerging markets are picking up 30% annualized, we’ll be picking up half of that and some people will say we look bad. I’m not going to change my style because, as markets change, we should do better relative to other funds. I’m trying to run the fund in a way that will make investors happy with the absolute returns they get in all conditions.”

Sumitomo Mitsui Financial has applied to Japanese regulators to offer hedge funds-of-funds and is also planning to offer investments that will focus on commodities, Bloomberg reports. The bank, Japan’s third largest, will manage the products through its brokerage subsidiary, SMBC Friend Securities, which it recently acquired for $1.6 billion, and sell the products through its 411 branches. “We have the advantage of a large distribution channel, enabling thorough marketing,” commented Terumasa Takahashi, head of consumer business development at Sumitomo Mitsui. Executives at Sumitomo Mitsui said that Japan’s economy appears poised for its longest period of expansion since World War II and that they want to tap into the $1.1 trillion of assets the nation’s Baby Boomers hold. “It’s important for banks to work with their brokerages to get a good grip on wealth,” said Kyoko Narita, an analyst with BNP Paribas in Tokyo. But doing so won’t be easy, Narita added, since “banks and brokerages in Japan remain two different cultures after a long period of separation.” Japan deregulated the financial services industry in 2004, permitting brokerages to offer managed funds.

Despite the $3 billion in hedge funds-of-funds, the investments have not faired well for investors. Investors would have made more money with a Standard & Poor’s 500 stock index fund, according to BusinessWeek. This is partly because investors are saddled with fees of 5% or more each year and the funds also generate high tax bills. A few years ago, investment firms began offering hedge funds-of-funds for those not as wealthy as traditional hedge fund investors and registered them with the Securities and Exchange Commission, a move that allowed the funds to admit an unlimited number of investors and keep investments minimums in the $25,000 to $100,000 range. The money is typically spread out across a dozen or more hedge funds for diversification and to minimize the consequences of a fund blow-up. Another reason performance of hedge funds-of-funds hasn’t turned out to be what it was cracked up to be is that most funds aim for modest gains, regardless of whether stocks rise or fall. The concept is that when stocks head south, such an “all weather” investment preserves capital, leaving a larger portfolio to work with when good times resume. A BusinessWeek analysis of performance data culled from SEC filings reveals that the average SEC-registered hedge fund-of-funds with a minimum of $25,000 to $100,00 and a fiscal year that ends on March 31 returned only 6% a year over the fours years through March 31. On the other hand, the S&P rose an average of 7.2% a year during that period. One thing that could help the funds would be a prolonged and nasty bear market, which would turn the tables on the less than stellar funds by helping them overcome performance deficits.

The NASD has fined Citizens Bank's broker/dealer subsidiary, CCO Investment Services, $850,000 for not properly supervising sales of 529 college savings plans and annuities to ensure that the products were suitable for investors. The bank also didn't adequately supervise telemarketing calls to make sure that employees didn't call consumers who had registered their names on federal do-not-call lists, the NASD said. The questionable sales and calls took place between October 2003 and March 2005, according to the NASD.

The early drumbeat on bonuses at fund companies is that they are expected to be higher than last year due to positive returns and high incentive fees. As recruiters see it, numbers compared to last year are spectacular.

NEW YORK-The separately managed account business will flourish, as many firms that have not previously offered SMAs will decide to do so over the next few years. But while this is likely to boost assets and the number of investors in SMAs, competition will become fierce. That was the message of speakers at The Money Management Institute's Managed Accounts Solutions conference here last week.

ING settled with New York and New Hampshire regulators for paying up to $3 million a year to the teachers unions in those states to steer business its way.

Ford Motor reportedly sent notices to employees last month telling them it will drop Fidelity's Magellan fund and three other funds from two other companies from its 401(k) lineup.

Amvescap's Flanagan Re-Elected as ICI Chair

HUNTINGTON BEACH, Calif.-Enough with the marketing bias toward Baby Boomers; it's time for mutual fund companies to move on to the Millennials.

Three new funds with unique investment approaches recently debuted, two of them last week. The Blue Large Cap Fund and the Blue Small Cap Fund, managed by Blue Investment Management of New York, screen for socially responsible characteristics as well as political leaning that aligns with the Democratic Party. (The blue name derives from the Democratic focus, versus the opposing red, representing Republican.)

China’s multi-billion dollar national social security fund signed agreements with Northern Trust and Citigroup to act as trustees for its foreign investments.

The fifty-three million people in the U.S. who rely on Social Security and Supplemental Security Income will see their benefits rise 3.3% next year, due to inflation.

The Blue Fund, a new mutual fund from Blue Investment Management that filed for registration in June, launched this week.