Special Program Root Tag

The Independent Directors Council has just released a task force report on how mutual fund boards might best approach self-evaluation, an annual checkup that will become mandatory next year, and while the 28-page document stops short of issuing any rigid mandates, it clearly urges directors to play a more active role in fund management.

MIAMI- Jack Brennan, chairman and chief executive of the Vanguard Group, blasted rival investment products such as hedge funds and separately managed accounts last Monday and defended the mutual fund industry against mounting criticism.

A former managing director at insurance giant Marsh & McLennan pleaded guilty in New York Supreme Court last week to bid-rigging and price-fixing.

Fidelity Investments announced Friday that it has promoted Rob Strickland, executive vice president of adviser and alliance distribution in Canada for the past two years, to become president of Fidelity Investments Canada. He succeeds David Denison, who left Fidelity last month to become president and CEO of the Canada Pension Plan Investment Board.

Led by favorable stock market activity and a reputation still unmarked by the scandal, Fidelity Investments witnessed a 23% surge in net income in 2004.

Janus Capital Group on Friday launched two new diversified equity mutual funds in an effort to leverage the firm's research depth, a reputation that was sullied when the market tanked in the aftermath of the dot-com bubble.

MIAMI - Having put the pain of a pervasive trading scandal behind it, Alliance Capital Management and its mutual fund subsidiary Alliance Bernstein are focused on carving out market share and winning new clients by retooling their distribution strategy.

The common practice of revenue sharing, where mutual fund companies pay brokers to tout their funds to clients, eventually hurts investors, according to Morningstar columnist Eric Jacobson writes. Even though revenue-sharing payments to brokers are made from mutual funds' own coffers and not from the funds' assets, investors are shortchanged because brokers are more likely to promote funds that pay them to do so rather than funds which offer the best deal to investors.

Challenges abound for the successor to Paul Roye, the Securities and Exchange Commission's outgoing director of the investment management division, MarketWatch reports. The division, which oversees the mutual fund industry, has been in the spotlight for some time now, owing to the wave of scandals that have hit the fund industry.

A new survey conducted by the Investment Company Institute, the mutual fund industry's main trade group, shows that 12b-1 fees have grown significantly since 1980, when the Securities and Exchange Commission instituted them. The fees, which funds charge investors to compensate financial advisers who provide investors with financial advice, have overtaken front-end sales loads.

Next week, the Securities and Exchange Commission will vote on a revised rule that allows mutual funds to impose a 2% redemption fee on mutual fund shares that are traded in within five days of purchase, Dow Jones reports. Originally, the SEC sought to impose a mandatory fee, eventually changing its proposal to a voluntary rule.

Even though directed brokerage has now been banned and revenue-sharing agreements are under close regulatory scrutiny, financial advisers will play an increasingly significant role in mutual funds sales in the coming years, according to a report from Financial Research Corp. The company predicts that direct sales to investors will drop from 15% in 2004 to 10% in 2009, while adviser-assisted sales will rise from 57% to 61% during the same period, The Wall Street Journal reports.

Many workers are not using their 401(k) plans to realize their full retirement savings potential, according to a study conducted by consulting firm Hewitt Associates and researchers from Harvard University and the University of Pennsylvania's Wharton School, Dow Jones reports.

Advisors can anticipate the rollout of a full suite of marketing and sales tools designed to help them expand their IRA businesses.

The Securities and Exchange Commission is considering recommending charges against a Bear Stearns & Cos. executive and three former brokers, who were allegedly involved in processing improper mutual fund trades, Dow Jones reports.

A large inflow of money into 529 college-savings plan is a potential sign that Congress will act soon to make permanent the tax advantages that these vehicles enjoy, according to The Wall Street Journal.

MIAMI-- Jack Brennan, chairman and chief executive of the Vanguard Group, blasted rival investment products such as hedge funds and separately managed accounts on Monday and defended the mutual fund industry against mounting criticism.

JPMorgan announced Tuesday it has officially merged the One Group Mutual Funds into the JP Morgan Funds, creating a $200 billion complex of 101 funds that is now the nation's fifth-largest.

China's central bank voted Sunday to allow banks to launch mutual funds of their own or to partner with foreign investment advisors or domestic insurers or pension companies to do so. Although any new fund must initially invest in money market instruments or bonds, it will be allowed to expand into securities and other investments after a trial period as well as consulting with shareholders and the board.

Speculation that Marsh & McLennan might spin off its scandal-plagued Putnam Investments unit continues, with the Boston Business Journal now reporting that a sale, merger or management buyout are all seen as possibilities. The fact that MMC has been caught up in an insurance scandal of its own costing it an $850 million settlement makes a sale even more likely, because Putnam would probably fetch that amount or even far more, according to the paper. In fact, according to one analyst, Justin Fuller of Morningstar, Putnam accounts for nearly half of MMC's $32 stock value, which could put its price tag as high as $8 billion.