Special Program Root Tag

Mutual funds are up an average 19.6% so far this year – small-cap funds up 30.7%, the Los Angeles Times reports. The market rally that began March 12 was first fueled by a quick outcome in the war in Iraq and, recently, positive economic data.

Probably the biggest benefit of separate accounts is their performance, Barron’s reports. The reason equity separately managed accounts returned 10.96% over the past 10 years, whereas equity mutual funds returned 7.78%, is the personal oversight of a broker or financial adviser and SMAs’ ability to rotate among different investment styles. Also, SMA programs are always weeding out poor performers.

Investors pulled out of bond funds for the first time in more than a year and a half, while equity funds gained ground in July, according to recent data from the Investment Company Institute.

In the first of a long series of arbitrations through the National Association of Securities Dealers, a panel has awarded around $110,000 to an investor who had been sold variable annuities by John Steven Blount, a former broker for New York Life Securities. Blount has 97 customer complaints on record with the NASD, with the bulk of those pending arbitration.

Technology funds are up 36% year-to-date through last Tuesday, making them the best-performing equity category so far this year, according to Lipper. That’s great news, but it has some fund managers worrying that investors might think happy days are here again, Reuters reports. And according to Money magazine, some investors are again flocking to unprofitable technology firms.

In spite of the recent, strong upturn in the market, investors are still gun-shy and looking for guidance, The Wall Street Journal reports. Lifecycle funds that automatically shift the balance between equity, fixed income and money market holdings as people age have recently gained popularity, and, as a result, more fund companies are offering them. Fidelity, Vanguard, Charles Schwab, T. Rowe Price and Wells Fargo are among the firms offering them.

Fund managers around the world maintained their positive outlook for the global economy as they continue to hold strong levels of equity shares compared to bonds, according to a poll conducted by Reuters.

NASD Breakpoint Order Places Onus on Brokers

The seven independent trustees who serve as watchdogs over 129 retail and institutional funds sponsored by Morgan Stanley Investment Management of New York have approved a restructuring of their board compensation plan that will result in a significant double-digit increase in their pay.

As much as separately managed account managers want to comply with the Association of Investment Management Research's performance standards to strengthen their clients' trust, they are hampered by the strong controls that sponsor firms have over their retail SMA accounts.

The Patriot Act's customer identification requirements set to take effect Oct. 1 could become a splitting headache for customer service reps if firms are not proactive in informing customers, according to Charlie O'Neill, Dalbar's manager of anti-money laundering (AML) services.

Frank Campanale, recently ousted from his chief executive officer position with Smith Barney's consulting group, has agreed to stay on in an advisory role with the firm, sources tell MME. Sources did note however, that no contracts had been signed as of late last week, and a Smith Barney spokeswoman was unable to confirm the developments as of press time.

Janus plans to swap 32.3 million of the nearly 40 million shares it owns in DST Systems, its data processing subsidiary, in exchange for ownership of a commercial printing and graphics design unit of DST that Janus will rename JCG Partners.

The market may be recovering and equity fund investing perking up, but stable value is still popular if sales at AEGON Institutional Markets are any indication. The company reported sales of $6.3 billion in the first six months of 2003, a 12.5% increase from the $5.6 billion worth of stable value products it sold in the same period in 2002.

Van Eck Funds is planning on removing class B shares on its Global Hard Asset Fund as of Wednesday this week, a filing published with the Securities and Exchange Commission revealed. Beginning Oct. 31, all shareholders with class B shares will find those shares converted to class C. Shareholders will no longer be subject to the contingent deferred sales charge but to a contingent deferred redemption fee of 1% for one year after purchase of any class C share. B shares have come under increasing scrutiny over the last few months as regulators and investors have charged various brokerage firms' representatives with selling the expense-laden share class in order to pump up brokerage commissions.

The Depository Trust & Clearing Corp. and the Japan Securities Depository Center (JSDC) want to expand their existing partnership to share information on depository services, clearance and settlement, risk management, infrastructure and legal issues, and straight-through processing. The Japan Securities Depository Center is particularly interested in the DTCC's settlement system based on delivery rather than on payment.

Thomson Financial has partnered with CheckFree Services Corp. to add separately managed account data to the Thomson ONE Advisor portfolio management software for financial advisers. CheckFree's SMA database, which covers 5,000 platforms from 1,300 money managers, represents 90% of the largest investment firms in the nation.

David A. Tiberii and Laurence Linklater have joined the fixed-income team at T. Rowe Price Group. As senior portfolio manager of corporate bonds, Tiberii will oversee the T. Rowe Price Corporate Income Fund and advise other bond managers at the firm. He joins the firm from GE Asset Management, where he oversaw an investment-grade corporate bond insurance portfolio. Before that, he was an analyst with Goldman Sachs.

Brett H. Wander has joined State Street Research & Management Co. as head of the market-based strategies group for fixed-income business, a new position at the firm. He will report to Mark Marinella, chief investment officer of fixed income.

Martin Cohen and Robert Steers are now co-chairmen and co-chief executive officers of Cohen & Steers, an investment firm that specializes in real estate investment trusts. Cohen previously served as president, and Steers was chairman of the firm.