Fund performance

Nearly every asset class saw robust performance in the second quarter, but the initial elation at the lack of terrible news has worn off as investors brace for a tough second half, according to Lipper's review of the second quarter.

While mergers and acquisitions among asset management companies were down significantly during the first half of 2009, many M&A experts predict this decline will flatten out or reverse by the end of the year, driven by renewed faith in the profitability of asset firms and banks' continued need to raise capital.

Hedge funds experienced their best six months during the first half of this year since 1999, according to Hennessee Group, a hedge fund advisory firm. The Hennessee Hedge Fund Index rose 11.74% through June 2009, second only to gains of 14.81% a decade ago.

Citing a steep decline in the pace of redemptions, Man Group said that a year-long exodus of client money is slowing. Assets fell only 7.5% in the second quarter, from $46.8 billion to $43.3 billion, whereas at the end of the second quarter of 2008, assets were 45% high, at $79.5 billion.

In a survey of 3,129 financial intermediaries on their opinions of leading mutual fund companies, the top three rated brands are American Funds, Barclays iShares and Ivy Funds, kasina and Horsesmouth found.

In response to investors’ interest in taking a comprehensive approach to their finances, financial advisers are moving even more broadly away from commissions to fees, and this is boosting their earnings by roughly 10%, the College for Financial Planning Annual Survey found in a survey of 390 advisers. Cerulli Associates assisted in the polling.

In a roundtable with The Wall Street Journal four of the most preeminent asset managers discussed their outlook for the economy, and while they expect rough times to continue for some time to come, they do see pockets of opportunity.

Propelled by yields that have been at 18-year highs for the past nine months, high-yield bond funds rose 23% in the first half of the year.

Just as the financial crisis is unprecedented, the recovery is also expected to chart new grounds, the St. Louis Post-Dispatch reports.

The economy will emerge from the recession in the second half of the year, but growth will be a tepid 2% in 2010, a survey of 23 leading economists by BNA found. By comparison, the U.S. economy grew an average of 3.1% a year between 1995 and 2004.

The majority of financial services firms don’t expect an economic recovery to take place until 2010 or later, with 34% saying they expect a rebound sometime in the first six months of next year and 32% pointing to a future date, a survey of 125 companies by Ernst & Young found.

Returns on target-date funds continue to disappoint, with the five largest 2010 funds trailing the S&P 500 by 11 percentage points since the market’s March 9 low. They are up an average of 25% since that date, well below the benchmark index’s 36% rise, The Wall Street Journal reports.

As the economic slump curbs retirement savings and the government considers imposing curbs on target-date funds, Great-West Retirement Services is trying out what its president is calling "the next generation" of target-date funds.

It won't be easy in the aftermath of a global recession, but with the right mixture of transparency and expertise, wealth managers will be able to regain their status as trusted advisers.

In the wake of Bernie Madoff's monumental, $60 billion Ponzi scheme, regulators are proposing to increase accounting safeguards by requiring mandatory surprise audit inspections of every investment adviser with custody of client assets.

Bill Miller, manager of the Legg Mason Opportunity Trust Fund, is showing that he’s still got game. With the fund returning a stunning 48% in the second quarter, it is the No. 1 performing U.S. stock fund for the period.

Get ready for subdued economic growth in the years ahead, as fear and frugality will dominate the mindset of U.S. consumers for at least a generation, Pimco’s co-CIO Bill Gross says in his July investment outlook, posted on the firm’s website. He projects annual GDP growth rates in the U.S. of 2% a year, down from the historical 3.5%.“Greed will come again. But for now, the trend is the other say, and it promises to persist for a generation at a minimum,” Gross said.While American consumers have been known to have short memories, the fact is, $15 trillion of wealth has been eliminated since early 2007 and the unemployment rate is near 10%, Gross pointed out.He writes: “Our economy’s lights, if not switched off in a rehash of the 1930s Depression, have certainly been dimmed in a 21st century version likely to be labeled the Great Recession. U.S. and many global consumers gorged themselves on Big Macs of all varieties: burgers to be sure, but also McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit. What a colossal McStake.”

Standard & Poor's, economy

Adviser confidence in the economy and the stock market grew in June, according to Rydex SGI AdvisorBenchmarking.

Hedge funds appear to be on track to deliver returns of 6% or better in the second quarter, their best quarterly performance since 2000, Merrill Lynch analysts project.