Fund performance

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.

The U.S. economy will begin to recover by the end of the year but unemployment is another matter, fund managers speaking at the Morningstar conference said.

With investment banking earnings set to improve this year, many executives will, despite government intervention, get bigger bonuses this year, according to compensation consultant Johnson Associates.

Persistent withdrawals brought Man Group’s revenues for fiscal year ended March 31 down by 22.8% to $2.49 billion and net profits down 85% to $503 million from $3.47 billion a year earlier.

In November, analyst consensus was that the S&P 500 would decline 17% for 2008 but rebound by 30% this year, The Wall Street Journal reports.

Hedge funds with $100 million or less in assets underperformed hedge fund giants for the first time since 1996, PerTrac Financial Solutions found.

Citing in-house investment expertise, New York’s pension plan appears to be trailblazing the way for other pensions to feel confident investing directly in hedge funds, not through funds-of-funds, Dow Jones reports. A year ago, New York’s state pension fund had $5 billion invested in hedge funds-of-funds. Today, at $500 million, that’s a mere shadow of its former self.

The seven largest fund houses in Boston saw assets under management surge 8% in April, boosted by a revival in the stock and bond markets and renewed faith by investors, who poured $42.1 billion into the funds during the month, the Boston Business Journal reports. The previous month, investors withdrew $6.3 billion.

Quantitative modeling took a tremendous hit during the credit crisis, and investors who favored such systematic investment strategies are, once again, favoring active stock pickers, The Wall Street Journal reports.

At the Morningstar Investment Conference in Chicago this week, speakers are expected to concentrate on the economy and how asset management firms should respond to the state of the financial markets.

Mutual fund and other institutional investors are moving heavily into financial stocks, believing they probably hit their lowest point in the first quarter and are poised for sharp gains, according to strategists at Oppenheimer & Co.

Risk management has taken on a whole new meaning after the crazy behavior of markets during the past 18 months.

Cash is flooding into municipal bond mutual funds at a record pace as investors become more comfortable taking on risk and spiriting money out of safe havens. A heartier risk appetite in financial markets has lifted a broad spectrum of asset classes.

The Securities and Exchange Commission is considering making significant changes to money market mutual funds because there is still a danger that these funds could be unable to meet redemptions when investors begin to step off the sidelines en masse and move back into equity markets.

Seven out of 10 money managers surveyed believe the world economy will improve within the next 12 months, and already, they are putting their money back to work in the stock market, as they are bullish on corporate profits, according to the Merrill Lynch survey of fund managers for May.

Even though Fidelity’s mutual funds are performing strongly, with 62% in the top half of their category, the firm is looking for a new chief investment officer, Reuters reports. By comparison, in 2008, only 36% of the firm’s funds were in the top half.

Few investors changed their saving or investing habits in 2008, Hewitt Associates reports, citing data from 2.7 million participants. However, equity fund allocations reached record lows.

The investment community is hopeful that with a little tweaking, target-date funds could be the ideal solution for getting apathetic investors into an age-appropriate asset allocation.

Those hoping for a return to the good old days of self-regulated, self-correcting markets need to face reality: Those days are over.

A line has been drawn in the sand, and anyone with an interest in banking stocks will have to pick a side.