Fund performance

Federated’s assets rose 31% in the final five months of 2008, from $271.1 billion on June 30 to $355.7 billion at year’s end. During the whole year, the firm’s money market funds took in $110 billion.

Stable-value funds, available in such tax-deferred accounts as 401(k)s, have been attracting a lot of attention lately, having returned 4.7% in 2008, compared to the Dow’s 33.8% decline, The Wall Street Journal reports.

Hit with $3.2 billion in redemptions in the first quarter, an 11% reduction in assets under management, Man Group said it plans to reduce its headcount by 15%, or approximately 270 positions, to save $60 million a year.

Sixty-seven percent of asset managers surveyed by Russell Investments said corporate bonds look attractive, 61% are bullish on junk bonds, and 57% are optimistic about equities. This is the first time in five years that money managers have had a more favorable outlook on fixed income than on stocks.

While the economy has hit most asset managers and investors hard, the top 25 hedge funds earned a breathtaking $11.6 billion in pay last year, according to Alpha Magazine.

Fund giants headquartered in Boston, still one of the biggest capitals for mutual fund companies in the nation, have taken a particularly hard hit, Boston Business Journal reports, losing an estimated $500 billion over the past year.

New York Life has added insurance to its charitable gift annuity program to make it more attractive to investors and charities like. Because the stock market’s performance has been so weak, not to mention increasing longevity, the obligation of charitable gift annuities to continue to pay donors an income for life has put undue financial risks on the charities that offer them.

Because the credit markets and asset values are at the very heart of the economic crisis, these areas will have to strengthen before the economy improves, according to Fidelity Investments, Bloomberg reports. As such, financial services will have to be the first area to improve, and it will lead the way out of the recession.

Industry watchers are stunned that Vanguard, a champion of low fees, has caved in to the realities of lower assets by raising fees on 31 of its 110 funds, albeit a scant average of 0.05%. But the truth is, poor market performance has ravaged assets at many fund shops, and grappling with lower assets, they are looking for ways to control costs, MarketWatch reports.

With mutual fund investors burned by negative returns of 30% to 50% over the past year, they are unlikely to remain confident about their investments, Celent predicts. As a result, the universe of 7,000 funds could shrink by as much as 70% over the next five years, leaving only 2,000 funds in existence.

It's counterintuitive-wealth managers are ratcheting up the price and providing lower returns on variable annuities. Some providers have doubled prices in the past six months, and more changes are expected.

Mutual funds have been able to thrive for the past 85 years thanks to their ability to adapt to changing markets and help investors stay diversified during good times and bad.

Investors seeking safety and stability have recently been moving massive amounts of their assets into money market mutual funds, causing the funds to swell to nearly $4 trillion and making them the single largest mutual fund asset class, according to the Investment Company Institute.

Financial advisers proved their worth in the second half of 2008, with their clients' average returns 16 percentage points higher than the S&P 500, Fidelity found in a survey of 300 investors and 200 advisers.

Power Financial experienced its first quarterly loss in 15 years, losing $773 million, or $1.12 a share, compared with profits of $532 million, or 73 cents a share, in the fourth quarter of 2007.

Hedge funds will continue to suffer poor results and redemptions for the next four years, Sanford C. Bernstein Analyst Brad Hintz told Reuters. And over the next year, one in four hedge funds will shut down, Hintz added.

Socially responsible investing has been offering one of the few positives for investors during the recession, the Orlando Sun-Sentinel reports.

Thinking about retirement is anything but positive and encouraging, even for those in their 20s with a 40-year time horizon for saving. Most planners recommend an absolutely ungodly sum of cash as the entry point to safe and sound years. The government continues to predict the demise of Social Security. Insurers warn about soaring healthcare and long-term care costs. And now, with the market having wiped out $11.1 trillion in market wealth since it peaked in October 2007, retiring is absolutely unrealistic for many.

Congress is considering whether to make major revisions to the fair-value accounting rules that have created so much controversy lately. Possible changes include suspending the rules, improving value-at-risk measurements and reinstating the uptick rule.

Invesco's Atlantic Trust Private Wealth Management plans to take advantage of the "chaos" in the financial services industry to add assets and customers, according to its new chief executive officer.