Fund performance

The Morningstar 1000 Hedge Fund Index declined 7.87% in September, its largest one-month decline since its inception in January 2003. In the third quarter, the index declined 13.17%.

More than ever, hedge funds are loading up on unusually high amounts of cash, a clear sign that the smart money is bearish on the market through the rest of the year, The Wall Street Journal reports.

The mutual fund industry has a long tradition of innovation and creative problem solving in times of challenge. These past months have been sobering, and the uncertainty around the financial services sector is not yet waning.

In a new ad campaign, New York Life aims to distinguish itself from AIG and the growing host of other beleaguered financial services companies by emphasizing its long history, big surplus, AAA rating and customer-focused, mutual ownership structure.

NEW YORK - In the wake of the ongoing credit crisis and illiquid money market, much of it due to the failure of a single money market mutual fund, the Securities and Exchange Commission plans to overhaul Rule 2-a7. Separately, the Department of the Treasury is looking into creating a market stability regulator with omniscient powers across the "entire financial system."

NEW YORK - As credit freezes up and liquidity all but vanishes, there is an enormous temptation for financial institutions and investors to hold on to their cash and brace for the worst.

With just $6 billion in assets left, of what once totaled $83 billion, Reserve Management is liquidating its 18 remaining funds.

The U.S. Justice Department has subpoenaed several large firms and agencies as part of an investigation to determine whether Lehman Brothers Holdings Inc. misled investors before its Sept. 15 bankruptcy filing, according to the Stamford Advocate.

Investors are continuing to add money to money market funds, adding $49.39 billion during the week ending Oct. 7, according to the Money Fund Report, published by iMoneyNet Inc. Total assets are now at $3.388 trillion.

Putnam Investments has named Jeffrey R. Carney as the new senior managing director and head of global marketing and products, effective Oct. 27.

Despite a stable economic outlook for the foreseeable future, many Canadians are concerned that their government isn’t doing enough to prepare itself for the kind of downturn the rest of the world is experiencing, writes the National Post.

Moody’s has downgraded Legg Mason’s senior debt from A2 to A3, on concerns over poor mutual fund performance and the $2 billion that Legg Mason has pledged to backstop money market funds, the Baltimore Business Journal reports.

John Bogle, the indefatigable founder of Vanguard and shareholder activist, likened the current financial crisis to a “speculative orgy like nothing we have ever seen before in the history of the United States,” speaking over the weekend on National Public Radio.

The credit crisis fueled a substantial 33% increase in asset management mergers and acquisitions in the third quarter, compared to 3Q07, Jefferies Putnam Lovell announced Tuesday. There were 69 M&A deals across the globe, up from 52 a year earlier.

The Federal Reserve announced Tuesday it will buy up to $1.3 trillion of the top-rated asset-backed and unsecured commercial paper in the markets—virtually a business loan bailout due to frozen money markets, the closest the government has come to making loans to businesses directly.

NEW YORK—In the wake of the ongoing credit crisis and illiquid money market, much of it due to the failure of a single money market mutual fund, the Securities and Exchange Commission plans to overhaul Rule 2a-7. Separately, the Department of the Treasury is looking into creating a market stability regulator with omniscient powers across the "entire financial system."

CHICAGO - When it comes to choosing derivative instruments, some portfolio managers still think the more complicated they are, the better.

Investors in the now-defunct Primary Fund got their first indication of when they can expect redemptions last Monday, when Reserve Management announced it would return 32% of the fund's assets as of Sept. 15, or $20 billion, on Oct. 13.

LAS VEGAS - Unified managed accounts (UMAs) are quickly becoming a popular and viable option for Baby Boomers looking for more diversification in retirement, but the plans still have a lot of work to do in order to overcome certain hang-ups.

Citing restrictions on short selling, credit and liquidity as drains on hedge funds in September, as many decided, instead, to sit on “significant cash balances,” Hennessee Group’s performance report for the month the average fund’s performance was the worst in a decade, with funds losing between 5% and 9%.