Investment funds

Strong performance and a conservative approach has enabled American Century Investments to outperform some of its competitors, despite market conditions that cost it 31.4% of its assets under management last year.

Here's a word to the wise for any executives of publicly traded companies who may be about to be visited by Portfolio Manager Roger Vogel: Don't roll out the red carpet and offer him a slick, well-rehearsed tour of a spotless and smoothly humming facility.

NEW YORK - Despite the terrible news about most stocks and mutual funds, investors should heed Sophocles' warning and "don't kill the messenger."

Money market funds took in an additional $11.30 billion in the week ended Jan. 28, the Investment Company Institute reported, for total assets of $3.904 trillion.

The Federal Reserve’s commercial paper holdings fell by more than $100 billion last week, with the balance sheet standing at $1.93 trillion, in a sign that the capital markets are returning to normal and that companies may be returning to the private sector for short-term financing.

State Street Corp. said assets under administration serviced by its private-equity fund team increased 60% last year.

David Corkins certainly has a knack for timing. He left the helm of Janus Capital’s flagship Janus Fund at the end of 2007 and has waited out the financial crisis the past year.

Fixed income mutual fund managers and other investors are beginning to move out of Treasuries into higher-risk debt instruments, including junk bonds, and that is good news, BusinessWeek reports. While it may not immediately spur the economy, it is at least helping to change the highly risk-averse mindset of retail and institutional investors alike.

In response to a report in The Boston Globe that Fidelity Investments is exploring a sale, chairman Edward C. “Ned” Johnson issued a rare response denouncing the rumor.

The Senate Thursday introduced the Hedge Fund Transparency Act of 2009, which, most notably, would require hedge funds to register with the Securities and Exchange Commission. It would also require them to adopt anti-money laundering programs.“There wasn’t much of an appetite for this sort of legislation before the financial crisis,” said one of the bill’s sponsors, Sen. Charles Grassley (R-Iowa). “A major cause of the current crisis is a lack of transparency. The wizards of Wall Street figured out a million clever ways to avoid the transparency sought by the securities regulations adopted during the 1930s. Instead of the free flow of reliable information that markets need to function properly, today we have confusion and uncertainty fueling an economic crisis.”The bill is an amended version of a similar one that Grassley introduced in 2007.

Legg Mason lost a record $1.49 million in the third quarter, down from profits of $155 million in the third quarter of 2007. Revenues also plummeted, by 40%.Total assets fell by 17% to $698 billion, and its flagship Legg Mason Value Trust fund fell 52% in 2008.Legg will close about one-fifth of its funds this year.

T. Rowe Price reported that its fourth-quarter profit fell 87% to $24.3 million, or 9 cents a share, from $190.7 million, or 68 cents a share, in the fourth quarter of 2007.This fell substantially lower than analysts’ consensus of 24 cents a share.Revenue fell 30% to $416 million in the quarter from $598 million a year earlier, advisory fees fell 35% to $330 million, and assets under management declined by 31% to $276.3 billion. Investors redeemed $2.2 billion from T. Rowe Price’s mutual funds in the fourth quarter.

DST Systems reported third-quarter net earnings of $70.6 million, or $1.43 a share, up 10.8% from $63.7 million, or 92 cents a share, in the third quarter of 2007.The company attributed much of the quarter’s strength to the sale of 730,000 shares in State Street worth $25.4 million. DST acquired the stock when it sold one of its subsidiaries to State Street; the firm still holds 10.6 million shares.The sale offset a $27.4 million decline in DST’s investment portfolio, which the company said it did not expect would be temporary.However, the number of mutual fund client accounts that DST services fell by 3.8 million in the third quarter, and revenues themselves declined slightly to $564.3 million from $577.4 million a year earlier.

The Department of Labor’s new rule that would permit advisers affiliated with fund companies administering a 401(k) plan to give advice, is drawing fire—so much so that industry observers don’t expect it to last.The rule would permit an adviser to give advice if they either use a computer model that suggests appropriate investments given a person’s age and risk tolerance, or a flat-fee structure whereby they would not stand to benefit more for suggesting one fund over another.In passing the new rule, the DOL said, “Access to professional investment advice is particularly important now for workers as they manage their 401(k) plans and IRAs in changing and volatile financial markets.”One critic, however, is Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, who recently testified that the law is flawed because “it will allow financial services firms to offer potentially conflicted investment advise on workers’ retirement accounts.”Financial planner Chad Griffeth agreed, telling Dow Jones, “The rule does not prevent potential for conflicted advice.“The controversy exists in that the person delivering the advice must adhere to specific fiduciary criteria, but their affiliated firm, whether that’s a broker/dealer, mutual fund company, insurance company or bank, does not,” Griffeth said. “[This] opens the door on the part of brokerage firms and mutual fund firms at the sake of participants, whom I fear wouldn’t know what questions they should ask to ferret out conflicted advice.”

Ellyn McColgan is leaving her post as head of Morgan Stanley's global wealth management unit after less than a year on the job. The news comes in the wake of the announcement of Morgan Stanley's planned joint venture with Smith Barney.

Left to their own devices, 401(k) investors either underweight or overweight their risk tolerance, ending up with a portfolio either loaded up or too light on equities.

The influx of money into Treasuries, combined with record-low interest rates, has driven the yields of Treasury money market funds so low that rather than risk breaking the buck, many funds are now turning away new money, MarketWatch reports.

Judging from the actions of the 11 million participants Fidelity Investment serves through their 401(k)s, investors remain faithful about retirement savings.

As Baby Boomers head toward retirement, they will likely decrease the number of relationships they have with financial institutions and reshape the entire industry, according to new research from the Retirement Income Industry Association.

Regardless of the stock market and the hit most people’s 401(k)s have taken over the past year, it is critical for Americans to be committed to save. That is the message of “America Saves” week, Feb. 22 through March 1.