Mutual funds

The sell-off in municipal bonds finally appeared to sap some retail demand for state and local government debt last week as muni mutual funds reported taking in the paltriest amount of new money in six weeks.

The high-yield market has been going great guns this year, but there’s a new caveat for those kicking the tires: a slower-than-expected recovery.

Fixed-income and commodity ETFs move up as equity prices slide.

"Moving away form AAA ratings is sacrilege," protests Peter Crane of Crane Data.

Fearful of how a change in ratings will help them market their funds among investors, money fund managers are chafing at the idea of Moody’s’ proposed new ratings. Investors are used to looking for AAA-rated money market funds, and it will take some time for them to get to a scale ranging from MF1 to MF4, money managers tell The Wall Street Journal.

WASHINGTON — Senate Finance Committee Chairman Max Baucus on Thursday proposed to extend the Build America Bonds program for only one year in legislation he unveiled that would extend several expiring or expired bond and tax provisions.

Margins of asset management firms have declined significantly in the past 10 years, according to a report from kasina. In 2000, operating margins stood at 39%. Today, they are 29%. And net margins, 27% 10 years ago, are now 20%.

Thin supply of short-term holdings and low yields are pushing managers into complex, potentially risky and illiquid instruments.

But there were also fewer hedge-fund launches, as investors continued to shun startups and smaller firms in favor of large, established players.

Despite the new rules that the SEC imposed on money market funds in January – or perhaps because of them – managers are challenged to find an adequate supply of investments. The scarcity of debt with a maturity of less than seven days, combined with low yields, is pushing money market fund managers into areas of the fixed income and cash management markets they previously would not seek out, The Wall Street Journal reports this morning.

The fixed-income trend is leading the bumper inflows for bond-heavy fund families, while investors continue to punish American Funds for not being “bear-proof.”

Fixed-income funds held their siren-like draw for investors, contributing largely to long-term mutual funds’ $16.8 billion in inflows in August, according to a Morningstar analysis.

State Street Global Advisors has launched a global natural resources exchange-traded fund.

Retail investors ignored the pullback in the state and local government debt market last week, committing the third-heaviest slug of new money to municipal bond mutual funds this year.

Mutual fund managers - not their hedge fund counterparts - are the original alpha males (and females).

The Securities and Exchange Commission is likely to revise its approach to circuit breakers on the nation's equities exchanges, to include a "careful review" of price bands that limit how far up or down the price of a stock can move at any given time.

The class-action lawsuit initiated by Third Avenue Management against the Reserve Primary Fund is only just beginning and will undoubtedly make for salacious headlines in the months ahead.

State Street Corp., known for its passive asset management, may soon expand its small active management business.

Vanguard has launched eight index mutual funds and nine exchange-traded funds based on Standard & Poor's domestic stock benchmarks.

The biggest winners of the week were taxable non-government funds, reaping $9.91 billion.