Mutual funds

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.

Besides learning that investors have not bailed out of their 401(k) plans, contrary to scare-mongering media reports, there was one other surprising moment at this month's General Membership Meeting of the Investment Company Institute. And that was when Richard Davis, chairman of U.S. Bancorp, looked directly at ICI President Paul Schott Stevens and urged him to prompt his member mutual fund companies to figure out how the financial crisis has affected various age groups.

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.

Companies are finding that pension plans are far too expensive to offer, despite the tax breaks, USA Today reports. Since the beginning of the year, at least 20 companies have frozen their pension plans; by comparison, that many companies did so throughout all of 2008.

Actively managed exchange-traded funds (ETFs) have not caught on as rapidly as asset managers would have liked, The Wall Street Journal reports. The 62 quantitative/actively managed ETFs on the market have amassed $2.67 billion, or an average of $43 million each. To reach profitability, it is generally assumed that a mutual fund must have $100 million of assets under management.

Long-time Fidelity Investments and Geode Capital Management veteran Jacques P. Perold has been named chief operating officer, asset management of the firm.

John Hancock Financial has named James R. Boyle president, in charge of all of the company’s core businesses, including long-term care insurance, variable annuities, 401(k)s, fixed products and mutual funds. He had been president of U.S. insurance.

Broadridge Financial Solutions has acquired Access Data Corp. to expand its offerings to the mutual fund industry, specifically Access Data’s unique data aggregation and data management solutions. Terms of the deal were not disclosed.

Americans plan to continue cutting back on their spending, a survey by financial consulting firm AlixPartners found. Once the recession is over, they plan to spend only 86% of what they did before the crisis began. And their No. 1 goal is replenishing their 401(k) and other retirement savings.

A significant number of 401(k) assets held by workers who leave their jobs has been left behind in the old plans, Charles Schwab found in an analysis of the activity of workers since the first quarter of 2008.

Mary Schapiro, chairman of the Securities and Exchange Commission, bridled against the proposal that the government create a consumer financial protection agency. Evidently, the SEC wants to maintain its regulatory control over mutual funds.

People investing for retirement in mutual funds should not pay capital gains taxes until those shares are sold, according to Senators Mike Crapo (R-Idaho) and Tim Johnson (D-South Dakota). To keep retirement savings earning more money for a longer period of time, the senators have introduced the GROWTH (Generating Retirement Ownership Through Long-Term Holding) Act, which the Investment Company Institute supports.

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.

The Obama administration is considering forming a regulatory commission to protect consumers against predatory sales and practices by mutual funds, mortgage lenders and credit card companies.

More actively managed funds-of-funds and mutual fund wrap programs are investing in such safe, low-cost vehicles as index funds and exchange-traded funds, The Globe and Mail reports.

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.

The Securities and Exchange Commission is holding a public seminar on June 10 to help companies and preparers comply with new financial reporting rules.

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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.