Mutual funds

WASHINGTON --Mutual funds remain a sound investment choice, and will, once again, grow through the perseverance of American ingenuity. Investment firms must stress this to investors to restore their faith.

The Securities and Exchange Commission has filed fraud charges against the Reserve Primary Fund and its officers for failing to disclose the fund’s vulnerability to Lehman Brothers, as it filed for bankruptcy, instead falsely assuring investors that it would support the fund’s $1 net asset value.

Market turmoil has spurred investors’ appetite for advice, and nowhere can this be seen more clearly than in mutual funds sold through brokerages or financial planners, according to Strategic Insight.

As investors have grown more conservative, fund companies are rethinking their entire product lineups, Dow Jones reports.

The Securities and Exchange Commission is considering better disclosures for target-date funds, particularly their glide paths and asset allocations, SEC Chairman Mary Schapiro told the Mutual Fund Directors Forum.

Legg Mason lost $325.1 million in the fiscal fourth quarter ended March 31, or $2.29 per diluted share, compared to a loss of $255.5 million, or $181per diluted share, in the fourth quarter of fiscal 2008.

Despite their growing popularity in recent years, target-date funds are grossly misunderstood, according to a survey by Envestnet Asset Management.

Investors who have been laid off or who have switched jobs may be in for a rude awakening when it comes to their 401(k). Not only has its value declined steeply, but the investment advisor may not honor redemptions in funds whose assets are tied up in any type of risky, illiquid investment, The Wall Street Journal reports.

Fidelity Investments has added the IQ Alpha Hedge Strategy Fund to its mutual fund platform, making it available to registered investment advisors and retail investors.

Growth funds are beating value funds handily so far this year, leading some fund managers to believe the market may be back on track, The Wall Street Journal reports.

Execs Predict 'New World Order' For Financial Services

Fidelity Promotes Hogan To Fill Donovan's Spot

With more than nine in 10 shareholders reporting Internet access, the SEC's summary prospectus rule represents more than just an opportunity to provide an easier-to-understand document. The new rule provides a unique chance to refine the overall shareholder communication model.

Last year was a brutal one for mutual fund performance, but that has not prompted bankers to revamp their lineups of preferred funds and fund families-possibly because they wisely erred on the side of caution and prudence in the first place.

Robert L. Reynolds loves a challenge. Without question, he certainly faces one. Trying to restore Putnam Investments' stature among America's top mutual fund companies after the firm's involvement in the trading scandal of 2003 and depletion of assets, now at $99 billion, a mere quarter of what they were in 2000-is a formidable task.

NEW YORK - Most financial transactions are dependent upon trust, but the last two decades of deregulation have eroded that trust and created a global crisis of confidence, according to experts who met last week at a global forum in the heart of New York's financial district.

Most mutual fund companies and financial planners rely on Monte Carlo simulation tools to help investors plan for their futures. They run thousands of investment scenarios to predict the success rate of probable portfolio returns given various contribution rates, investment mix and risk tolerances.But virtually none were ever designed to take a year like 2008 or the current extremes in the market into account—which has prompted many statisticians to go back to the drawing board, The Wall Street Journal reports.In the bell-shaped curve that Monte Carlo simulations use, “the probability of getting one of these extreme outcomes [like we saw last year] is basically zero,” explained Paul Kaplan, vice president of quantitative research at Morningstar, who notes that the Standard & Poor’s 500 Index has declined 13% or more in one month at least 10 times since 1926.Thus, Monte Carlo simulators should be updated to include a larger number of scenarios that assume greater volatility, say critics, including the Retirement Income Industry Association.

An employee-led buyout of Neuberger Berman Group has been completed, creating what the firm calls “one of the world's biggest independent asset managers.” Neuberger, originally founded in 1939, has approximately $158 billion in assets under management. The New York-based firm is now majority owned by a group of employees, consisting of portfolio managers and senior professionals, with Lehman Brothers Holdings, the previous owner, still retaining the remainder.

The only way the financial services industry will recover from the brutal market and financial crisis of the present is to concentrate wholeheartedly on rebuilding investor trust. That was the overriding theme of this year’s Fund Forum Asia, the Singapore Straits Times reports.“High-profile frauds such as the Madoff and Stanford cases have made investors very nervous,” said David Seymour global head of investment management for KPMG. “The investor community is rattled, and confidence will not return easily.”To counter this sentiment, Seymour said, “Rebuild trust and confidence through strong customer relationship management. Historically, the most successful investment management firms have been those which focus clearly on their customers.”And while the market outlook currently remains weak, Seymour is convinced that investment management will bounce back in a “tremendous” way. “Those investment funds which keep their nerve, concentrate on improving transparency and communication with customers, and get themselves in shape for the new financial world order stand to enjoy an exciting and profitable future indeed.”Investors are currently seeking regular income-generating, low-risk products,” said Lester Gray, CEO of the Asia-Pacific arm of Schroders.

Harry Lange, manager of the $18.6 billion Fidelity Magellan Fund, appears to be back on a roll, up 10.6% so far this year after a brutal 2008, Dow Jones reports. Large technology and financial bets took the fund’s value down nearly 50% last year.