Mutual funds

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.

Morningstar reported first quarter net income of $25 million, a 8.2% increase from $23.1 million in the first quarter of 2008. However, excluding acquisitions and the impact of foreign currency conversions, revenue declined 7.1%.

Money market funds lost $8 billion in the week ended April 29, bringing total assets to $3.798 trillion, the Investment Company Institute said.

Although their investments may have lost as much as 40% to 50% of their value, Canadians are resilient in their faith in mutual funds, PricewaterhouseCoopers found in a survey of 867 people who own mutual funds.

Prudential Retirement has entered into an agreement with Hewitt Associates to offer Prudential’s IncomeFlex Target to Hewitt’s retirement plan clients.

Affiliated Managers Group reported that its first quarter profits plunged 80% to $6.1 million, or 15 cents a share, from $31.2 million, or 81 cents a share, in the first quarter of 2008.

Only 18% of individuals between the ages of 28 to 53 seek out financial advice, even though they are in the prime savings and asset accumulation of life, according to a survey of 800 investors conducted by Sway Research and Mast Hill Consulting. Most of this group—younger Boomers between the ages of 43 and 53, and Generation X, aged 28 to 42—turn to family and friends for advice on key investing decisions.

The Securities and Exchange Commission is holding its annual regional CCOutreach seminars between May and July.

Standard & Poor’s has downgraded Fidelity Investments’ parent FMR Corp. one level from AA-/A-+ to A+/A-1, citing a 22% decline in assets in 2008 to $1.25 trillion and trailing performance of some of its equity funds.

Nationwide Mutual Funds has selected Federated Investors to sub-advise three of its money market funds with $5.6 billion in combined assets. They are the Nationwide Money Market Fund, the NVIT Money Market Fund and the NVIT Money Market Fund II.

The mutual fund industry will bounce back to historic inflow levels on the low to medium side, according to Financial Research Corp., attracting between $130 billion and $180 billion a year.