Mutual funds

The $600 million in new assets that Horizon Cash Management captured in the third quarter could be a sign of things to come for the Chicago company and other cash managers.

Fund Fees Expected to Tumble By $38 Billion by 2012

Slowly but steadily, the Securities and Exchange Commission continues on the long journey toward adopting international tax and accounting standards, with the recent release of its long-anticipated roadmap.

Mutual funds had $9.5 trillion in assets as of Oct. 31, a full $2.5 trillion, or 21% less, than their year-to-date $12 trillion under management peak at the end of May, Lipper data shows. Since the beginning of the year, when mutual funds had $11.7 trillion under management, assets have fallen 19%.

The $600 million in new assets that Horizon Cash Management captured in the third quarter could be a sign of things to come for the Chicago company and other cash managers.

First the good news. The average 401(k) plan balance is down only 14% this year to $68,000 from $79,000 in 2007, according to Hewitt Associates. And since the precipitous decline in the stock market of the past few months, only 4% of participants have decided to stop contributing.

Fees on actively managed mutual funds in the U.S. could fall as much as 26%, or $38 billion, by 2012 due to investors’ renewed preference for fixed income and passive investments, Bloomberg reports, citing a report from Boston Consulting Group.

Waddell & Reed is planning to first offer employees voluntary layoff packages next month, and depending on how that goes, will hand out pink slips the following week, the Kansas City Star reports. The goal is to reduce payroll costs by 15%.

Morningstar has acquired the business operations of InvestData of South Africa, a fund data provider, for undisclosed terms.

More than 110,000 people working in finance in the U.S. have lost their jobs so far this year, but that could nearly double to more than 200,000 in the final weeks of the year, the Anniston Star reports.

With redemptions reaching exceptionally high levels, mutual funds are hoarding cash like never before, BusinessWeek reports. Funds lost $68 billion in October and appear to be on track to top those losses this month. By comparison, in October 2007, mutual funds lost $11.3 billion and $9.94 billion the following month.

Reserve Funds will distribute $14 billion to investors in the Primary Fund on or around Dec. 5.

Even as equity values continue to fall and economic woes mount, certain financial services firms will emerge as leaders, and the ones that do will be those that focus on long-term success, according to a report released Monday by management consulting firm Casey, Quirk & Associates and asset management compensation consulting firm McLagan, titled “Crisis in Asset Management: Industry Profitability Under Siege.”

Massachusetts lost another 7,000 in October, the worst month for the state’s labor market since March 2005, the Patriot Ledger reports.

The Securities and Exchange Commission’s proposed two- to four-page mutual fund prospectus profiles will only provide investors with the “quick-and-dirty lowdown,” charges Dow Jones columnist Chuck Jaffe. “It seems a bit inappropriate to have investment decisions based on information that can accurately be called ‘quick and dirty,’ rather than ‘thorough and complete,’” Jaffe said.

Monagle to Assist Reserve As Liquidation Adviser

EU to Propose Hedge Fund, Private Equity Regs

Stressing that the reorganization is not motivated by the financial crisis but a strong desire to improve accountability and, with that, performance, Putnam Investments Chief Executive Officer Robert Reynolds announced the firm is doing away with team-managed equity mutual funds. Instead, those funds will be run by single portfolio managers.

Talk about market capitulation.

If investors have learned one thing from the financial crisis, it is that, eventually, level heads and long-term investing will prevail. In that spirit, sister publication Investment Dealers' Digest recently spoke with a man known for having one of the most level heads in the industry, John Bogle, founder of Vanguard Investments, about what he sees for mutual funds and other investment firms in the years ahead.