Mutual funds

John Thain, chief executive officer of Merrill Lynch, said the reaction of his firm’s “thundering herd” of more than 16,000 financial advisers to the Bank of America sale has been almost 100% positive.

Fidelity Investments reached agreements with New York and Massachusetts officials to buy back at par $300 million of auction-rate securities from its customers by the end of the year, becoming the first retail brokerage firm to settle alleged fraudulent sales practices in the ARS market.

Neil Bathon, who founded Financial Research Corp. in 1987, has now formed a new investment management research firm, FUSE Research Network. Bathon said the information he will provide investment management distributors will be “actionable.” “With FUSE, our goal is not to produce information, but to assist clients to enact change by providing implementation support based upon the insights we derive through our research efforts,” Bathon said. “There are any number of providers who offer interesting data books and reports. Our research is designed to fill a higher spot on the value scale by delivering tangible, actionable guidance.” Joining Bathon in running the company is former FRC President Michael Evans. “I’m very pleased to be reconnecting with Neil at FUSE,” Evans said. “We firmly believe in our ability to convert marketplace knowledge into tangible results on the behalf of our clients. Many of the traditional information providers have not kept pace with changing needs of asset managers. The service offerings of FUSE will provide clients with the next generation of research support through the practical application of knowledge.”

Fidelity will buy back $300 million worth of auction-rate securities from its brokerage customers, according to the Associated Press, citing an individual close to the talks. In so doing, it will settle an investigation by New York Attorney General Andrew Cuomo, and the announcement could possibly be made this afternoon.

Janus Twenty Fund manager Ron Sachs must be ruing purchasing nearly 10 million shares in Lehman Brothers, now that the company is either on the brink of collapse or a fire sale, the Rocky Mountain News reports. The stock is down nearly 80% since the beginning of June.

Bruce Bent, chairman of The Reserve and the creator of the first money market mutual fund, is breaking from the pack that has been critical of the Securities and Exchange Commission’s proposal of the rule governing money funds to lessen their reliance on credit rating agencies, Dow Jones reports.

Financial services, insurance, and real estate businesses’ hiring plans for the fourth quarter are the weakest they have been in 16 years, as a result of a contracting banking sector and the slumping housing market, a survey by Manpower found.

Although unemployment and inflation have been higher in the past 30 years, a majority of people age 60 or older have a very pessimistic outlook, according to a poll by the MetLife Mature Market Institute.

With Japanese households worth more than $14 trillion, and half of that in cash or postal accounts, Manulife Financial Corp. has decided to enter the nation’s mutual fund market.

Edward Jones will pay $7.5 million to California to settle claims that it failed to disclose its revenue-sharing policies to investors. Although it earlier denied the attorney general’s charges, in settling, the firm neither admitted to nor denied the allegations.

While American Funds and Vanguard raked in $74 billion apiece in 2007, Fidelity Investments netted $2 billion, according to Strategic Insight data. It was the first time in 20 years Fidelity didn’t rank in the top 25 fund houses in terms of net sales.

Anxious to do business in the world’s third-largest economy, where the population is aging, The Hartford is expanding into Germany.

Bill Miller, manager of the Legg Mason Value Trust, may have made a poor gamble last summer, when he expanded his holdings of Freddie Mac, 14.6 million shares of which he first bought in the fourth quarter of last year, by an additional 30 million shares, The Baltimore Sun reports.

Julian Pick, co-manager of two Janus Group international mutual funds, is leaving at the end of the month, Rocky Mountain News reports.

The boomerang effect of the financial crisis and eye-popping oil prices are proving more difficult than even the most skilled mutual fund managers can handle, the Chicago Tribune reports.

Whereas financial advisers have long been known for avoiding index funds, and their newer, exchange-traded fund brethren, for fear of not appearing to warrant their fees for providing active advice, that is changing, The Wall Street Journal. Advisers are beginning to see the merits of ETFs’ low fees, tax efficiencies and narrow slices of the market—and instead of leaving it to mutual fund portfolio managers to create a basket of diversified funds, many advisers are now driving asset allocation themselves by creating a basket of ETFs.

The Pension Protection Act is proving to help people better prepare for retirement by easing employers’ liabilities for automatically enrolling workers in retirement savings plans. But millions of middle- or lower-income Americans are still underserved, particularly if they work for small employers that don’t offer a 401(k) plan, The Wall Street Journal reports.

Social Investment Forum Recruits Two PR Execs

Taking dead-aim at Middle America, Allstate Corp. has added guaranteed lifetime withdrawal benefits to its target funds.

The Financial Industry Regulatory Authority (FINRA) has widened its ongoing auction rate securities (ARS) probe with a sweep letter aimed primarily at sellers, rather than lead managers, of the illiquid instruments.