Mutual funds

If imitation is the sincerest form of flattery, American Funds has a lot to be proud of. An innovative 529 plan it launched with the State of Virginia last Friday has caused at least two other investment managers to revamp their own college savings plans, according to industry executives.

As Franklin Templeton's director of defined contribution services, Dan Reinhold never thought he would find himself working at, of all things, an automobile industry conference.

Open to the back pages of the "Money and Investing" section of the Wall Street Journal and you'll find a series of indexes, including those from the paper's parent company, Dow Jones. Then flip to fund listings provided by Lipper and you'll find a list of funds delineated by category: small-cap, large-cap, value, core, growth.

It's separately managed account mania. In the past month alone, three different studies examining managed acount products and prognosticating their impact on the fund world were issued by industry consultants.

Hedge funds may turn out to be a greater competitor to mutual funds than most people expected. While hedge funds are extremely risky vehicles that do not appeal to investors who are interested in safer products, funds of hedge funds offer some of the advantages of hedge funds with an enormous reduction of risk. Although the number of funds of funds is relatively small right now, it's growing, and may soon capture a lot of assets that ordinarily would have gone to mutual funds, say industry observers.

This year Nuveen Investments launched 18 new closed-end, fixed-income funds. Last year it launched zero.

With U.S. warplanes swarming over Afghanistan and Special Forces troops readying to take to its ground, financial planners have begun to get calls from investors inquiring about defense-related investing.

Fidelity Investments Institutional Brokerage Group and Frank Russell announced an alliance in which Fidelity will distribute Russell's new multi-manager separately managed account program through its registered investment advisors and correspondent broker/dealers.

In an effort to gain access to the education savings market, investment management companies are increasingly looking to partner with existing state-sponsored "529" college savings plans (See MFMN, 9/3/01). But standards don't yet exist for 529 partnerships, so the nature of the arrangements among these companies is different with each one.

For years, people have gathered in quiet, suburban living rooms to pick stocks and discuss matters impacting markets. They are known as investment clubs, and the communities of investors sometimes manage sound returns based on the notion that many heads are better than one.

BOSTON - Exchange-traded funds are approaching their capacity, and the development of new types of exchange-traded products is going to be necessary to sustain growth, according to industry executives who spoke here earlier this month at the Performance Institute's 2001 Summit: Beyond Mutual Funds (assets have grown at an enormous rate over the past few years. Total ETF assets were less than $10 billion in 1997, but have passed the $80 billion mark this year).

The American Stock Exchange has created a new business unit to pursue new opportunities for exchange-traded funds and capitalize off of ETF product development, the company announced last week.

The mutual fund industry has historically showed its resilience to competitive products and predictions of its demise have always proven false. So it is not likely that several products that have gained recent attention from investors and the financial media will spell the end of the fund industry, said industry executives speaking at the Morningstar Investment Conference last week.

In the burgeoning business of socially responsible investing, companies sometimes employ the help of a board of advisors in choosing stocks. The boards are often made up of experts with commanding resumes. They include professors, politicians and philanthropists.

NEW YORK - With poor investment management, the mutual fund industry has opened the door for alternative products like Web folios, separately-managed accounts, and exchange-traded funds, according to John Bogle, the founder and former chairman of the Vanguard Group of Malvern, Pa. However, with a return to sound management based on the fundamental principles of investing, mutual funds should be able to fend off these challengers, he said. Bogle spoke here last week at a forum on use of the Internet in financial services sponsored by Forrester Research of Cambridge, Mass.

E*TRADE Group of Menlo Park, Calif. has signed an agreement with Standard & Poor's of New York to offer online investors 21 predesigned "baskets" of stocks, to be called E*TRADE Stock Baskets.

State Street Global Alliance, a jointly-owned subsidiary of State Street Global Advisors and State Street Corporation, all of Boston, will develop and sell alternative investment products, including hedge funds, and has acquired hedge fund manager, RXR Group of Stamford, Conn., the company announced last week.

New York Life Investment Management LLC of Parsippany, N.J., has announced that it will offer three new funds for institutional investors.

By issuing exchange-traded shares of the Vanguard Total Stock Market Index Fund last Thursday, the Vanguard Group of Malvern, Pa. may have compromised its brand name and reputation of being a product innovator, not a product marketer, according to some industry observers.

SunAmerica Mutual Funds of New York has announced that it has expanded its optional Asset Protection Plan term life insurance coverage to include the five SunAmerica Brazos mutual funds which are offered as part of the SunAmerica mutual fund family.