Mutual funds

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.

The Vanguard Group may add an exchange-traded share class to its Small Cap Index Fund and its Total Stock Market Fund, according to Brian Mattes, a company spokesperson.

Until now, if a foreign fund company had a successful fund and wanted to give it exposure to the potentially lucrative U.S. marketplace, it has had to start from scratch and register a similar fund in the U.S. That may no longer be true. Julius Baer Group of Zurich may have found a way around that onerous process.

A mutual fund devoted to investing in casket manufacturers and funeral parlors is six feet under. So are two funds devoted to the golf industry. Other specialized funds, such as one that invested in sports interests, have also died out.

Morgan Stanley Dean Witter of New York will issue a new social index fund called the Morgan Stanley KLD Index Fund, according to a preliminary prospectus filed April 17 with the Securities and Exchange Commission.

Assets of exchange-traded funds have declined during the current market downturn, along with those of many mutual funds. That is no surprise. However, unlike stock mutual funds, which experienced net outflows in February, exchange-traded funds are being used more than ever, as average daily trading volume continues to rise.

Principal Preservation Portfolios of Milwaukee, a fund family with $1.2 billion in assets under management, has announced that it has changed its name to the North Track Funds.

State Farm Insurance of Bloomington, Ill. has announced that it is offering mutual funds nationally. The company started offering mutual funds in January, in a pilot program in Missouri, North Carolina, Kansas and Virginia.

When a roomful of mutual fund company executives at a recent industry conference was asked for a show of hands of those who had looked into running managed accounts as a means of growth for their respective companies, no one moved.

Munder Capital Management, adviser to the Munder Funds, has announced the opening of the Munder Power Plus Fund, one of the first mutual funds focused on investing in technology for new sources of power.

Forum Funds of Portland, Maine has filed a preliminary prospectus with the Securities and Exchange Commission for the Shaker Fund, which would invest primarily in small and medium-sized companies and would be the newest fund in Forum's family of 19 funds. The family includes equity and municipal bond funds.