Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

Week In Review

9% of Finance Execs Planning to Hire Soon

Nine percent of executives in the finance, insurance and real estate sector plan to hire full-time staff members in the next quarter, a new survey by Robert Half International found. Among all industries, 10% are planning on hiring, and only 6% foresee layoffs. The legal field is expecting the strongest hiring activity, followed by business development and IT.

The survey also found that 82% of executives are confident about their companies' growth prospects in the second quarter, and 37% said that despite the recession, it is a challenge to find skilled professionals.

"Many firms, especially those that cut staff too aggressively during the worst of the recession, may need to add personnel at the first sign of a pickup in business," said Max Messmer, chairman and chief executive officer of Robert Half.

Only 1% Bailed Out of Stock Funds at Height of Stock Market Volatility

Investors showed uncanny calm, inertia or perhaps even malaise during the recession, with a scant 1% selling out of equity funds at the height of the market volatility in October 2008, Vanguard found.

However, perhaps even more earth-shattering is that investors have gravitated to bond funds, unlike other rebounds, when investors readily returned to equity funds. The extreme volatility investors witnessed in 2008, coupled with the memory of a second bear market on top of the dot-com crash 10 years ago, have evidently caused new reactions.

In the 2003 rebound, investors took $265 billion they had parked in money market funds and put $152 billion into equity funds and $51 billion into bond funds. Through November 2009, however, they pulled $500 billion from money market funds and $9 billion from stock funds and invested $340 billion in bond funds.

Vanguard researchers believe investors may have become more risk-averse or risk-sensitive than in the past and see fixed-income investing as the next logical step from money market funds.

Vanguard also found that the 1% who sold out of equities in October 2008 tended to be men age 65 or older or people who had little equity exposure to begin with. Investors in balanced funds tended to stick with the market-and do better.

For instance, from the start of the bear market in 2007 through Dec. 31, 2009, an investor with a 100% stock portfolio lost nearly 25%, while an investor with a 50% stocks/50% bonds portfolio lost only 5%.

"These results are consistent with the notion that investors may be better able to maintain a broadly diversified investment strategy through the use of balanced mutual funds than by assembling a portfolio of individual funds from different asset classes," said John Ameriks, head of investment counseling and research at Vanguard.

JPMorgan Fund for Near-Retirees Takes on Unusually High Risk

A fund for retirees and near-retirees from JPMorgan, the J.P. Morgan Income Builder Fund, aims to deliver institutional-type risks by investing in collateralized mortgage obligations, real estate investment trusts, high-yield debt, convertible bonds and emerging markets equities.

As these are instruments that financial advisers rarely recommend for older investors, Portfolio Manager Anne Lester admits they may seem risky, but as proven by the recent market meltdown, having a portfolio too narrowly focused on traditional asset classes can prove to be an even greater risk.

The fund is part of J.P. Morgan's new strategy to more aggressively pursue retail investors; the investment firm is now actively marketing the fund's 0.7% rise since its May 2007 inception. In that timeframe, the S&P 500 fell 9.5%. Last year, the J.P. Morgan Income Builder Fund rose 39.5%, handily beating the S&P 500's 26.5% performance.

Folio, Alliance Benefit Offer Turn-Key 401(k)

FOLIOfn's subsidiary Folio Institutional has teamed up with Alliance Benefit Group Carolinas to offer a turn-key, web-based 401(k) platform that offers transparency, simplicity, low cost and is customizable. It includes custody, trading, recordkeeping and administration, and is available to advisers for just 95 basis points. The investment choices on the platform include well-diversified target-date funds that offer a choice of varying risk, including conservative, moderate and aggressive, and pre-set portfolios of exchange-traded funds. Advisers can rebalance holdings themselves or use the Folio(k) model.

Money Funds Welcome Fed's Reverse Repos

Money market funds are welcoming the Federal Reserve's offer to buy an estimated $1 trillion in reverse repos, as the economy continues to rebound and the government looks to reduce the $2 trillion it pumped into the capital markets.

So far, the Fed has dealt with 18 primary dealers, purchasing about $100 billion in reverse repos.

Three major money market fund providers, Fidelity, Vanguard and Federated Investors, welcomed the offer as a way to help support money funds' $1 net asset value and liquidity, as well as to support capital markets.

Caterpillar, Hartford Life 401(k) Fee Cases Embolden Workers