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April 19, 2010

Past Issues

Mutual Funds

Money Funds are Far Too Big for Regulators to Ignore

Money market funds are the stepchildren of finance. Though they manage more than $4 trillion in assets, they have not gotten much attention recently. Sen. Chris Dodd (D-Conn.)'s regulatory reform proposal does not even mention money market funds, which we believe is a glaring mistake. Before the crisis, money funds were considered a safe haven. Since their inception in the 1970s, no fund of significant size ever broke the buck. Thus, it is not surprising that in 2007, when the crisis started, money funds had significant inflows from investors seeking safety.

Week In Review

Stock Fund Fees Edge up 2 BPS to 0.86%, Treasury and DOL Discuss Hitches of 401(k) Annuities, FINRA to Bond Funds: Get Credit Ratings Out Of Ads, Firms Hike Muni Holdings, SEC to Track Large Trades By Mutual Funds and Hedge Funds, SEC Looking to Hire Hedge Fund Managers, National Quality Review Honors Citi Transfer Agent, and Consumers Are Holding Out for Real Economic Bottom.

401(k)s

Investors Seek Advice As Nest Eggs Rebound

Assets in 401(k) plans and other retirement accounts are up 18% from a year ago and have nearly erased losses from the recession as investors continue to pump money into their plans and take advantage of lower prices, according to a report from the Spectrem Group. Furthermore, investors are more than twice as likely to seek out financial advice than they were a year ago and commonly turn to mutual fund and plan provider websites for information, the report said.

Regulation & Compliance

Regulators Crack Down on Risky Strategies

As mutual fund companies turn out derivatives- and leveraged-laden offerings, regulators are becoming increasingly concerned that funds, and the financial industry at large, are forgetting the lessons of the Great Recession by returning to complicated, high-risk products. With the Dow crossing 11,000 last week and the economy on the mend, fund managers are beginning to look for creative ways to spike performance and meet demand for non-correlated securities-but regulators are wary about letting them make the same mistakes.

Ops & Tech

Managed Accounts: Helping to Restore Investor Confidence

Investor confidence in hedge funds appears to be making a comeback. Just over $1 billion of net investments moved to hedge funds in the third quarter of 2009, the first quarter of inflows since mid 2008, according to Hedge Fund Research. Despite the rebound, the events of 2008 and 2009- market turmoil, fraud and the widespread use of gates or suspension of redemption-left a lasting mark on the industry structure. Investors and prospective investors, such as pension funds, sovereign wealth funds and other large institutions, are demanding higher levels of transparency and control, greater liquidity and more flexible fee schedules. They are requiring rigorous due diligence, risk management and financial controls, and are demanding independence and separation of functions related to valuation, pricing, compliance and custody.

Mergers & Acquisitions

Wealth Management M&As: Sink or Swim?

As sentiment among wealth managers shifts, more capital has become available and companies right-size, banks, trust companies, wealth managers, and bank brokerages that are in a strong position to expand into a new market and acquire new units, will do so. But it is also the moment when companies without the capital-and stability-will get left behind. "If you can be bold, you can make acquisitions now," said Alois Pirker, research director at Aite Group. "If you're weak to start out, it will be hard to expand."

Executive Moves

Executive Moves

Manning to Replace Pozen As Chairman of MFS, Sentinel Appoints Kania VP, Retirement Director, and Curian Names Eisenrich VP Senior Market Strategist.