Fidelity, T. Rowe Excel at Addressing Volatility
November 7, 2011
While 88% of mutual fund companies that Corporate Insight tracks offer materials on market volatility, only 40% organize this content into centralized outlets. This, Corporate Insight said, is "a key factor in determining firms' effectiveness in communicating with clients and prospects during ongoing market instability."
The market research firm gave high marks to Fidelity, T. Rowe Price and Franklin Templeton for displaying market volatility materials, including streaming video commentary, in well-organized resource centers on their homepages. Fidelity augments this with actionable investment advice and Franklin, T. Rowe, Vanguard and Legg Mason also include prominently displayed letters from their CEOs. Franklin's CEO letter was the most visible, while Vanguard is featuring detailed analysis from an array of high-ranking officials.
Corporate Insight also found that 73% of the firms it tracks have discussed the Standard & Poor's U.S. credit downgrade, and 33% are addressing various markets and sectors around the globe, including emerging markets and European equities.
75% of Employers Restore 401(k) Matches
Three-quarters of 260 employers that suspended 401(k) matches due to the recession have restored them, Towers Watson said in a report Wednesday. Of these companies, 74% have brought these matches back to the levels they were before the recession, and only 23% have brought them back at a lower level.
The most common matching formula is 50% of contributions, up to 6% of a salary. The median suspension time was 12 months.
"Many employers are making it a priority to contribute to their workers' retirement accounts," said Robyn Credico, a senior retirement consultant at Towers Watson. "Employers understand the importance of helping and encouraging their employees to save for retirement. With 401(k) plans now the primary retirement savings vehicle for most workers, it is very encouraging to see that the vast majority of employers have reinstated their matching contributions."
New Putnam Fund Kicks Money Funds Up a Notch
Putnam Investments has launched the Putnam Short Duration Income Fund, a fixed-income fund that aims to combine the capital preservation appeal of a money market fund with the higher yield of an ultra-short bond fund.
However, unlike ultra-short bond funds, this fund will seek to have lower volatility. Therefore, it will not be benchmarked against traditional indexes but the BofA Merrill Lynch U.S. Treasury Bill Index instead. At Putnam puts it, the fund will not be a top performer.
"We are aiming to provide excess yield over a market cycle of a three-year horizon, while offering the liquidity of a money fund," said Michael Salm, one of four portfolio managers of the fund. "The fund combines the benefits of transparency, a conservative risk/return profile and income."
Like other money market funds, the Putnam Short Duration Income Fund will invest in certificates of deposit, repurchase agreements, U.S. government securities and other conservative instruments. Like ultra-short bond funds, it will expand into asset- and mortgage-backed securities, investment-grade corporate paper, sovereign debt, derivatives and private placements.
While there are a handful of other funds on the market that are bridging these two worlds, "no one is declaring it is a new category," said Jeffrey Carney, head of global marketing and products at Putnam, which is why Putnam believes the new fund will find wide acceptance among retail and institutional investors alike.