Week in Review
April 30, 2007
Fidelity's New Campaign Focuses on Regular People
Fidelity Investments is running three new TV ads that depict people talking about their finances, rather that former Beatle Paul McCartney. One spot features a couple where the husband talks about taking his retirement savings and putting it through a "rollover, turnover, whatever."
"The more people talk about their finances, the more successful they are," Claire Huang, Fidelity executive vice president for marketing, told The Boston Globe. "The normal financial services ads show babies, brides and super-Boomers who surf or skydive. We're about regular people trying to engage in conversation."
Fidelity will air the ads, created by Arnold Worldwide, on 18 shows during prime time, including "American Idol" and "Lost." Print ads will follow.
Although Fidelity declined to reveal how much it spent on the broadcast ads, an advertising industry executive estimates it was about $5 million.
John C. Verret, a professor with Boston University who studies media, said the ads should resonate with investors because they show that Fidelity "understands the consumer."
BISYS Sale: Parts More Valuable Than the Whole?
BISYS hopes that buyers will have an appetite for bite-size bits of the company, after efforts to sell itself whole yielded little interest, according to TheDeal.com.
The multi-faceted company, which said it would sell itself as one big block in order for investors to reap a tax advantage, expected an offer between $1.5 billion and 2 billion. The company announced its sale plans last August, after a strategic overview conducted by Bear Stearns. At the same time, Russell Fradin resigned the chief executive post.
At the end of a second round of bids in February, Welsh, Carson, Anderson & Stowe, The Carlyle Group and The Blackstone Group were all rumored to be on the short list of suitors.
But a source described the process as "tortured," and several others confirmed that some suitors are looking only at part of the company. The top contender now, according to unnamed sources, is Brussels-based Fortis. Blackstone appears to have bowed out, meanwhile.
Some have suggested the disparate functions of the company-half provides back-office, third-party services for fund complexes, retirement plans, hedge funds and private equity, while half centers on life, commercial property-casualty and long-term care disability insurance products-turns buyers off.
A federal investigation alleging the firm provided kickbacks to 27 fund companies, coupled with several shareholder lawsuits, only further diminished marketability. "There is not a person alive who wanted to [acquire] the whole company," a source said.
As Wealth Builds in Asia, Fund Firms Expand Offices
As the markets throughout Southeast Asia continue to deliver strong performance-stunning returns averaging 31% a year over the past five years-they are creating more affluent investors and appealing to investment managers around the world, The Financial Times reports. For fund companies that have already extended operations in China and Japan, the region is fertile hunting ground, said Shiv Taneja, the Asia head of Cerulli Associates.
"Southeast Asia has tended to have a justifiably bad reputation because of market volatility, political instability and a willingness to take the nationalistic view at the drop of a hat," Taneja said. "However, the wealth that is being created has become too hard to ignore."
In fact, locally domiciled mutual fund assets are up 155% from $27 billion in 2002 to $69 billion at the end of 2006. The boom extends throughout Thailand, Malaysia, Indonesia, South Korea and Taiwan. However, to put the assets in perspective, they are but a mere fraction of the total $1.2 trillion Asian mutual fund market.
Experts Warn Investors About Single-Country ETFs
The original exchange-traded funds, based on broad-based indexes such as the S&P 500 and the Nasdaq 100, gave investors wide exposure to a multitude of stocks. But as the market has become more crowded, investment advisory firms anxious to jump on the bandwagon have been offering narrower and narrower slices of the market.
The newest to come on the scene is single-country ETFs-a bad idea, according to Gary Gordon, a certified financial planner and president of Pacific Park International. Many of these are focused on emerging-markets, perhaps the riskiest of all.
Even many supposedly diversified international ETFs invest as much as 25% of their assets in a single stock. Funds guilty of this include the MSCI Mexico Index Fund and MSCI South Korea Index Fund.
Advocacy Group Pressures Funds on Global Warming
Co-Op America, a not-for-profit advocacy group, is urging mutual funds to vote in favor of climate change proxy resolutions. The organization has sent out 10,000 e-mails and letters to the nation's 100 largest mutual fund companies. Visitors to the website can send out an e-mail of their own to Fidelity, American Funds and Vanguard urging them "to re-think your strategy on climate change issues and take seriously the impact that global warming will have on your funds."