Week in Review
May 7, 2007
Vanguard Planning Launch Of Active Bond ETF
Vanguard is planning to launch an exchange-traded share class of an existing bond fund, the Vanguard Inflation-Protected Securities Fund, The Wall Street Journal reports. Vanguard recently debuted a line of bond ETFs but didn't include one of these types of funds in the mix, which is why it has filed to offer an ETF share class, explained Kenneth Volpert, co-manager of the fund.
So far, only Vanguard and Barclays are offering bond ETFs, although a number of bond ETFs from other investment firms are in the pipeline.
Morningstar to Expand Hedge Fund Coverage
Morningstar, which already has aggressively expanded its coverage of hedge funds' performance in the past year from 3,500 funds to 6,000, plans to grow that coverage even further, Reuters reports, citing comments by Morningstar Director of Hedge Funds Ryan Tagal.
As more investors add these instruments to their portfolios, the demand for information about them will increase, Tagal noted. He would not specify, however, by how much Morningstar plans to grow that business.
Morningstar began offering hedge fund data in 2005, and increased its database significantly in March through its $55 million acquisition of Standard & Poor's fund data business. Since then, Morningstar has been reconciling duplications between its own database and S&P's records on 135,000 mutual funds and hedge funds around the world. In a few months, Tagal said, the company will have a better idea of how many additional funds it is now covering.
In addition, Morningstar is considering launching a hedge fund ratings system similar to the star system it uses for mutual funds.
Fidelity Opens Back-Office Operation in China
Fidelity Investments has opened a back-office operation in China, in a port city in the Northeast by the name of Dalian, Financial Times reports.
The office will employ several thousand people, possibly making it second in size to Fidelity's back-office operations in India, where it employs 9,000 staff, said Brett Goodin, head of Fidelity Asia.
The new office will support Fidelity's operations in Japan. "I don't know that this venture will be able to provide all of Fidelity's back-office support for this region, but I do feel that it may be able to provide a high level of support due to the strong systems, operational and linguistic skills that are not all available in India or elsewhere," Goodin said.
Citigroup also recently opened a back-office center in Dalian.
Feds Nab The Bishop' Pipe Bomb Suspect
The U.S. Attorney General's office arrested John P. Tomkins, a 42-year-old machinist from Dubuque, Iowa, on suspicions he is the culprit who sent dud pipe bombs to the offices of American Century and Janus Capital with ominous messages signed "The Bishop."
Tomkins, a former part-time U.S. Postal Service letter carrier, was on his way to work at a manufacturing facility. He has been charged with one count of mailing a threatening communication with intent to extort and one count of possession of an unregistered explosive device. The first charge carries up to 20 years in prison, the second, 10 years. Tomkins also faces a $500,000 fine.
Authorities have said that over the past year and a half, "The Bishop" mailed 16 threatening letters to financial institutions, saying they would face consequences if certain stocks didn't move to $6.66.
Officials said that Tomkins' handwriting matched the writing on some of the envelopes; he owns the same kind of car, a 1993 Chevrolet Lumina, as the man they were looking for; in December 2006, he purchased materials similar to those used in pipe bombs from a home improvement store; and trading records indicated he owned the stocks cited in the letters.
One of the letters read: "The way I see it, you owe it to us to make things right, or I will make your life as miserable as mine is." Another read: "Time's up. It is better to reign in hell than to serve in heaven." Accompanying the two parcels containing pipe bombs was a letter that said, "Bang! You're dead."
"We take it quite seriously if anyone goes out and tries to mail threatening communications to people to affect the stock market," said U.S. Attorney Patrick Fitzgerald.
State police, the Postal Inspection Service, the FBI Terrorism Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Securities and Exchange Commission also worked on the case.
Morgan Stanley Acquires Affinity Investment
Morgan Stanley Investment Management has acquired all the assets of Affinity Investment Advisors, an independent investment advisor that specializes in disciplined large-cap equity investing, and hired its investment team, according to a Morgan internal memo.
Based in Irvine, Calif., Affinity manages assets for a variety of clients in the institutional and retail separate account space. The staff will remain based and operate out of Irvine, according to the memo sent by Chief Investment Officer Dennis Shea and Yie-Hsin Hung, head of strategic acquisitions and alliances.
Affinity was established in 1992 by Gregory Lai, formerly an active equity portfolio manager and quantitative analyst at Pacific Investment Management Co.
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