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Executive Briefings


NEWS SCAN

Mutual Funds Top $1B in Outflows

Mutual funds dropped $1.19 billion for the week ended Wednesday, August 1, according to data from the Investment Company Institute.

Equity funds bled $6.89 billion for the week, compared to estimated outflows of $3.00 billion in the previous week. Domestic equity funds had estimated outflows of $5.68 billion, while estimated outflows from world equity funds were $1.22 billion.

ETFs Top $16B in July

US ETF assets totaled $1.19 trillion as of July 31-up 13.8% year-to-date, according to the latest ETF Snapshot report from State Street Global Advisors.

In July, investors added $16.2 billion more to ETFs than they withdrew, as large cap and small cap ETFs attracted $5.6 billion and $1.7 billion of inflows respectively. Year-to-date, ETFs have attracted over $88 billion of inflows

Is Schapiro Set to Float Money Funds?

Mary Schapiro, chairman of the Securities and Exchange Commission, is looking to turn the $2.6 trillion money-market mutual-fund industry on its head.

The SEC has set a public vote for Aug. 29 in an effort to force all five commissioners to take a public position on the much-anticipated reforms over money funds, the Wall Street Journal reports.

RESEARCH

Alts, EM to Fuel Industry Growth

Operating margins in the global asset management industry have recovered from their 2009 lows, at a median 32% in 2011, yet they remain below pre-crisis levels, according to new research by U.S. Institute, McLagan and Casey, Quirk & Associates.

The research also revealed that alternatives and the expansion of professional money management in new markets will provide substantial growth opportunities for the industry. In fact, by 2016, alternatives-including hedge funds and funds of hedge funds, private equity, real estate, and commodities-will represent 40% of total asset industry revenue and 17% of assets under management, according to the research.

PRODUCTS

Emerald Reincarnates Genesis Fund

Emerald Asset Advisors has restructured its flagship allocation fund, formerly dubbed the EAS Genesis Fund, to a more focused alternative investment mandate. The revamped EAS Alternatives Fund, which previously made bets on alternative investments and long US and global equities, will now pursue a purely liquid alternative investment strategy.

Specifically, the restructured fund will employ a variety of hedge-like bets on commodities; convertibles; currencies; emerging market bonds; high yield; equities; futures; Master Limited Partnerships and real estate.

FocusShares Bails Out of ETFs

One exchange-traded fund provider is calling it quits after deciding to pull the plug on its external PR efforts. FocusShares last week said that the Board of Trustees of the FocusShares Trust will liquidate the FocusShares family of ETFs as of August 30.

The 15 funds, which launched last March, had approximately $100 million in aggregate assets as of July 31.

The funds' board determined the inability of the funds to attract "significant market interest since their inception" as a major hurdle that it could not overcome and decided to liquidate the offerings and cut its losses. The firm's decision to exit the ETF business follows a sudden cancellation of a media meet-and-greet last month by Erik Liik, chief executive of FocusShares, in New York City.

Russell Rethinks ETF Initiative

Et Tu, Russell?

On the same day that FocusShares announced its exit from the exchange-traded fund business, Russell Investments announced that it is "conducting a strategic review of its direct U.S. ETF business in an effort to focus more exclusively on its core competency."

RiverNorth Offers Dual Strat Fund

RiverNorth Capital Management has launched the RiverNorth/Manning & Napier Dividend Income Fund (RNDIX, RNMNX). The fund will be sub-advised by Manning & Napier Advisors.

The fund will employ two strategies: a tactical closed-end fund equity strategy, which will primarily invest in equity closed-end funds, and a dividend-focus strategy, which will primarily invest in dividend-paying common stocks of mid-to-large cap companies (generally companies with market caps of more than $2 billion). It is managed by Patrick Galley.

Eagle Snatches Sentinel's Managers

Sentinel Investments' chief executive Christian Thwaites last week saw four members of his investment team walk away from their posts.

The four portfolio managers, including Charles Schwartz, Betsy Pecor, Matthew McGeary, and Matthew Spitznagle, had managed Sentinel's Small Company Fund, Mid Cap Fund, Mid Cap II Fund, and Sustainable Mid Cap Opportunities Fund.

ARRIVALS

MoFo Adds Ex-Janus, SEC Legal Eagles

Morrison & Foerster has added two lawyers to its Denver office.

Kelley Howes joins the firm from Janus Capital Group, where she was most recently general counsel. Brian Neil Hoffman joins the firm from the Securities and Exchange Commission, where he was a senior attorney in the Division of Enforcement.

Hatteras Sales Vet Rejoins Firm

Hatteras Funds has rehired Michael Hutten as an executive director, responsible for leading sales initiatives in the Western U.S. region, focusing on investment consultants, Registered Investment Advisors, and broker/dealers.