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Alternative Investments

Global REITs Set for Takeoff

July 26, 2010 - CB Richard Ellis Managing Director Steve Carroll foresees five to seven years of commercial real estate boom time. And - New York is the leading indicator.

Derivatives, No Longer 'WMD,' Gaining Respect

April 12, 2010 - They've been derided by Warren Buffett and feared by regulators, but some advisers are convincing clients that derivatives are helpful. Back in 2002, when AIG was still in that ultra-exclusive Triple-A-rated club and its financial strength seemed all but unbreakable, the billionaire signaled an ominous warning in Berkshire Hathaway's annual report: 'Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.'

ETFs Add Exposure to Alternatives

April 12, 2010 - NEW YORK -- Asset managers looking for creative new ways to profit during the global recovery have been launching a wave of exchange-traded products that aim to help portfolio managers and sophisticated investors increase their exposure to alternative investments and small-capital stocks. Last week, Invesco PowerShares, Scottrade and Van Eck Global all launched specialized exchange-traded funds that provide exposure to everything from domestic small-cap companies to Latin American economies.

Schwab's Strike to Fend Off SEC Mortgage-Backed Suit Makes Solid Argument

March 29, 2010 - Charles Schwab filed arguments in federal court in San Francisco to try to preclude the Securities and Exchange Commission from suing it over its YieldPlus fund. Once one of the biggest short-term bond funds in the world, with $13.5 billion at its peak in 2007, YieldPlus lost 35%, before dividends, in 2008 due to high exposure to mortgage-backed securities, which comprised nearly 50% of its portfolio. Today, a mere shell of its former self, it stands at $184 million.

Estate Tax Expiration Reveals Opportunities

February 8, 2010 - NEW YORK - Financial experts think 2010 could provide many interesting opportunities in the realm of wealth transference, particularly with the temporary, one-year expiration of the federal estate tax and reduction of the gift tax.Thanks to the expiration of the estate tax on Jan. 1, beneficiaries of people who die this year don't have to pay federal taxes on inherited estates. Unless Congress takes action this year, the tax will be reinstated in 2011 to 2001 levels of a $1 million exemption and 55% tax rate above that. President Barack Obama has proposed reinstating the tax at 2009 levels of 45% on anything above $3.5 million, possibly retroactively.

Grail Makes Big Bet on Actively Managed ETFs

February 8, 2010 - The actively managed exchange-traded funds sector is increasingly going mainstream, and Grail Advisors is riding right along with it. Grail is aggressively expanding its product lineup, introducing two fixed-income funds that brings to seven its stable of actively managed exchange-traded funds.William Thomas, the chief executive officer of the San Francisco money manager, said in an interview that the company plans to introduce still more equity and fixed-income actively managed ETFs and is in talks with mutual fund companies that are interested in converting to the products.

403(b) Group Seeks Common Language

February 8, 2010 - An industry group developing best practices for 403(b) retirement plans is coming closer to streamlining these plans to make them even more similar to 401(k) plans, but first they will have to get everyone to agree to speak the same language.Leaders say the SPARK Institute's work on 403(b) best practices is coming along smoothly, thanks to the cooperative efforts of approximately 50 participating institutions. The latest update, version 1.04, fixes many of these communication issues by requiring a standardized reporting format, which it hopes most institutions will adopt by this July.

The Future Goes to the Alternatives

February 1, 2010 - After the recent massive meltdown, it's no surprise that 81% of registered investment advisory firms and 79% of brokers and advisers now believe that traditional asset allocation relying on stocks, bonds and cash provides insufficient portfolio diversification.In a survey released Wednesday by Rydex/SGI, a majority of respondents used alternatives or were interested in them for portfolio diversification. The Rydex survey, conducted in November and December, polled 291 professionals-including RIAs and advisers from independent and wirehouse shops.

Obama Proposals Could Boost Annuity Sales

February 1, 2010 - To help the middle-class save for retirement, President Obama may have also given a boost to the annuities sector.Last Monday, Obama proposed a series of measures, including expanding existing tax credits for child care and retirement savings, and providing financial relief for families caring for children and the elderly.The White House also plans to promote "the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their retirees' living standards will be eroded by investment losses or inflation."

New Financial Regulations to Create Unprecedented 'Sea Change' at SEC

January 25, 2010 - BOSTON -- Mutual fund companies must stay on top of their compliance programs, particularly because Congress is likely to pass new financial regulations, executives warn. "Regulation writing is about resolving tensions and balancing purposes,' said Michael Novey, associate tax legislative counsel at the Office of Tax Policy at the Department of Treasury. "Our task is to implement legislative purpose, recognizing that Congress' acts ought to be workable. There is a tremendous amount of misunderstanding about many of the proposed regulations."

Funds Still Out of Touch With Adviser Needs

January 25, 2010 - BOSTON -- After all these years, mutual fund companies still don't understand their distribution partners, sales executives say. But before fund executives try to improve on their current models, they need to realize that distribution channels are changing yet again as investment advisers seek lower-cost, laser-focused solutions. Most investment advisers who choose to register with the Securities and Exchange Commission have been managing assets for at least eight years, said Matthew Bienfang, senior research director of securities and investments at TowerGroup.

BNY Mellon Aims to Curb Costs, Expand Wealth Unit

January 25, 2010 - As it waits for the fee income that will come once interest rates rise, Bank of New York Mellon will continue to try and control costs and focus on expanding its asset management and asset servicing businesses overseas, the firm said during an earnings call last Wednesday. Robert Kelly, BNY Mellon's chief executive, said the firm will cut expenses by $100 million, or 4.3%, this year. "There are a lot of opportunities to drive efficiencies in our businesses," he said. "Executives will re-engineer operations to make us more efficient."

C- Grade is Nothing To Crow About for 401(k)s

January 18, 2010 - The mutual fund industry should proudly celebrate Americans' 73% approval rating for 401(k)s, according to an Investment Company Institute report, "Enduring Confidence in the 401(k) System." In our book, a 73% rating equals a C- grade that, in fact, should be a wake-up call for the industry to do a far better job of equipping Americans to adequately prepare for a decent and healthy life in their old age.

Wholesalers Adapt to Advisers' Changing Needs

January 18, 2010 - The fundamentals of what advisers need from wholesalers are changing, and wholesalers have no choice but to adapt. Our research at kasina concludes that wholesalers should focus on serving advisers' needs for: *Better products and solutions for clients (advisers rate performance/risk/correlation at 7-8 on a 10 point scale of importance, well above other factors); *Improving their insights and context (news and market commentary trails only product info as a reason advisers visit asset manager websites); and, *Ideas and best practices to help build their businesses (the importance of which has jumped enormously in the last two years).

ICI Study Finds 401(k) Confidence, Apathy

January 18, 2010 - A new survey by the Investment Company Institute finds that most Americans are still confident that their 401(k) plans can help them reach their retirement goals, but last year's 31% average drop in account balances has also highlighted the need for improvements to this popular, critical retirement vehicle. Improving education and financial literacy among investors, as well as boosting participation among African American and Hispanic minorities, should be a top priority of the nearly $12 trillion mutual fund industry, said Mellody Hobson, president of Ariel Investments.