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SEC Defers IFRS Decision Until 2011

March 1, 2010 - The U.S. has taken another step closer toward converging its accounting standards with those adopted by the majority of the world. On Wednesday, the Securities and Exchange Commission unanimously approved a statement in support of efforts to converge U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) in order to narrow the differences between the two sets of standards.

Johnson Calls For Reduced IT Complexity to Raise Quality of Customer Service

February 22, 2010 - MIAMI -- Technological advances are allowing investment firms to add ever-increasing layers of information to their products, but leaders say the financial services industry should be doing more to reduce complexity for the end user so investors can make sense of it all. "Reduced complexity will improve quality, bring about innovation and improve customer loyalty," said Abigail Johnson, vice chairman of parent FMR LLC and president of Fidelity Investments' personal and workplace investing business.

New Money Fund Rules Could Create Headaches For Transfer Agents

February 15, 2010 - The Securities and Exchange Commission's new rules to improve liquidity and disclosure for money market funds spared the $3.2 trillion industry from the cumbersome operational task of marking value of shares to market every day.The bad news is the burden is now on the back office. Money market funds must adapt their customer service procedures and information systems to more frequently disclose their "shadow net asset values" and modify their transfer agent systems to be able to process orders and redemptions at a price other than $1 a share.

A New Look at Outsourcing: A Key Strategy for Recovery

February 15, 2010 - The ability to adapt to changing market conditions has always been a critical element for success in the financial services arena. But in today's market, asset managers will have to go beyond adaptation and in many respects reinvent themselves in order to ride out a perfect storm of industry pressures.Recovery from the recession of 2008-2009 promises to be slow. Net revenues remain threatened as investors continue to gravitate toward lower-margin and "safer" products. And consolidation among distributors exerts pressure on institutional pricing and revenue sharing. Surviving in a risk-sensitive, capital-intensive environment will require asset management companies to restructure operating models as they seek to increase revenues and transform costs, while responding to changing investor needs.

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.

Putnam Calculator Directs 401(k) Investors to Retirement Income

February 1, 2010 - NEW YORK -- Online retirement calculators are usually so confusing or overwhelming that the average plan participant logs in, checks their account balance and then logs off without making any changes. Putnam Investments has developed a new retirement income twist it hopes will resonate with investors, plan sponsors and financial advisers. "Complexity leads to inactivity," said Edmund Murphy, managing director and head of defined contribution at Putnam, at a presentation at the Four Seasons Hotel last week. "Participants find it hard to see how their balance turns into retirement income. They are told they need to save millions, and they just give up and turn off instead."

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.

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.

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.

Distressed Debt Reaches for Fair Value

January 18, 2010 - NEW YORK -- It's difficult to determine what something is worth if no one is buying or selling it. While cryptic mortgage-backed derivatives stymied the markets at the beginning of the credit crisis, industry experts predict commercial real estate will be the next shoe to drop. Even though the stock market continues to mend, distressed commercial real estate and bank debt need to regain value before the economy recovers for real, they said.

2010 Will Be The Year Fund Investors Get Real

January 4, 2010 - Since the recession hit two years ago, 80% of mutual fund firms have laid off tens of thousands of people, as total assets under management dropped from $11.999 trillion at the end of 2007 to $10.688 trillion as of October. In line with this 11% decline in assets, fees have undoubtedly plummeted by at least $1 billion a year. While the S&P 500 delivered a remarkable 24.9% return last year, the fact of the matter remains, the stock market is still down 30% from its peak in October 2007. This is why investors in 2009 remained stock-spooked, yanking $36 billion from U.S. equity funds and socking $357 billion into bond funds.

IFRS Puts Focus On Fair Value

January 4, 2010 - As regulators work to converge U.S. Generally Accepted Accounting Principles (GAAP) with International Financial Reporting Standards (IFRS), several key differences remain, most notably the different measurement attributes of financial liabilities, the timing and approaches to projects and the difference between fair value and amortized costs. Under GAAP, investment companies like mutual funds, private equity holders and venture capital organizations are exempted from certain consolidation requirements and are allowed to account for separate fund holdings at fair value. No such exemptions currently exist under IFRS, though fair value concerns are being featured prominently in convergence discussions, and the U.S. has been adapting its rules on fair value to increase its international appeal.

American Century Looks Abroad

December 14, 2009 - American Century Investments is a brand-new player in the international wealth management business-and that novelty could be an ace up its sleeve, according to the company's top executive. "That's because the Kansas City, Mo.-based mutual fund firm is a fresh alternative for institutional investors who are "disenchanted with their current providers," said Jonathan Thomas, American Century's president and chief executive officer. "For the most part, we're nobody's current provider."

Morningstar Publishes Credit Ratings

December 7, 2009 - Morningstar has started publishing credit ratings for about 100 of the largest U.S. companies. Over the next year, it plans to produce credit ratings for up to 1,000 companies currently covered by its equity analyst team. The ratings are available for free for institutional equity research clients at its website. Morningstar is drawing on its equity research, which is has been producing since 1998, to bring a distinct perspective to debt ratings. Its equity analysts produce detailed five-year forecasts of cash flows for stock evaluation. The company then compares these forecasts with liabilities coming due to offer insight into companies' creditworthiness.