Friday, April 25, 2008

REGULATORS TO DISTRIBUTE $30M TO FUND INVESTORS

UPDATE: Regulators To Distribute $30 Million To Fund Investors
Dow Jones
April 25, 2008: 03:12 PM EST

WASHINGTON (AP)--The Securities and Exchange Commission said Friday it will distribute more than $30 million to about 250,000 investors in a boutique mutual fund firm charged with allowing excess trading.

The funds stem largely from a settlement the SEC reached in 2004 with RS Investments, a mutual fund firm based in San Francisco, and two of its executives, G. Randall Hecht and Steven M. Cohen.

The firm agreed as part of the settlement to pay $25 million in disgorgement of profits and civil penalties, without admitting or denying wrongdoing.

The rest of the $30.6 million distribution includes $3.3 million in disgorgement and penalties paid by several units of Bank of America Corp. (BAC) on a related matter, the SEC said, as well as interest.

RS Investments was charged in 2004 by the SEC and then-New York State Attorney General Elliott Spitzer with allowing certain large investors to make millions of dollars in profits by rapidly trading shares of its mutual funds.

Quick trading of mutual fund shares can take advantage of inefficiencies in fund share pricing and can reduce gains for long-term investors.

NOTE: QUICK TRADING OF MUTUAL FUNDS CREATES MILLIONS OF DOLLARS IN PROFITS FOR BIG INVESTORS.

The SEC began cracking down on the practice several years ago. On Thursday, the agency said that Gabelli Funds LLC agreed to pay $16 million to settle similar charges of rapid trading in one of its funds.

Mario Gabelli, a high profile mutual fund manager, is chief executive of Gamco Investors Inc. (GBL), which owns Gabelli Funds.

The SEC is also suing Gabelli's son, Marc Gabelli, and Bruce Alpert, the chief operating officer of Gabelli Funds, both of whom said Thursday they will fight the SEC's charges in court.

(END) Dow Jones Newswires
04-25-08 1512ET
Copyright (c) 2008 Dow Jones & Company, Inc.

Top of page

More Markets
Dow at nearly 4-month high
Election '08: Wall Street's big donors
Oil tops $119
The Hot List
100 best places to start a business
Diesel: The truck stops here
'You're working for gas now'

NOTE: CHECK OUT MORE STORIES IN ORDER TO LEARN MORE!

Top Stories
Rebate checks: How to spend 'em
Why the worst may be over
Dow at nearly 4-month high
Showtime for Microsoft-Yahoo
Daily News owner bids $580M for Newsday

Money
Privacy Policy
© 2008 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy
Home Portfolio Calculators Contact Us Newsletters Podcasts RSS Mobile Press Center Site Map
Advertise with Us Magazine Customer Service Download Fortune Lists Reprints Career Opportunities Special Sections Conferences Business Leader Council
Live Quotes automatically refresh, but individual equities are delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET.
* : Time reflects local markets trading time. † - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer
Copyright © 2008 BigCharts.com Inc. All rights reserved. Please see our Terms of Use.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. All Times are ET.
Intraday data provided by ComStock, an Interactive Data Company and subject to the Terms of Use.
Historical, current end-of-day data, and splits data provided by FT Interactive Data.
Fundamental data provided by Hemscott.
SEC Filings data provided by Edgar Online Inc..
Earnings data provided by FactSet CallStreet, LLC.

Thursday, April 24, 2008

Don't spend $ on new fund's gimmick

By Chuck Jaffe / Your Funds
Tuesday, April 22, 2008 - Updated 7m ago
+ Recent Articles + Email


For years, the mutual fund industry has talked about creating actively managed exchange-traded funds, and I always figured that the very first one - heralding the new genre of ETF - would be a Stupid Investment of the Week.

I wasn't wrong.

Last month marked the debut of Bear Stearns Current Yield, and while there is no truth that its ticker symbol "YYY" is shorthand for investors wondering "Why, why, why would I buy this?" there's no denying that the fund qualifies as Stupid Investment of the Week.

Note: It's important to note that not all companies who offer Mutual Funds are reliable.

First, it's important to note that the issue here is not with Bear Stearns, the troubled financial-services firm. Shareholder money in the fund is safe and segregated.

The problems with Bear Stearns Current Yield fund involve what the fund itself can deliver, which probably won't live up to anyone's expectations for actively managed ETFs.

ETFs are built like index mutual funds but traded moment-by-moment like stocks. They tend to be low-cost, tax-efficient baskets of securities, designed to track an index or specific market strategy.

Used correctly, they can be a great alternative to traditional mutual funds. That's partly why so many industry watchers have been clamoring for actively managed ETFs, where the fund is run based on the intuition and decisions of an expert, rather than a passive, follow-the-benchmark strategy. A traditional actively managed mutual-fund not only would have greater costs, but can only be bought or sold at the day's closing price.

Lost amid the excitement of the first active ETFs is the constricted nature of the Bear Stearns fund's mandate. The very asset class involved diminishes the ability of a manager to deliver superior returns, meaning shareholders aren't likely to get what they expect from the fund.

Bear Stearns Current Yield buys short-term debt to generate income. That means it purchases government securities, corporate debt, mortgage-backed and asset-backed securities, municipal bonds, foreign debt obligations, and the like.

The trouble is, there's not a lot of value that an active manager can add to short-term bond funds and money market funds. In fact, studies have shown that the biggest determining factor between the top funds and the laggards has much less to do with the assets they choose than with the costs associated with the fund.

Bear Stearns Current Yield is charging 0.35 percent in expenses, thanks to a reimbursement that management is making to the fund. That's competitive - better than the 0.47 percent charged by the average money market fund, according to Crane Data - but not great in the realm of bond funds. It's roughly double the expenses on the Vanguard Short-Term Bond Index fund, which also has an ETF sibling - that is cheaper too - and that's before brokerage charges are tacked on.

Moreover, because ETF shares trade like a stock, there's a brokerage commission for every buy and sell. While that's no big deal for people paying a few bucks per trade with a discount broker, it can add a significant layer of costs to ordinary expenses in some circumstances. It's likely to eat up any edge over the average money fund, for example.

"If you trade in this fund, you fritter away any expense advantage that ETFs might normally have," says Jeff Ptak, director of ETF research at Morningstar Inc. in Chicago. "While the liquidity can be valuable, I'm not sure it justifies paying higher costs or transaction fees."

Note: ETF is indeed a good potential to invest into.

Indeed, it's hard to think of a situation where an average investor bailing out at noon from a stable investment such as a Treasury fund would wind up protecting more money by "getting out now" than they pay in commissions. They're not much better off than if they owned a traditional fund and got the end of the day price, without any trading charges.

"This fund is pretty darned close to just holding cash," says Gregg Brewer, executive director of research at Value Line. "As such, it's not that cheap when you factor in commissions."
Chuck Jaffe is senior columnist for MarketWatch.

Next Article in Business & Markets:
Trader in a fish bowl

Related Links


Contact us | Print advertising | Online advertising | Herald history | News tips | Electronic edition | Browser upgrade | Home delivery | Herald wireless

$ave on Boston Herald Home Delivery

Jobs with Herald Media

Tuesday, April 22, 2008

Mutual Fund

MUTUAL FUND

Mutual Fund Monday
Star Fund Managers Can't Agree on Market

Even the savviest money wizards can't seem to agree on the best next bet on the investing horizon.

Maybe it's a symptom of the now-it's-up, now-it's-down malaise on Wall Street.

Last Wednesday, a group of eight fund managers -- all of whom lead funds defined by mutual fund rating service Lipper as "Lipper Leaders" -- met in midtown Manhattan to share their thoughts on investments.

While there was near-universal agreement on the blessings of having avoided exposure to financial stocks recently, there seemed to be little overlap regarding investing ideas going forward.

Note: it's important to know what are your options in Mutual Funds...

The eight, who represented a subset of the funds granted Lipper Leader status (which is given to top performers), were:

# Stephen Goddard, portfolio manager of the approximately $81 million AFBA 5 Star Balanced FundAFSAX
# Dan Chung, portfolio manager of the $2 billion Alger Mid Cap Growth Institutional FundALMRX
# Arieh Coll, portfolio manager of the roughly $90 million Eaton Vance Tax-Managed Multi-Cap Growth FundEACPX in Boston
# Todd McAllister, portfolio manager of the approximately $1.7 billion Heritage Mid Cap Stock FundHMCAX
# Patrick Gundlach, co-manager of the approximately $300 million Marshall Small Cap Growth FundMRSCX
# Brian Placzek, portfolio manager of the $1.5 billion Principal High Yield Fund CPHYX
# Jeff Knight, portfolio manager of the $2.4 billion Putnam Asset Allocation Growth PortfolioPAEAX
# Jeff Markunas, portfolio manager of the approximately $1.3 billion RidgeWorth Large Cap Core Equity FundCRVAX

More Prime Picks From Lipper Leaders

Eaton Vance's Coll is perhaps the most surprising of the group in his view that now might be a suitable time to take a nibble at the financial sector, despite the seemingly constant dribble of news of more bad debts at the big banks.

He points to Annaly CapitalNLY, a firm which makes its money by investing in mortgage-backed securities, as a particularly appealing play.

Because the Federal Reserve has lowered the cost of borrowing so dramatically, Coll says the firm now makes a much bigger spread on the difference between its cost of funds and the yield on the securities it buys.

What that means is likely big profits over the coming quarters, and because the firm is a real estate investment trust, by law it has to pay out 95% of its earnings in dividends. That could mean a dividend yield of over 17% later this year, assuming a $3 per share payout and the current share price around $17, he says.

Coll also believes the bear market in stocks ended March 17, which coincided with news of the Bear StearnsBSC bailout.

That's also the date gold prices, a barometer of all things bad financially, reached their all-time intraday high around $1,030 an ounce before retreating over $100 over the past month or so.

"It's not an accident that the market rallies after a crisis," says Coll. "It's because of all the things the government does, like lowering interest rates and making cash available."

He points to a multidecade history of stock-market rebounds following financial-company meltdowns as evidence of the repeating pattern of stock behavior.

ABFA's Goddard takes the opposite tack. He says that pretty much everything other than financials is looking healthy.

"Most companies have too much capital and don't know what to do with it," he says. "They should be much more aggressively buying back shares, or paying dividends."

He says IBMIBM has been "ahead of the curve" in returning cash to shareholders through such methods.

The aging Baby Boomers should make dividends attractive to investors seeking steady income through their retirement. That should make dividend-paying shares more attractive relative to those showing massive growth in earnings that is not matched by increases in cash payouts.

RidgeWorth's Markunas likes another recently out-of-favor group: technology stocks.

"I think people have gotten scared off by the [lack of] growth after the dot-com bubble burst," Markunas says. "The valuations have become compressed, which means either people don't believe the growth prospects or are suspicious."

That means expectations are now so low that the big names in the sector, such as Hewlett-Packard HPQ, OracleORCL, IntelINTC and NokiaNOK, stand a high chance of beating consensus estimates, he says.

Note: There are other credible institutions who offers Mutual Funds. Have to be wise in choosing them.

He points to robust cash flow and balance sheets, partly from sales to hot overseas markets, as the key drivers for choosing a relatively high 20% weighting for the sector.

Note: Here's another information..

04/21/08
U.S. Recession Great for Latin America

Simon Constable revisits the 'locomotive theory' to explain what effect a U.S. slowdown will have on the rest of the world.

04/14/08
Award-Winning 'Small' Fund Not Small After All

Award-winning Waddell & Reed Advisors and Ivy Funds have the same parent and same chief marketing officer. Taken together, they'd be in another category.

04/07/08
Why a Company in Flux Is a Chance to Buy

The manager of a Touchstone fund thinks times of change at companies are ideal for investing.

03/31/08
Russia, Poland Are Big Bets for This Fund Manager

A Metzler/Payden emerging-markets specialist sees promise despite uncertainty in Moscow.

Banking-Credit
RSS
Money Management
RSS
Bonds/Economy
RSS
Financial Services
RSS
Consumer Goods
RSS
Technology
RSS
Saving
RSS
Personal Finance
RSS
Banks
RSS
Metals and Mining
RSS
Biotech
RSS
Energy/Commodities
RSS
Markets
RSS
Retirement
RSS
Mutual Funds
RSS
Personal Finance Basics
RSS
2008-02-28 09:30:38.0
Five Fast Ways to Blow a Windfall

Getting unexpected money can be a problem if you don't have a plan.

2008-02-28 10:06:48.0
You Ask, Cramer Answers

Jim Cramer answers questions on UnitedHealth and more.

2008-02-29 11:27:30.0
Home Ownership and the Single Woman

Female buyers are finding more ways to buy property early in their careers.

2008-02-28 11:48:19.0
Top 10 Stocks With Big Insider Buying, Buybacks

Large repurchases make Cheesecake Factory and Stryker stocks to watch.

2008-02-01 11:59:57.0
Kass: Near-Term Pros and Cons

The negatives have a slight edge over the positives.

2008-02-29 08:24:40.0
3 Stocks I Saw On TV

3 Stocks I Saw On TVDan Fitzpatrick examines three stocks viewed on Fast Money and Mad Money Today's stocks include Deere & Co., Petrobras and MBIA

2008-02-22 15:30:13.0
The Mac Owners' Conceit

Research from Mindset Media suggests Macintosh owners like themselves.

2008-02-27 10:57:21.0
Clinton Attacks, Obama Parries

Obama maintains his advantage in the race as Clinton puts up her dukes.


scottrade

Zecco.com

Fidelity

E*TRADE FINANCIAL
Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*


Premium Products

Note: Premium Stock Products are good means to invest your money through Mutual Funds too..

HPQ was an Action Alerts PLUS pick on 2008-02-07
Learn More About Action Alerts PLUS
More popular tickers are indicated by scale.
MBI GE C FRE WMT XOM INTC GOOG NOK YHOO JPM IBM MOT MSFT CFC AAPL CSCO MER BSC PFE LEH BAC WM MS WB GS RIMM MRK ABK TMA FNM VZ

1. AMR Fights to Quell Bankruptcy Fears
2. Why You Need Long-Term Care Insurance
3. Top Rocket Stocks for Week of March 31
4. Vertex Lifted on Hepatitis C Drug Data
5. Kass: Grading My Surprises So Far
6. Thornburg Faces Monday Deadline on Capital Plan
7. Health Insurers Take Sickly Turn
8. Four Things to Know About Airline Mergers
9. One Night in Bangkok -- or Several
10. Garmin, MapQuest Ink Maps Pact

Brokerage Partners

E*TRADE FINANCIAL

Zecco.com

Fidelity Investments

Scottrade

Charles Schwab

TD Ameritrade