International Funds Gain Popularity
From The Wall Street Journal
Six months after declines in Latin America, Eastern Europe and other global markets, investors are buying international mutual funds again. Amid a rally in many markets' performance, investors during the second quarter put a net $476 million into international and U.S.-inclusive global mutual funds -- the first quarterly flow into the funds in a year, according to Financial Research, the Boston mutual fund consulting firm. In the previous three quarters, investors pulled out an average of $6.9 billion each quarter from these funds as performance was down outside of the U.S. The international-fund resurgence is also broadening in the array of mutual funds receiving new money from investors.
Vanguard and Janus on track for annual inflow record
From The Boston Globe
Vanguard Group, Janus Capital Corp., and Fidelity Investments secured 66 percent of all inflows into U.S. stock and bond funds in the first half of the year, as long-term assets of all funds passed the $4 trillion mark. Stock and bond funds at Vanguard, the nation's second-largest mutual fund group, and Janus, the sixth-largest fund manager, are on track to surpass their previous records, set last year, for annual inflows, according to Boston-based Financial Research. Overall, in the first six months this year, investors sent a net $99.3 billion into stock and bond funds, down 42% from the first half of 1998.
Bankers Trust to pay $60 million fines
From The Boston Globe
In a sentencing hearing yesterday, a number was finally placed on the Bankers Trust scandal. The district court judge presiding ordered the bank to pay the federal government $60 million for the diversion of $19.1 million in unclaimed funds from 1993-1996 into the company's coffers. Bankers Trust also agreed to pay a separate $3.5 million fine to New York state banking regulators, reimburse clients it had cheated, and improve internal controls to prevent a recurrence.
Waterhouse prez joins E*Trade
From The San Francisco Examiner
E*Trade Group Inc. has hired Frank J. Petrilli, president and chief operating officer of Waterhouse Group Inc., to run its brokerage business. Petrilli, 48, succeeds Kathy Levinson as president of E*Trade Securities Inc. Levinson remains president and chief operating officer of the Menlo Park, California-based parent company. Petrilli will have primary responsibility for retail brokerage, asset management and clearing.
Fund mergers may have a negative impact on returns
A recent study from Georgia Tech's Dupree College of Management finds that fund mergers actually cut into as much as two-thirds of the surviving fund's peer-adjusted returns during the following year. If a fund outperformed its peers by 10% before the merger, it would beat its peers by less than 4% the following year. And its expenses would rise by 0.03% on average. The public often associates a merger with positive returns and should be reminded in instances like these about the long-term goals of the fund.
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