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Mutual Funds: There's an App for That
Tweet Share on Facebook September 30, 2009 Comment (2)Apple has prided itself on claiming that its iPhones have "an app for just about anything." And with a new application from Vanguard, consumers can now add mutual funds to the list. The app, which could come out in the next few months, is expected to make Vanguard the first mutual fund company to get real estate on iPhones.
Users who download the app will be able to access their Vanguard accounts, view their transaction history for the past seven days, read market news, listen to podcasts, and watch videos. "The iPhone app is the continuation of our mobile computing strategy," says Vanguard spokesperson Linda Wolohan. "The iPhone was a natural place to start because of the iPhone's prominence in the marketplace."
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SEC Looks to Put Buck Back Together in Money Market Case
Tweet Share on Facebook September 28, 2009 Comment (5)After a year of payments and legal wrangling, the broken buck is one step closer to repair. Under a Securities and Exchange Commission plan and a timeline articulated by a federal judge, the Reserve Primary Fund's shareholders could recover by the end of the year all but a penny on each dollar they had invested. But even as the process reaches a partial conclusion, some investors are digging in for another battle.
[See Money Market Insurance Program Set To Expire.]
Last Wednesday, U.S. District Judge Paul Gardephe said that he would like to see the Reserve Primary Fund liquidate virtually all of its holdings by December 23. His remarks came during a hearing on the SEC's plan to compensate investors who had money in the fund, which last September sparked an industrywide panic after it "broke the buck," meaning that its value dipped below $1 per share. After Lehman Brothers collapsed, the $62 billion Reserve Primary Fund's shares fell to 97 cents, shattering the common notion that money market funds—which invest in short-term, low-risk holdings like certificates of deposit and government bonds—couldn't lose money.
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Bond ETFs: the Ins and Outs
Tweet Share on Facebook September 25, 2009 Comment (1)Bond exchange-traded funds are gaining momentum: Assets invested in this slice of the ETF market rose from $53 billion in mid-September 2008 to $91 billion this September, or 59 percent, according to TrimTabs Investment Research. What's more, the sheer number of bond ETFs has increased more than tenfold, from just six funds in 2006 to 67 in early September. "Although they don't get as much attention as equity ETFs, [bond ETFs] have really come on strong lately with more ETF providers," says Tom Lydon, editor of the blog ETF Trends. Another force driving the popularity of bond ETFs: Investors, looking for more diversification after suffering steep losses in 2008, are moving into more asset classes within the bond market, says James Ross, senior managing director of State Street Global Advisors.
Here are a few things to know about bond ETFs:
[See 9 ETFs For 2009 and Beyond.]
A Departure From Index Funds. Exchange-traded funds are very similar to index mutual funds in that they generally mirror an index, such as the S&P 500 or the Russell 2000. But unlike mutual funds, they can be traded throughout the day. "Having interday liquidity is an advantage to some investors and even mutual fund managers themselves," says Lydon. "More mutual fund managers and investors are putting money into ETFs so they can have instant allocation in areas they are looking for."
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Could Arbitration Help You Recover Investment Losses?
Tweet Share on Facebook September 23, 2009 Comment (2)As Horace Grant found out the hard way, it's not always easy being a Bull in a bear market. But even though the former basketball star saw his investments take a dive during the credit crisis, he managed to net a victory recently. Grant, best known for his career with the Chicago Bulls, won $1.46 million from mutual fund provider Morgan Keegan & Co. after charging that the company underplayed the amount of risk that some of its bond holdings carried.
All told, Grant's case, which fits nicely into the familiar story of the big man (in this case a 6-foot, 10-inch basketball player) taking on big business, is certainly one of the more high-profile instances of mutual fund arbitration. And his award is the largest arbitration recovery to date against Morgan Keegan, whose RMK bond funds reportedly lost $2 billion in the year starting March 31, 2007. But Grant's win is hardly the only one, and recent results have shown that you don't need to be a celebrity to collect.
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How Healthcare Reform Could Affect Your Investments
Tweet Share on Facebook September 21, 2009 Comment (3)As of last week, healthcare reform has a new price tag. According to the Congressional Budget Office, the plan unveiled September 16 by Montana Democrat Max Baucus would cost $856 billion over 10 years. But while politicians on Capitol Hill remain fixated on pinpointing direct costs, analysts on Wall Street are worrying about an even more elusive calculation: the downstream impacts reform would have on the markets.
[See 4 Conundrums That Impede Healthcare Reform.]
In the years between the Clinton presidency and the current reform push, managers of mutual funds that specialize in healthcare have known it would be only a matter of time before Congress took up another legislative overhaul. And they have made their bets accordingly. "You see healthcare managers favoring companies that they think are going to make healthcare more affordable," says Christopher Davis, an analyst for Morningstar. "These shifts have been taking place before Obama became president, before healthcare became a top-of-mind issue."
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Money Market Insurance Program Set to Expire
Tweet Share on Facebook September 16, 2009 Comment (1)Some anniversaries just aren't meant to be celebrated. A year after the Reserve Primary Fund broke the buck and ignited industrywide panic, the federal government's profitable insurance plan for money market funds is set to come to an unceremonious end on Friday.
[See Are Money Market Funds Safe?]
But as investors look to bury memories of the wreckage left behind by the disastrous month of September 2008, analysts are using the expiration of the program as an opportunity to reflect on the state of the money market as the grip of government intervention begins to loosen.What they see, for the most part, is an industry that has spent the past 12 months on an unsteady road to recovery and that is once again ready to support itself. "I think the money market fund industry really needs to stand on its own feet," says Jeff Tjornehoj, Lipper's research manager for the United States and Canada.
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6 Funds Plunging Back Into Financials
Tweet Share on Facebook September 15, 2009 CommentBig banking is back. Since the beginning of the year, a number of funds—some more well known than others—have leapt back into the financial sector. Financials as a category have blasted off this year with a 23 percent return, and managers are seeing more room for them to run. As Morningstar analyst Harry Milling puts it, "The one way is up from here." Based on Morningstar data, here are some of the funds that invested the most in the financial sector between the end of 2008 and mid-2009.
[See Where Bargain Investors Can Still Find a Deal.]
Fidelity Independence (symbol FDFFX) and Legg Mason Value (LMVTX) are among the most well-known names on the list of funds making big bets in the financial sector. Currently, stocks of financial companies make up about a quarter of each portfolio. For Fidelity Independence, that allocation represents an increase in its share of financial stocks by more than 16 percent. In 2008, the fund's comanager Bob Bertelson got burned by materials stocks, and the fund lost almost half of its value. Now, Wells Fargo, Bank of America, and JPMorgan Chase account for Fidelity Independence's top three holdings, and the fund is up 29 percent year-to-date.
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Mutual Fund Bill Remains in Congressional Limbo
Tweet Share on Facebook September 10, 2009 Comment (5)Unveiling a new set of initiatives during his Saturday radio address, President Barack Obama made a sweeping promise to workers. "We cannot continue on this course," he said. "If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement."
[For more, see 3 Ways Obama's Saving Initiatives Will Affect Your Retirement.]
Obama's proposal, which includes a provision that would help small businesses automatically enroll employees in savings plans, comes as workers struggle to recoup losses on their recession-ravaged retirement investments. Although Obama does not need congressional approval to enact his plan, which is administrative in nature, his remarks follow on the heels of a recently renewed—although lesser-known—push on the Hill to tackle retirement savings.
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Why Small Caps Are Sizzling
Tweet Share on Facebook September 4, 2009 CommentFunds that invest in small companies typically lead the pack in a market rebound, despite the fact that they're often the hardest hit during downturns. The Aegis Value fund, which aims to buy small-cap stocks on the cheap, is currently riding the market upswing. The fund suffered deep blows in 2008, with a negative 51 percent decline, but it has risen quickly and steadily so far this year with a 61 percent return—ranking it in the top-five-performing diversified U.S. stock funds. Recently, U.S. News spoke with manager Scott Barbee about why small-company stocks bounce back quickly and what companies he likes now. Excerpts:
[See Where Bargain Investors Can Still Find a Deal.]
If small-company stocks are hit the hardest during steep market declines, why do they tend to rebound ahead of the pack?
In the latest banking crisis, we believe small-cap value stocks were hit because they were, compared to larger-cap companies, disproportionately owned by levered financial institutions and hedge funds facing margin calls and investor redemptions. In general, [small] companies are very sensitive to economic conditions. They tend to be value investments. In the down markets of 2002-2003 and 2008, those companies got crushed. When those companies came back, a big portion of their recovery had to do with the fact that these companies are economically sensitive and able to come back when the economy improved.
[Also see Funds Stage a Comeback: Time to Forgive and Forget?]
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Could China Be Right for You?
Tweet Share on Facebook September 2, 2009 Comment (1)Not sure where to invest your money right now? If you have time on your side—20-plus years or so—and you don't mind adding a riskier holding to your already diversified portfolio, you might want to consider one of the growing number of mutual funds that focus on China-based companies.
There was much said about President Obama's stimulus package here at home. Should there be one? If so, how much should the government spend? Where will the money come from? In China, there was little debate when its economy also hit a bump in the road, and, as James Oberweis, president of Oberweis Funds, recently told U.S. News, "Dictatorship certainly has its disadvantages, but the upside is you can get things done very quickly."
