-
American Funds Dumps PetroChina
Tweet Share on Facebook February 22, 2010 CommentAmerican Funds quietly extricated itself from PetroChina during the fourth quarter of 2009, according to the fund provider's most recent filings, which it made available this month. The filings show that American Funds finished the year with $2.7 million worth of PetroChina shares, down from the $190 million stake it had maintained just a few months before.
On its surface, this sudden shift appears to represent a drastic about-face for American Funds, which in November fought to maintain its right to invest in PetroChina despite protests from divestment advocates, who maintain that the Chinese oil company's financial ties to the Sudanese government make the fund company complicit in the genocide in Darfur.
-
Study Measures Trust in Fund Providers
Tweet Share on Facebook February 12, 2010 CommentAmericans have a surprising amount of trust in their mutual fund providers, according to a recent survey by the public relations firm Edelman. As part of the survey, entitled the U.S. Financial Services Trust Barometer, 59 percent of respondents said they trust fund companies.
[See Study Shows Managers Trading More Frequently.]
Overall, the survey found that fund companies are the second-most trusted financial institution. Community and regional banks, which had the trust of 79 percent of respondents, came in first. In the survey, respondents answered on a scale from 1 to 9, with 1 meaning that they had no trust at all in a particular institution. Scores of 6 and above qualified as trust.
-
Study Finds Managers Trading More Frequently
Tweet Share on Facebook February 11, 2010 Comment (1)Institutional managers—who typically manage large sums of money for things like pensions and university endowments—may be trading more frequently than their clients think. A study released Tuesday by the Investment Responsibility Research Center Institute reports that institutional investment managers trade more often than they say they do, based on data collected by investment consultant firm Mercer. For the study, the IRRC Institute teamed up with Mercer to analyze about 800 investment strategies (including large-cap value, small-cap growth, and socially responsible investing) that institutional managers use to invest in the U.S. stock market and throughout the world. From June 2006 through June 2009, the study showed that about two thirds of institutional investing strategies had a higher-than-expected average turnover. The actual turnover—a measure of how often managers change holdings—among the different strategies was, on average, 26 percent higher than anticipated, and some strategies showed turnover between 150 and 200 percent more than expected, based on Mercer's data.
[See 4 Funds for the Record Books.]
The IRRC Institute focuses on corporate responsibility and investor education and has conducted other studies on issues such as corporate governance and the transparency of sovereign wealth funds. Jon Lukomnik, program director for the IRRC Institute, says the study aims to determine "whether investment managers—who are primarily dealing with long-term investors because these are institutional managers who are dealing with pensions and endowments—do what they say they're doing," he says.
-
Among Emerging Markets, Interdependence Grows
Tweet Share on Facebook February 10, 2010 Comment (1)The world's often fragile network of emerging economies is perhaps more interconnected than ever, according to a recent study by the British company Ashmore Investment Management. The study's main finding is that investors in emerging markets countries are beefing up their positions in other emerging markets, even as they keep their asset flows into the developed world fairly steady.
[See The Future of China's Stimulus Efforts.]
The study looks at cross-border investments, which are investments in foreign governments and companies (for example, if someone from India buys shares of a mutual fund that invests in U.S. companies). Ashmore's numbers show that in 2001, investors in emerging markets countries put about 5 percent of their cross-border investments into securities housed in other emerging markets. By the end of 2008, that number had grown to about 25 percent. The remaining 75 percent went to developed markets.
-
The Future of China's Stimulus Efforts
Tweet Share on Facebook February 5, 2010 Comment (2)The Chinese economy has so far this year given investors plenty of reasons to be spooked. For starters, there have been concerns that a tightened lending environment means that the Chinese government is winding down its massive stimulus package. Meanwhile, the Shanghai Composite Index, which is the most common way to track the performance of the Chinese stock market, has tumbled by around 8.8 percent year-to-date.
-
Health Funds Get Boost From ‘Relief Rally’
Tweet Share on Facebook February 3, 2010 Comment (2)A rash of cautious optimism has propelled health funds to an encouraging start for 2010. With healthcare reform looking stalled at best, the funds have benefited from a "relief rally," says Morningstar analyst Christopher Davis.
[See How Healthcare Reform Could Affect Your Investments.]
Overall, health funds are the top-performing domestic stock fund category so far this year, according to Morningstar. To date, their 2010 returns are 2.74 percent. Financial funds are next in line, with year-to-date returns of 0.82 percent. "It's looking less likely that something is going to happen with healthcare reform," says Davis. "With that uncertainty lifted from the sector, I think that's been helpful."
