Data & Research April 23, 2010

Retirement: The Worry Felt around the World

The HSBC Global Pulse survey found the top three financial worries are the same for citizens around the globe: taxes, wealth preservation, and retirement.
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Among respondents from the Americas to Asia and Europe, 82% selected taxes as a top financial concern, while preservation of wealth and retirement each were chosen by 81% of respondents. 

The survey revealed that, relative to their peers, affluent Americans took the largest losses on their portfolios. Looking back from 2008 to the present, more than half of the respondents in the U.S. (56%) said they lost money, despite the fact that 75% of them claimed to be either very or extremely knowledgeable about their personal financial matters, according to a release of the results.  

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Only 19% of respondents in Hong Kong, 28% in Sao Paulo, and 37% in Sydney reported losses.  

Despite their losses, respondents in America said they haven’t taken any steps to change their investment strategy since 2008. The survey also revealed significant differences in asset allocation between countries, with Americans and Canadians more heavily weighted towards mutual funds, while respondents in Hong Kong, London, and Sao Paulo were more willing to invest in real estate, collectables, and alternatives. 

The HSBC Global Pulse was conducted online in February and March among 2,044 respondents (54% male, 46% female) in 11 locations worldwide, including 200 participants per market in Chicago, Los Angeles, New York, Paris, and Washington, D.C.; 121 in Toronto; 94 in Vancouver; 228 in London; 199 in Hong Kong; and 201 in Sao Paulo and Sydney. Respondents are 25 to 64 years old, college educated (43% with graduate degrees), have investable assets of at least $100,000 (48% over $500,000), and are financial decisionmakers in their households (96%).

Products April 23, 2010

Federated Says Money-Market Fee Waivers to Stay

Federated Investors, the third-largest U.S. manager of money-market funds, announced that it expects to continue waiving some fees for the rest of the year because of low interest rates.
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Fees waived on money-market funds will likely reduce the Pittsburgh firm’s operating income by $15.5 million in the second quarter, Chief Financial Officer Thomas Donahue said on a call with analysts, Reuters reported. The waivers reduced first-quarter operating income by $17.8 million.

According to the news report, because interest rates on short-term debt bought by money market funds remain so low, managers like Federated have given up some of their fees to prevent yields on the funds from going negative.

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If yields on money market investments rose by 10 basis points, Federated’s fee waivers would be reduced by one-third, Donahue said. A 25-basis-point increase would reduce the waivers by two-thirds.

Federated managed $272 billion of money-market funds at the end of the first quarter, down from $360 billion a year earlier. It trailed only closely held Fidelity Investments and JPMorgan Chase in that sector, according to Reuters.

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