The Markets January 18, 2011

Resumption of Fixed Income Fund Focus Expected for 2011

The stock fund gains seen in December are likely a temporary development, with investors expected to continue their focus on income and risk avoidance through 2011.
Reported by

That was a key conclusion of a new report by Strategic Insight (SI), an Asset International company.

After attracting $1 trillion globally since the beginning of 2009, bond funds experienced a “turning point” in December, according to the SI analysis. While the improving economic environment benefited stock funds (they were up 6.4% in December), the rising interest rates that accompanied it led to total return losses for bond funds.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

SI said the losses coupled with year-end rebalancing prompted bond fund redemptions of an estimated $23 billion over the month. December’s bond fund net outflows came on the heels of small net redemptions in the sector in November, when it net redeemed for the first time since December 2008.

Meanwhile, SI said stock funds continued showing strength in December with $19 billion in inflows,

Overall, investors worldwide have added nearly a net $1.7 trillion to their stock and bond funds since the beginning of 2009. Globally, stock and bond market price-recovery and net inflows combined to generate a $6-trillion increase in stock and bond fund assets over the past two years, with two-thirds of that increase coming within the U.S. fund industry.

According to the SI report, over the past year, the fund industry has benefited from slowly rebuilding investor confidence, rapid fund innovation, evolving leadership among small and large fund managers and the continuing balance between “safety and income” investments and those targeted for longer term capital accumulation.

Among the industry’s largest 100 managers of stock and bond funds, 96% gained assets over the past year. Within the same universe of companies, about 70% experienced positive long-term fund net flows in 2010, and only a few suffered net redemptions exceeding 10% of their assets.

For the full-year 2010, bond and stock funds, including ETFs, attracted net inflows of $350 billion. This included about $250 billion in net inflows to bond funds—the second-largest flow numbers to bond funds ever, after 2009’s record of $400 billion—and about $100 billion in net inflows to equity funds (virtually all to international stock funds), up from about $70 billion in 2009.

Products January 18, 2011

New Fund Uses Global Network of Asset Managers

Franklin Templeton Investments has introduced the Franklin World Perspectives Fund, an actively-managed, global growth equity fund.
Reported by

The fund draws upon the investment expertise of Franklin’s global network of local asset management teams and will be managed by Stephen H. Dover and Purav A. Jhaveri.  The two will work with Franklin’s regionally based sub-advisers to develop local portfolios that seek to outperform the relevant markets of each region and to create a diversified global fund. The sub-advisers are based in Brazil, Japan, India and South Korea, and will also work with the heads of the U.S., Canadian and European Franklin Equity Group growth teams.    

According to a press release, the fund uses a diversified, opportunistic approach to stock selection that is unconstrained by geographical location or market capitalization.  It can invest across all markets—including developed, emerging and frontier markets.    

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The fund also has an interactive regional allocation process, which means that exposure to various regions will vary over time, according to the portfolio managers’ and the sub-advisers’ opinions as to the prevailing conditions and prospects for these markets.    

The benchmark for this fund, the MSCI All Country World Plus Frontier Markets Index, consists of all investable countries in the world.  It was selected as the most appropriate benchmark since the fund is anticipated to typically have assets invested in emerging and frontier markets, where many other global equity funds and benchmarks do not, the announcement said. 

«