Products December 19, 2006

State Street Global Advisors Lauches International Real Estate ETF

State Street Global Advisors launched an exchange-traded fund Tuesday on the American Stock Exchange that will track the performance of real estate securities outside the US.
Reported by

The streetTRACKS(R) DJ Wilshire International Real Estate ETF is the first to monitor the performance of publicly traded real estate securities outside the US, according to a press release from State Street about the new product.

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The new fund is based on the Dow Jones Wilshire exUS Real Estate Securities Index(SM).

“Through the launch of this ETF, we’ve provided investors with simple, comprehensive exposure to the international real estate market, an exciting and otherwise difficult asset class to access,” said James Ross, senior managing director of State Street Global Advisors, in the release.

The company now has more than $113 billion in ETF assets under management as of November 30, 2006, and now manages 67 of the funds worldwide.

State Street came out with two ETFs in mid-November that give investors greater access to the Japanese market. One of the funds focuses on the broad Japanese stock market and measures the performance of Japan’s 1,000 largest stocks, and the other tracks the smallest 15% of companies in the stock market.

For more information, visit www.ssgafunds.com

In Practice December 18, 2006

Profit Growth Lagging Revenue for Adviser Firms

The past five years may have been kind to advisers in some respects, but their financial picture may be starting to darken, a new study found.
Reported by

A news release from Seattle-based accounting firm Moss Adams LLP said its 2006 Moss Adams LLP Financial Performance Study of Advisory Firms found that margins are under pressure, owners’ income has stagnated, and growth is slowing.

 

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“This is the first time we’ve seen such dramatic growth in the top line (revenue) without a corresponding improvement in Key Performance Indicators that measure profitability and productivity,” said Mark Tibergien, principal of Moss Adams, in the news release.

 

 

To service larger numbers of clients in a more demanding environment, practices have added more staff. Moss Adams researchers found that the leverage from these new hires has boosted the top line across the industry, but the cost of doing so has wreaked short-term havoc on the economics of many practices that has yet to level off in the form of long-term profitability.

 

 

But Tibergien cautioned firms against interpreting these findings as an indication that they need to trim back their staff. “The problem isn’t that firms have too much staff,” he said. “It’s that their growing staff needs better management.”

 

 

Strong Revenue Growth

 

 

According to the survey, advisory practices are now growing at rates not seen since the early 1980s.The 119 firms that have participated consistently in Moss Adams surveys since 2001 posted averaged revenues of $777,927 for fiscal year 2000 but practically doubled that top line by 2005, with $1,356,018 in revenue, according to the firm.

 

 

Meanwhile, AUM for all firms in the survey has grown steadily on average, at better than 20% per year during the past three years.

 

 

But income growth has not kept up. At the same time that advisory firms were increasing AUM and revenues at notable rates, their owners saw a less appreciable rise in firm-derived income.

According to Moss Adams, in 2000, principals in these firms collected on average $253,010 in pre-tax income per owner (compensation plus firm profits).But by 2005, income per owner had grown to $272,761 – an 8% increase “for what was five years of tremendous effort and commitment to grow their firms 74% in terms of revenue,” the study said.

 

 

Wrote the Moss Adams researchers: “This is a period of reinvestment for the industry in order to ratchet up to the next level of growth.It is a period when good management, more than ever, will distinguish profitable firms.”

 

 

More than 1,000 firms completed the online survey.

 

 

The 2006 Moss Adams LLP Financial Performance Study of Advisory Firms can be purchased for $145 at www.mossadams.com/surveys/advisorstudy/2006.htm or by contacting Dan Inveen at 206.302.6521.

 

 

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