The Markets July 21, 2010

Skittish Investors Reverse Fund Flow May Trends

Investors who were skittish over the European sovereign debt crisis and whether the global economy would slide back into recession reversed course in May. 

Reported by

The latest fund flow data from Strategic Insight (SI), an Asset International company, said that in the process the nervous investors at least temporarily unraveled positive fund flows seen in the U.S. and Europe since April 2009. 

SI said U.S. long-term funds saw net redemptions of $5 billion in May at the same time as long-term funds in Asia were reaping $15 billion in net inflows.  Year to date, SI said the U.S. enjoyed $199 billion in net inflows.  

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According to the report, May flows by category were:    

  • U.S. Equity, -$18.9 billion; 
  • International/Global Equity, -$5.7 billion; 
  • Mixed Allocation, -$1.9 billion; 
  • Tax-Free Bond, $2.6 billion; and
  • Taxable Bond, $12 billion.

 

The top five mutual fund money managers in the U.S. in terms of assets in May were The Vanguard Group ($1.36 trillion), Fidelity Investments ($1.19 trillion), American Funds ($883 billion), BlackRock ($692 billion), and PIMCO/Allianz Global ($407 billion). SI said the top five had 44% of the U.S. market share, up from 42% a year earlier.  

More information is at http://www.sionline.com/.

 

Compliance July 20, 2010

Cash Balance Settlement Gets Court Approval

A settlement of two cash balance pension challenge suits against JPMorgan Chase has won final approval from a federal judge. 

Reported by

U.S. District Judge Denise L. Cote of the U.S. District Court for the Southern District of New York signed off on the agreement covering approximately 100,000 plaintiffs in the two class actions under which the company will provide a year of financial planning services.  

One of the suits alleged Employee Retirement Income Security Act (ERISA) violations in that the cash balance plan of a company now part of JPMorgan Chase discriminated against older workers and had not provided an adequate notice when the plan was converted from a defined benefit program.   The second suit also alleged the cash balance program of another company later merged into JPMorgan Chase violated ERISA’s notice requirements (see Court Sends Slimmed-Down Cash Balance Suit on its Way).  

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The settlement applies to employees who had a vested benefit in JPMorgan’s cash balance plan or in a plan from one of JPMorgan’s predecessor companies.  

Cote also approved a plaintiffs’ request for $600,000 in costs and expenses.  

The case is In re JPMorgan Chase Cash Balance Litigation, S.D.N.Y., No. 06-cv-0732 (DLC)(THK).  

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