Investing September 21, 2004

Lipper: Markets Still Driven by Caution

September 21, 2004 (PLANSPONSOR.com) - Investors kept the feet resting on the brake pedal during August with only moderate inflows into mixed equity and taxable bond funds.
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Equity funds pulled ahead by $11.5 billion in August with core and value funds racing ahead of growth fund offerings, according to an analysis by Lipper Inc. Factoring in money market funds’ $8 billion outflow, funds overall finished the month with a total $6.3 billion inflow.

“Investor sentiment seems to be taking a wait and see attitude as the vacillating equity market and the seesawing presidential election dominates investor concerns,” Lipper researchers wrote. “Add to that the uncertainties aroundIraq and what appears to be a U.S. economy that took a pause during the summer month and you have a case for investor sentiment that is looking more to avoid losses than necessarily seek out gains.”

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In the equity arena, Lipper said investors’ affinity for value over growth and mixed equity/fixed income funds mirrored the overall market’s cautious approach. Domestic diversified funds were the top performers, enjoying a $5.7-million inflow while world equity funds had a $2 billion August increase.

Examining equity performance by size and style, Lipper said value offerings were ahead $2.1 billion in August, compared to a $1.4 billion increase for growth funds. At the same time, multi-cap funds were ahead by $2.5 billion in August, followed by a $1.9 billion hike for mid-cap funds.

The fixed income space saw a $2.9 billion increase for short and intermediate term funds while long bond funds were ahead by a tick. Lipper said corporate bond funds raced ahead of both Treasury and government funds with a $1.3 billion asset advance. “We do not thing the new inflow into bonds in August signals a lightening of risk aversion on the part of investors,” Lipper wrote. “Instead we think bonds are benefiting from a lackluster stock market and investors are doing what they typically do when the stock market meanders – they’re putting money in bond funds.”

The full report is available    here .

Compliance September 20, 2004

Survey: Endowments and Foundations Favor Hedge Fund Regulation

September 20, 2004 (PLANSPONSOR.com) - The majority of endowments and foundations that invest in hedge funds support the proposed regulation by the Security and Exchange Commission (SEC) that would require these alternative investment vehicles to register as Registered Investment Advisors (RIA).
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>According to the Hennessee Group’s 2004 Foundation and Endowment Survey of 46 foundations and endowments that invested in hedge funds, 59% were in favor of the proposal requiring hedge funds to register with the SEC under the Investment Advisors Act of 1940.

>However, the 31% who did not support such a move manage three times as much capital and allocate 46% more to hedge funds. They also have 50% more experience investing in hedge funds.

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>The survey also finds that those who favor registration have on average 15% of their assets allocated to hedge funds, with 8% invested directly and 7% invested through a fund of hedge funds vehicle. An average of 22% of assets are in hedge funds for those who oppose registration, with 15% being invested directly.

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