TAG | mutual fund companies
Today, in an article in InvestmentNews.com, we learn that the emerging-markets mutual funds managed by Goldman Sachs Group Inc. and Franklin Resources Inc., along with leveraged raw material ETFs, were among the U.S.-registered funds affected the most in this week’s commodities selloff.
It was noted that the mutual funds and exchange-traded funds dedicated to commodities, including index-based products, suffered steeper declines. The ProShares Ultra Silver ETF, designed to return twice the daily performance of silver, plummeted 51 percent from Monday to Thursday, although it was up 2.85% as of midday on Friday. Non-leveraged silver ETFs fell about 30 percent.
In the $831 million Goldman Sachs BRIC Fund and the $825 million Templeton BRIC Fund, which focus on Brazil, China, India and Russia, both fell 5.7 percent in the week ended yesterday. The funds, from New York-based Goldman Sachs Group Inc. and San Mateo, California’s Franklin Resources Inc., lost the most among diversified equity funds with more than $500 million in assets and at least 20 percent in energy or basic materials stocks, according to data compiled by Bloomberg.
The InvestmentNews.com article says that Bill Miller, manager of the $3.94 billion Legg Mason Capital Management Value Trust, said in an April 19 letter to investors that he saw little value in commodities. He pointed to research from Stifel, Nicolaus & Co. showing that commodity returns relative to stock returns were at a 200-year high on a rolling 10-year basis.
“One thing is clear from the analysis of long-term commodity returns: they are cyclical,” Miller wrote.
Commodities plunged yesterday as investors accelerated sales following year-to-date gains through April of more than 23 percent for silver, oil, gasoline and coffee. The Standard & Poor’s GSCI index of 24 commodities sank 6.5 percent at 4:32 p.m. New York time in the biggest one-day drop since January 2009, bringing its loss this week to 9.9 percent.
“It’s panic,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “There’s nothing to do with weak U.S. economic data. It’s not a global financial crisis. It’s a classic liquidation move in a crowded trade.”
Oil tumbled 8.6 percent yesterday, the most in two years, to $99.80 a barrel. Silver dropped 8 percent, extending the worst four-day slump since 1983 to 25 percent. The Dow Jones BRIC 50 Index declined 5.1 percent from April 28 through yesterday.
These leaders of the four countries plus South Africa, a group known as the BRICS, said last month that excessively volatile commodity prices pose “new risks for the ongoing recovery of the world economy.”
The $726 million DWS Latin America Equity Fund, managed by the funds unit of Frankfurt’s Deutsche Bank AG, fell 5.4 percent in the past week. Boston-based Fidelity Investments’ $5.46 billion Canada Fund lost 5.3 percent, and the $1.4 billion FPA Capital Fund, run by Los Angeles-based First Pacific Advisors LLC, dropped 4.6 percent.
Open interest in silver futures has tumbled about 15 percent since the Comex exchange in New York began raising margin requirements on April 25. Futures on Brent crude, crude oil, heating oil, gasoline and natural gas plunged more than 6.9 percent yesterday.
Also, crude oil dropped below $100 a barrel for the first time since March 17. Copper futures slumped 3.3 percent, falling below $4 a pound for the first time in five months. Among agricultural commodities, cocoa, cotton, corn and weak retreated more than 2.3 percent in futures trading.
If you have invested in ETFs or mutual funds and lost money, you may have valuable legal rights to be compensated for your losses. Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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They say, trust is easy to lose and hard to regain, writes Andrew Osterland in a recent article in Investment News.
A recent survey conducted by public relations firm Edelman on investors’ attitudes towards the financial services industry seems to confirm the aphorism.
In the survey, Edelman interviewed 503 investors with $10,000 or more invested in liquid assets and/or mutual funds, and 38% of them said that their level of trust in the financial services industry had decreased in the last year. Fifty-three percent of respondents said it had remained the same, and just 9% said that they trusted the industry more compared with a year ago.
“We would have thought that as the economy has improved and the bad news has faded, the level of trust in the industry would have increased, but it hasn’t,” said Julie Crothers, a senior vice president at Edelman. “The state of consumer trust in the industry is not good.”
The attitudes were worse for some than others. Edelman asked investors for their attitudes towards eight financial service provider groups. Private-equity firms — with whom few of the investors likely had personal experience — were ranked the least trustworthy. Just 32% of respondents gave such firms a ranking of 6 or higher on a scale of nine as to their level of trust that such institutions would “do what is right.” Investment banks (35%), and property-and-casualty insurers (37%) scored only slightly higher. Life insurance companies (42%), brokerage firms (43%) and large national banks (45%) fared better still.
Also, the survey reported that the institutions that scored the highest marks were community banks (67%) and mutual fund companies (55%).
Edelman broke out the top 18% of the investor group as “entry level affluents.” These investors have annual incomes of more than $150,000 and investments of more than $100,000. They are highly educated (92% have a college degree), majority male (61%) and predominantly white (93%).
In contrast to the broader group, these investors tended to have relatively more trust in large national banks, brokerage firms and investment banks compared than the less affluent investors. “That is likely a reflection of the fact that more-affluent investors have a need for more-complicated services such as those offered by large banks and brokers,” Ms. Crothers said.
The more interesting insight from the survey was that investors tended to view client-facing employees as the most credible sources of information about a financial-services firm. Thirty-seven percent of investors said that brokers, advisers, agents or bankers were the most credible source of information. Portfolio managers ranked second (15%) in this regard, with affluent investors (21%) finding them substantially more credible. Chief executives and senior managers, on the other hand, scored a miserable 5% —3% from affluent investors — on the credibility meter.
“It sends a clear message to the firms’ marketing divisions that CEOs may not be good spokespeople for the companies at this point,” said Ms. Crothers.
Call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority
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