Wealth Management Media Scan: What Consumer Financial Publications Wrote about This Week
BusinessWeek's Personal Business section focuses on how investors can better finance their retirement, with a story that says fund companies are poised to flood the market with new income funds.
Retirement income funds are portfolios of funds spread across asset classes, according to the magazine, with a twist: The split between asset classes is actively managed to produce a projected income stream.
But instead of guaranteeing a fixed payout like an annuity, these funds aim to provide annual income ranging from 3% to more than 12%. This wrinkle is creating "some confusion about the way the funds work," according to BusinessWeek.
"Even very intelligent clients of mine think that the return in these funds is guaranteed. It is not," said Debra Brede, the president of D.K. Brede Investment Management in Needham, Mass.
Vanguard Group and Russell Investments plan to launch income funds by late March; T. Rowe Price and Charles Schwab plan to introduce a group of funds by September; and Fidelity Investments recently added three new portfolios to its lineup, which made its debut in the fall.
The cover story in Barron's focuses on the best mutual fund families and reports that 2007 was marked by the resurgence of growth-oriented funds.
The annual "Lipper/Barron's Fund Families Survey" ranked fund companies on overall performance across a variety of asset types. The survey "demonstrates just how important a growth bias was in 2007," Barron's says.
Waddell & Reed, which ranked first out of 67 firms, third-place Janus Capital, and No. 5 American Century "all improved their standing over 2006 based on their bets on growth shares."
Other keys to success, the magazine says, included: buying the stocks of companies with big overseas operations; avoiding mine fields such as major banks, housing companies, and retailers; and owning the highest-quality bonds.
Though not known as a growth shop, Eaton Vance came in second place, lifted by top-tier performance in several asset types, including U.S. equity, world equity, and mixed equity. Fourth place went to Hartford Financial Services Group Inc., which came in first in the U.S. equity category "owing in no small part to a strong performance by its funds subadvised by Wellington Management."
Some community banks and credit unions are offering a new product called "reward checking" with yields as high as 6% for customers who use their debit cards heavily and meet other requirements, The Wall Street Journal's "Green Thumb" column reported.
But the accounts have some strings attached, according to the Journal. To qualify for the high yields, customers must: agree to electronic bank statements, have at least one direct deposit or automatic debit in the account each month, and use their debit cards at least 10 times a month.
But there are usually no monthly fees or minimum-balance requirements, and many banks will also offer refunds of automated teller machine fees charged by other banks.
Banks can pay higher rates because they do not have to mail paper statements or process paper checks and also earn fees from debit card transactions.
BancVue Ltd. of Austin, which provides reward checking accounts for roughly 400 banks and credit unions, said reward checking accounts are, on average, twice as profitable to those financial institutions as a free checking account. …