Mutual Fund News Roundup: October 24

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Mutual Fund News Roundup: October 24

Shauna O'Brien Oct 24, 2014

Staying on top of the most important mutual fund news is important for investors. Below, we highlight some recently reported mutual fund-focused news.

Voya Financial Rewards Babies Born on October 20 with $500

To celebrate National Save for Retirement Week, Voya Financial (VOYA) announced that it would give every baby born on October 20, 2014 a free $500 mutual fund investment.

This promotion was created as a marketing campaign to tell the public that Voya, which was originally a division of ING, is now its own separate publicly traded company.

This is also a part of the company’s Voya “Born to Save” program, which aims to remind people that it is never too early to start saving for retirement.

Many Mutual Fund Investors Will Pay More Taxes This April

According to a report published by Times, mutual fund investors may be seeing a higher tax bill in April – even if they did not sell any mutual funds.

Fund managers are required to realize capital gains when a stock in a portfolio is sold. However, with the bull run over the last few years, the amount of selling has been minimal. Now, many investors will be stuck with the capital gains taxes in April.

Investors impacted by these taxes will include those who sold PIMCO funds after the departure of Bill Gross.

M&A Activity Heats Up for Mutual Funds

As mutual fund companies attempt to grow their businesses and product offering, the amount of M&A has increased for many of these companies.

Most recently, Janus Capital Group reported that it now plans to purchase the company that builds VelocityShares ETFs. This announcement came after TIAA-CREF closed a deal to purchase Nuveen Investments Inc. This deal was the largest mutual fund deal since 2009.

According to Martin L. Flanagan, the president and CEO of Invesco, these types of deals are triggered by higher customer demands.

Factors Mutual Fund Investors Should Watch

In an article recently published on MarketWatch, Ken Moraif outlines several factors that retirees should watch out for with their mutual funds. According to the article, the following events are the most important for investors:
  • Changes to a fund’s manager
  • The fund’s performance is not consistent
  • When the fund changes its objectives
  • When the fund outperforms (it may be better to claim gains)
  • When the market is declining

These events should be followed closely by investors as they can have a large impact on a portfolio.

Will Mutual Funds Be Replaced by ETFs?

With the rising popularity of ETFs, many investors wonder if ETFs will ever completely replace mutual funds. According to an article published by Investopedia, it will not happen any time soon. Both of these investment vehicles have their place in the market. As of 2013, a total of $15 trillion was invested in mutual funds, while $1.7 trillion was invested in ETFs.

While the mutual funds industry is currently significantly larger than the ETF industry, this may not always be the case. What may be a big factor in the mutual fund growth is fees. If fees stabilize over time, more ETF investors may be inclined to choose mutual funds.

Joel Greenblatt’s Funds Get Wall Street’s Attention

In 2005, Joel Greenblatt published a book titled “The Little Book the Beats the Market.” Following the book, he created a website for investors and later started a mutual fund in 2010. This mutual fund lacked the attention it needed to become huge – raising just $360 million.

However, the money has been pouring in recently for Greenblatt. Mutual funds that he started with his firm Gotham Asset Management are catching the attention of Wall Street. The funds have recently grown from just $1 billion in assets in January to $4.8 billion.

For more information on these funds, click here.

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