The Securities and Exchange Commission recently said it is looking into the use of derivatives by mutual funds, exchange-traded funds and other investment firms, concerned that the financial instruments and the risks they pose are not fully understood by market participants. Many investors might be surprised to learn the extent to which derivatives, including options, swaps and futures, are used by mutual funds.
The review is likely to focus on the over-the-counter market, especially for interest-rate and credit-default swaps, which are used by firms including BlackRock Inc., Allianz SE's Pimco, and Western Asset Management Co., a unit of Legg Mason Inc., said Michael Herbst, an analyst at Morningstar Inc. Over-the-counter derivatives are traded privately rather than through commodity exchanges, which are regulated by the Commodity Futures Trading Commission.
Those three managers are some of the biggest users of derivatives, Mr. Herbst said. "A wide range might use them a bit more sparingly." Among the reasons for using them, he said, would be gain or magnify exposure to markets or interest rates, and to hedge against risk in a portfolio.
Some investors may be surprised to learn that many core bond mutual funds use derivatives extensively. Among them are Pimco Total Return Fund (trading symbol PTTAX) and BlackRock Total Return Fund I (MDHQX) and II (BCBAX), Mr. Herbst said. In addition, Western Asset Management Core (WACSX) and Western Asset Core Plus (WAPSX) funds have used them in the past, but probably do so a little less today, he said.
Western Asset Management confirmed that its Core and Core Plus funds are using derivatives less. The asset manager discloses all of its holdings in its annual reports, a spokeswoman said.
BlackRock declined to comment on its funds' use of derivatives, and Pimco didn't respond to a request for comment.
Absolute-return and commodity funds also make use of derivatives.
Eric Jacobson, director of fixed-income research at Morningstar, said use of mortgage derivatives by funds has made a comeback since the 2008 crisis. Interest-only and inverse interest-only mortgage securities, which can be lucrative but volatile, are reappearing. Putnam Income (PINCX), Putnam U.S. Government Income (PGSIX) and Putnam American Government Income (PAGVX) funds had "bold allocations" to IO and inverse-IO securities as of the end of March, he said.
Showing posts with label mutual funds. Show all posts
Showing posts with label mutual funds. Show all posts
Friday, April 9, 2010
Friday, December 4, 2009
SEC to consider mutual fund fees, disclosure on securities
Next year, the Securities and Exchange Commission will look into banning some mutual fund fees, originally intended to cover distribution costs, and requiring point-of-sale disclosure on securities to investors who are in the process of evaluating investment. SEC Chairman Mary Schapiro said she has doubts about whether the fees, called 12(b)-1 in the mutual fund industry, are justified. Schapiro said she anticipates "significant push-back" from financial advisers on expanded disclosure because of the inconvenience and expense.
Tuesday, November 3, 2009
Supreme Court considers mutual fund advisers' compensation
The Supreme Court heard arguments regarding compensation policies for mutual fund investment advisers. The court appeared reluctant to give judges a role in overseeing the policies, although some justices indicated that courts might have to intervene. The high court's case focuses on mutual funds, but justices touched on compensation policies of other sectors.
Saturday, October 3, 2009
Worst Performing Mutual Funds through 9/09
click on the symbol to view the fund's chart & profile on Yahoo Finance
| Symbol | Name | NAV Return (1 Month) | NAV Return (YTD) | NAV Return (1 Year) | NAV Return (3 Year) | NAV Return (5 Year) | NAV Return (10 Year) |
|---|---|---|---|---|---|---|---|
| UFPSX | ProFunds UltraShort Latin America Svc | -3.53% | -73.70% | -78.29% | -- | -- | -- |
| UHPSX | ProFunds UltraShort China Service | +8.07% | -66.09% | -68.59% | -- | -- | -- |
| UVPSX | ProFunds UltraShort Emerg Mkt Svc | +1.05% | -64.75% | -68.21% | -53.25% | -- | -- |
| USPSX | ProFunds UltraShort NASDAQ-100 Svc | -3.95% | -55.36% | -29.08% | -22.08% | -18.61% | -22.47% |
| RYVNX | Rydex Dyn Inverse NASDAQ-100 2X Strat H | -3.87% | -54.64% | -24.50% | -19.92% | -17.01% | -- |
| UIPSX | ProFunds UltraShort Mid-Cap Svc | -9.47% | -51.61% | -30.31% | -17.55% | -20.04% | -- |
| UCPSX | ProFunds UltraShort Small-Cap Svc | -7.36% | -50.09% | -35.43% | -19.79% | -22.65% | -- |
| UXPSX | ProFunds UltraShort Intl Svc | -9.44% | -47.47% | -46.02% | -19.08% | -- | -- |
| RYIRX | Rydex Inverse Russell 2000 2x Strategy H | -6.72% | -47.21% | -30.32% | -17.17% | -- | -- |
| SRPSX | ProFunds Short Real Estate Svc | -12.99% | -41.82% | -41.24% | -15.35% | -- | -- |
| GRZZX | Grizzly Short | -5.33% | -40.46% | -17.90% | +0.25% | -4.24% | -- |
| URPSX | ProFunds UltraBear Svc | -7.66% | -39.86% | -18.90% | -6.92% | -9.99% | -6.28% |
| RYTPX | Rydex Inverse S&P 500 2x Strategy H | -7.53% | -38.07% | -15.67% | -4.92% | -8.52% | -- |
| UKPSX | ProFunds UltraShort Japan Svc | -3.38% | -37.73% | -33.91% | -5.40% | -- | -- |
| UWPSX | ProFunds UltraShort Dow 30 Svc | -8.41% | -31.65% | -18.22% | -9.17% | -10.27% | -- |
| SOPSX | ProFunds Short NASDAQ-100 Svc | -1.92% | -31.28% | -8.23% | -7.48% | -6.58% | -- |
| RYAAX | Rydex Inverse NASDAQ-100 Strategy Adv | -1.85% | -30.95% | -5.98% | -6.26% | -5.66% | -- |
for a complete list see Worst Mutual Funds of 2009
Best Performing Mutual Funds through 9/09
*click on the symbol to view the fund's chart & profile on Yahoo Finance
| Symbol (*) | Name | NAV Return (1 Month) | NAV Return (YTD) | NAV Return (1 Year) | NAV Return (3 Year) | NAV Return (5 Year) | NAV Return (10 Year) |
|---|---|---|---|---|---|---|---|
| UBPSX | ProFunds UltraLatin America Svc | +0.38% | +100.25% | -65.74% | -- | -- | -- |
| EGLRX | Alpine International Real Estate | +9.55% | +86.74% | -20.16% | -12.22% | +2.34% | +6.74% |
| SMPSX | ProFunds Semiconductor UltraSector Svc | +5.37% | +84.72% | -19.82% | -14.60% | -6.81% | -- |
| OBCHX | Oberweis China Opportunities | -5.04% | +80.56% | +4.82% | +10.24% | -- | -- |
| INPSX | ProFunds Internet UltraSector Svc | +4.52% | +76.37% | -15.90% | -6.14% | +3.76% | -- |
| MPYMX | Metzler/Payden European Emerging Markets | +10.21% | +75.18% | -24.76% | -4.64% | +14.59% | -- |
| WAEMX | Wasatch Emerging Markets Small Cap | +2.11% | +72.62% | -5.71% | -- | -- | -- |
| RYVYX | Rydex Dynamic NASDAQ-100 2X Strategy H | +2.45% | +68.95% | -38.91% | -10.51% | -3.54% | -- |
| BPLEX | Robeco Long/Short Eq Inv | +7.21% | +67.87% | +29.63% | +10.20% | +12.85% | +12.09% |
| UUPSX | ProFunds UltraEmerging Markets Svc | -3.48% | +67.46% | -53.53% | -11.98% | -- | -- |
| UOPSX | ProFunds UltraNASDAQ-100 Svc | +2.54% | +67.36% | -39.42% | -11.53% | -4.55% | -23.06% |
| MSMLX | Matthews Asia Small Companies | +0.15% | +65.61% | -- | -- | -- | -- |
| QUSOX | Quant Foreign Value Sm Cap Ord | +7.70% | +64.83% | -2.13% | -- | -- | -- |
| TMRFX | Third Millennium Russia | +6.26% | +63.95% | -44.79% | -14.91% | +4.09% | +16.88% |
| MINDX | Matthews India | +2.70% | +63.44% | -5.62% | +7.79% | -- | -- |
| UGPSX | ProFunds UltraChina Service | -10.51% | +61.81% | -49.42% | -- | -- | -- |
| IASMX | Guinness Atkinson Asia Focus | -4.60% | +61.34% | -4.70% | +5.84% | +13.70% | +7.54% |
| TEPSX | ProFunds Technology UltraSector Svc | +3.28% | +60.85% | -20.84% | -6.07% | -0.27% | -- |
for a complete list see Best Mutual Funds of 2009
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