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Money managers under the microscope

from Reuters Money:

Actively managed ETFs and other wrinkles

David Gaffen is pictured in this undated handout photo. REUTERS/HandoutThe following is an edited excerpt from Never Buy Another Stock Again: The Investing Portfolio that Will Preserve Your Wealth and Your Sanity, written by David Gaffen, who is the Reuters markets editor. It was printed with permission of FT Press, an imprint of Pearson.

One of the biggest growth industries in finance right now is in exchange-traded funds, and further growth in ETFs appears likely to come from several places.

Sector or country-specific ETFs and actively managed ETFs are likely to continue to be a growth area, along with perhaps a combination of the two (an actively managed ETF focusing on small-cap stocks, for instance).

The most popular sector ETFs are in natural resources and technology, although State Street, which sponsors the SPDRs ETF, has S&P sector ETFs for nine of the ten S&P sectors (telecommunications is the lone exception—it’s folded into another area); new ones continue to crop up.

from Reuters Money:

Lazy portfolios win again in 2010

A Chinese investor looks at share prices at a securities exchange in Shanghai March 28, 2005. REUTERS/Claro Cortes IVThose of you who diligently invest from reclining chairs with passive portfolios, rejoice! You had another good year without doing much of anything.

Not only did you get more out of life by not watching business TV channels, stock prices on your smartphone or fretting over the latest blip on Wall Street, you built up your retirement portfolio without much effort.

from Reuters Money:

The year’s best and worst ETFs

Dealers work on the trading floor at IG Index in London May 10, 2010. REUTERS/Suzanne PlunkettThe best investments often don't have the highest returns. I know this is heresy to most, yet mass behavior can be a siren song.

About this time every year, we gaze intently at our portfolios, hoping against hope that we did something right. Sometimes we get lucky.

from Reuters Money:

Coming soon: the loud thud of a gold bust

VIETNAMSome time in the future the price of gold will crash and it won't have a fairy-tale ending for the millions of investors who piled on in recent months.

If I could tell you when gold was going to bust, I'd likely be wrong or bigger than Warren Buffett, so I won't even try. Just be incredibly cautious now. There are too many signs that gold is frothier than a Starbucks cappuccino.

from Reuters Money:

6 healthy healthcare funds

CANADA-HEALTH/The following column is by Tom Roseen, senior analyst for Thomson Reuters.

Prospects may be brightening for healthcare and biotechnology stocks, now that the election is over and earnings in that sector are strengthening.

Third-quarter earnings reports and advance guidance have been fairly good, according to our Thomson Reuters Proprietary Research team. With 58 percent of the healthcare constituents of the S&P 500 reporting thus far, 86 percent have beaten their consensus earnings estimates.

from Global Investing:

Equities — an ‘even years’ curse?

Are global equity markets under an 'Even Years Curse' that sees them underperform bonds in even-numbered years but beat fixed-income returns in odd-numbered ones? After some number-crunching, Fidelity International's' director of asset allocation Trevor Greetham suspects so.

"It's not just hocus-pocus but to do with global inventory levels," he explained at a forum organised by the London-based investment house.

from From Reuters.com:

Following the smart money

At least 20 of the 30 biggest hedge funds boosted their positions in financial institutions in the last quarter, a sign that Wall Street is ready to bet on more risky sectors in the hope of longer-term rewards.

The push into financials indicates fund managers including Steven Cohen and John Paulson -- closely watched as barometers of risk -- have shifted from routine merger arbitrage plays to directional bets with more reward potential.

Out of the woods

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Hedge fund managers are beginning to see some light through the trees.The hedge funds industry may be finally emerging from the woods after last year’s debacle. The Credit Suisse Hedge Fund Index is up 9.69 percent in the year to date, with some strategies, like convertible arbitrage (up 30.7 percent) and fixed income arbitrage (up 16.07 percent) delivering bumper returns.

It’s all very different from those dark days at the end of 2008. Charlie Porter, CEO of Thames River Capital, which is split 55 percent hedge, 45 percent long-only, says most firms were focused on survival. “No one knew where their businesses were. A lot of hedge funds have disappeared over the last year but there were probably too many of them.”

from Global Investing:

For better or worse?

Wealth managers at Citi Private Bank are telling their clients to stay neutral in their exposure to hedge funds at the moment, whether the strategy be event driven, equity long/short or macro. The main reason is that capital markets are still stressed and many hedge funds still need to deleverage.

The firm points out, however, that hedge funds had a good news-bad news kind of year in 2008. Based on the HFRX Global Hedge Fund Index, it was the worst performance on record. The index lost 23.3 percent. Its next worst performance was 2002 -- and that was only a 1.5 percent decline.

from Global Investing:

A dish best served cold

Alain Grisay, the softly spoken CEO of F&C Investments, was in a wry humour at F&C’s annual press seminar for European journalists on Thursday.

Fresh from his bout with the UK’s Treasury Select Committee on the causes of the banking crisis, and enjoying a respectable set of fourth quarter figures, Grisay is in the rare position of having come through the storm with his house intact. “We have just gone through an unrequested market stress test that confirms our model works,” he said. “We were able to report resilient results for the year and took the market by surprise."

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