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Deals Amid RIA’s Are At A 5-Year Low (The Wall Street Journal)
There were just 18 mergers and acquisitions (M&A) involving registered independent advisors (RIAs) in the first half of 2013, according to Schwab Advisor Services. This totaled $US15.4 billion in assets under management (AUM) and was at a five-year low. This is down from 25 deals at $US36 billion in AUM in 2012.
“Advisors considering ownership transition may be focusing on creating more value in their firm leading them to delay a deal for a few years,” Jonathan Beatty at Schwab Advisor Services told the WSJ.
The 2013 CFA Institute & Edelman Investor Trust Study finds that investors think that “trusting an investment manager to act in their best interest is the single most important factor in making a hiring decision. Achieving high returns was cited only half as much, and fee amounts or structure only one-fifth.”
Shown below are the top attributes investment managers need to build client trust.
Doug Kass: 10 Reasons The Market has Peaked (The Street)
Doug Kass thinks the stock market has peaked for 10 key reasons. 1. “Rising interest rates pose more of a threat to growth than many believe.” 2. The U.S. economic recovery is still fragile. ” 3. “The economic prospects for China, the straw that stirs the drink of global growth, are uncertain.” 4. “An expected 2013 tapering is likely a policy mistake” 5. “The Fed head selection represents a more significant market event than consensus believes.”
6. Politics will come center stage again. 7. We are far into this bull market, and the average bull market in the last 60 years has been 43 months, and the longest have been between 56-60 months. 8. “Sector/group leadership changes are typically a negative sign for markets.” 9. “Though most indices are within 1% of an all-time high, new peaks have not been confirmed by breadth or by new 52-week highs since mid-July.” 10. “Valuations are stretched.”
Asset manager Janus Capital Group has its biggest monthly redemptions in over three years. John Groneman, head of investor relations at Janus told Bloomberg that one investor yanked $US1.3 billion in July, and overall investors pulled out $US2.2 billion.
“The redemptions are a function of the underperformance the fund has experienced over the last three years,” Groneman told Bloomberg. Janus has been hurt as investors have moved into bonds and passive investments. Janus has 80% of its assets in actively managed stock products.
The SEC has charged Ohio-based hedge fund manager, Anthony Davian, known as @hedgieguy with fraud. The SEC filing accuses Davian of misappropriating “more than $US1 million from investors in funds managed by his company.” From the filing:
“Defendants promote Davian Capital as a highly successful investment firm managing a portfolio of profitable hedge funds. But Davian Capital is nothing more than Davian’s personal piggy bank. He has invested only some of his clients’ funds. He has used the rest to finance construction of a luxury home for himself, and to buy himself a luxury car, among other things.”
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