Deals & People December 12, 2011

BofA Continues to Hire Advisers

Bank of America plans to add more than 160 Merrill Edge Financial Solutions Advisors (FSAs) across Southern California and Arizona.
Reported by

The advisers will work in Los Angeles, San Diego, Orange County and Phoenix, and will bring the total number of FSAs in banking centers to more than 250 in that region (there are an additional 110 FSAs located in the Merrill Edge Advisory Center in Chandler, Arizona).  The new hires are expected to be completed by the end of the first quarter of 2012.   

The FSAs will cater specifically to BofA’s Preferred customers – those with investable assets of $50,000 to $250,000. They will provide financial solutions and guidance to help them manage their banking and investment needs and stay in better control of their finances.

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“Preferred customers don’t typically fit the traditional model for a full-service financial adviser or private banker, and so they’re often underserved by financial institutions,” says Linda Shelby, West Division executive. “By placing more Merrill Edge FSAs in banking centers throughout the Southern California and Arizona, we will be able to offer our Preferred customers in-person attention and support with their saving, investing and financial planning.”

The company has long believed that the Preferred customer segment is among the fastest-growing in the financial services industry and has been steadily increasing its numbers of FSAs  throughout the year (see “BofA Hires Nearly 300 Advisers”).   

Bank of America also announced new Merrill Edge regional managers throughout Southern California. They include: Gioia McCarthy in North Orange County, Will Smayda in Los Angeles, Nick Givogri in South Orange County and Debra West in San Diego. Additional regional managers are planned in Phoenix, Arizona, and the Inland Empire area in California.

The Markets December 12, 2011

U.S. Stock & Bond Mutual Fund Flows Down in 2011

The U.S. mutual fund industry is on track for $80 billion in net inflows for the year; more than $100 billion less than 2010 or 2009.
Reported by

2010 saw $246 billion in net inflows to long-term mutual funds and 2009 had $364 billion, according to Strategic Insight, an Asset International company.

One reason that smaller net-flows are expected for 2011 compared with 2010 is a significant drop in flows to bond funds—a sign that volatility fatigue has pared investors’ willingness to participate in financial markets, even though investors have continued to turn to bond funds as a source of income at a time of extremely low yields. In addition, 2011 featured accelerated net outflows from U.S. equity funds, and a slowdown in net inflows to international/global equity funds, versus 2010—a result of investors’ reduced appetite for risk, as well underperformance by international funds versus U.S. funds (and U.S. Dollar appreciation), SI said.

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Investment and economic uncertainty continue to lead Americans to hoard cash in the banking system, as deposit accounts expanded by about $2 trillion in the past few years.

“The drop in stock and bond mutual fund flows in 2011 reflects both a pause for some investors, as well as a shift for othersin terms of what will engage investors and bring them back to the markets,” said Avi Nachmany, director of research for Strategic Insight. “Increasingly, alternative, non-traditional, flexible and global strategies are becoming more important parts of the investor portfolio. Today, the mutual fund industry is rife with product innovation that is creating a slew of funds that will help redefine asset allocation.”  

According to Strategic Insight, investors continue to look at the patterns of market returns rather than cumulative returns. The S&P 500 Index ended November with a 1.1% gain for the first 11 months of 2011, but that included a large number of wide daily movements and just five months of positive total returns in 2011—compared with eight positive months in 2010 and nine positive months in 2009.

Investors took net $7 billion out of long-term mutual funds in November 2011. Taxable bond funds drew $9 billion in net inflows in the month, roughly half of the inflows seen in October. Muni bond funds saw $3 billion in net inflows, amid reduced worries about widespread muni bond defaults.

Equity mutual funds saw net outflows of $19 billion, with $16 billion of net redemptions coming out of domestic equity funds. “With the market still gyrating, investors still enthusiasm for U.S. equity funds,” said Nachmany. “In the meantime, we expect reduced portfolio volatility to be a greater priority for investors.”

Money-market funds saw net inflows of $42 billion in November, as retail investors turned to money funds as a safety net, even as institutional money market funds continued to see sluggish demand. In the first 11 months of 2011, money market funds experienced $173 billion in aggregate net outflows.

Separately, Strategic Insight said U.S. Exchange-Traded Funds (ETFs) in November experienced $5 billion in net inflows. Leading the way in net inflows were bond ETFs (just over $5 billion in inflows). Equity and commodity ETFs saw slightly negative net flows.

Through the first 11 months of 2011, ETFs (including ETNs) saw net inflows of $93.5 billion, a pace that could produce the fifth straight year of $100 billion or more in inflows to ETFs. At the end of November 2011, U.S. ETF assets stood at $1.06 trillion.

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