The Markets September 29, 2008

FRC: Mutual Funds See Modest Inflow in August

Stock and bond funds experienced net inflows of $401 million in August, according to the Financial Research Corporation (FRC).
Reported by

The Investment Company Institute (ICI) had different data, which was also released Monday (see “ICI: Mutual Funds Report More Modest Drop in August“). The ICI said the combined assets of the nation’s mutual funds decreased by $9.50 billion, or 0.08%.

According to FRC data, domestic equity funds experienced the largest net inflows for the month – $12.9 billion – while government funds came in a distant second with $2.9 billion in net inflows. International/Global equity funds experienced a net outflow of $21.5 billion.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

By Morningstar category, large blend funds brought in a net $7.5 billion in August. Intermediate-bond funds posted a net intake of $2.7 billion, followed by specialty-financial funds with a net intake of $2.1 billion.

State Street Global Advisors’ SPDR S&P 500 ETF led the sales chart, bringing in a net $3.6 billion for the month. PIMCO’s Total Return fund and Capital International’s Emerging Markets Growth fund took the second and third spots with net intakes of $1.7 billion and $1.6 billion, respectively.

Information on purchasing FRC’s data is available at www.frcnet.com.

Compliance September 29, 2008

Caterpillar Fee Suit Clears First Legal Hurdle

A federal judge cleared the way for participants in Caterpillar’s 401(k) plan to pursue their fiduciary breach claims, but only on issues other than allegations of inadequate revenue-sharing disclosures.
Reported by

On the issue of whether the company’s revenue-sharing arrangements were proper, U.S. District Judge Joe Billy McDade of the U.S. District Court for the Central District of Illinois agreed with the plan administrators that the Employee Retirement Income Security Act (ERISA) and Department of Labor (DoL) do not currently require the disclosure of revenue-sharing arrangements. So, any potential fiduciary breach did not concern the revenue-sharing payments, McDade ruled.

However, dealing with the participants’ other claims, the court said those must be tested after additional pre-trial proceedings. Participants’ main allegation was that the administrators breached their duties by not acting in the participants’ best interests and charging excessive fees to generate a profit for themselves (see “Lawyer: Excessive Fee Suits Not an Organized Anti-Plan Campaign“).

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

On another issue, McDade said he could not yet resolve the issue of whether plan administrators are protected by the ERISA Safe Harbor provision. The court said the administrators have not yet proven the participants had control over their accounts as Section 404(c) requires.

The case is Martin v. Caterpillar Inc.



«