The Markets February 27, 2009

Sales not Enough to Counter Mutual Fund Losses

The combined assets of the nation's mutual funds decreased by $191 billion, or 2%, to $9.411 trillion in January, according to the Investment Company Institute (ICI).

Reported by

Rebecca Moore

However, market losses were at fault for the decrease, as most fund categories reported sales in excess of redemptions for the month. Long-term funds—stock, bond, and hybrid funds—had a net inflow of $25.35 billion in January, versus an outflow of $29.43 billion in December, ICI data showed.

Stock funds posted an inflow of $9.05 billion in January, compared with an outflow of $20.43 billion in December. Among stock funds, world equity funds (U.S. funds that invest primarily overseas) posted an inflow of $2.19 billion in January, while funds that invest primarily in the U.S. had an inflow of $6.85 billion.

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Bond funds had an inflow of $16.73 billion for the month, compared with an outflow of $7.01 billion in December. Taxable bond funds had an inflow of $12.87 billion and municipal bond funds had an inflow of $3.86 billion.

Money market funds were still the most popular choice for investors—at least for institutional investors—as ICI data showed the funds had an inflow of $59.52 billion in January, on top of the $109.35 billion inflow in December. Funds offered primarily to institutions had an inflow of $67.62 billion, while funds offered primarily to individuals had an outflow of $8.10 billion.

Hybrid funds posted an outflow of $419 million in January, compared with an outflow of $1.99 billion in December.

The ICI data is here.

Compliance February 27, 2009

BoA Gets Subpoena to Release Bonus Information

The New York Attorney General’s office has subpoenaed Bank of America (BoA) for a list of employees' bonuses, according to reports.

Reported by

Ellie Behling

When Bank of America refused to speak up about the bonuses, New York Attorney General Andrew Cuomo decided to issue a subpoena for a list of employees who received bonuses and amount received, Reuters reported. The move is part of an ongoing probe into $3.6 billion of bonuses paid by Merrill Lynch days before it was acquired by BoA (see “Probe of Merrill Bonuses Continues’).

BoA Chief Executive Ken Lewis was subpoenaed last week in the ongoing investigation (see “Cuomo Supoenas BoA’s Lewis’). Then Cuomo filed a court motion Monday to force former Merrill Lynch CEO John Thain to discuss the bonuses (see “Cuomo Files to Force Thain to Discuss Merrill Bonuses’). ABC news reported that Thain revealed the names to the attorney general Tuesday of executives who received multi-million dollar bonuses.

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Citing anonymous sources, ABC reported that Merrill and BoA agreed that Merrill could award billions of dollars in performance bonuses. The bonuses were agreed upon following a conversation between Thain, Lewis, and Steele Alphin, a top aide to Lewis.