USA – General Motors (GM) Corporation, the world’s biggest carmaker, plans to enter the financial services business by selling low-cost investment portfolios to 401(k) retirement plans of America’s largest companies.
USA – General Motors (GM) Corporation, the world’s biggest carmaker, plans to enter the financial services business by selling low-cost investment portfolios to 401(k) retirement plans of America’s largest companies.
This will be the first time GM has managed money for those outside the organisa-tion. It manages the largest corporate pension plan in the US with US$110 bil-lion of funds under management.
The plan is to attract business through “co-mingled trusts” which are similar to managed funds, except fees are about half to a third lower than the average re-tail fund.
Around the US, co-mingled portfolios now have about US$112 billion in assets. That is about 8 per cent of the money in 401(k) plans, which are still dominated by mutual funds and guaranteed investment contracts, a bond-like investment that promises a fixed return.
The one downside to co-mingled funds has been that as unregistered pools, the Securities and Exchange Commission won’t allow companies to advertise their per-formance. That has kept some companies from offering them to employees, who feel more comfortable with name brands and performance they can look up in newspa-pers.
General Motors, as a non-traditional fund manager has never disclosed its record in managing assets and will continue to do so. It says its target is 10 per cent annual return but will not reveal if it has reached or exceeded this goal.
Other large American companies already offer their expertise as money managers and sell their own mutual funds. General Electric, AMR Corp, which runs American Airlines; Caterpillar Inc. the world’s largest maker of construction machinery and Owens- Illinois Inc., the largest glass container manufacturer in North America, have all decided to make money-management a profit centre.
Indian boom
India – India is fast becoming a major market for fund managers with investors last month alone placing more than AU$300 million in to managed funds.
The total under management has created a record of AU$27 billion with five re-cent fund launches pushing the number to 305, another all-time high.
Growth is being powered by the private sector with international financial serv-ices groups leading the surge in joint ventures with local businesses and banks. Principal, Canada’s Sun Life and the UK’s Prudential have already formed alli-ances.
UBS buys Global
USA – UBS, the world’s biggest private banker, is to acquire Global Asset Man-agement (GAM) at a cost of up to US$675 million, according to London’s Financial Times.
UBS, with US$1.1 trillion of funds under management, says it bought GAM to boost the number of wealthy clients on its books and to build up a fledgling US mutual fund business.
Working through Chicago-based UBS Brinson, UBS manages about $2 billion in 11 mutual funds while Bermuda-based GAM sells seven funds in the US, with about $2.1 billion in funds under management. The funds will still be run separately, with GAM funds sold through broker dealers and the UBS funds offered directly to investors as well as through financial advisers.
Schwab’s $100 billion
USA – Wrap account pioneer Charles Schwab Corporation has passed the $100 bil-lion milestone in funds under management with the firm’s eight-year-old mutual fund doubling assets under management in the past two years.
About 80 per cent of the figure is in money market funds with a further 18 per cent in stock index funds and the remainder in bonds. The milestone puts Schwab among the industry’s elite such as Fidelity Investments, Vanguard Group, Merrill Lynch Asset Management, Smith Barney Advisers and Morgan Stanley Dean Witter Ad-visers.
Chinese giant plans to create financial services ‘supermarket’
China – China International Trust and Investment Company (CITIC), China’s lead-ing state-owned conglomerate, will form one holding company covering all its fi-nancial services, creating a financial services “supermarket” with possible listing on the Hong Kong stock market.
The new structure will be unique for the Chinese market and will group a range of activities from commercial banking to securities broking, leasing, insurance and funds management.
CITIC is also seeking an insurance licence from the Chinese government and a possible link with one of the foreign companies recently allowed to enter the local market and add insurance products to its range.
AXA into US
USA – Financial services group The Equitable Companies has changed its name to AXA, according to US magazine Financial Planning.
AXA has also launched AXA Advisors, which will represent the financial planning capabilities of the company’s network of financial professionals. The Equitable brand will remain as a major component of the company’s growth strategies. The change reflects a similar move with National Mutual in Australia also taking on the AXA brand for marketing and labelling strategies.
