* Money fund assets level off as retail investors sit tight
* Advisers see few safe alternatives for cash
By Ross Kerber
June 5 (Reuters) - The miniscule interest rates being paid by money market mutual funds are making many investors restless, but wealth advisers are urging most to stay the course.
Already historically low U.S. short-term interest rates have dipped even lower in recent weeks as investors fleeing financial turmoil in Europe have sought safe havens.
But investors have little to fear that rates could turn negative on money market funds, and alternatives like bank savings or checking accounts are no more appealing, advisers said.
"Everything that is stable is crummy," said Douglas Conoway, managing principal of Wealth Management Group LLC in Rochester, New York. "There's no place to go."
Conoway's firm invests about 5 percent of its $40 million in client assets in money funds, the same level as a year ago.
The stability of money funds does not mean investors are happy with their rates. John T. Boland, president of Maple Capital Management Inc in Montpelier, Vermont, said clients often call to complain about low rates, which he said "have given a whole new meaning to the phrase 'cash drag.'"
But there are not a lot of alternative investments he can suggest -- "which is why we are holding the cash in the first place!!" Boland wrote in an email.
Low interest rates have already forced fund sponsors to waive billions of dollars in fees to prevent yields from going negative. Fund companies have the resources to keep waiving fees and maintain yields above zero, said Peter Crane, publisher of Cranedata.com, a website that tracks the industry.
"If they haven't gone negative by now, guess what, they're not going negative," he said.
By some measures, the pressures on fund companies are easing despite the safe-haven flood into short-term U.S. government securities. While rates on Treasury bills declined, rates on other investments the funds buy such as repurchase agreements have ticked up.
Big fund sponsors like Fidelity, Federated Investors Inc and JPMorgan Chase & Co on average waive 45 percent of fund fees, down from 50 percent several months ago, Crane said.
The desire for safety should be paramount, said Philip Blancato, chief executive and president of Ladenburg Thalmann Asset Management in New York. "While there is little yield available in the market today, we continue to believe safety of assets is more important than yield," he said.
A few advisers have tried to come up with alternatives to money funds. In Westport, Connecticut, Gerard Gruber, chief investment officer of Hayden Wealth Management, said his firm might suggest a combination of municipal bonds, fixed annuities or dividend-paying stocks and funds. Only the safest money funds pass its screens, such as those that invest in government-backed instruments.
"Our clients are willing to accept a lower money market rate that invests conservatively than be with one that takes more risk and has exposure to possible losses," he said.
In Michigan, financial planner Theodore Feight said he has started replacing money fund holdings with dividend-paying stocks like those of Intel Corp and Altria Group . He also has bought high-yield corporate bond exchange-traded funds.
"Money market rates are just not cutting it anymore," he said.
Hoping to capture flows, some firms have pitched new products as money fund alternatives. On a web page about a new fund, for instance, Pacific Investment Management Co, operator of the world's biggest bond fund, writes: "PIMCO Short Asset Investment Fund offers higher income potential than traditional cash investments. ... Unlike money markets, however, the net asset value (NAV) of the fund may fluctuate."
Many of the new funds fall into the category of "ultra short obligation bond funds" tracked by Thomson Reuters' Lipper unit. Flows to these funds totaled $2.2 billion through the end of May, on pace to surpass the $3.4 billion they took in for all of 2011.
Still, that is just a drop in the bucket compared with money fund assets overall. The funds held $2.55 trillion at May 29, down from $2.65 trillion at the start of the year, according to iMoney.net.
Islamic Finance set to mobilize trade and investment flows between Asia and the Middle East - AME Info
The two day WIBC Asia event, held under the official support of the Monetary Authority of Singapore, kicked off today with an inaugural address by H.E. Ravi Menon, Governor of the Monetary Authority of Singapore.
The inaugural address was immediately followed by an opening keynote session which featured H.E. Dr. Ahmad Mohamed Ali Al-Madani, President of the Islamic Development Bank and Edy Setiadi, Executive Director of the Directorate of Islamic Banking, Bank Indonesia. The session addressed the challenges and opportunities inherent in the increasingly global geographic footprint of Islamic finance and also discussed the national and international initiatives that will ensure consistency and foster greater interconnectedness across key jurisdictions for Islamic finance.
A key highlight of WIBC Asia 2012 was the high profile Power Debate session led by internationally respected CEOs and industry leaders. Moderated by Haslinda Amin of Bloomberg Television, the session analyzed the expanding role of Islamic finance as a conduit for trade and capital flows between Asia and the Middle East and also discussed how Islamic financial institutions can better develop the capacity to structure large-scale multi-currency and cross border transactions. The Power Debate session featured Toby O'Connor, Chief Executive Officer, The Islamic Bank of Asia; Hussain AlQemzi; Chief Executive Officer, Noor Islamic Bank and Group Chief Executive Officer, Noor Investment Group; Muzaffar Hisham, Chief Executive Officer, Maybank Islamic Berhad; Dato' Jamelah Jamaluddin, Chief Executive Officer, Kuwait Finance House (Malaysia) Berhad (KFH Malaysia); Syed Abdull Aziz Jailani Bin Syed Kechik, Chief Executive Officer, OCBC Al-Amin Bank Berhad; Shamsun Anwar Hussain, Director - Consumer Banking, CIMB Islamic Bank Berhad; and Wasim Saifi, Global Head, Standard Chartered Saadiq, Consumer Banking.
Speaking to the media present at the event, David McLean, Chief Executive of the World Islamic Banking Conference: Asia Summit noted that "Asia is becoming an increasingly attractive destination for investments that are Shari'ah compliant. To reap the full benefit of the region's rapid expansion and robust development, there is a need to press on towards achieving global connectivity and deepening economic cooperation with various key centres for Islamic finance. In order to better facilitate cross-border relationships, more intensive international co-ordination of regulatory approaches, supervisory oversight and industry practices is needed."
He also said that "as interest in Islamic finance expands across Asia, an increasing number of Middle Eastern investors are looking at opportunities to deploy their capital in the region and Islamic finance is perfectly positioned to act as a catalyst to further bridge capital flows between Asia and the Middle East."
"An ongoing dialogue between key regulators, industry practitioners and market participants representing the two key centres for Islamic finance, i.e the Middle East and Asia, is vital to achieve greater international harmonization in the architecture for Islamic finance", he added.
A similar view was expressed by Hussain AlQemzi, Chief Executive Officer, Noor Islamic Bank and Group Chief Executive Officer, Noor Investment Group, who said that "in order to ensure an orderly evolution of Islamic finance from a niche segment into the mainstream international financial markets, it is vital to further enhance the industry's capabilities for cross-border activities, which in turn will encourage innovative product development, robust and standardised regulatory frameworks and the long term stability of the industry. What the industry lacks at the moment is the breadth and depth that investors enjoy in the conventional market. An inter-linkage between the key Islamic financial centres will facilitate investor access to a wider range of Shari'a-compliant products beyond those available in their domestic market."
He also said that "the annual World Islamic Banking Conference: Asia Summit is becoming an increasingly important platform that facilitates dialogues between the two key centres for Islamic finance - Asia and the Middle East. The theme for this year, "Islamic Finance in Asia: Strengthening International Connectivity and Capturing Cross-Border Opportunities", highlights the tremendous potential for significant cross-border transactions which the Islamic finance industry must tap into. As a key industry player we are keen on exploring these unique opportunities."
Commenting on their participation at the event, Toby O'Connor, Chief Executive Officer of the Islamic Bank of Asia said that "the theme for the 3rd Annual World Islamic Banking Conference: Asia Summit (WIBC Asia 2012), "Islamic Finance in Asia: Strengthening International Connectivity and Capturing Cross-Border Opportunities", highlights a significant opportunity that IB Asia is focused on. We hope that the high-level discussions at this important forum in Singapore will foster new business relationships between key growth markets for Islamic finance. We are once again delighted to renew our partnership as a Platinum Strategic Partner of WIBC Asia."
WIBC Asia 2012 continues on the 6th of June and will features an exclusive keynote address by Jaseem Ahmed, Secretary-General of the Islamic Financial Services Board (IFSB), and a special address by Daud Vicary Abdullah, President and Chief Executive Officer of INCEIF- The Global University of Islamic Finance.
TIF Money For Chicago Public Schools: Like TIFs in Miniature - chicagomag.com
Via Greg Hinz, Roosevelt prof Stephanie Farmer just released a report breaking down what schools in Chicago have received tax-increment finance funding, how much, what students they serve, and where they're located. It's an interesting read, and significant because it addresses one of the biggest controversies of the TIF program.
One of the accusations lobbed at TIFs is that they divert money from public schools—or, alternately, they cause tax levies to increase in order to replace money that would otherwise go to public schools. A quick reminder: TIF designation fixes the amount of property tax revenues that go to the usual places for up to 24 years. That "additional" money, the increment, then gets plowed back into the district to finance economic development. The theory is that the district gets the property tax revenue it would have gotten anyway; the reality is much trickier, because of obvious things like inflation, broader socioeconomic trends, and so forth. Either way, the many, many TIFs that have sprouted up since Harold Washington plunked one down in the Loop a couple decades ago have taken up an increasing percentage of city revenues. Here's your periodic reminder:
So. One of the ongoing defenses of TIFs in regard to its effect on school funding is that TIF money is spent building schools, as Ben Joravsky described six years ago. At the time, Mayor Daley promised one billion dollars in TIF spending over six years to build schools. Farmer's report finds that 28 schools have received $857.8 million, and another 26 schools have used over $32 million TIF money to meet ADA accessibility standards. (Another question is whether TIF money should be spent on schools, but that's a big question.) And she breaks down where that money has gone.
The most interesting and/or significant finding is this: "Though selective enrollment schools account for 1% of all CPS schools, they received 24% of all TIF funds spent on school construction projects," or $209 million dollars. By comparison, open-enrollment neighborhood schools, making up 69 percent of CPS schools, received $415 million, or 48 percent. Farmer explains:
The city’s nine selective enrollment schools were created by Mayor Richard Daley to help retain middle-class families who he believed would leave CPS and the city in pursuit of what they perceive as better schools in the suburbs.
Expect more where those came from, Jean-Claude Brizard told Linda Lutton in April.
This feeds back into the question of whether TIF money should be spent on schools. One of the points Ben Joravsky has made over the years is that there's been a TIF mission creep from strict economic development to funding basic infrastructure, such as school-building, as well as a shift from repairing blighted neighborhoods to attracting businesses to the central business district. Joravsky and Mick Dumke found with a ward-by-ward breakdown of TIF spending from 2004-2008 that 43 percent of TIF money was spent in the three wards in and around downtown.
But that's the funny thing about Farmer's findings: selective-enrollment schools are intended as economic development, so it's really not a surprise that so much TIF money has gone into them versus open-enrollment schools. Intended to address blight, TIFs have been shifted to block flight, and Farmer's work shows how the dilemma is mirrored with the use of TIF money to fund education.
Photograph: naosuke ii (CC by 2.0)
Posted in The 312
Brookline officials: Money running low for Runkle renovation - Abington Mariner
As construction costs continue to rise, Brookline’s Runkle School renovation is perilously close to running out of money.
Last week, the Board of Selectmen approved just over $300,000 for a variety of unexpected costs, exhausting the project’s $1.35 million change order contingency fund, and leaving just $220,000 or so in a backup contingency fund.
“We do expect to get through the project with what is there,” said Selectwoman Nancy Daly, chairwoman of the Runkle School Building Committee. “That’s what [project officials are] telling me.”
Project manager Tony Guigli said that if the project did run out of contingency money, officials could try and find additional money by playing around with other line items in the project’s budget. It’s unclear where the needed money would come from if for some reason officials couldn’t find money somewhere else in the budget.
“I don’t want to speculate because I haven’t asked people that question yet,” said Daly, who added that it’s possible that would require the officials to secure more money from Town Meeting. Historically, the next Town Meeting wouldn’t take place until the fall.
Since the renovations began, the project’s costs have ballooned as one unexpected problem cropped up after another. Towards the beginning of the renovation, the town found itself dealing with a series of issues, including abating large amounts of hazardous materials and clearing rubble from a previous school — complete with a decades-old oil leak.
“There’s no question that this is a project where there have been a lot of issues,” Daly said. “It’s frustrating.”
But officials have wondered if some of the problems they’ve encountered could and should have been predicted by the architect, or avoided by contractors.
“Some of these things just seem to me — and I’m a layman — to be the kind of things that should have been in the architect’s drawings in the beginning,” said Selectman Ken Goldstein at a meeting last December. “When I see things that, in my mind, should have been part of the original specifications, I want to know why.”
To that end, Daly said the Building Commission has pledged to go through the contingency costs with a fine-toothed comb once the project is complete so they can see if any of the money can be recouped.
“There are definitely going to be people taking a real hard look at everything down the road,” Daly said. “Whether [the problems are] somebody’s fault…certainly there’s going to be some discussion about that when all is said and done.”
While Daly wouldn’t discuss the potential of the town suing any of the project’s players, she did say that’s a relatively common practice for the town.
“Historically, the town has quite frequently sought economic redress on some of these projects,” she said.
Meanwhile, the project’s use of the backup contingency fund, called the owner’s contingency fund, could affect other parts of the project. Officials said that particular fund is used to supplement any area of the project that goes over budget. In practice, the money is sometimes used to purchase new furniture and the like.
“Our hope is that we don’t have to use it and then we can use it for other furnishings at the end,” Daly said, conceding that current use of the fund could limit such purchases. “I’m sure there are things that the principal would have like to have gotten new that we may be reusing from the old school.”
But officials stressed that all of the money woes are taking a backseat to the task at hand: finishing the project on time. The goal is to get the project done before students return to school next fall.
“The focus right now is to get it done,” Guigli said.
In other words: The blame game will have to wait.
Emerging Opportunities in the Indian Consumer Finance Industry: Market Size, Strategies, Products and Competitive Landscape - Yahoo Finance
NEW YORK, June 5, 2012 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:
http://www.reportlinker.com/p0874112/Emerging-Opportunities-in-the-Indian-Consumer-Finance-Industry-Market-Size-Strategies-Products-and-Competitive-Landscape.html#utm_source=prnewswire&utm_medium=pr&utm_campaign=Credit_an
Synopsis
The report provides detailed market analysis, information and insights into the Indian consumer finance market, including:
• Current and forecast values for the Indian consumer finance market
• Comprehensive analysis of the industry's market attractiveness and key trends and drivers supporting the growth of the consumer finance market in India
• Detailed analysis of the marketing strategies adopted by banks in India for selling consumer loans
• Detailed analysis of the challenges affecting the Indian consumer finance market
• Company profiles of the major banks in the Indian consumer finance market
Summary
The Indian consumer finance market recorded a compound annual growth rate (CAGR) of 16.4% during the review period (2007–2011). It is projected to retain a high CAGR of 14.55% over the forecast period (2012–2016). The strong growth will be driven by the country's improving macro- and micro-economic fundamentals, and by the increasing domestic demand for consumer finance services. India's rising employment levels are expected to generate more demand for consumer finance in the country. The unemployment rate in India is projected to decrease from 6.6% in 2011 to 6.3% in 2016. The improving employment conditions in the country will encourage Indians to increase their personal consumption expenditure, which will create a higher demand for consumer finance products, such as personal loans, education loans, auto loans and mortgage loans. The country's sustained economic growth, rising disposable income levels, affordable interest rates and tax incentives are the main macroeconomic growth drivers that are encouraging the housing loan category's development in India. Although the Indian consumer finance market registered significant growth during the review period, the market's growth decelerated towards the end of the review period as a result of the country's microfinance crisis caused by India's strict regulatory environment. The Indian banking industry is well regulated and contains 167 commercial banks. The banks operating in India include a mixture of both domestic and foreign businesses. Despite the fragmented nature of the Indian banking industry, the competitive landscape for the Indian consumer finance market varies significantly depending on each product category.
Scope
• This report provides an extensive analysis on the consumer finance market in India
• It details historical values for the consumer finance market in India for 2007–2011, along with forecast figures for 2012–2016
• The report provides a detailed analysis on key trends and drivers, marketing strategies, and challenges in the consumer finance market in India
• It outlines the current regulatory framework in the industry
• It details the marketing strategies adopted by various banks
• It profiles the major banks in India
Reasons To Buy
• Make strategic business decisions using historic and forecast market data related to the Indian consumer finance market
• Understand the key market trends and growth opportunities in the Indian consumer finance market
• Assess the competitive dynamics in the Indian consumer finance market
• Gain insights into the marketing strategies adopted by banks to sell consumer finance products
• Gain insights into key regulations governing the consumer finance market in India
Key Highlights
• Housing loans was the largest category in the Indian consumer finance market, and it generated approximately 56.9% of the total market value in 2011.
• The gold loans category was the fastest growing in the Indian consumer finance market during the review period. It recorded an impressive CAGR of 43.93% during the review period.
• The education loans category recorded the second-fastest CAGR of 30.20% during the review period. This growth was primarily due to the rapid expansion of India's education services, as well as the rising number of students choosing to travel aboard to access higher education.
• The auto finance category recorded a strong CAGR of 18.85% during the review period
• The Indian credit card loans category is in the initial stages of development. It recorded a CAGR of -0.28% during the review period. This was mainly due to the country's high defaults rate and the availability of other popular credit products in the Indian consumer finance market.
Table of Contents
1 Executive Summary
2 Future Outlook of Consumer Finance in India
3 Indian Consumer Finance Market Dynamics
3.1 Macroeconomic fundamentals
3.1.1 GDP
3.1.2 Annual disposable income
3.1.3 Inflation rate
3.1.4 FDI inflows
3.2 Consumer attitudes towards credit
3.3 Key performance indicators
3.4 Regulatory framework
4 Indian Consumer Finance Market Opportunity and Growth Potential
4.1 Overview
4.2 Personal Loans
4.3 Credit Card Loans
4.4 Auto Loans
4.5 Gold Loans
4.6 Housing Loans
4.7 Education Loans
5 Key Trends and Growth Drivers for the Indian Consumer Finance Market
5.1 Personal Loans
5.2 Credit Card Loans
5.3 Auto Loans
5.4 Gold Loans
5.5 Housing Loans
5.6 Education Loans
6 Industry Structure and Competitive Landscape
6.1 Indian Banking Industry Market Share
6.2 Housing Loan
6.3 Auto Loan
6.4 Credit Card Loan
6.5 Education Loan
6.6 Gold Loan
7 Strategies
7.1 Marketing and Product Strategies
7.2 Market Entry Strategies
7.3 Growth Strategies
8 Challenges
9 Company Profiles
9.1 State Bank of India (SBI)
9.2 Housing Development Finance Corp. Ltd (HDFC)
9.3 ICICI Bank Ltd
9.4 Kotak Mahindra Bank
9.5 AXIS Bank Limited
9.6 Other private banks
10 Appendix
10.1 About BRICdata
10.1.1 Areas of expertise
10.2 Methodology
10.3 Disclaimer
List of Tables
Table 1: Indian GDP at Constant Prices (US$ Billion), 2007-2016 (Base Year 1999-2000)
Table 2: Indian Annual Disposable Income (US$ Billion), 2007-2016
Table 3: Indian Inflation Rate (%), 2007-2016
Table 4: Indian Banking Industry Value by Loans and Deposits (US$ Billion), 2007-2016
Table 5: Indian Banking Industry Growth by Performance Indicator (%), 2007-2016
Table 6: Indian Consumer Finance Market Size (INR Trillion), 2007-2011
Table 7: Indian Consumer Finance Market Size by Category (INR Billion), 2007-2016
Table 8: Indian Personal Loans Market Size (INR Billion), 2007-2016
Table 9: Indian Credit Card Loans Market Size (US$ Million), 2007-2016
Table 10: Indian Auto Loans Market Size (INR Trillion), 2007-2016
Table 11: Indian Gold Loans Market Size (INR Billion), 2007-2016
Table 12: Indian Housing Loans Market Size (INR Trillion), 2007-2016
Table 13: Indian Education Loans Market Size (INR Billion), 2007-2011
Table 14: Indian Credit Card Transactions Volume and Value, FY2009-FY2011
Table 15: Market Entry Strategy of Foreign Banks in India
Table 16: Foreign Banks in India
List of Figures
Figure 1: Indian Future Outlook of Consumer Finance (INR Billion)
Figure 2: Indian GDP at Constant Prices (US$ Billion), 2007-2016 (Base Year 1999-2000)
Figure 3: Indian Annual Disposable Income (US$ Billion), 2007-2016
Figure 4: Indian Inflation Rate (%), 2007-2016
Figure 5: Indian FDI Inflows (US$ Billion), 2007-2010
Figure 6: Indian Banking Industry Value by Loans and Deposits (US$ Billion), 2007-2016
Figure 7: Indian Banking Industry Growth by Performance Indicator (%), 2007-2016
Figure 8: Indian Consumer Finance Market Size (INR Trillion), 2007-2016
Figure 9: Indian Consumer Finance Market Size by Category (INR Billion), 2007-2016
Figure 10: Indian Personal Loans Market Size (INR Billion), 2007-2016
Figure 11: Indian Credit Card Loans Market Size (INR Billion), 2007-2016
Figure 12: Indian Auto Loans Market Size (INR Trillion), 2007-2016
Figure 13: Indian Gold Loans Market Size (INR Billion), 2007-2016
Figure 14: Indian Housing Loans Market Size (INR Trillion), 2007-2016
Figure 15: Indian Education Loans Market Size (INR Billion), 2007-2016
Figure 16: Indian Unemployment Rate (%), 2007-2016
Figure 17: Indian Urban and Rural Population (%), 2007-2016
Figure 18: Indian Number of Households (Million), 2007-2016
Figure 19: Indian Leading Banks by Assets (% Share), March 2011
Figure 20: Indian 10 Leading Banks by Assets (INR Billion), March 2011
Figure 21: Indian Housing Loans Market Share (%), 2011
Figure 22: Indian Auto Loans Market Share (%), 2011
Figure 23: Indian Credit Card Loans Market Share (%), 2011
Figure 24: Indian Gold Loans Market Share (%), 2011
To order this report:
Credit and Loan Industry: Emerging Opportunities in the Indian Consumer Finance Industry: Market Size, Strategies, Products and Competitive Landscape
Check our Industry Analysis and Insights
Nicolas Bombourg
Reportlinker
Email: nicolasbombourg@reportlinker.com
US: (805)652-2626
Intl: +1 805-652-2626
G7 finance ministers vow European action as Spain fears mount - Globe and Mail
A conference call of G7 finance ministers concluded with promises of further European action over the coming weeks to calm markets as concern now focuses on the Spanish economy and its fragile banking sector.
The discussion among finance ministers and central bank governors focused on potential policy responses, “including the progress towards financial and fiscal union in Europe,” according to a brief statement released by Finance Minister Jim Flaherty’s spokesperson. The statement was virtually identical to one issued earlier Tuesday by the U.S. Treasury.
Both Mr. Flaherty and Bank of Canada Governor Mark Carney took part in the conference call.
Japanese finance minister Jun Azumi said the ministers discussed the situation in Europe.
“The European side stated that they will respond to it speedily,” he said, according to reports.
The private call was never officially announced, but Mr. Flaherty disclosed it would take place while speaking with reporters on Monday.
The next summit of G20 leaders – to take place later this month in Los Cabos Mexico – is once again shaping up as a deadline of sorts for European leaders. The planned agenda of last year’s G20 summit in Paris was largely derailed by Euro zone politics as European leaders grappled with Greece’s plan – later retracted – to hold a referendum on Europe’s bailout conditions.
The G20 summit will take place just days after the June 17 Greek election, in which voter decisions between pro and anti-bailout parties could hasten that country’s exit from the euro zone.
Spain is now the most pressing concern, as the region’s fourth-largest economy admitted for the first time Tuesday that it will need European help to shore up its banking sector.
Prime Minister Stephen Harper, who is in London for the Queen’s diamond jubilee celebrations, will be in Paris Wednesday to meet with French President François Hollande.
With a report from Jeremy Torobin
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