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BUSINESSTuesday 29 December 2015
Mutual fund trends: STREET BRIEFS
Stock pickers increasingly bulking up on bank stocks Deutsche Bank
sells China bank
STAN CHOE to a review by Goldman conventional wisdom says, cially conscious funds con-
AP Business Writer Sachs. That’s 1.65 percent- would be hurt by rising sider whether companies stake for $4B
NEW YORK (AP) — By them- age points more than S&P rates. They own fewer real- are helping or hurting the
selves, neither is very popu- 500 index funds have. estate investment trusts, environment, promoting BERLIN (AP) — Deutsche
lar. But together, perhaps, That may not sound like a utilities and telecoms than good corporate gover- Bank says it has agreed
they can win some fans? big difference, but it’s the index funds do, for exam- nance or reducing income to sell its stake in China’s
Stock-picking mutual funds, sector where active man- ple. These kinds of stocks inequality. These factors Hua Xia Bank to a Chinese
which investors have been agers most differ from index pay high dividends, and could ultimately help pro- insurer in a deal worth be-
fleeing, are increasingly funds, by far. The next-big- the thought is demand for tect or hurt companies’ tween 23 billion and 25.7
bulking up on bank stocks gest “overweight” by ac- them will drop as income profits over the long term, billion yuan ($3.6 billion-$4
in hope of beating index tively managed funds is in investors gravitate back to proponents say. billion). Deutsche Bank
funds and luring back dol- the industrial sector. Man- bonds. “Our numbers show that AG said in October that
it no longer considered its
19.99 percent stake in Hua
Xia Bank strategic. Ger-
many’s biggest bank an-
nounced Monday that it
will sell the entire stake to
PICC Property and Casu-
alty Company Limited. It
said that the deal’s value
will depend on “final price
adjustment at closing” and
the sale will have a positive
financial impact. Co-CEO
John Cryan said that “now
is the right time for us to
sell this investment,” which
dates back to 2006, but
added that China remains
a key growth market for
Deutsche Bank. q
Report: Valeant
CEO Pearson on
a medical leave
A trader works in the Goldman Sachs booth on the floor of the New York Stock Exchange. Stock-picking mutual funds, which inves- NEW YORK (AP) — Valeant
tors have been fleeing, are increasingly bulking up on bank stocks in hope of beating index funds and luring back dollars.
Pharmaceuticals CEO J.
(AP Photo/Richard Drew)
Michael Pearson is taking a
lars. That, plus other trends agers have 0.68 percent- — Doing good; doing well sustainable investing has
from around the mutual- age points more of their Actively managed mutual become part of the main- medical leave of absence
fund industry: portfolios there than index funds have been hemor- stream,” said Lisa Woll, chief
funds do. rhaging dollars generally, executive of the Forum for after he was hospitalized
— Banking on banks The emphasis on banks is but one niche within stock Sustainable and Responsi-
Actively managed mutual part of a broader approach picking has remained con- ble Investment, which also with pneumonia last week.
funds are struggling. Most to take advantage of rising sistently popular. goes by the name US SIF.
have fallen short of the interest rates, now that the Socially responsible mu- Hundreds of funds incorpo- Shares of the troubled
Standard & Poor’s 500 in- Federal Reserve has raised tual funds have drawn rate environmental, social
dex for years, and the rea- short-term rates for the first more investment dollars or governance factors in Canadian pharmaceuti-
son to pay their higher fees time in nearly a decade. than they’ve lost in every their investment strategies, cal company fell nearly 7
is for the chance to beat in- The Fed’s move earlier this 12-month period going US SIF has a list of them on percent in premarket trad-
dex funds. Only 27 percent month, and expectations back to late 2013, accord- its website. ing Monday. Valeant says
of large-cap core mutual for more increases, give ing to Morningstar. They three executives will take
funds beat the S&P 500 this banks cover to charge attracted $2 billion in net — Falling 401(k) fees over for Pearson in his ab-
year, as of Dec. 9. more for credit cards, auto investment over the year When it comes to investing sence. A representative
To improve their returns and loans and other products, through November, for ex- for retirement, you don’t for Valeant said Monday
lure investors back, stock which should help their ample. necessarily get what you that Pearson has a “severe
pickers are increasingly profits. Higher rates should That’s in stark contrast to pay for. You keep what you case of pneumonia and is
betting on stocks of banks also help insurers, allowing the $163 billion that ac- don’t pay for. receiving treatment in the
and insurers. Large-cap their vast bond holdings to tively managed U.S. stock High expenses can erode a hospital.” The company
core mutual funds have an produce more income. funds lost as a group over nest egg, particularly over declined to offer details
average of 17.8 percent of At the same time, fund the same time. the decades that a work- on his condition or the ex-
their portfolios invested in managers have also light- Investors like that these so- er is saving. And expenses pected length of his ab-
financial stocks, according ened up on stocks that, can quickly add up. q sence. Valeant has recent-
ly come under scrutiny for
its drug pricing policies, as
well as its relationship with
the mail-order pharmacy
Philidor. Critics believe Ph-
ilidor created a network
of “phantom pharma-
cies” to steer pharmacy
benefit managers toward
Valeant’s more-expen-
sive drugs, rather than to
cheaper alternatives. q
