AT THE BELL

Not smooth sailing after dark

Brokers must make sure investors are aware of the pitfalls of after-hours trading, Securities and Exchange Commission Chairman Arthur Levitt cautioned them following the National Association of Securities Dealers’ vote to start evening trading sessions: less liquidity and consequent greater volatility. Investors need this information, he said in a prepared statement, so they “can make an informed choice concerning whether their orders should be executed in the after-hours market.”

As for financial advisers, they’re mixed on the topic. Says Richard Bregman, president of MJB Asset Manage-ment: “It’ll probably decrease the volatility of the markets because you won’t have this pent-up” overnight demand. “You won’t have people waking up at 5 a.m.”

Patricia Raskob, a planner from Tucson, Ariz., expects more volatility. “It will give the day traders more time to wheel and deal,” she says. And finally, “The day my clients start worrying about day-to-day fluctuations of the markets is the day I go out of business,” says Marc S. Freedman, president of Freedman Financial Associates in Peabody, Mass.

Fidelity to start web brokerage

Fidelity Investments is expected to reorganize its brokerage group to support online trading growth. The Boston-based company, which holds $178 billion in online accounts, has appointed Tracey Curvey, head of customer marketing for Fidelity personal investments and the brokerage group, to head a soon-to-be announced interactive brokerage group, a spokesman confirmed. It will be responsible for brokerage marketing and Internet initiatives for active traders.

J.P. Morgan loses exec

Credit Suisse Asset Management has hired Laurence Smith from J.P. Morgan & Co. Inc. to fill the new post of global chief investment officer. Mr. Smith, who is global head of asset allocation and balanced accounts for J.P. Morgan Asset Management, will oversee Credit Suisse’s product management and investment processes from New York. Credit Suisse has more than $216 billion under management worldwide in both pension and mutual funds.

Subadvice, overperformance

One in 11 U.S. mutual funds is now managed by a subadviser rather than the fund company, while one in nine domestic stock funds and one in six international/global funds is subadvised, Financial Research Corp. reports.

That’s not necessarily a bad thing, either: FRC tells InvestmentNews sister publication Pensions & Investments that domestic equity funds managed by subadvisers outperformed internally managed ones by margins of between 30 and 50 basis points over the one-, three- and five-year periods ended Dec. 31. Subadvised international and global funds garnered returns over internally managed ones of 3.57% for the year ended Dec. 31 and 2.16% over five years.

Russell indexes changing

The Frank Russell Co. says it’s time again to adjust its Russell 1000, 2000, and 3000 indexes. On June 11, the Tacoma, Wash.-based investment management house will post on its website www.russell.com the names of companies its adding to and deleting from its indexes.

Stock fund assets surge

Investors poured $25.83 billion into stock mutual funds in April, the most in 12 months, according to the Investment Company Institute. Assets hit $3.27 trillion, a $155.86 billion, or 5%, increase over March.

Fla. broker undercuts Pru

Investacorp Inc., an independent broker-dealer in Miami Lakes, Fla., is lowering its commission for trading stocks, online or through a broker, to $19.50 from traditional full-service fees of $300-$400. The move follows Prudential Securities Inc.’s decision to cut trading costs to $24.95 plus an advisory fee (InvestmentNews, May 17). Investacorp’s advisory fee starts at 2% for clients with at least $37,500 in assets and decreases to 1% for clients with at least $75,000.

South Africa fund to close

The latest casualty of last year’s emerging markets meltdown is the closed-end New South Africa Fund, which is to be dropped from the New York Stock Exchange and liquidated June 1. A liquidation dividend of $10.22 a share will be paid June 2. Despite the Johannesburg Stock Exchange’s strong gains so far this year, the fund’s directors felt that upswings in the volatile market were not being adequately reflected in its stock price, says Max Hopfl, the CEO of Fleming Asset Management in South Africa, which runs the fund.