Yellen, Fed Colleagues Benefit as Low Rates Lift Markets

Thursday, 28 Aug 2014 02:37 PM

 

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Federal Reserve officials benefited from gains in asset prices that have boosted the wealth of millions of other Americans, financial disclosure reports show.

Fed Chair Janet Yellen’s assets were valued at $5.3 million to $14.1 million last year compared with a range of $4.8 million to $13.2 million in 2012, according to financial disclosure documents released today. The assets are listed in ranges, so determining a precise valuation isn’t possible from the documents.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

The Fed is winding down the most aggressive U.S. monetary stimulus in history, which has benefited stock and bond markets over the past several years. The Standard & Poor’s 500 Index rose about 30 percent in 2013 and is up 8 percent so far this year. The $42.8 trillion global bond market lost 0.3 percent last year, according to the Bank of America Merrill Lynch Global Broad Market Index.

Yellen and her husband, Nobel laureate economist George Akerlof, reported a mix of investments, with individual stock holdings in companies such as Houston-based ConocoPhillips, the third-largest U.S. energy company, and a variety of mutual funds.

Low interest rates have punished savers, pushing them into higher-yielding, riskier investments. The Fed chair also had a stake in the Vanguard High Yield Corporate Fund, which invests in high-yielding corporate debt. Yellen also has investments in savings plans at the University of California, Berkeley, where she was a professor. She joined the faculty in 1980.

Her disclosures again noted that she has a stamp collection valued at $15,001 to $50,000, unchanged from the range in previous filings.

Powell’s Assets

Jerome Powell is one of the richest Fed governors with 2013 assets in a range of $15.5 million to $36.3 million. Powell’s records show dozens of sales of stocks such as Adidas AG, the German sportswear maker, Allianz SE, the Munich-based financial company, and UBS AG, the Zurich-based financial company.

Powell, like many other individual investors, is becoming more diversified, said George Padula, a principal in Boston at Modera Wealth Management LLC.

Powell’s records showed purchases of stock-focused exchange-traded funds with as much as $1.5 million newly invested in these products. That included $365,000 to $800,000 placed in ETFs that track stock indexes in developed markets globally.

ETFs are bundles of securities that trade on an exchange like stocks. They typically track an index of stocks, bonds, commodities or currencies.

ETF Growth

“The growth in ETFs has been huge,” Padula said. “They’re efficient, easy to use and transparent.”

Federal ethics rules prohibit Fed Board employees from owning debt or stock in banks, although there are exceptions for diversified mutual funds and pension or retirement funds that have independent managers.

“The small foreign bank holdings on Gov. Powell’s 2013 financial disclosure form were in two trusts — one a charitable trust and the other a trust for a minor child,” said Fed spokesman Joe Pavel in an e-mail. “The holdings were acquired without his knowledge and, upon discovery, the small holdings were liquidated under the direction of an independent money manager.”

Private Equity

Powell was a partner at The Carlyle Group, a private equity firm, from 1997 to 2005. He took office as a Fed governor in May 2012, and was reappointed and sworn in for a second term this year.

Daniel Tarullo, the Fed governor in charge of bank supervision and regulation, reported assets of $1.86 million to $4.41 million.

They included a number of retirement-oriented investment accounts and annuities. He held $50,000 to $100,000 in the Clearbridge Large Cap Growth Fund, a stock mutual fund; $250,000 to $500,000 in the Dow Jones Target 2015 Fund, a fund designed for savers aiming to retire in or near 2015; and $250,000 to $500,000 in common stock of Mathematica Policy Research Inc., a Princeton, New Jersey-based provider of research and data on public policy issues from health care and education to nutrition and employment.

Fed Vice Chairman Stanley Fischer and Governor Lael Brainard weren’t required to disclose another set of 2013 assets because they already released their information as part of their nomination process. Both joined the Fed board this year.

Fischer, prior to his May Senate confirmation to the Fed Board, disclosed assets of as much as $56.3 million and said he would sell his shares of financial companies including BlackRock Inc. if confirmed.

Editor’s Note:
New Warning - Stocks on Verge of Major Collapse

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