Increased pressure on performance and the need for better portfolio diversification is forcing institutional investors to pump more money into alternative asset classes.

According to a new survey by Russell Investment Group, real estate still represents the largest share of alternative assets, although hedge funds are currently the vehicles attracting more new money from investors.

The percentage of institutional investors using hedge funds in Australia almost doubled between 2003 and 2005, from 18 per cent to 32 per cent.

The market for inflation-linked bonds is not only growing in size but also in terms of the different investment products on offer to investors.

With the London Stock Exchange (LSE) caught in the cross-hairs of potential multi-billion euro bids from Euronext, Deutsche Boerse and Macquarie Group, Heiko H. Thieme – chairman of American Heritage Management Corporation – said that, were he based in London, he would “defend to his last breath” the independence of the LSE.

Speaking at the 26th International Swiss Futures & Options Association meeting in Burgenstock, Switzerland, Mr Thieme questioned the LSE’s strategy and asked why such a prestigious exchange, with a distinguished 200-year history, was not the prime mover in European stock exchange consolidation, rather than being a predatory target.

A claim by Swift’s chief executive Leonard H. Schrank that the financial industry-owned messaging body’s “transformation” project was on track was greeted with some scepticism by delegates attending Sibos 2005 in Copenhagen.

Why has one of world’s biggest multi-managers moved 15 per cent of its assets away from some well-known players? CIO Chris Condon tells Adam Courtenay about his selection process.

Super-sized mandates are not normally associated with Australian asset managers – a population of 20m simply cannot support the kind of scale which attracts global attention.

Having built up third-party assets, Old Mutual Asset Managers is now seeking to use its boutique status to win specialist mandates from pension funds which have adopted a core satellite model. Their new CEO talks to Henry Smith about spearheading new products.

If you want to run high performance long-only investment products, start a hedge fund. Why? If all the best managers are busy running hedge funds, then the only way to woo them is to launch your own alternative investment strategies.

That’s what Peter Baxter believes and its just what he did soon after leaving Hill Samuel (following its merger with Scottish Widows in 2000) to start up a third-party fund management business for Old Mutual Asset Managers UK (OMAM), a specialist investment subsidiary of the South African-based insurer Old Mutual.

The general economic backdrop in Europe has been disappointing for some years. But this belies the fact that within the Eurozone there are marked distinctions between different countries. Spain and Ireland are growing quite rapidly, running budget fiscal surpluses and thriving on the back of a low interest rate environment.

The weekend before Hurricane Katrina barreled into Louisiana and Mississippi, I stopped by one of my favorite petrol stations along the back roads of New Hampshire. Alas, the pump was locked and empty. The proprietor told me that he had refused to take delivery from his wholesaler — at $2.89 a gallon. I wonder if he is now rethinking that decision.

The effects of a sustained period of high commodities prices have had a substantial impact on a Latin America long dogged by high inflation, currency crises, and ballooning fiscal deficits.

Investors have welcomed the landslide Japanese general election victory of prime minister Junichiro Koizumi’s Liberal Democratic party.

In the wake of the election result, a flurry of trading activity pushed the Nikkei 225 index up 1.17 per cent while the yen also rose against the dollar.

Since 2002, Mr Koizumi’s reform-minded leadership has enticed investors back into Japanese stocks.

Domestic consumer spending and private capital investments remain the major drivers of the economy. Export growth has weakened since last year.

The freezing of Australian interest rates looked to have scuppered AUD performance, but rising commodity prices has fuelled optimism, says Neil Mellor.

Traditionally, life insurance companies have kept their asset management capabilities in-house, but with a new focus on making investment portfolios work harder, outsourcing might help meet client expectations, Paula Garrido reports.

Over the last few years, the life insurance sector has been criticised for failing to meet clients’ expectations. Changes in regulation and poor investment returns at the beginning of the decade have resulted in many life companies rethinking their strategies for the future, with the outsourcing of asset management capabilities one of the options being considered.

Adrian Lawrence, of Henderson Global Investors, examines the various methods by which with-profits insurers can beat the strict guarantee and the pitfalls they face in securing some upside.

The new UK regulatory environment for insurance capital seeks to change the nature of the business, raise more capital and reduce risk in investment portfolios, writes Madeline Forrester.

The effects of the new FSA regulations will have a broad-sweeping, yet laudable effect as they encourage insurers to manage assets and liabilities to deliver promises, writes Paul Bourdon.

Goldman Sachs Asset Management talks to Alan Durrant, chief investment officer of Skandia Investment Management, to find out more about the first steps in the due diligence process – an essential element in finding the right sub-advisory partner.

Uncertainty about demand levels has led the UK government to syndicate its 50-year inflation-linked bond rather than auction it. However, the sector is steadily growing in Europe, the US and the UK, with regulatory changes allowing hitherto reticent countries to get involved, writes Paula Garrido.

Ray Dalio puts the case forward for global over domestic inflation-linked bonds in an investment portfolio.

The credit derivatives market suffers from operational problems, so how close is a viable technological solution, asks Roger Aitken.

With a British Bankers’ Association report forecasting that the global market in credit derivatives will rise to $8400bn (€6,839bn) by the end of 2006, recent remarks from the US Federal Reserve chairman, Alan Greenspan, and the UK’s Financial Services Authority (FSA) served to put pressure on the industry to tackle operational issues confronting it.

Despite some high profile teething problems, e-trading has recently seen a rise in popularity. This is because it is now faster, more efficient, portable and cheaper, says Roger Aitken.

Whatever else the decision by the UK’s Financial Services Authority (FSA) might constitute, in fining Citigroup Global Markets Limited (CGML) £13.9m (€20.9m) in June for executing a bold trading strategy in the European bond markets, it highlighted a loophole and speed of execution in electronic trading. But when a market goes electronic, it rarely looks back.

A key differentiator with MTS is that it sends matched settlement instructions, on behalf of its participants, to over 13 depositaries and clearing houses in Europe - offering a crucial component of straight-through-processing for its participants. In the electronic fixed income world, most other platforms offer only one clearing house/counterparty.

As the boundary between trade order management systems and execution management systems blurs, global spending will increase and OMS is competing for the shelf space, writes Roger Aitken.

In order to meet the provisions of the new Mifid regulations, investment firms will either have to spend on technology or outsource, which will in turn lead to more monitoring, writes Henry Smith.

Roger Aitken talks to Brown Brothers Harriman, which has an administration outsourcing operation that covers over 90 markets through a single, technology-focused, standardised global operating platform.

Many view the Schroders/JPMorgan breakdown as more a case of outsourcing evolving than dying. But business process analysis and technology issues keep on cropping up, writes Gerry O’Kane.

With well-intentioned lift-outs breaking up amid confusion, many are calling for standardisation of the service level agreements and key performance indicators, writes Gerry O’Kane.

Tax breaks and a faster approach have boosted the profile of the Isle of Man and turned it into a more tempting destination for fund administrators.Roger Aitken reports.

The recent Ucits III regulations may seem like an administrative nightmare, but a better understanding of the directive’s requirements can bring benefits to investors and fund promoters alike.

While they are seen as one homogenous command, the recent Ucits III regulations are actually made up of two distinct European directives.

A moderate change in correlation can seriously undermine the returns offered by a systematic processes, warns Amos Galvin.

Though securities lending has proved to be a profitable venture, many believe it to pose a threat to good corporate governance.Roger Aitken reports on new ISLA initiatives that tackle issues such as transparency, consistency and information.

As securities lending becomes an essential part of portfolio returns, many institutions are looking towards outsourcing the activity to a third party.Mark Fieldhouse examines the options available to ensure a successful partnership.