Problems arise in investment operations outsourcing deals because of mismatches between the aspirations of the buy-side and the capabilities of the supply-side, according to Ken Back, managing director, EMEA, Global Strategic Solutions at Citigroup Global Transactions Services.

US asset management firms are under-spending on client service, despite recognising the contribution the function makes to their profitability.

The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the US with $200bn (e168bn) of assets, has signed as a client for M-cube Investment Technologies’ AlphaEngine software, a move which endorses the importance of applications that help to evaluate portfolio decisions in a transparent and systematic way for all asset classes.

Suzanne Donohoe, currently co-head of Goldman Sachs Asset Management (GSAM) Europe, is returning to New York in April to become head of GSAM’s North American client businesses.

When choosing alternative asset managers, investors need to check that they are getting what they are paying for, according to Magnus Backström, chief investment officer of Finland’s OP Bank Group pension fund.

JPMorgan’s John Donohue is bringing the fixed income specialisation from the US office to London in order to create ‘centres of excellence’. However, he will have to educate investors in the ways of risk-taking. Henry Smith reports.

With new regulation increasing the flexibility of members’ retirement options, the Laurus pension fund has refocused its investment strategy to achieve a better risk/reward balance, writes Paula Garrido.

Europe’s economy is on a firmer footing and corporate profitability remains on an improving trend heading into 2006. Against this backdrop, valuations look reasonable, with European companies in general trading on an average of around 15 times expected 2006 earnings.

After two years of healthy gains, the US stockmarket had less impressive though still positive results in 2005. Energy and utilities accounted for the bulk of returns amid a surge in energy prices.

Brazil has just dispensed with capital gains tax for foreign holders of domestic debt, followed within hours by a statement from Chile that capital gains tax would be waived there also.

Given apparent solid economic growth prospects and valuations, Asia is set for a good 2006. The main risks are potential external shocks including a sharp reduction in US consumption sparked by a housing market downturn and a consequent decline in Chinese exports and economic activity.

Pay close heed to signs that international investors are losing their appetite for South Korean stocks and for indications that the Kospi’s rally is running out of steam, warns Neil Mellor.

Client demand for the integration of environmental, social and corporate governance considerations into investment decisions is being met to varying degrees, says Emma Hunt.

Institutions are grabbing the lucrative high yield asset class with both hands, but default rate crashes are common place and one is long-overdue. Elizabeth Cripps reports.

How risky is too risky when it comes to high yield debt? Institutions on both sides of the Atlantic are moving down the credit ladder but, with default rates set to rise, they need to handle this potentially lucrative asset class with care.

Yield-hungry institutional investors are naturally attracted by an investment not only unrelated to equities but also sufficiently detached from mainstream fixed income to be, in the words of ABN Amro Asset management’s Chris Brils, “an asset class in its own right”.

FTMandate speaks with Andrew Wilmont, the lead manager of the Axa Global High Income fund, on Global High Yield opportunities and the role of high yield in an investment grade portfolio.

Following regulatory changes which have opened the door to pension funds wishing to deploy LDI solutions, suppliers are racing to create the ideal strategy for clients. Paula Garrido reports.

Regulatory changes across some of Europe’s most developed pensions markets are forcing pension schemes to reconsider their investment approach by adopting strategies that could help them match their assets and liabilities.

Wojtek Nabialek presents a consistent way of performing efficient frontier analysis on a portfolio containing structured products – providing new insights into their contribution to an investor’s portfolio.

Volatility offers insurance against market falls, as when the market is down, volatility spikes. Christine Senior offers an overview of the current outlook and how best to capitalise.

In recent years volatility has become an indispensable tool for the fund management industry and moved mainstream recently with major exchanges listing volatility indices and derivatives.

After years of sitting on the sidelines, the buy-side is finally in the algorithmic trading game, chiefly because it lets managers take control of their own trading processes, says Lee Ratner.

Hedge fund practitioners are recognising the importance of the back office, and firms are developing tailor-made IT solutions. They may be biting off more than they can chew, writes Roger Aitken.

Before making a considerable investment in communications technology, clients need a number of very specific requirements to be fulfilled. Graham Bright describes the process.

The Markit/FT Interactive Data tie-up, which will offer enhanced service offerings, shows the extent to which demand for evaluation services has grown. Roger Aitken explains.

An experienced and dynamic team is the key to success at the TT European Equity fund, where individuals are given a relatively free reign and bureaucracy is kept to a minimum. Paula Garrido reports.

Clearstream, the international central securities depository (ICSD), has hailed three big client wins for its ‘Vestima+’ electronic fund order routing system as proof that market participants prefer a flexible open architecture model that does not “jailhouse” users into settling in a single CSD.

Cross-border EU trading generally requires the use of a chain of intermediaries, hence consolidation and harmonisation is the preferred route to greater efficiency, writes Ana Miro.

The argument is there for a European central counterparty, in order to reduce costs and simplifying the process, but which of the main providers can seize the business? Ana Miro reports.

The latest research from FT Mandate reveals a more mature securities services industry, with a discerning outlook for deals. Gerry O’Kane examines the winners and the trends of 2005.

A string of wins in 2005 has left Investors Bank & Trust in a buoyant mood and it aims to open offices in Europe, employing the same methodologies that it has used in its back office outsourcing business since 1969. Tim Cooper reports.

Is the outsourcing of middle- and back-office functions a perfect partnership or a relationship based on strict roles? Henry Smith talks to industry pioneers on the major issues.

Henry Smith: Michael, when going through the process of outsourcing your middle and back-office to the Bank of New York, you chose to implement a gradual component by component transition, rather than a full blown lift out. Why was this, and what advantages did it offer you over the lift out?

Henry Smith: A lot of institutional investors going into hedge funds for the first time, take the fund of hedge funds route. What are the main back-office issues facing funds of hedge funds and how can outsourcing help?

The joint venture RBC Dexia Investor Services, claims its director Tim Wood, now has a truly worldwide presence by combining European and American expertise. This might explain why it is so confident of UK success, writes Tim Cooper.

As the big players target the sub-custodian business in Asia, bringing both an established template for success and local expertise, how can the smaller firms compete? Paula Garrido reports.

A Rolls Royce service from Swiss bank Pictet has seen it shoot up the custody tables, as the smaller firms’ personal touch seems to be swaying clients away from the big guns. Tim Cooper reports.