Archives » 2007 » September

Amid the uncertainty surrounding the final outcome of the subprime mortgage crisis, it is hard to tell what the impact has been on pension funds. But it is likely that the steady diversification of investment portfolios since the dotcom-driven stockmarket crash has left pension schemes less hostage to the fortunes of a single asset class.

Better risk management and co-ordination from the exchanges and regulators means a repeat of the 1987 stock market crash is less likely, market makers at an industry event in Europe believe.

The Alternative Investment Management Association (Aima) has created a new steering committee dedicated to improving the engagement of the hedge fund industry with the institutional investor community.

The Committee of European Securities Regulators (CESR) has approved, in principle, the classification of hedge fund indices as financial indices for the purposes of the Ucits III Directive, clearing the way for them to be held as securities in Ucits funds.

The seven-year bull run in global property stocks stalled in Q2 2007, in part due to the fall out from the US subprime mortgage market, according to the latest Quarterly Global Property & Reit report from Standard & Poor’s Index Services.

Performance measurement teams are compelled to buy in the latest IT systems as they come under pressure from their clients to provide more and more accurate data, writes Henry Smith.

— Elizabeth Corley, Allianz Global Investors, Europe

With numerous affiliate companies around the world, it comes as a surprise that Allianz Global Investors adopts a hands-off approach and lets its firms get on with it. In spite of performance blips, CEO Elizabeth Corley refuses to hear a bad word about any of them, writes Henry Smith.

Asset management firms, irrespective of size, should foster a “culture of investment” that benefits their clients. A focus on achieving sustainable performance will bring investor satisfaction and long-term profitability, according to Elizabeth Corley, CEO of Allianz Global Investors, Europe.

RZB’s Oxford-educated head of investment banking, Patrick Butler, has turned his back on his native UK in order to be at the forefront of the action in Austria as history looks set to unfold in Central and Eastern Europe. Nat Mankelow reports.

Given his position at the centre of a rapidly developing and expanding financial marketplace in Central and Eastern Europe (CEE), Patrick Butler is a refreshingly calm and measured senior banker.

— Susanne Willumsen, State Street Global Advisors

Ongoing credit and liquidity issues are likely to continue to generate uncertainty in financial markets, particularly in relation to risk appetite, potential financial losses and the economic growth outlook.

— Robert N. Streed, Northern Trust Global Investments

In a stock market where prices have been advancing for some time, investors often look back and say: “I wish I bought this stock back when it was trading at…” We believe the market is entering the “back when” period which investors will be pointing to in coming years.

— John Cleary, Focus Capital

Latin America is broadly doing better than at any time since the mid 1970s. The region is in its fourth successive year of economic growth, which is averaging 5 per cent, while inflation remains in the low single digits.

— Jan de Bruijn, Asian equity, Threadneedle

It is still too early to have a totally clear picture of what the impact of the current credit crunch will be on Asia in macro terms.

Though a level of stability has returned to the markets (although the sharp rebound in itself reflects the increased volatility), no one is yet clear as to what the actual losses will be or who will be left “holding the baby”.

— Morgan Downey, LaSalle

The subprime tidal wave is sweeping through hedge funds. Is the leveraged CDO trade dead? Is this a buying opportunity in ravaged fixed income markets – even for asset-backed securities? Martin Steward looks for the upside within the current crisis.

— Ian Cash, distressed specialist, Alchemy Partners

LBOs were among the first to come under scrutiny after the credit crunch. How serious will the fallout be for private equity – and can distressed provide the upside? Martin Steward reports.

— Toby Nangle, Barings Asset Management

Distress in the US subprime housing market has resulted in an ongoing credit fallout which is affecting banks around the world. Nat Mankelow takes a look at the issues involved.

— Rick Lacaille, SSGA

Once the preserve of sophisticated investors, the versatility of equity derivatives has catapulted them into the mainstream. Matthew Craig outlines the various ways in which they can be used.

— Mihir Worah, inflation portfolio manager, Pimco

The inflation-linked bonds market has been robust lately. But will the recent US subprime problems cause it to plunge into trouble, as some old hands in the investment community have suggested? As Gerry O’Kane reports, markets and central banks will provide the key.

If they had not all been away on holiday, you could just imagine the older hands of the investment community wagging their fingers and cackling: “I warned you whipper-snappers those new-fangled subprime collateralised debt obligations would cause trouble… ”

David Dyer, investment manager, fixed income at Axa Investment Managers, analyses the history of inflation linked bonds and how threats against current benign inflation rates have prompted institutional investors to manage risk levels more effectively.

— Sara Ståhl, business development manager, European Climate Exchange

Global carbon trading has more than tripled over the last year and financial institutions are set to get in on the act going forward. Ceri Jones looks at the current and future market trends.

— Mark Azzopardi, BNP Paribas

The growth of insurance-linked securitisation has been steady in the past decade, particularly since Hurricane Katrina. That looks set to continue, as Nat Mankelow reports.

— PJ Di Giammarino, CEO of the JWG-IT MiFID

MiFID is high on everyone’s agenda, but for the wrong reasons, as confusion reigns and financial services firms look to their local country regulators for guidance, writes Peter Guest.

Jerry Lees, head of electronic execution services at CA Cheuvreux, speaks to FT Mandate about the challenges for both the buy-side and sell-side in the more competitive post-MiFID environment.

MiFID opens the door to systematic internalisation, which offers reduced costs and improved efficiency, claims Brian Schwieger, head of EMEA Quantitative Execution desk at Merrill Lynch.

Andrew Allwright of Reuters explains how asset managers should overcome their scepticism of transaction cost analysis, as it can provide an easily accessible data set in the wake of MiFID.

Harrell Smith, co-head of trading product strategy at Portware, outlines how fragmentation in exchanges has led to increased ‘dark’ liquidity, which can be accessed through crossing networks.

Richard Semark, managing director, COO European Client Trading and Execution at UBS, outlines why in this newly fragmented market it is important for the sell-side to continually innovate.

This summer, Eurex, one of the world's largest derivatives exchanges and the leading European clearinghouse, introduced derivatives on the Dow Jones EURO STOXX® Select Dividend 30 Index.

— Richard Evans, Citi

Citi has made a number of acquisitions in the past few years, including Lava Trading, TD Waterhouse and Automated Trading Desk, with the aim of being a global player and ensuring its future development. Peter Guest looks into its prospects.

When Swift started its automation drive for mutual funds in 2000, the complex and secretive hedge funds slipped through the net. Things may now be about to change, writes Oliver Paeme.