Archives » 2008 » February

Am I alone in thinking that the suspicion and criticism directed at sovereign wealth funds by bankers, politicians, regulators and journalists in Europe and the US is a tad unsavoury and not a little hypocritical, given the scandalous losses and write-downs announced by the world’s biggest investment banks and the less-than-stellar performance posted by many secretive and expensive hedge funds?

— Stewart Hay, Standard Life Investments

The challenges faced by private equity groups as the credit contraction bites do not appear to have affected institutional investors’ appetite for the asset class.

Financial Risk Management (FRM), a $14bn (€9.82bn)fund of hedge funds, is launching a new business, FRM Capital Advisors (FCA), which aims to raise $1bn this year to provide seed capital for early-stage or start-up hedge fund managers.

Hedge funds outperformed the major traditional benchmarks through volatile market conditions last year, according to data from hedge fund index providers Credit Suisse/Tremont, HFR, Greenwich Alternative Investments, RBC Capital Markets and Eurekahedge.

— Dawid Konotey-Ahulu, Redington Partners

A controversial discussion paper on proposed changes to the accounting standards applicable to UK pension funds has provoked fierce debate in the industry.

— Frits Bosch, Bureau Bosch

Frits Bosch says fiduciary management is taking off in the Netherlands, offering opportunities for third-party asset managers.

— Rick Lacaille, State Street Global Advisors

After a three-year bull run, European markets have been hit by volatility and multiple corrections and equities are now 25 per cent lower than their summer 2007 highs. The catalyst for this volatility has been the deterioration in credit markets and concerns over US subprime lending.

— Cormac Weldon, Threadneedle

We find ourselves at a crossroads. With the things that we thought would do well in 2007 having done very well, and the parts of the market we avoided having been sold off, we are close to needing to make big changes to our strategy.

— Urban Larson, Latin America Equity Fund

Latin American markets have been very volatile year-to-date, in sympathy with global equity markets. However, economic growth across the region is strong, with inflation in some countries close to record lows.

— John Cleary, Focus Capital

Asia will become the world’s dominant economic region in this century. The Asian Development Bank estimates that in 2007 and 2008 alone, growth in the region will exceed 8 per cent, ahead of most countries in the rest of the world. So what are the factors behind this?

— Gilbert Van Hassel, CEO Europe, ING Investment Management

With predictions that larger asset managers may lose out in future as the market becomes more specialised, should ING IM be worried? Not according to its CEO Europe, who tells Henry Smith how its multi-business structure will ensure it is one of the mega-players.

Large asset managers face a future as uncertain as present market conditions. Recent investment industry reports predict that they will lose out to a growing number of specialist fund groups over the next decade as institutional investors step up their search for products with the potential to generate alpha.

— José Barréiro, Banco Bilbao Vizcaya Argentaria

After spending a year restructuring the business, BBVA’s head of global wholesale banking and asset management is quietly confident about its future. Nat Mankelow reports.

Few investment bankers, whether in Europe or the US, are looking forward to the next 12 months. A mix of widening credit spreads, little deal flow and the actions of Société Générale trader Jérôme Kerviel, have already made for an unsettling January and the ‘R’ word is been mentioned with increasing regularity.

— Simon Ruddick, Albourne Partners

The bear market in credit may be spreading to equities at last. Hedge funds are held to be one of the few attractive options left for the put-upon investor – but is this still true after years of rising correlations and ‘disguised beta’? Martin Steward investigates.

Shortly before Christmas, Aoiffin Devitt, managing director of alternative investments advisory firm Clontarf Capital, offered a bottle of champagne for the best definition of alpha. The lucky winner? “Alpha is what’s left over when your luck has run out.”

— Tian Rencan, CEO, Fortis Haitong

Volatile market conditions, increasing competition and a slowdown in growth are all likely to have an impact on funds launched under China’s Qualified Domestic Institutional Investor scheme. Henry Smith assesses the prospects for new products set to roll out in 2008.

— Kazuo Katayama, Japan’s MoF

Japan, keen to boost foreign interest in the yen-denominated bond market, is undertaking an exhaustive ‘world tour’ of roadshows. Nat Mankelow assesses the task in hand, and the government’s chances of success.

— Mike Ward, Merrill Lynch

The search for alpha is driving institutional investment managers to demand increasingly sophisticated and tailor-made equity derivatives, reports Elizabeth Cripps.

— Manooj Mistry, head of db x-trackers in the UK, an arm of Deutsche Bank

Liquidity and ease of use are just two reasons why ETFs are becoming increasingly popular. Ceri Jones reports on the latest developments in the market.

— Daniel Draper, Lyxor

Complex tax regimes and different platforms make it difficult for Europe to catch up with the US. Growing triparty services could help.

— Claudia Calich, Invesco

Few foreign investors allocate seriously to emerging market debt and fewer still in local currency securities. Last year’s sliding dollar made it a no-brainer, but even in the long term, managers benefit from the correspondingly diverse sources of alpha available within the asset class. By Martin Steward.

— Niki Beattie, Merrill Lynch

After decades of developing in different directions, it looks as if the trading landscape in post-MiFID Europe will resemble that of the US more closely. But first Europe must tackle the thorny issue of costs, as Peter Guest reports.

— Janet Wynn, DTCC

For hedge funds, asset managers and other buy-side institutions, over-the-counter (OTC) derivatives are an increasingly important element of their investment and trading strategies.

While regulation encourages the creation of new liquidity venues, it is innovation and technology that will determine their viability.

— Arman Falsafi, CME Group

The creators of the world’s largest futures exchange argue that the CME-CBOT merger offers customers economies of scale and greater choice of products. But others complain that they are paying the price for a growing monopoly. Peter Guest reports.

— Adam Honoré, Aite Group

Straight-through processing, enterprise data management and hosted solutions are likely to be the hot trends of 2008, according to a new report. Peter Guest reports.

— Jan Arpi, Cinnober

Nascent exchange Turquoise’s choice of a relatively unknown software provider has raised eyebrows – but Cinnober’s CEO insists it is up to the job. Peter Guest reports.

HedgeWorks might be at the smaller end of the market, but for Deutsche Bank the acquisition was a good fit in terms of both technology and staff. Peter Guest reports.

— Stuart Martin, Dechert

Most hedge funds are domiciled in the Caribbean, but European offshore domiciles such as Jersey and Guernsey and “onshore-offshore” centres like Ireland and Luxembourg are working hard to make an impression on fund managers. Martin Steward reports.

— Cheryl Packwood, BIBA

A long-standing history of cooperation between government, regulators and industry in Bermuda has generated progressive legislation and regulation on the island.

— Raymond Morrison, Olympia Capital (Bermuda) Limited

Major players from the hedge fund sector are being attracted to Bermuda, which has a robust attitude to security and regulation while being sensitive to industry needs.