With companies falling over themselves to offer transition management services, clients face a bewildering choice of providers, some more qualified and equipped than others. Tim Wilkinson offers a guide to selecting the right manager.

Transition management, once a rarity, is now offered by numerous providers, raising issues of standards and transparency in charging. Nevertheless the industry has enjoyed a healthy 12 months, says Gerry O’Kane.

At the beginning of this year, a transition management brief was up for grabs worth £30bn (e45bn) after Abbey National Asset Management outsourced most of its active funds under management.

For the sake of preserving effective self-regulation, providers should not only comply with the Global Investment Performance Standards, but also offer feedback on how they can best be improved, says Gill Wadsworth.

For those smaller fund managers unwilling to relinquish control of their back-office systems, numerous off-the-shelf DIY software options exist. Henry Smith explains.

Distrust among European custodians as well as competing platform providers make a unified trading system as far away as ever. Yuri Bender explains.

BNP Paribas Securities Services is branching out into the Austrian custody market following the launch of its clearing and settlement business in the region.

The custodian has established a direct link to the Austrian central securities depositary, OeKB from BNP Paribas’s Frankfurt branch.

INVESTORS BANK & Trust has seen its assets processed for clients climb 34 per cent in the past year after a string of business wins.

Mellon Global Securities Services (GSS) has picked up an outsourcing and custody deal with a new branch of the US Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF).

Odey Asset Management profits by staying away from the index in tough times, writes Yuri Bender.

Started in 1991 by Barings refugee Crispin Odey, Odey Asset Management has always had a disdain for benchmarks. As a primarily absolute-return oriented hedge fund house, it has been able to bring some of the risk disciplines and alternative ways of managing money to the world of European equities. Tracking error as a measure of risk, for instance, is seen as “ludicrous” by Odey’s strategists.

Regardless of the amount of active risk an investor seeks, the ‘active alpha fixed income investing’ framework serves to identify the optimal mix of opportunities, skills and diversification benefits to maximise returns,say Jonathan Beinner, Iain Lindsay and Scott McDermott.

Investors are getting to grips with the concept of transporting high alpha strategies to whittle down deficits. But pension funds are still wary of using derivatives, writes Simon Hildrey.

AlpInvest, with e20bn in assets, has rapidly become one of the world’s leading private equity houses without actively marketing itself. Simon Hildrey explains.

Djuro Rnic writes:

The FT Mandate Benchmark Online database is a unique, fully searchable database listing the latest mandate wins and losses in the asset management, custody and related third-party services in Europe, the Americas and the Asia-Pacific region from 1999 to present day. More than 1400 fund managers are listed and over 5000 mandate wins. The flexible search criteria enables users to customise searches with ease.

The Rhondda Cynon Taf County Borough Council Superannuation Fund in the UK has put a £330m (e496m) balanced equity mandate out to tender due to dissatisfaction with the performance of the current holder of the brief, Deutsche Asset Management.

Investing in a hedge fund for absolute returns may present extra risks, but most of these can be managed, says Matt Gibson.

E5.46bn in pan-European equities

Flagship product

Morley does not have a pan-European institutional fund, but runs a segregated institutional pan European Fund on behalf of a client.

E7.8bn in pan-European equities.

Flagship product

JPMF Europe Equity fund, E1.9bn low risk fund with tracking error of 2-4 with +/-2 stock active and +/-3 sector and country.

E6.12bn in pan-European equities

Flagship products

Pan-European Large Cap and Mid Cap Equities

Flagship product
Axa Europe Actions

Investment process

Active and fundamentally based, conviction-led, driven by in-house research. Largely bottom-up and risk managed. Main portfolios have no systematic factor or style. Four-step process consists of:

FT Mandate’s research team compares process, portfolio breakdowns and performance.

Mellon tops the FT Mandate international equity table after securing a $5bn passive mandate from the Alaska Permanent Fund, with The Bank of New York coming second via a $2bn contract win. Henry Smith reports.

Ossian Ekdahl, head of ALM studies at AP-Fonden, says pension provision in Sweden has moved from a traditional income-related defined benefit system, to two types of defined contribution systems, individual financial accounts (fully funded) and a pay-as-you-go system. The SKr139bn (e15.1bn) Forsta AP-fonden (AP1) is one of four buffer funds in the pay-as-you-go system.

Surrey County Council recently switched its entire Ł1bn (E1.5bn) pension fund portfolio from a balanced management to a core-satellite model. The move was the culmiznation of an asset liability modelling study carried out in late 2000 in conjunction with consultants, Watson Wyatt. Following the study, the fund changed to a customised benchmark of 75 per cent equities, 20 per cent bonds and 5 per cent property.

The yen may appreciate further, as investors start to look for opportunities outside the US, writes Simon Derrick.

Three months ago, investors were elbowing each other aside to get into China and its Asian neighbours. The region had the strongest GDP growth, the most exciting prospects and the fastest growing investment opportunities in the world.

Growth remains the dominant theme in Latin America despite the global interest rate uncertainty which sparked the May/June sell-off in local and external emerging markets. The region has been recovering for two years, with Brazil particularly strong. This growth trend looks set to continue into 2005.

Just two years into economic recovery and investors are disillusioned and disgruntled, despite evidence that they should feel anything but.

The May German IFO Business Climate Survey index was down in June at 96.1 and has declined by 1.4 per cent since January 2004.

Ignoring the herd and a client-centric focus are key to the maintenance of a successful business and avoidance of trading abuse scandals. Interview by Henry Smith.

A shift to diversification, specialisation and SRI has turned the Dutch metalworkers’ fund around, writes Elizabeth Cripps.

Alan Brown, global chief investment officer and vice-chairman of State Street Global Advisors, explains why the industry must end its obsession with strategic benchmarks and design a new breed of dynamic products. Interview by Yuri Bender.

Are there any other Europeans who ever feel sorry for the Germans? Every time there is a lack of success in German sport or business, there is a sense of schadenfreude – ironically a Teutonic term – in the UK, Italy and the Netherlands.

Ten years ago, a cultural gulf divided teams marketing institutional and retail fund products for the same investment house. Typically there would be a mutual disdain between the two. “The worst thing would be if you were on your way to an institutional pitch and you saw downmarket retail advertisements for the same product you were trying to sell,” recalls an ex-JPMorgan salesman.

Cambridgeshire County Council in the UK has awarded Schroder Investment Management an £85m (e127m) property fund of funds mandate following a decision to increase its strategic commitment to property from 6 per cent to 10 per cent of total assets.

The Bank of New York (BNY) has picked up a global custody brief with the National bank of Kazakhstan for $3bn (e2.5bn) of foreign exchange reserves.

LSV Asset Management has chosen Northern Trust to provide a range of group trust and limited partnership services for its newly-launched LSV International Value Equity Trust and LSV International Value Equity Fund.

The burgeoning growth of hedge funds is set to undermine demand for traditional funds, according to nearly three-quarters of European fund managers.

Major restructuring at a £480m (e750m) UK pension fund has seen Merrill Lynch Asset Management and Deutsche Asset Management lose out on balanced briefs.

Demand from European investment managers has prompted Northern Trust Global Fund Services (GFS) to launch a UK fund accounting operation.

The global custodian will create a UK fund accounting centre to complement its existing fund administration services.

Abbey National, which has made a strategic move from asset management to distribution, has ceded its £40m (e60m) fixed income mandate at a major Scottish pension fund to Scottish Widows Investment Partnership (Swip).

One of the world’s largest shipping companies has appointed Northern Trust Global Investments (NTGI) to run its pension fund’s first allocation to a multi-manager strategy.

The Polestar Group pension fund has terminated balanced contracts following an asset liability study conducted by Hewitt Bacon & Woodrow.

The £400m (e600m) pension scheme of a UK engineering company, the Weir Group, which has awarded fixed income mandates to Goldman Sachs Asset Management (GSAM) and Legal & General Investment Management is making pioneering use of derivativeinstruments.

The alternative investment industry is facing new legislation in the US after the Securities and Exchange Commission (SEC) proposed tighter controls for hedge funds.

The Exeter Group and iimia are set to merge to create a single financial service business with Ł3bn (e4.5bn) in assets under administration.

Trustees must focus on asset allocation and strategic benchmarks if they are to capitalise on the market upturn, according to an industry survey.

One hundred and forty staff face redundancy from National Custodian Services (NCS), the UK subsidary of National Australia Bank (NAB), after the parent company transferred its Ł40bn (e60bn) UK custody business to The Bank of New York.

Investec Asset Management has been forced to find five equity fund managers after a string of senior employees quit in a dispute over pay.

Executives at F&C Management have bagged the lion’s share of key institutional appointments following its merger with Isis Asset Management.

The short-term outlook of capital markets is a significant obstacle to incorporating environmental, social and governance principles into investment-decision making, according to Klaus Toepfer, executive director of the United Nations Environment Programme (Unep).

Welcome to your new improved FT Mandate

Welcome to your new-look FT Mandate! After more than five years as a fortnightly publication, we felt the time was right to ring in some changes.

FT Mandate has been refashioned as a bigger, brighter monthly magazine, filled with more views and interviews covering every aspect of the global institutional investment arena.