Financial Times Mandate
NEWS & ANALYSIS

Magnus Spence, Spence Johnson

Observe American way, managers told

Despite the decline of the DB pensions sector, and the emergence of DC, managers are failing to align themselves with this shift.

In brief

Curtain closes for draper at Lyxor
Former iShares employee Dan Draper has left his role as global head of ETFs at Lyxor, the Société Générale asset management unit.

PFA looks overseas for fresh mandates

Denmark’s DKr219bn (€29.4bn) pension and insurance company PFA could expand its asset management operations abroad, according to its chief executive officer Henrik Heideby.

MARKET ANALYSIS Europe

Disparity in countries’ recoveries leave many markets vulnerable, says Marcus Svedberg.

Caution still reigns as markets recover

Investors are still in a risk reduction mentality despite growing confidence in markets, according to Kathleen Hughes, head of global liquidity EMEA at JPMorgan Asset Management.

MARKET ANALYSIS North America

For now, lower growth and higher prices are the order of the day, which will boost real assets, says Don Ross.

Investment priorities revealed

CIOs are keen to improve risk management and compliance systems as IT budgets are likely to increase following a year of technology cost-cutting measures.

MARKET ANALYSIS South America

Chile looks set to flourish in 2010, the overconfident Brazilian market offers opportunities in some stocks, while Peru makes a V-shaped recovery, says Urban Larson.

Carve-up plans are too vague

Proposals announced by US president Barack Obama banning banks from proprietary trading, owning hedge funds and private equity firms, will be impossible to implement and could be detrimental to asset classes relying on high levels of gearing to generate positive investment returns, according to industry observers.

MARKET ANALYSIS Asia Pacific

China’s yuan peg has received criticism for its impact on trade and beyond, writes Greg Meier.

Hedge funds evolve to bounce back

Hedge funds rebounded strongly in 2009 by posting the highest returns since 1999, according to Hedge Fund Research (HFR).

Jhon Mortensen, Nordea Bank CEO

Boutique approach is a fitting choice

The trend for large firms to rebrand each of their specialisms to achieve a more personal touch shows no sign of abating, writes Yuri Bender.

Assets grow in the East for Dutch fund

APG takes advantage of the growing opportunities in Asia as it creates and expands multiple teams in Hong Kong.

In brief

Money funds get new industry guidelines
The Institutional Money Market Funds Association (IMMFA) has changed its code of practice in light of the events over the last two years, it says.

Jean-Christophe Le Duigou

FRR steers clear of hedge fund vehicles

One of Europe’s biggest pension funds will continue to eschew any investments in hedge funds as long as powerful trade unions retain seats on its strategy-setting board.

MARKET ANALYSIS Europe

Emerging Europe is aiming for the debt/GDP target with some vigour, writes Jerome Booth.

Darren McShane

Hedge funds to take hold in Hong Kong

The Hong Kong Pensions Regulator appears set to relax investment rules on hedge funds and equities.

MARKET ANALYSIS North America

Outperformance in small and mid-cap equities can be achieved with research, writes David Wagner.

A safe bet for China’s QDII fund

China’s Qualified Domestic Institutional Investor scheme is set to swell in 2010, and with it will bring a raft of business opportunities for sub-advisory mandates.

MARKET ANALYSIS South America

The Brazilian and Mexican markets are slowly picking up the pace as investors regain an interest
in Latin America, writes Dave Woolford.

Icelandic pension fund venture stalls

The future of a real estate and infrastructure investment company run by Iceland’s pension funds could be in doubt after disputes arose from a meeting with politicians.

MARKET ANALYSIS Asia Pacific

Appreciation of the RMB will be a key topic for 2010, writes Yang Liu.

Calls for LSE back-up

Two of Europe’s biggest alternative trading venues – Bats Europe and Chi-X – are demanding the London Stock Exchange (LSE) and other primary exchanges set up a protocol for what to do when trading suddenly stops because of computer failure, as it did on two separate occasionvs at the LSE last month.

Iceland funds unite through real estate

Icelandic pension funds are coming together to form a joint real estate investment company and help fund infrastructure projects.

In brief

Gold trounces currencies
With gold breaking through $1,000 (e668) an ounce, investors should now be looking to switch from mining companies to gold bullion to capture some of the commodities bubble and reduce exposure to currencies, according to Percival Stanion, head of asset allocation at Baring Asset Management.

Ford Fraker, KKR

KKR eyes Riyadh for debut Saudi office

Private equity giant Kohlberg Kravis and Roberts (KKR) intends to open an office in Riyadh, Saudi Arabia in the near future.

MARKET ANALYSIS Europe

Yield rates in the UK and Europe remain static and a rise in the short term looks unlikely, writes
Dennis Gepp.

Masroor Haq

Omani SWF moves into Russia property

The $8.2bn (€5.4bn) State General Reserve Fund of the Sultanate of Oman, a sovereign wealth fund (SWF), has awarded a $300m Russian real estate mandate to international financing group VTB Capital.

MARKET ANALYSIS North America

Earnings are gathering momentum and driving the market forward, writes Seung Minn.

President Kagame, Rwanda

Africa now private equity hub

The rise of middle class spending is driving wealth expansion in many African nations and transforming the continent into a regional private equity investment centre.

MARKET ANALYSIS South America

The economic condition of Latin America, when set next to its European and US counterparts, is glowing, writes Jerome Booth.

Travis Barker, IMMFA

Euro MMFs close in on risk definition

European money market funds could be a step closer to agreeing on a definition for their flagship products, meaning better protection for buyers that don’t realise funds can hold the same credit and liquidity risks of any other investment instruments.

MARKET ANALYSIS Asia Pacific

Domestic demand and state intervention boosted Asia’s economies, writes Khim Tan.

Hedge fund fees still high

Hedge funds are continuing to charge high fees despite pressure from investors to lower their costs.

Trustees turned off

Pension fund trustees are “simply switching off” in the face of growing investment complexity, according to Chris Edge, chief executive at AllenbridgeEPIC Investment Advisers.

Prime time for taking a risk

If 2008 was the year when triple A liquidity funds met rising redemptions with plain vanilla products, are we now seeing a return to risk, despite some funds claiming to be ‘asset-backed free’, as yields cling near zero per cent?

John Hunt, JPMAM

JPMorgan emerges with new debt team

Although many institutions are looking to lower their risk, emerging market investments are still generating interest.

In brief

Deficits still have a long way to go
Pension deficits for FTSE 350 companies were reduced by £10bn (€10.7bn) last quarter, according to consultancy Hymans Robertson.

Neil Record, RCM

Absolute FX approach is a no-go for schemes

Pension schemes should steer clear of absolute return foreign exchange strategies, according to an investment consultant at Watson Wyatt.

MARKET ANALYSIS Europe

Forecasts on the way out of a crisis are generally overpessimistic, writes Marcus Svedberg.

China’s RMB in move to usurp dollar in Asia

China is a step closer to rivalling the US as the largest provider of trade currency for Asian corporates and investors after the first ever cross-border transaction denominated entirely in renminbi (RMB).

MARKET ANALYSIS North America

Liquidity has restored buoyancy to asset prices,  writes Daniel C. Peirce.

US firm looks at London expansion

Real estate opportunities in Europe have pushed one US financial services firm to expand its operations in London, which could also see a boost to its bond business.

MARKET ANALYSIS South America

Premiums for Latin American currencies have disappeared as markets admitted they were able to withstand the global crisis, writes Manuel Canas.

Scott McLaren, RBC Dexia Trust Services

Companies chase China custody

A global investor services company will add sovereign wealth funds and other state-owned investors to its books as the scramble for custody business in Asia intensifies.

MARKET ANALYSIS Asia Pacific

A global economic upturn will also allow China’s export markets to recover, writes Anh Lu.

LP’s timber plan felled

Laerernes Pension (LP), the DKr26bn (€3.5bn) Danish teachers’ pension fund, has indefinitely postponed its planned Eastern European timber investments.

States plays it safe

Despite suffering steep losses on the stock market last year, institutional investors in America have largely stuck with the same investment policies they were adopting prior to the credit crunch, according to a report by the Conference Board, a US-based non-profit management organisation.

Peter Sands, Standard Chartered Bank

Markets must self-regulate to survive

There are deep concerns that the global financial system has yet to fully assess the structural imbalances that have led to the worse economic downturn for 50 years, senior officials told a gathering of banks and financial technology vendors in Hong Kong recently.

In brief

Settlement firm clears the way

Transaction settlement firm Euroclear will introduce its fund clearing platforms to the UK this month.

Bob Parker, Credit Suisse

Funds must resist asset bubble appeal

Pension funds have been warned against trying to capture an asset bubble by looking to buy into a market at the bottom and sell out at the top.

MARKET ANALYSIS Europe

Recent events will mean a return to the simple life, believes Simon Thorpe.

Europe shows appetite for forestry funds

Forestry investment looks likely to have an active remainder of the year as the asset’s performance through the credit crisis has caught the attention of many, particularly in Europe and the UK.

MARKET ANALYSIS North America

There is at last enthusiasm for an economic rebound, writes Peter Anderson.

James Mullins, Hymans Robertson

Pension funds failing to derisk

Fifty per cent of defined benefit (DB) pension funds in the UK have not formulated a long-term strategy to reduce risk, according to a survey of pension scheme trustees by consultants Hymans Robertson in conjunction with the PensionChair Network and Winmark Research.

MARKET ANALYSIS South America

With global trade volumes at a cliff edge, are letters of credit experiencing a boom in Latin America? John Ladany investigates.

Managers nervous despite expectations of global recovery

Fund managers remain cautious despite more optimism that the global economy is back on track.

Market Analysis Asia Pacific

There are several indicators that the Japanese economy could have a new lease on life, writes Kenichi Kubo.

Günther Schiendl, VBV Pensionskasse

Be prepared to ditch and switch

Active management’s role within pension funds is under scrutiny, and it appears the bar of ‘reasonable expectation’ is shifting. By Henry Smith.

In brief

Asset boom Global hedge fund assets will rise at a compound annual growth rate of approximately 12.1 per cent between 2009 and 2013 to return to 2007 levels of $2,900bn (€2,077bn), according to research from Cerulli Associates and HedgeFund.net.

Charles Baillie, GSAM

UK a natuaral home for hedge funds

Hedge funds are not expected by Goldman Sachs Asset Management (GSAM) to flee the UK should tougher regulations be passed by the European Union. By Spencer Anderson.

MARKET ANALYSIS: Europe

Equities have witnessed a rally of late, and a cautious approach will yield results, writes Dean Tenerelli.

Bjarne Graven Larsen, ATP

Credit is due to top ranking danish fund

ATP, the DKr355.6bn (€47.7bn) pension scheme, could double its exposure to credit in the coming year, according to its chief investment officer Bjarne Graven Larsen. By Spencer Anderson.

MARKET ANALYSIS: North America

The shape of the recovery will affect long-term stability, writes Peter Anderson.

Chinese QDII funds hit the mark

Stellar performance by overseas investing funds in Q2 has opened up further opportunities for China’s investors as fund managers plan new product launches. By Henry Smith.

MARKET ANALYSIS: South America

Latin America has suffered indirect hits from the credit crunch. But ironically, the global crisis will eventually help propel its economy, writes Jerome Booth.

Demand for dark pools remains dry

The regulatory overhaul of investment services in Europe through MiFID has been far reaching, though its impact on competition for exchanges remains uneven two years after its introduction, according to a new report. By Nat Nankelow.

MARKET ANALYSIS: Asia Pacific

Japanese equities are favourably priced, writes Yoshihisa Nakagawa.

Luke Spajic

Bond market booms

Pimco, the $750bn bond investor. He pointed to traditional sources of demand such as credit funds receiving a boost from alternatives sources of liquidity like gilt and equity investors. By Nat Mankelow.

Consultant attacks fund recovery plans

The investment industry’s herd mentality is damaging many pension funds’ chances of survival over the long term. By Henry Smith.

In brief

Diversity still drives US investors

The impact of the financial crisis has not deflected US institutional investors from their pursuit of portfolio diversification.

Scott Burns, Morningstar

Doubt over BGI merger benefit

Opinion is divided on whether BlackRock’s $13.5bn (€9.7bn) acquisition of Barclays Global Investors (BGI) will benefit clients. By Spencer Anderson.

MARKET ANALYSIS: Europe

The UK property market looks favourable against other countries, writes Andrew Allen.

Robert Parker, CSAM

Owning up to key structural flaws

Asset managers have a massive mountain to climb if they are to repair the significant loss of confidence from customers who have seen their savings and investments “destroyed” in recent months, one of the industry’s most influential figures has said. By Nat Mankelow.

MARKET ANALYSIS: North America

A lack of credit is proving challenging for fund managers and investors, writes Katharina Lichtner.

Keva takes an active stance

Keva, the €20bn Finnish local government pensions institution, has moved an estimated €1bn of its emerging market equities from passive to active management. By Spencer Anderson.

MARKET ANALYSIS: South America

ECA financing is being implemented across the region to boost Latin American economies hit by the global recession, writes Valentino Gallo.

Mark Hemsley, Bats Europe

MTFs could spark a pricing war

The alternative exchanges marketplace is on the verge of a price war as many of the trading platforms that have sprung up this year fight for survival. By Nat Mankelow.

MARKET ANALYSIS: Asia Pacific

The Asian markets are showing positive signs, writes Joseph Wat.

China funds industry

Now is the perfect time for asset managers looking to gain a foothold in China to buy into or establish a Sino-foreign joint venture (JV) fund management company, according to Shanghai-based investment consultants, Z-Ben Advisors. By Henry Smith.

Money market fund misery

Investors continue to flee the rapidly-sinking asset class following last year’s financial meltdown, as a US group calls for funds to offer greater resilience to redemptions. By Nat Mankelow.

Paul Craven, GSAM

GSAM makes alternative prediction

Irish and UK pensions will allocate more to alternative investments as a result of 2008, according to Goldman Sachs. By Spencer Anderson.

Nigel Blanshard

Funds-of-hedge funds are failing investors

Hedge funds are on shaky ground as principal reveals failed business models are scattered throughout the sector. By Henry Smith.

IN BRIEF

The flight by FTSE 100 pension funds out of equities and into bonds appears to be accelerating, according to research by defined benefit scheme consultants, Pension Capital Strategies (PCS).

Israfil Mammadov

SWF summit to lay down guidelines

Sovereign wealth funds (SWFs) around the world will be gathering in the Azerbaijani capital Baku to draw up a set of ‘principles of best practice’. By Spencer Anderson.

MARKET ANALYSIS: Europe

Analysts have missed the point when it comes to eastern Europe, writes Marcus Svedberg.

John Donohoe

EC must step up its hedge fund plans

The European Commission’s draft directive on alternative investment fund managers does not go far enough in how it proposes to regulate the hedge fund industry. By Henry Smith.

MARKET ANALYSIS: North America

While the US markets start to revive, job losses continue to hamper their recovery, writes William H. Cunningham.

ETF levels receive European boost

Exchange traded funds have been insulated from the market downturn, but more so in Europe than the US, where net sales fell rapidly at the beginning of 2009. By Spencer Anderson.

MARKET ANALYSIS: South America

Prudent policies and debt sustainability means many Latin American countries have warded off the worst of the financial downturn, writes Floris Kleemans.

MARKET ANALYSIS: Asia Pacific

With buyout deals on the increase, emerging Asia is gaining prominence in the private equity arena, writes Khim Tan.

EFRP seeks new members

The European Federation for Retirement Provision (EFRP) is hoping to add the Czech Republic, the Baltic states and Bulgaria as members to the organisation. By Spencer Anderson.

Edwin Meysmans

KBC first belgian fund in ils queue

The €900m defined benefit KBC Pension Fund is considering an investment in insurance-linked securities (ILS). By Spencer Anderson.


Rory Tobin

‘Business as usual’ for iShares chief

iShares will continue to focus on client relationships and delivering new products despite uncertainty over its ownership. By Nat Mankelow.

In brief

Christopher Alderson has been appointed president and CEO of T.Rowe Price International (TRPI) following the retirement of David Warren. Mr Alderson, who has been with TRPI for 22 years, has led the firm’s Global Emerging Markets equity investment strategies since 1997.

Nicolas Simon

CAAm to continue European expansion

Crédit Agricole Asset Management – Real Estate (CAAM RE), intends to expand its business and investments into Germany and the UK this year.

MARKET ANALYSIS: Europe

Investing in bonds may become a very risky strategy in these unprecedented market conditions, writes Chris Oulton.

Luiz Eugenio Figueiredo

Brazil attracts private equity from overseas

Several foreign private equity firms are opening offices in Brazil, according to ABVCAP, the country’s private equity association.

MARKET ANALYSIS: North America

Fund managers have started finding value in equities by trying to identify who will emerge from the current turmoil on top, writes Alison Cratchley.

Securitisation slump continues

Europe’s securitisation market declined throughout 2008, and recovery is dependent on investors’ regaining their confidence and stability returning to financial markets. By Henry Smith.

MARKET ANALYSIS: South America

The core markets of Brazil, Mexico and Chile are well placed to benefit from a turnaround in the global economy, write Stefan Herz and Ian Simmons.

Risk management functions sidelined

Asset managers appear to be paying mere lip service to the importance of creating a risk management process that reports all the way to the top of their organisations.

MARKET ANALYSIS: Asia Pacific

Regional central banks now need to reduce the levels of foreign currency reserves that they have built up over the past decade, writes Jerome Booth.

Danish pension funds look to real estate

Denmark’s pension funds are positioned to increase their allocations to real estate in the coming year.

NPRF to establish ethical guidelines

A new committee will ensure the Irish National Pensions Reserve Fund invests in a socially and environmentally responsible manner. By Henry Smith.

In brief

Muzinich & Co has launched a socially responsible high yield bond fund. The fund will invest in US dollar denominated bonds issued by companies with strong environmental, sustainable and governance policies as well as solid creditworthiness and quantitative attractiveness. Josh Hughes, director of institutional sales at the firm, said the fund would offer attractive returns with the added benefit of having a positive impact on the environment.

Russia suffering liquidity shortages

The absence of a domestic pension fund base and the collapsing wealth of Russia’s oligarchs have left serious liquidity shortages in both long-only and alternative investments, according to Moscow-based money managers.

MARKET ANALYSIS: Europe

Now may be a good time to start investing in private equity, writes Dr Katharina Lichtner.

Robert Stheeman

Hunger for government bonds remains high

The appetite for government debt from investors is as strong ever, despite fears that a huge rise in issuance could swamp the market after new plans to rescue banks was announced.

MARKET ANALYSIS: North America

Before any meaningful economic recovery can take place in the US, housing prices must stabilise, writes Scott Simon.

Equities continue to lose out

Investors remain nervous about equity and bond funds preferring the safety of money market funds, though financials have enjoyed their first inflows in months. By Spencer Anderson.

MARKET ANALYSIS: South America

There are some very attractive valuations among Latin American companies for investors with a long-term view, writes José Costa Buck.

Toby Nangle

Barings calls for regulatory easing

Baring Asset Management has called for an immediate suspension of pensions accounting standard, FRS17, following the Bank of England's announcement that it is going to buy up to £150bn (€167bn) of government and corporate debt in a bid to stimulate the UK economy through “quantitative easing”.

MARKET ANALYSIS: Asia Pacific

Asia ex Japan economies are in strong fiscal positions and should be among the first to recover, writes Hiroshi Yoh.

Allianz puts off Scandinavian push

Allianz Global Investors has postponed part of its expansion into Scandinavia, despite a profitable year.

Georges Pauget

CAAM-SGAM merger the ‘logical’ step

Merging the asset management arms of Crédit Agricole and Société Générale should benefit their institutional and retail clients. By Nat Mankelow.

In brief

A one-page paper from UBS Global Asset Management has urged investors to avoid holding large amounts of cash during a difficult investment and economic environment. The reasoning was that investors would miss out on a recovery and fail to take advantage of low risk opportunities.

Thorgeir Eyjolfosson

Iceland seeks new sources of finance

Iceland is looking to private equity to help resuscitate its beleaguered domestic companies.

Two new ventures are underway, one from the country’s pension funds, and the other from financial services firm Audur Capital.

MARKET ANALYSIS: Europe

Low equity prices offer great value to investors with a long-term view, writes Justin Thomson.

MARKET ANALYSIS: North America

Even if banks heal and profits recover, a sense of disillusionment may limit enthusiasm for equities, writes Daniel C. Peirce.

Helene Heberlein

Pass-throughs able to cushion downgrades

The covered bond market could be heading for a reversal in fortunes following a series of deals where the bond rating is less dependent from the issuer’s.

Jerry Wang

Funds seek separate accounts

Funds of hedge funds are demanding customised accounts in order to gain an accurate picture of the liquidity of the underlying securities they are investing in. By Henry Smith.

MARKET ANALYSIS: South America

Stronger fundamentals mean governments have greater freedom to implement policies to combat the downturn than in the past, writes Marcelo Assalin.

MARKET ANALYSIS: Asia Pacific

China should prove a great investment opportunity for those with a medium-term view, writes Yang Liu.

Jacob Schmidt

Madoff scandal asks industry awkward questions

Bernard Madoff’s Ponzi scheme was a porcupine of red flags, and yet several institutional investors bought in. By Martin Steward.

Credits attractive but not without risk

Many corporate bonds offer great value but investors must choose their credits carefully to avoid defaults in a tough market. By Henry Smith.

In brief

Irish funds were opened to the Chinese market via the Qualified Domestic Institutional Investor (QDII) regime for the first time on October 23, following a memorandum of understanding between the respective regulators.

Tough time ahead for private equity

The next 12 months look set to be turbulent for private equity funds as credit markets remain seized-up even as bargain multiples come to market. Many are warning that institutional investors faced with problems elsewhere will have to reduce their commitments. By Martin Steward.

MARKET ANALYSIS: Europe

European equities are good value for investors with a long-term view, writes Arvind Sabharwal.

Diversification may hold schemes back

Strategic diversification – and governance constraints – has offered little protection over recent months and could get in the way of exploiting opportunity, according to two leading consultants. By Martin Steward.

MARKET ANALYSIS: North America

Private sector exposure to mortgage-related securities must be reduced to bring about the end of the credit crisis, writes Christopher Probyn.

Funds move to ensure liquidity

Money market funds hope that having central bank funds to fall back on will calm investors' fears and therefore avoid the need to draw on the reserves. By Nat Mankelow.

MARKET ANALYSIS: South America

In light of the recent depreciation of the real, it is time to reassess Brazil's monetary stability, writes Floris Kleemans.

MARKET ANALYSIS: Asia Pacific

Despite fears of a recession, many of Asia's emerging markets have strong economic fundamentals, writes Yong Moon Kim.

Hedge funds victims and not villains

Hedge funds have been cast as the villains who caused the market to collapse when in reality they are the victims of the credit crunch. By Henry Smith.

Managers retain faith in emerging economies

Many fund managers still believe that emerging economies have, at least partially decoupled and will continue to drive global growth. By Martin steward.

IN BRIEF

European institutional investors have slowed diversification into other regions’ equity and bond markets, but are ready to continue in less volatile times, according to Greenwich Associates. Twenty per cent will allocate substantially more to other regions, while only 7 per cent plan to pull back; and nearly a third will significantly increase emerging markets exposure by 2011.

The way forward for hedge funds

FT Mandate readers are invited to attend the Hedge Fund Insights Series 2008, which will address the future of an industry rocked by a wave of redemptions, reduced leverage and heightened liquidity and counterparty risks.

Maurice Gravier

Anticipating Obama’s economic policy

As Barack Obama waits to be inaugurated as the forty-fourth president of the US, some fund managers fear he will enact protectionist measures which could hit the fortunes of companies which trade with America.

MARKET ANALYSIS: Europe

Market volatility is set to continue, but now may be the time for medium to longer term investors to start buying equities again, writes Cesar Perez.

MARKET ANALYSIS: North America

A fall in the cost of financing is necessary for a sustainable rally in the equity markets to occur, writes Andrew Tunks.

Diane Miller

Hedge funds facing job cuts

Increased concerns about counterparty risk may mean that the threatened staff reductions at investment houses will not affect the operational side. By Henry Smith.

MARKET ANALYSIS: South America

The Argentine government’s decision to merge private pension funds into the state system has created an unnecessary financial crisis, writes Daniel Eustaquio.

MARKET ANALYSIS: Asia Pacific

The economic world is undergoing a seismic shift which will secure China’s growing importance writes John Cleary.

Outflows may boost equities

As hedge funds continue to suffer large-scale capital redemptions, asset managers are confident that much of this cash outflow will find its way into long-only equity funds.

Central counterparty will reduce OTC risk

Institutional investors have called for greater transparency, increased standardisation and more accurate valuation for over-the-counter (OTC) derivatives as they begin confirming their liability-driven investment strategies for 2009.

James Bevan, CCLA’s head of investments

Keeping an eye on longer term trends

The economic climate may be ‘ferocious’, but investors should keep a cool head and avoid counter-productive diversification. By Yuri Bender.

In brief

1-in-10 hedge fund managers are not covering their costs with management fees, according to a survey by KPMG for PCE Investors. The average fund spends 45 per cent of management fees are spent on costs – even excluding front office salaries and bonuses.

Sunil Chadda, principal consultant at Carne Global Financial Services

The changing face of prime brokerage

With the credit crunch having wiped out almost an entire community of investment bank broker-dealers, is a new prime brokerage model emerging from the wreckage? By Henry Smith.

MARKET ANALYSIS: Europe

Property investors should not shelter in their domestic markets, writes Alice Breheny.

MARKET ANALYSIS: North America

Systemic solutions are required to address both the current credit crisis and the long-term financial future, writes John M. Balder.

Florence Lombard, AIMA’s Chief Executive

Hedge fund anger at short-selling bans

The Alternative Investment Management Association (AIMA) reacted critically to the temporary short-selling bans introduced by finance regulators from September 17. By Martin Steward.

Funds may face radical changes

A Fitch Ratings report has found that the management of money market funds may have to be significantly altered to ensure liquidity after underlying investments failed. By Nat Mankelow.

MARKET ANALYSIS: South America

Those emerging economies that are able to control inflation may actually benefit from the credit crisis, writes Jerome Booth.

MARKET ANALYSIS: Asia Pacific

Asia’s strong fundamentals should see continued growth writes James Wier.

Time for pump priming?

As recession drags on the public sector purse it could provide new opportunities for private infrastructure investors, according to two leading fund managers. By Martin Steward.

Lehman’s defaulted CDS near settlement

The auction to determine the final payout on $400bn (€291bn) of defaulted credit default trades referencing failed investment bank Lehman Brothers could see a net $6bn transferred from sellers to buyers of credit protection. By Nat Mankelow.

Dawid Konotey-Ahulu, Redington Partners

First test for LDI structures

The crisis in banking has called into question the swaps-based LDI structures bought by pension funds and whether it is time for a return to cash and government bonds. By Martin Steward.

Henry Paulson, US Treasury secretary

Covered bonds could boost US mortgages

US Treasury initiatives prompt the four largest American banks to launch covered bond programmes, and more may follow. By Nat Mankelow.

State Street Index goes into red

The State Street Private Equity Index posted its first quarterly contraction of IRR growth during the second quarter for 2008, confirming that the ongoing financial crisis is starting to affect the valuations of portfolio companies.

MARKET ANALYSIS: Europe

The ECB’s approach to rising inflation should ensure a swifter economic recovery than for the US and UK, writes Tom Beevers.

Richard Garland

Investec shifts funds to Luxembourg

Investec Asset Management re-domiciled the 26 sub-funds in its Global Strategy Fund range from Guernsey to Luxembourg on July 1, as part of its bid to take its brand to European institutional investors. The move comes hot on the heels of a major mandate from the heart of Europe – a deal to run €1bn of global equities for Raiffeisen Capital Management.

MARKET ANALYSIS: North America

A rising dollar and resurgent equities leaves the US in a better position than Europe, writes Andrew Tunks.

Paul Price, Pioneer Investments

Pioneer enters Irish market

Pioneer Investments has belatedly entered the Irish institutional investment market, and aims to offer “solutions-led” mandates to pension funds. By Henry Smith.

MARKET ANALYSIS: South America

Argentina may have got a bad press recently, but the country could offer a prime investment opportunity, writes Raphael Kassin.

Bonds rally

Corporate bond managers have become cautiously bullish again – after getting caught out by central bank hawkishness over spring and summer. Investors are once again predicting loosening policy and a correction from spreads that are pricing-in unrealistic corporate default rates. By Martin Steward.

MARKET ANALYSIS: ASIA Pacific

Despite current worries, Chinese equities look healthy over the long-term, writes William Fong.

UK equities suffer global competition

The rapidly growing popularity of global equity mandates, particularly among UK pension funds, is contributing to a steady decline in the volume of UK equities under management.

IN BRIEF

The Universities Superannuation Scheme the second largest pension fund in the UK, has committed $600m (€425m) to Boston, MA-based buyout firm Constitution Capital Partners to invest in North American mid-market private equity funds and direct co-investments. The pension fund will take a stake of around 10 per cent in CCP as part of the deal.

Patrick Butler, Raiffeisen Zentralbank Österreich (RZB)

Liquidity injection leads to record deals

Europe’s securitisation market celebrates a successful transaction and the promise of beneficial law changes in France. By Nat Mankelow.

After a dismal few months for structured finance, a number of deals have come to the marketplace spurred on by the recent injection of central bank liquidity into the financial system.

Morten Spenner, International Asset Management

IAM returns to independent roots

International Asset Management, the specialist fund of hedge fund manager, has undergone a management buyout to take it out of Fortis Investments. The Belgian group acquired IAM when it merged with ABN Amro’s asset management business in April. By Peter Quest.

MARKET ANALYSIS: Europe

The ECB is right to raise interest rates, ensuring inflation expectations do not take off, writes Raj Shant.

European Private equity defies crunch

The European private equity industry defied the worst of the credit crunch last year, raising €79bn and returning 11.8 per cent on a pooled average basis, net of management fees and carried interest, according to newly-released figures from the European Private Equity and Venture Capital Association (EVCA), Perep Analytics and Thomson Reuters. By Martin Steward.

MARKET ANALYSIS: North America

A US recession now seems inevitable; the question is just how bad things will get. But there are bargains to be had in every bear market, writes Angus Campbell.

Paul Price, Pioneer Investments

A responsibility to deliver

Asset managers have to ensure that the default fund option in defined contribution pension schemes must be simple to understand but not simplistic in approach. By Henry Smith.

MARKET ANALYSIS: South America

Brazil has been a success story for investors, but vast improvements could still be made to the country’s economy, writes John Cleary.

Pension schemes seek standards

Pension funds are prepared to put their weight behind ethically active managers according to a new survey commissioned by KPMG into attitudes towards the Hedge Fund Standards Board (HFSB) best practice standards. By Martin Steward.

MARKET ANALYSIS: ASIA PACIFIC

Indian growth may slow in the short to medium term, but the long term picture is a healthy one, writes Vinay Gairola.

Hedge funds deliver

US institutions surveyed by Greenwich Associates and Global Custodian in October 2007 found 23 per cent planning to increase their hedge fund allocations by 2010 and only 2 per cent set to reduce them. By Martin Steward.

Aoifinn Devitt, Clontarf Capital

FSA clampdown on short positions in rights issues

New provisions introduced by the Financial Services Aurthority in their Code of Market Conduct are seen as a response to “bear raids”. By Martin Steward.

Christopher Cox, International Organisation of Securities Commissions’ (Iosco)

Iosco criticises inadequate models

Institutional investors and investment banks had inadequate risk models and internal controls to understand and address the risks contained in structured finance products, a report into last year’s credit crisis has found.By Nat Mankelow.

MARKET ANALYSIS: Europe

The European Central Bank remains fully focused on the threat of inflation, writes Tony Dolphin.

Alvin Chua, Hong Kong Securities and Futures Commission

F&C launches new Hong Kong office

F&C Investments has opened a new office in Hong Kong with a view to targeting institutional investors and mutual fund distributors in the Asia-Pacific region.By Henry Smith.

MARKET ANALYSIS: North America

Stocks must overcome a wide variety of issues before they can start a

meaningful recovery, writes Daniel Farley.

Avoiding risk the prime concern

A new poll by SEI has found that the current market conditions mean pension fund managers would rather decrease portfolio volatility than increase returns.By Martin Steward.

MARKET ANALYSIS: South America

Some countries are squandering the windfall export revenues that they have been enjoying, writes Gorky Urquieta.

Buyers positioning for price correction

June 2008 may turn out to have been a key month for oil prices. June 6 saw a rise of almost $11 (€7)/bbl, the biggest ever single-day increase, and prices nudged a new record at just under $140/bbl on June 16. By Martin Steward.

MARKET ANALYSIS: ASIA PACIFIC

Intra-regional trade and domestic demand offers some protection against the US slowdown, but the threat of inflation continues, writes Vanessa Donegan.

Wealth funds not motivated by profit

No evidence has emerged to support fears that the investment behaviour of sovereign wealth funds is politically motivated.By Henry Smith.

Recent investors liable to pull out

The liquidity mismatch developing between funds of hedge funds and the underlying funds could be exposed if investors withdraw. By Martin Steward.

Pensions buyouts an opportunity

The buyout by Paternoster of the Lonmin Superannuation Scheme and buy-in by Norwich Union of Friends Provident’s DB scheme are indicative of the current scramble for business which, according to a new report from Lane, Clark & Peacock (LCP), has pushed pricing below the typical UK scheme’s funding reserves. But Pension Buyouts 2008 suggests that today’s bargains may represent a “window of opportunity” for sponsors considering the market. By Martin Steward.

MARKET ANALYSIS: Europe

Central European currencies have seen massive appreciation against both the Euro and the dollar, writes Jerome Booth.

Mohammed Abdel-Halim,VP at EFG Hermes Asset Management

EFG Hermes aims to exploit Saudi market

Middle Eastern fund manager EFG Hermes is looking to exploit the inefficiencies of the Gulf’s largest market with its new Saudi Equity Fund, which is currently raising funds from European and North American investors. By Peter Guest.

MARKET ANALYSIS: North America

Volatility in equity markets means that quality stocks can be picked up at bargain prices, writes Neil Michael.

John Moulton, Alchemy Partners

Investors to switch off taps

Institutional investors could have significantly less money available to allocate to private equity, and may be much choosier where they put it. By Martin Steward.

MARKET ANALYSIS: South America

Emerging local currency strategies may provide interesting investment opportunities, writes John Cleary.

Growth despite the downturn

A new report from the Tabb Group has found that, despite the credit crunch, the average size of hedge funds has increased significantly in the last two years. By Peter Guest.

MARKET ANALYSIS: Asia Pacific

Despite struggling so far this year, the future looks brighter for Asian equities, writes Yong Moon Kim.

Dr Mark Mobius, Templeton Asset Management

Fund managers stand to profit from sovereign wealth

Sovereign wealth funds should invest through asset managers rather than directly to avoid political repercussions. By Henry Smith.

Professor Amin Rajan, Create-Research

Focus on individual the key to staff motivation

The multi-boutique operating model must recognise the benefits of passion, persuasion and persistence to get the best out of staff. By Henry Smith.

Calpers leads rallying cry for US treasuries

While the giant American pension systems are refuting South Korean claims and keeping faith with US treasuries, European schemes are keeping their own counsel, reports Nat Mankelow.

Michael Maubousin, Legg Mason Capital Management’s

Legg Mason finds light at the end of tunnel

Credit spread products and large-cap equities are looking particularly attractive, according to an optimitstic prognosis from the US supergroup. Martin Steward reports.

Intech research puts case for revival of active management

Intech, the specialist quantitative equity manager for institutional investors, presented research at the NAPF [UK National Association of Pension Funds] Investment Conference in Edinburgh that challenges the widely accepted view that average active managers consistently underperform equity indices.

Paul Myners, Personal Accounts Delivery Authority (Pada)

Personal Accounts likely to favour passive style

The investment options under Personal Accounts, the government’s complementary pension scheme due for launch in 2012, are likely to be dominated by passive strategies in order to keep costs down, according to Paul Myners, chair of the Personal Accounts Delivery Authority (Pada).

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