Passive investors in inflation-linked bonds are losing out on opportunities to gain extra returns, according to Helen Roberts, head of government bonds at F&C Asset Management.

The fate of Cazenove’s fund management business appears to be hanging in the balance, following news that JPMorgan Chase is to buy half of the blue-blooded London firm’s investment banking business.

Recently troubled fund management group Janus is finally celebrating a change in its fortunes, reporting an increase in assets under management and new products launches on the horizon.

Next year’s gross supply of European “Jumbo” covered bonds – a securitised mortgage instrument increasingly bought by pension funds – should reach €125bn, with a third of that coming from Germany, according ABN Amro research.

In a move away from in-house fund management, the second Swedish national pension fund, AP2, has hired a slew of investment firms, including its first external fixed income managers.

Gartmore plans to launch new hedge funds in early 2005, despite disappointing returns from the asset class and signs of declining investor interest.

Charles Beazley, head of institutional and alternative assets at the fund house, revealed that he would roll out a China long-short strategy, an Asia long-short strategy and two or three further hedge funds in the New Year. He said the vehicles would aim for performance of around Libor plus 600.

One in three European institutions are poised to change their investment strategy, with active Asian, emerging market and small-cap products likely to benefit.

F&C has hatched a plan to survive as a multi-discipline fund manager in market conditions much more favourable to specialist managers.

Northern Trust is bolstering its global transition management operation with the creation of a new post in its Chicago headquarters, to be filled by Grant Johnsey. The role, strategist for transition management worldwide, has been dreamt up to cope with the growth of the operation, according to its global director Kevin Hardy.

The findings of the Myners report, which called for a shake up of the UK pensions industry in 2001, are slowly filtering into concrete action.

One of Paul Myners’s key concerns was pension scheme funding levels. Today they are viewed as more of a priority according to research carried out by the broker firm Instinet Europe, which surveyed 101 schemes.

Fund managers are now able to keep a closer eye on the financial analysts they use thanks a new monitoring system. Deutsche Bank and ING are the latest companies to submit their recommendations to the Starmine system, which claims to track all the major analysts.

Swiss institutions are rethinking their investment strategies and boosting their allocations to alternatives, with a view to achieving higher near-term levels of funding.

European fund managers are blighted by a short-termist culture, which could be harming their clients’ long-term returns.

The current squeeze on Europe’s equity research providers could harm the institutional investors who rely on them, research firm Greenwich Associates has warned.

CIOs are increasingly advising for new allocations such as natural resources.

How important is asset allocation to investment performance? Since most chief investment officers (CIOs) have studied modern portfolio theory, which demonstrates a strong correlation, they are agreed that it is the main driver. Get your assets untangled first, then worry about manager selection, is their message.

Commerzbank’s investment banking division has seldom been out of the news in recent weeks. Mehmet Dalman, former chief executive of Commerzbank Securites jumped ship to set up alternative investments operation WMG. Among others, Ali Satrap, a member of the bank’s investment committee, is expected to join him. Wolfgang Matis, Deutsche Bank’s head of global markets was supposed to replace Mr Dalman, but changed his mind. Bankers are keen to stabilise volatile earnings, after a E120m first quarter pre-tax profit turned into a E47m loss in the second. The division is often pre-fixed with the adjective “troubled” in news reports.

Despite the prospect of new ownership, James Bevan, chief investment officer for Abbey and its life companies, has confidence in the wisdom of his sophisticated outsourcing methods. Interview by Yuri Bender.

Airbus has chosen Invesco to launch a long-term investment plan for German employees, despite the fund house’s poor performance, writes Henry Smith.

George Möller, Robeco Group’s newly installed chief executive officer, tells Henry Smith of his plans to pursue new institutional clients in Continental Europe and the US.

There are subtle micro trends developing in the eurozone, which point toward greater flexibility for both producers and consumers.

In discussing structural reform, analysts have largely focused on timid labour reform in Germany. However, a much more important trend is represented by the employment deals of Siemens, Bosch and Daimler Benz, signalling a period of subdued wage growth.

Like a phoenix rising from the ashes, the global bond trade has once again revived despite the best efforts of the major central banks. Bond yields have fallen throughout the developed markets as the ‘carry trade’ (borrow short, buy long) has been resurrected as one of the few sure bets in the global capital markets – aside going long oil, of course. Forgive the cynicism, but a 4 per cent 10-year US Treasury yield while the Federal Reserve is in tightening mode leaves us a bit queasy. Strained global economic activity is providing credence to the carry trade, contrary to conventional wisdom that rising central bank rates should foretell rising government bond yields.

Our current central scenario for the world economy in the next 12 months (US & Western Europe growth between 2–3 per cent, inflation between 1.5–2 per cent) makes us extremely positive about growth in the Latin American markets during 2005.

China and India are forecast to develop into the world’s largest and third largest economies by 2040, according to Goldman Sachs economists. Institutional investors are investing in the sector for the short term and longer term because of these compelling growth prospects.  The region offers a growing pool of world-class Asian companies, many of which are seeing global market share gains.

Although there was plenty of rhetoric on currency market issues from the participants at the recent G7 and International Monetary Fund meetings, there was little overt evidence that any substantive progress had been made on the timing of a move by China to change its forex regime. This was, of course, largely as expected.

The Colorado Public Employee’s Retirement Association’s (Pera) asset allocation by market value is approximately 43 per cent domestic equity, 15 per cent international equity, 22 per cent fixed income, 10 per cent alternative assets, 8 per cent real estate, 1 per cent timber and 1 per cent cash. Two years ago, Colorado Pera conducted an asset/liability study which led the Board to establish its current asset allocation policy for the $29bn (€24bn) plan.

Mercer Consulting has revealed there will be a “significant increase in the number of schemes allocating to hedge funds in the next year” but they will not be joined by West Sussex County Council Pension Fund. It has decided against allocating any of its £966m (€1.4bn) pension fund to hedge funds for three reasons.

A €2bn sub-advisory management brief from insurer Safeco propels Pioneer to helm of FT Mandate’s US equity manager rankings for new business. Henry Smith reports.

The First Swedish national Pension Fund, AP1, is seeking to appoint one or more private equity partners to establish a new private equity investment portfolio.

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.

Size and reputation makes State Street’s team the kind you hire to run the core part of a portfolio, says Roxane McMeeken.

Australian superannuation funds have a long, and often prosperous, history of investing in infrastructure projects, says Garrie Lette.

DWS’s Asian strategy is simple – it doesn’t care where the companies it invests in are based, it just buys firms it thinks have a competitive advantage. Henry Smith explains.

With an increasingly regulated market and a growing awareness of the importance of reputation, the sub-advisory market is moving closer to the institutional manager selection model, says Nick Phillips.

Pessimism over equities means investors are looking at foreign exchange trading. Now FX managers must address historical anxiety over this asset class, writes Roxanne McMeeken.

It sounds an ideal situation; an automated currency dealing system with access at the best exchange rates, but many clients still take some convincing. Roxanne McMeeken reports.

A slowdown in global growth, the surge in oil prices and the US trade deficit will have important implications for currency markets. Nick Bennenbroek explains.

Options strategies are an important element of any currency portfolio, either in a multi-manager setting or within the investment process of a single manager. John Taylor, Arun Muralidhar and Pierre-Yves Guillo explain.

Despite losing a €16bn mandate from Sweden’s AP-Fonden, Citibank continues to view Europe as its best battleground, writes Yuri Bender.

An intensifying battle for business in the European custody industry is exerting horrendous pressures on margins, according to Laurens Vis, managing director at Kas Bank in Amsterdam.

In order to compete with global institutions, specialist custodians say they need to expand their asset servicing product range and geographical presence as well as ensure their service is more flexible. Simon Hildrey writes.

While the world’s investing institutions brace themselves for the outsourcing wave, which should see them handing control of their back offices to securities services providers, one market is determined to resist the prevailing tide.

Specialist custodians may have developed by focusing on particular product areas or markets. But to prosper in the future, some custodians say they need to expand into new markets. This is certainly the belief of Crédit Agricole Investor Services (CA-IS), which is part of the Crédit Agricole group.

Technology has been found to improve efficiency in the processing of interest rate derivatives, credit derivatives and OTC equity derivatives. Roxane McMeeken reports.

Businesses adopting an open business architecture will only achieve the real efficiencies they are seeking if they have their IT house in order, says John Mayr.

The desire to cut costs and minimise risk as well as the growth of fund of fund products are all stimulating moves to outsource, says Gerry O’Kane.

It might not have been the biggest of outsourcing contracts, but the Gartmore deal with HSBC could be said to reflect the trends of the times. June saw 115 people moved from Gartmore to HSBC in a full lift-out of back and middle office operations, with HSBC adding its name to the list of those performing full lift-outs.

Benchmarking, projecting the future, assessing the operational risks and consideration of an exit strategy are key to a successful outsourcing deal. Gerry O’Kane explains.