Despite a widely anticipated slowdown in the Chinese economy, Asian equity experts remain bullish on the region, launching new funds and looking forward to double-digit returns.

HSBC’s head of Asian equities ex-Japan, Kerry Series, said he expected performance in the mid teens for the next five years: “Stockmarkets in Asia, excluding Japan, are still trading on the lowest price to earnings ratios anywhere in the world and we’re looking at 6 per cent GDP growth for the region which is two to three times that expected in other parts of the world.”

The investment community is pigeonholing asset managers too narrowly in terms of their investment style, industry experts have warned.

Robert Barr, director at multi-manager and consulting firm Russell, said: “We’re not as concerned about style drift as others.” His comments were diametrically opposed to the doctrines of competitors such as Northern Trust, which vows to sack fund managers who deviate from their stated investment style.

UK balanced pooled products have performed well for the second consecutive year after over-weighting overseas equities. British balanced funds achieved an average return of 10.2 per cent last year, according to Russell/Mellon. This followed a return of 18 per cent in 2003.

Investors are continuing to pour new money into hedge funds and managers are launching new products in the sector despite a fall in average returns.

The hedge fund sector increased in assets by $148bn (e113bn) in 2004, according to Hedge Fund Research.

Two products aimed at asset-liability matching have been launched this month, signalling the growing popularity of the investment approach. Standard Life Investments is rolling out a suite of “liability managed” credit funds, while Merrill Lynch Investment Managers has announced a new pair of enhanced cash vehicles.

Charismatic leaders driving funds business at SGAM and BNP PAM about tobe challenged by a familiar face at the helm of Natexis.

French asset management firms fighting for a share of their own domestic market, the near-European abroad and increasingly encroaching into the US and Asia, have set the scene for an engrossing battle of the giants.

Robert Fernholz, founder and CIO of Intech, tells Henry Smith of his unique volatility capitalising investment process and his company’s plans for a global equity product.

Janus Capital Group, the Denver-based growth house, is still struggling to recover from a dot.com crash which caused assets under management (AUM) to plummet from $325bn (e248) to less than $140bn in the space of five years.

Gilles Glicenstein, CEO of BNP Paribas Asset Management, tells Yuri Bender how he intends to acquire another five decentralised units by the end of the decade.

Exasperation with the current state of French and Italian institutional markets is so strong that even global consultants who moved in with such verve during the last 10 years are having second thoughts, says Gilles Glicenstein, chief executive officer of the ?190bn investment operation at BNP Paribas Asset Management (BNP PAM).

Unfortunately, the solid returns posted by European equities in the fourth quarter mask a tough outlook for economic growth. The prospects for exporters are being bedevilled by the persistently high oil price, which despite recent falls is still acting as a brake on global demand, and the squeeze on competitiveness caused by the strength of the euro.

The outlook for internally generated growth has also slowed. German demand remains anaemic, while the acceleration in French economic activity witnessed seen last summer has faded away. Given weakened business confidence , we have rimmed our GDP growth forecast for the eurozone for 2005 to 1.5 per cent.

In 2004, the US equity markets showed surprising resiliency around the triumvirate of rising interest rates, volatile oil prices, and the weak dollar. While down for much of the year, a rally after the US presidential election in November pushed the major equity indices into positive territory, marking the first time since 1999 that the market has posted back-to-back yearly gains.

Top-performing sectors included leisure, energy, and consumer durables. The laggards included the semiconductor, pharmaceutical, and automobile sectors. Security selection seemed more important than sector selection throughout the year, as investors separated the wheat from the chaff.

The interest-rate tightening cycle in the US is well underway. Global leading indicators have turned over. Emerging market debt is trading at near record-low spreads to US Treasuries. Commodity prices are at cyclical highs. The Latin American MSCI Index is near record levels. So why would one invest in Latin American equities? Because they provide a favourable investment opportunity in the low return environment predicted for 2005.

Last year was a year of consolidation for investors in China. H shares declined 5.6 per cent and Redchips gained 9 per cent. But, significantly, it was in the domestic markets where Chinese equities have struggled again.

The Shanghai and Shenzhen Asias registered losses of 15 per cent and 16.5 per cent respectively and have reached five-year lows in January 2005. This has had a knock-on effect for B-shares, which saw even greater declines during 2004: 28 per cent in Shanghai and 19 per cent in Shenzhen. After a gain of 123 per cent in H shares in 2003, a consolidation of this nature was expected.

The sheer scale of capital inflows into Asia over the past two years inevitably starts to raise concerns about their sustainability, says Simon Derrick.

Funds of hedge funds must ensure that clients understand what to do with the education provided and to monitor the quality and content of any programmes, says Andrew Gibson.

Over 2300 years ago Aristotle said “education is the best provision for the journey to old age”, making him, perhaps, the earliest person to identify the responsibility of pension funds to become “informed investors”.

Since then several regulatory bodies have placed a premium on making training and competence schemes a core element of financial services compliance, and there is now a significant industry servicing the needs of the sector with examinations and qualifications.

The Louisiana State Employees’ Retirement System demands that its investment strategy delivers a fairly formidable return of at least 4 per cent, every year, without fail. “Total fund return for Lasers shall consistently rank in the top half of an appropriate public fund universe”, proclaims the fund’s website – no mean feat in the current market conditions, but one that investment chief Bobby W Beale is determined to achieve.

Amonis, the ?695.5m pension fund for Belgian doctors, dentists and pharmacists, is planning a first-time investment in hedge funds amounting to 5 per cent of total assets.

Finance director Tom Mergaerts says the Brussels-based scheme is currently investigating four different hedge fund strategies – equity market neutral, fixed income arbitrage, convertible arbitrage and long/short equity.

French public sector pension fund shares bounty among industry players. Henry Smith writes.

Henry Smith assesses FT Mandate’s research of the processes and performance of the largest Asian equity managers.

Scottish manager says it is comfortable taking decisive bets against the benchmark, underpinned by convictions from proprietary analysis.

Independent group within GSAM responsible for monitoring portfolio risk.

Research involves reviewing annual reports, broker reports and industry studies.

Internal database tools increase transparency of the investment process.

Research includes over 1000 company contacts in the region each year.

Fundamental analysis designed to identify and exploit mispricings.

Adroit trustees should look beyond the tool kit provided by fund managers to financial instruments such as swaps that may better manage their risks. Bill Sharpe explains.

Pension fund investment has become increasingly sophisticated, from balanced to specialist, constrained to unconstrained, investment grade to speculative, publicly quoted to private equity. The investor’s tool kit provided by fund managers is certainly colourful.

The Danish pension fund ATP is poised to increase its foreign property investments in a move that could see it invest for the first time in real estate outside Europe.

Pulling in large contracts comes after the gradual development of a trusting client relationship, says BGI’s transatlantic sales and fund management team. Interview by Roxane McMeeken.

If anyone knows how to win business from institutional investors it’s the world’s largest index manager Barclays Global Investors. Despite the departure of a star salesman a year ago, the firm is still managing to pull in large contracts, such as a £1.3bn (e1.8bn) mandate won from Fujitsu Services in 2004.

Insurance companies, universal banks and the smaller regional banks, are driving the trend to sub-advisory as they do not regard asset management to be their core competency, says Nick Phillips.

Many financial organisations are now looking at all aspects of their value proposition from a profitability, competitive and scalability perspective.

Provided investors enter into the world of enhanced cash funds with their eyes open, there are good reasons to invest. Roxane McMeeken assesses an often misunderstood instrument.

Pension funds intending to set aside cash for long periods can enhance yields and lower volatility by adopting a combination of money market and enhanced cash strategies, says   Sander Boelen.

Pension funds have become increasingly aware of the importance of cash management since the late 1990s. In 1995, money market funds in Dublin, Luxembourg and the Channel Islands had less than $1bn (?770m) in assets under management but this had grown to $204.2bn (?157.62bn) by the end of the first quarter of 2004.

The cash management industry in the UK and Europe has a lot of catching up to before it reaches the sums handled in the US. But interest and take-up is on the verge of serious growth, says Christopher Oulton.

Axa Rosenbergs’s UK Equity Alpha Fund has turned around its performance.Roxane McMeeken explains.

Smaller securities services providers and non-financial firms enter the market.

Competition within the securities services market is set to intensify, with existing operators going after new types of client and brand new non-financial players entering the fray.

Northern Trust has won an outsourcing contract from UK-based Insight Investment in a deal that suggests mid-sized securities services providers could be moving up to challenge the giant players in the market.

Euroclear has warned that the future of Europe’s capital market hangs in the balance. The Brussels-based clearing and banking group has stepped up its war of words with Deutsche Boerse during the past month, leading to both organisations taking somewhat extreme measures to communicate their views to the press.

Philippe Collas, CEO for asset gathering and securities services at Société Générale,tells Yuri Bender about the French firm’s drive to take on local and American rivals.

French bank Société Générale, which has enjoyed recent successes in distribution of alternative asset management products and gathering assets for its growing private banking franchise, has started a new push into Europe’s custody, fund administration and outsourcing markets.

Flexibility and an ability to adapt to change are among the essential requisites when selecting an outsourcing provider, and regular monitoring is also advisable.

...but a takeover of the London Stock Exchange by either Deutsche Boerse or Euronext would have conflict of interest implications. Roxane McMeeken explains.