Archive » 2003 » Issue 16 (December)
Rain clouds dampen Swiss celebrations
11 December, 2003
UBS’s jubilant announcement of a 21 per cent increase in wealth
management profits belies the fact that all is not quite right in
Helvetia.
The latest results from Swiss banking giant UBS have been welcomed as signifying the
official end of the bear market. UBS’s wealth management profits were
up 21 per cent on last year, with net new money over the last 12 months
totalling SFr23.3bn (E15bn), compared with SFR14.9bn for the previous
year.
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Europe on tenterhooks over mutual fund probes
11 December, 2003
Roxane McMeeken reports on the worry Eliot Spitzer’s campaign is invoking.
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Wealth news
11 December, 2003
Marighetti exits DB
Luca Marighetti, the man who fronted Deutsche Bank’s pioneering
“guided architecture” policy, establishing distribution deals with
eight preferred external fund management groups, is about to leave the
company.
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Awards for keeping it in the family
11 December, 2003
Roxane McMeeken reports on JP Morgan’s targeting of family businesses through a collaborative awards scheme.
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UBS puts Merrill Lynch German arm in basket
11 December, 2003
Swiss banking giant on track to expand wealth operations in Europe.
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CSAM’s born-again Asian fund
11 December, 2003
Credit Suisse is enhancing its range of Asia Pacific products for Europe.
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Three British lions join M&A; feeding frenzy
11 December, 2003
The pace of private banking mergers and acquisitions has finally
shifted up a gear as another E2bn has been pumped into the industry in
the second half of October. The spending spree came this time from the
British private banking majors – HSBC Republic, Royal Bank of Scotland
and Barclays Bank (BPC). Each deal has significant strategic
characteristics and it is worth considering how well-placed each
business is in terms of absorbing the new partners.
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Cash to funds shift looms
11 December, 2003
It might have been a grim year for investors overall, but as Sector
Analysis research shows, the European funds industry is alive and
kicking, especially in the UK, Spain and Italy.
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Brock: ‘The introduction of open architecture leads to internal conflict, but there is no opportunity without risk’ |
Gently coaxing Commerzbank to open its doors
11 December, 2003
Jörg Brock, Commerzbank’s head of product development, tells Roxane
McMeeken about the arduous task of selling open architecture to the bank.
Selling products manufactured by your rivals is corporate suicide. If
you have the capacity to create a wide range of investment funds
in-house, why on earth would you sell the competition’s products
simultaneously?”
This was the argument Jörg Brock came up against when he began
advocating the introduction of so-called “open architecture” at
Commerzbank in 2001. As head of product development for private clients
at the German bank, he believes offering customers access to external
funds best serves the interests of the entire firm – both the product
sales division and the product manufacturing centre.
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‘Spanish investors have weathered the recent crisis and are beginning to understand third party funds’
Juan Alcaraz, Allfunds |
Telling reasons why Don Juan loves Allfunds
11 December, 2003
As an offshoot of Santander Central Hispano, Allfunds Bank controls half of the Spanish funds market. Yuri Bender explains how open architecture manager Juan Alcaraz plans to build on his success.
Talk to European and American asset managers looking for a Spanish
distributor and there is one man’s name on their lips. “Juan Alcaraz is
a good guy,” says one suave Italian representative of a US house. “Juan
Alcaraz is a personal friend of mine, but he won’t buy my products,
whatever I tell him,” ventures another Italian, resignedly. “We have
been working very closely with Juan Alcaraz,” the London-based chief of
a European house nods knowingly. So who is this man who appears to run
the Spanish funds market?
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Safe assets need some active risk
11 December, 2003
A ‘risk-free’ investment should be the starting point before a solution can be individually tailored.
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‘Capturing all the risk embodied in a complex
portfolio is impossible using only one parameter’
Ahmed Talhaoui, CSAM |
The risk/return trade-off
11 December, 2003
In order to efficiently manage risk in a fixed income market, one must
first understand how to measure it. The introduction of an expanding
range of more complex fixed income instruments, each with its own
individual risk characteristics, is challenging the traditional asset
allocation and risk management strategies employed by fund managers.
Developing successful strategies to invest in more “specialist” asset
classes such as emerging markets, convertibles and high yield, as well
as more traditional fixed income securities, requires both an in-depth
knowledge of these new instruments, and, crucially, the expertise to
understand and control the risks therein.
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‘History has shown that one rogue fund can impair the overall performance of the hedge funds sector and generate very adverse publicity’
Thomas Richter, DWS |
Proper tools needed to work a complex investment strategy
11 December, 2003
As they tend to use more complicated and more aggressive strategies
than traditional funds, and are highly dependent on the fund manager’s
judgement, hedge funds attract a higher level of volatility. For
successful investment, risk limits must be carefully set and correctly
monitored.
Hedge funds strategies deserve consideration as many of them offer the
opportunity to generate returns independent of the movements of the
broad capital markets.
Furthermore, many of these strategies have demonstrated the ability to generate attractive risk-adjusted returns over time.
However, as with any type of investment strategy, there are specific
risks associated with hedge funds strategies that must be clearly
understood by any potential investor.
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‘The current situation in
the FX options market has
positive effects on the global FX markets. The balance between option buyers and sellers has clearly shifted to become more neutral’
Niklaus Meyer, UBS |
Implicitly selling volatility
11 December, 2003
Active investor trading has brought about changes in the foreign
exchange options market, leading to the revival of older – but still
useful – concepts.
Over the past couple of years, drastic changes have taken place in how
private investors view and influence the foreign exchange options
market. It has gradually become a far better environment in which to
control risk.
Specifically in FX, the options market used to be a buyer’s market. Big
market-making houses were generally short vega (at-the-money options)
and short volgamma (out-of-the-money options). This has changed and
there is a direct and a more indirect reason for this revision.
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Overtaking the benchmark – but doing so safely
11 December, 2003
Positive gains build up over the long term, just like the car driver
who is going that little bit faster than the others on a lengthy
journey.
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‘Investors should be more concerned with unconnected political and economic risks, such as revision of property rights after a presidential election, or a fall in oil or gas prices’
Dmitri Chibisov, GLOBEXBANK |
Early birds taking their pick of the commercial properties
11 December, 2003
Western European investors should look beyond the political risks of
the Yukos affair, as Russia offers excellent opportunities,
particularly in real estate.
Helped by both political stability and economic growth, Russia has been
something of an investors’ heaven over the last year. But it remains
important for investors to apply correct risk management filters.
On the political side, President Vladimir Putin introduced much-needed
law and order, centralising power in the hands of federal authorities,
reforming the legal system and bureaucracy.
Structural reforms are underway, with more emphasis on boosting
competition and creating a better climate for foreign investors. The
state is also introducing more transparent legislation and taxation
systems.
Parliamentary and presidential elections in the coming winter and
spring are not expected to bring many changes to Mr Putin’s vision,
though foreign investors are likely to wait until a new government has
been formed.
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‘We are going to look at how we sell because we have been very successful on a local basis, but it’s now a question of joining up things’
Tony Solway, BNPPSS |
Europe business plan eludes BNP Paribas
11 December, 2003
Now that the integration of Cogent is officially complete, BNP Paribas
Securities Services must decide how best to respond to the rise of the
wealth management industry. Roxane McMeeken reports.
The European arm of BNP Paribas Securities Services, under head of
business development Tony Solway, is beginning to cast a beady eye over
the continent’s fast developing private banking market.
BNPPSS, as it is known, holds around E1800bn in assets under custody
and administers over 3400 funds. Like most securities services
organisations, it has had the highest profile while in the midst of
mergers and acquisitions.
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Reasons, other than China, to be cheerful
11 December, 2003
Simon Hildrey finds Asia Pacific to have recovered from its
1997-8 crises and to be less dependent on the US economy. Consequently
the prospects for further growth look better than elsewhere in the
world.
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Panel Investment
11 December, 2003
Each month in PWM, six top European asset allocators reveal how they would spend E100,000 in a fund supermarket for a fairly conservative client with a balanced strategy.
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JO Hambro takes it to the limit
11 December, 2003
Small fund gets noticed by big players thanks to a limited number
of stocks. Roxane McMeeken reports.
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Foxley: ‘affluent investors overlooked’ |
Moving in on the affluent
11 December, 2003
Simon Foxley writes on why providers should aim real estate
investment vehicles at the wealthy. Despite the dramatic growth in the
number and size of European real estate investment vehicles over the
last few years, one group of investors seems to have been regularly
overlooked – high net worth investors.
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Portfolio planning
11 December, 2003
In this section of PWM we test the performance and volatility of
two investment strategies using model portfolios. Each month we look at
two distinct approaches – one global and one European.
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