Having already established alliances in the Middle East, Russell has launched Sharia compliant products, reports Elisa Trovato

Germany’s tax probe into Liechtenstein has rallied popular sentiment, and this moral scrutiny raises questions for the global banking industry

Following four years of significant growth, since mid-2007 the Spanish investment fund industry has been searching for new innovations to combat unprecedented outflows. Jorge Zuloaga Montero reports

Having benefited from corporate deals and real estate in recent years, private banking is suffering from the credit crisis. But interest rate cuts and alternative investments could help boost the sector

The outlook for Spanish mutual fund firms has changed significantly due to the sub prime crisis, but the country’s product selectors and distributors claim not to fear what the future holds

Anton Simonet, the German bank’s head of wealth management, talks to Yuri Bender about his love of derivatives and the culture changes brought about by Dresdner’s merger with insurance company Allianz. Now the group structure may change once more

Cristobal Mendez de Vigo tells Yuri Bender about F&C;’s far-reaching global distribution plan to expand into a series of new markets, as the fund house undergoes a change in ownership status

F&C, short for Foreign & Colonial, made its name running the world’s oldest retail fund, launched in 1868, and was soon financing railway infrastructure in Egypt and throughout the Americas. By the mid 1990s, the asset management company, under the ownership of German bank HVB, was developing a deep footprint in European and UK institutional markets.

In an increasingly competetive market the correct communication strategy is vital. Promoting brand awareness is a good start, but on the wealth management side, providing the right information to the right people is key. Elisa Trovato reports

When constructing a portfolio, two main challenges present themselves – picking the right asset classes and then picking the best managers to run those assets. Choosing an asset allocation strategy can help protect you from downside risk as well as helping to ensure that you maximise the benefit from potential upside. Interestingly, diversification is one of the few elements in a portfolio that is also free.

The fund management industry has been busy launching products to gain exposure to the Middle East equity market. Elisa Trovato reports on a region where limitations on foreign ownership are still prevalent

An efficient way of gaining access to the Middle East’s equity markets is the key to a successful investment strategy in the region. Sharia compliant investment structures and participation certificates present attractive solutions writes Federico De Palma

The impact of the credit crunch is widening the spreads of investment grade bonds over treasuries, but in the longer term they offer attractive opportunities, writes Simon Hildrey

Commodities are seeing record prices, and are being used in a variety of ways, but can be notoriously volatile. Martin Steward reports on how this makes structured products attractive

With clients become more sophisticated and calling for more complex products, concerns are emerging from wealth managers about inadequate systems and operating models. Nat Mankelow reports

“Equity markets are still weak and recent data on the US economy make us cautious. We sold exposure to foreign exchange total return strategies and increased positions in emerging markets bonds, buying the AMEX Global Emerging Markets Absolute Return fund. The duration of the bond portion has been kept stable following a strong month for government bonds. We increased exposure to the Legg Mason Value fund, following its weak performance due to troubles in the US financial sector. On equities, we add some exposure to the European and Japanese markets, where we see a less critical situation than in the US.”

“February 2008 was characterised by relatively high price increases in international commodity markets. The oil price broke through the psychological barrier of $100 and attained a new all-time-high of $103. At the same time the price per ounce of gold reached record highs of approximately $970. Experts attribute the recent rally of the gold price to the global weakness of the US

dollar, possible inflation threats and uncertainty in regard to the US economy. In order to benefit from the promising commodity development, we bought a fund that gives us exposure to both oil and gold.”

“While February saw the equity markets recover some of their loss ground, the month continued to be challenging for Global credit markets. Credit spreads have dramatically widened and offer longer term investors some interesting opportunities. Over the shorter term, negative news flow and increasing defaults continue to dominate investor sentiment. We have switched out of CS Target Return Fund replacing it with Templeton Asian Bond fund, replacing the credit risk with a more direct play on Asian currency appreciation. ”

“Our portfolio is up 0.6 per cent in February. The Evli Greater Russia equity fund was the best performing fund with a rise of 6.1 per cent. The large inflow of petrodollars remains a strong support for the domestic economy. Despite a very uncertain short term outlook for equities in general, we maintain our equity overweight due to the long term nature of the portfolio. The Senior Bank Loans are still suffering under the fall-out from the credit markets and general risk aversion. A lot of negative news has already been factored in at current levels and given that this fund invests primarily in the top-tier and most liquid senior bank loans while applying a careful on-going monitoring, we remain committed.”

“In the last month we have made some changes to our portfolio. We replaced Templeton European Total Return Fund with Dexia Euro Bond Fund, in order to reduce exposure to corporate bond in favour of government bond. Moreover we reduced the weight of Long Term Investment Classic in favour of ING Global High Dividend. Despite the changes, the asset allocation of the portfolio hasn’t varied. We are always monitoring the market, looking for new funds that could be included in our portfolio. Each potential change in the portfolio will derive solely from fund picking.”

“Over the past month our defensive investments continue to play their role as shock absorbers in a context of volatile markets. For example, Centrale Long Vol, which is invested in equity markets implied volatility, has returned +2.24 per cent over the month and Pam Bonds Euro (Euro Govies) has returned +0.60 per cent. These investments benefited from a risk aversion increase.

Our Asian bet has surprisingly returned a positive performance, as investors believe more and more in a decoupling scenario with Europe and the US.”

“All our European Funds performed well in February and we used this rally to reduce our exposure to this market. As pointed out last month, we were uncomfortable with the Artemis European Growth Fund in the current environment and when we decided to reduce the allocation to Europe, we sold this fund. We added to Schroder Tokyo and our two existing US funds. The star performer for the month was the Nevsky Emerging Markets Fund closely followed by the IdB Real Estate Fund which takes both long and short positions in quoted Real Estate securities; an interesting area this year.”

“The equity exposure of our balanced portfolio has been slightly reduced and stands at 40 per cent as of the end of February. The cash level stands at its highest ever, at 40 per cent: the risk-reward does not favour a regular fixed income investment and we consider it is still too early to buy into the high yield corporate market, where opportunities are slowly building up. So, what is left? Eight equity funds, without any addition during February, but one deletion (China Equity) and one long held position halved, because of hard times for its favoured themes (China and financial markets).”

cut:

The remaining fund managers are some of the most conservative throughout Europe and the US. Whereas it is not our job to pile in cash positions, it is our business to avoid the poor risk-reward trades, which are abounding by now. And at some point, it will be important to tiptoe back into battered stocks that offer huge value.

“No big changes in our view since last month: we continue to believe that the current market uncertainties are more driven by the fears surrounding the credit than by the growth slowdown. Fed rate cuts will hardly help the market rebound, as long as confidence between lenders and borrowers remains an issue. We are maintaining our cautious bias and our significant exposure to alternative investments, through multi-strategy funds of hedge funds. We continue to favour large cap equities against small cap and we consider that strong sectorial bets should be avoided according to the high volatility across sectors.”

“During the month of February markets remained nervous on the back of patchy corporate earnings/economic news flow but equities generally remained ahead of levels plumbed in mid to late January. At the fund level, Fidelity Euro Bond and Thames River Global Bond, remained resilient and the least volatile reflecting continued support for areas of "safe haven status" like government or quasi-government bonds. At the other end of the spectrum in terms of risk JP Morgan Emerging Markets was the stand-out performer on the equity fund front rising by around 5 per cent in February.”

“The recent weeks were dominated by volatile market movements that make it more difficult for fund selectors to closely monitor the relative performance of their invested sub-funds. One problem is the interpretation of short term volatility in relative performance (i.e. tracking error). In this market environment, there are some fund managers whose investment style is not rewarded, thus they underperform significantly. Therefore it is essential to fully understand the fund manager’s investment style and to keep a close contact to the manager.”

Cut:

One recent example is the MainFirst avant-garde fund, whose year-to-date underperformance has to be seen in the context of a good - if volatile - relative performance. We continue to appreciate Anko Beldsnijders investment approach even if his style has difficult times, too.”

“In Euro terms, February was a mixed month for our balanced portfolio. The underperformance of bonds does not yet attract us to bottom-fish and add to our positions here, preferring the insulation that the two in-house funds we are using (Thames River High Income and Thames River Global Bond) give us from the worst of the credit crunch continuation. Within equities we increase Japan at the expense of holdings in the UK and Europe with the introduction of JO Hambro Japan Growth. This value-biased fund has been targeting the oversold stocks in the Japanese market on good absolute valuations.”

Each month in PWM, 12 top European asset allocators reveal how they would spend E100,000 in a fund supermarket for a fairly conservative client with a balanced strategy

The private banking world does not make enough use of electronic messaging standards like FIX and is missing an opportunity to offer a better service to clients. Peter Guest reports