There’s more to investment than profit, as managers reeling from single-digit returns concentrate on asset structure and supplementary portfolio features.
“It takes a great deal of boldness and a great deal of caution to make a great fortune,” said Nathan Mayer Rothschild of the famous banking dynasty back in 1834. “And when you have got it, it requires 10 times as much wit to keep it.”

Single-manager product to build on success of institutional forerunner.
ABN Amro Asset Management, currently in the throes of a wide-ranging business review, has launched its first single manager hedge fund product.

Modifications not related to market timing abuses and late trading, says SGAM.

BGL selling off stake in EFA after Fortis funds merger

Luxembourg-based transfer agent European Fund Administration (EFA) increased the number of sub-funds it services by 6.48 per cent in 2003, while the total number of sub-funds domiciled in Luxembourg fell by 3.8 per cent during the same period.
Last year EFA was awarded administration mandates worth €4.7bn, coming from international promoters and one hedge fund. EFA now services 1150 sub-funds with total assets of €69bn.
Banque Générale du Luxembourg (BGL), one of EFA’s shareholders, has announced the sale of its 26 per cent share in the company following the integration of BGL’s in-house funds into the Fortis fund family. “EFA no longer administer our own products and we have now aligned our shareholding with this situation,” said Robert Scharfe, member of the board at BGL.

At long last, the disclosure standards for the global private banking industry appear to have been raised. The trendsetter this time is Citigroup Private Bank. Indeed, the bank’s latest presentation on business performance last month should set a new standard for all global private banking operators.

With 2003 data now to hand, Rodney Williams says it is time to roll out the ‘fund industry academy awards’ red carpet.

Part of a family enterprise herself, Amy Braden is well qualified to head JPMorgan’s innovative Family Wealth Centre. She explains to Yuri Bender how the US giant may have started a new private banking trend in Europe.
JPMorgan, one of the best-known US wealth management institutions, has identified Europe as its new battleground. And, along with competitors such as Pictet, UBS and Credit Suisse, it sees Germany as a key area of focus. Earlier this year, it recruited former UBS German private banking chief Andreas Muth to run its Teutonic operation. The bank chose Dr Muth for several reasons – his experience in working with not just rich, but “ultra high net worth clients”, his familiarity with “innovative and institutional-quality solutions” and last but not least, his passion for working with families.

Paula Garrido examines how State Street’s acquisition policy has led to significant growth in the key European distribution market.

Whether it’s chopping and changing, remoulding or building something

new from scratch, designers of products for the wealth management

industry have their work cut out for them. Paula Garrido and Yuri Bender report.

As a country, Russia is worthy not only of headlines on the front page but also on the investment pages. With increased transparency and structural reforms comes real growth and a better business environment.
The arrest of Mikhail Khodorkovsky in autumn last year and the recent dissolution of the cabinet highlight the greatest risk in Russia: its lack of legal and political transparency. This is, however, not unusual in a developing economy.
We therefore class such a case as a typical “event risk” to which even positive markets tend to resort to swift overreaction, normally recovering within a very few days when there are no other negative repercussions. For example, when Mr Khodorkovsky’s “right hand man” and head of Menatep Bank, Platon Lebedev, was arrested in July 2003, the markets initially lost 15 per cent, but within three weeks they added 25 per cent to stand ahead of where they had been prior to the incident.

In uncertain market conditions, fund managers may go for a product that produces gains from two completely different investment styles.

Private wealth managers may be shying away from putting USFs to use because the concept takes some figuring out. But the results are worth the effort.
Launched by Euronext.Liffe in January 2001, universal stock futures (USFs) were initially utilised predominantly by institutional players. Although some private wealth managers have been using the product selectively since its inception, USFs are starting only now to find their way into private portfolios, despite limitations imposed by management mandates and regulators. In particular, those managers seeking to control equity risk more organically and add flexibility to equity portfolios are now looking at these products as a viable tool.

Quantitative analysis provides a powerful tool for identifying investment opportunities and for suggesting how to best structure a global portfolio: it’s all about picking the winners across countries and across industries.

Managers are now promoting high yield as a stable asset class with good income favoured over capital appreciation possibilities, writes Simon Hildrey.

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.

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.