Yuri Bender reports on the NY Attorney General’s funds clean-up campaign. New York attorney general Eliot Spitzer’s mutual funds probe is gathering momentum, with the conviction of James P Connelly Jr, formerly with funds house Fred Alger. Mr Connelly tried to conceal trading arrangements with Texas hedge group Veras Investment Partners.

T+1 talks revived

Stephan Zimmermann, head of operations at UBS and Swift board member, has predicted moves towards trade and settlement in a single day (T+1) will again gather momentum, writes Roxane McMeeken from Singapore.

SYZ & Co gets serious about hedge funds advice

The Swiss banking group SYZ & Co has set up a unit dedicated to advising private clients on hedge funds. The Hedge Fund Advisory Group will comprise three people, including its head, SYZ & Co vice president Roberto Almaleh. The bank’s alternative investment division, Alternative Asset Advisors, has launched a multi-class leveraged fund of hedge funds called 3A Windrider. On the long-only side, SYZ has selected Bill Wilby, senior investment officer at Oppenheimer funds, to run its E125m Oyster World Opportunities Fund.

Wrap accounts are clearly gaining in popularity. The idea is that a client has a single co-ordinated investment portfolio employing a strategy across a variety of investment ‘pots’ or sub-accounts. These accounts might be allocated for specific purposes such as short to medium term funds, a longer term portfolio and a pension. More likely, they are divided up into different investment ‘wrappers’ that afford a variety of tax breaks.

Private clients are demanding local contact, says Swiss banking boss.

HSBC switches private banking clients in France to Louvre Gestion.

Yuri Bender reports on a network created to support wealth advisers facing a conflict of interest when deciding what is best for customers.

A quick analysis of international merger and acquisition (M&A) activity in the wealth management market indicates that around 25 significant acquisitions have been made in the last nine months. What is more, half of the deals have included at least one Swiss partner. With large transatlantic mergers seen as the way forward for wealth managers, the Helvetic activity shows Switzerland remains at the heart of international business.

Roxane McMeeken on why Dexia’s private banking makeover embraces expansion Eastwards as well as improved service levels with an emphasis
on financial planning, but doggedly sticks to its anti-open architecture stance.Private banking operations at Franco-Belgian financial services group Dexia are being beefed up, but a question mark hangs over whether the firm will embrace the use of external asset managers.

Hedge fund manager in London; ETF salesman in Germany; Italian open architecture afficionado; retail marketeer (individual investor bias preferred) in Spain.
Andrew Hutchings proffers a guide to Europe’s dream jobs for the coming 12 months.

US funds house explores channels besides direct distribution in an
effort to tap into the European market. Roxane McMeeken writes.

Research findings are showing that there is a greater likelihood of generating robust returns from a low tracking error approach than from a higher one.

In today’s uncertain environment, the managers who focus on low tracking error strategies and who have historically managed to a tight “risk budget” have been gaining attention from both index-oriented investors and those focused on traditional active management strategies. Given the increased level of interest and the attractive performance attributes of these approaches, we wanted to provide investors with more information on this unique corner of the market.

The market for ETFs on this side of the Atlantic may only have got going
three years ago, but in 2003 it is on track to double in size yet again.

Exchange-traded funds (ETFs) have been one of the fastest growing areas in the European asset management industry in recent times. While these products have been available in the US for several years, their introduction in Europe only started in 2000.
Since ETFs became available in Europe, assets under management in this new and innovative investment vehicle have risen to over $16bn (e14bn). (See Chart 1.)

Investors are beginning to notice that the under-researched mid cap asset class – especially around the $1bn–5bn mark – can offer a winning combination of upside potential and limited downside risk.

Imagine a racehorse which, for 10 years, wins more races than any of its rivals, but is hardly ever bet on by the public – seldom even by professionals – and gets only minimal coverage in the racing pages.
Implausible certainly, but this is exactly what has happened in the investment world. Mid cap value beat all other US equity asset classes over the 10 years to 2002, according to Lipper statistics, and yet it accounts for only 2.9 per cent of invested equity assets. (See Charts 1 and 2.)

Demand has been high for indices that reflect recent currency changes in the trading marketplace and the broader European landscape.

Today’s market conditions and Europe’s expanding horizons require new index products. The main European index, for example, is now over five years old – predating both the euro and the end of the 1990s bull market.

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.

Andy Whelan explains why all that glitters is most certainly not the US economy nor its currency. Gold has a proven inverse correlation to both capital markets and more importantly to the dollar. This relationship has been very profitable for those investors who had the foresight and courage to invest in gold in March 2001, when the metal was trading at $258 (e221) an ounce. While the MSCI World Index has fallen by 12 per cent, gold bullion has gained 47 per cent – an out performance of over 60 per cent.

Chris Turner assesses the risks of investing in Europe’s vacant office building stock.

Wander around the business districts of any major city of Europe and you cannot help but notice that the number of “To Let” boards attached to office buildings is a lot higher than it was two years ago. If you take a drive round any city’s outer ring road the boards will be even more numerous.

James Jacklin explains why finding the right fund of hedge funds manager is so important. In recent years, the number of hedge fund providers as well as the variety of hedge fund investment styles available has increased significantly. While choice has expanded, the task of choosing a hedge fund product has not got any easier. In an effort to attain the attributes that hedge funds add to a portfolio many investors, both private and institutional, have chosen to minimise their exposure to any single manager or product and have opted for funds of hedge funds.

In this section of PWM we test the performance and volatility of two investment strategies using model portfolios. Each month we look at two baskets of shares – one global and one European.