Lombard Odier has successfully re-invented itself as a foward-looking investment boutique, and senior partner Patrick Odier is hoping to target a younger generation of clients. Yuri Bender reports

Wealth managers across Europe are looking to implement new business models with an onshore focus, either by recruiting new teams of managers or by acquiring entire businesses, writes Yuri Bender

Disappointment with the performance of active funds, along with the lower fees charged by passive investments have seen ETFs become a vehicle of choice for many private clients, writes Ceri Jones

Both institutional and individual investors are now looking for transparency and reliability in their investments, meaning that passive management vehicles such as indexing are back in the limelight

There are plenty of buyers drawn to the wide spreads priced into the corporate bond sector. But, asks Ceri Jones, is there a risk of oversupply?

Up until September last year hedge funds were so popular with investors that some had to restrict entry, but a rush of redemptions since then has seen many go out of business. But what does the future hold for those that survive? Henry Smith reports

Has the financial crisis changed the definition of value? Three value specialists from the Natixis Asset Management Group give their views on identifying opportunities in the current climate and agree that are some very attractive valuations to be found

As global market volatility reaches extreme levels and most asset classes suffer heavy losses, bankers are engaged in the arduous work of finding Sharia-compliant ways to offer companies and investors some protection, writes Philip Alexander

“In May we are reducing our equity exposure, following a strong global rally. We think that equity markets will still show high volatility and earnings uncertainty due to a long and complex global rebalancing process. We sold our GLG Performance fund and added the Deka Euro RentenPlus. We keep our defensive positions in high dividend equity portfolios and commodity related stocks.”

“During the month of April, stock markets continued the recovery that started in March. One reason is the fact that so far the earning season did not lead to any bad surprises that were not already priced in the market. The majority of the companies listed in the S&P; 500 could exceed financial expectations for the quarter. In addition, the central banks expanded their ordinary monetary policy (interest rate cuts) through the quantitative easing measures. In our portfolio an alternative investment basket of 40 per cent was introduced at the expense of money market funds and cash.”

“With the return of investor risk appetite during April, the strongest gains came from emerging equity markets and Asian equity markets. Accordingly, our positions in the Ignis Hexam Global Emerging Markets and Veritas Asian funds have proved fruitful. In light of the significant rebound in equity markets we have decided to reduce our directional exposure to Europe. We have made a partial disposal in the JOHCM Continental European Fund and switched the monies into the recently launched Gartmore Absolute Return Fund. This Ucits III vehicle will follow a similar strategy to the very successful Gartmore AlphaGen Capella hedge fund.”

“We still hold on to our allocation. In equities, we are underweight to our neutral position but we are looking to increase our exposure. The reports for the first quarter from US and European companies are better than expected and economic indicators signal that perhaps the market has reached the bottom. We still focus on the European and emerging markets where a recovery of the global economy should have the larger impact. For goverment bonds we still see the risk of rising yields into the direction of 3.4/3.5 per cent for 10 year-bonds. The large supply from governments should put further pressure on the bond market”

“During the last month we did not change the composition of our portfolio, keeping both sector and geographic allocation unchanged. We also made no changes to the allocation between equity funds and bond funds. As in previous months, the performance of the portfolio suffered mainly because of the portfolio being underweight in the financials sector. However we still expect great volatility in the markets, and we think our portfolio is well allocated to benefit from the current market situation. With regard to the bond portion of the portfolio, we are keeping a conservative approach, by using low tracking error funds, focused on government bonds.”

“The international equity markets continued their rally in April, buoyed by good earnings news, especially from banks, and by firmer than expected macroeconomic indicators. The MSCI AC World index rose by 11.5 per cent, while emerging markets (MSCI Emerging index) rose by by 16.3 per cent. Cyclicals and financials recorded the best performances. Returns on our portfolio benefited again from the rebound on global markets. Considering turning points on leading indicators we decided to implement a more aggressive stance, by increasing our holding on Alken European Opportunities and trimming part of our Uniglobal Minimum Variance Europe’s stake.”

“While the market has continued its rebound in April, we have decided not to increase our equity allocation and to rebalance the portfolio in order to take some profit. However, we have made several changes in underlying funds both on the equity and the fixed income side. Concerning fixed income investments, the allocation has been switched to less directional funds or to such funds that can generate higher alpha in volatile markets. For the equity position, we have decreased our bets on value tilted investments and reinvested the proceeds in emerging market equity funds, which we expect will be the first to come out of the crisis.”

“The best performing fund last month was Odey European Inc (+30 per cent). This manager benefited from a large position in Barclays. We have diversified our holding in Invesco Perpetual High Income and invested into PSIGMA Income and Standard Life UK Growth. We moved into the Schroder Commodity Fund for three reasons: a hedge against inflation; if economies pick up commodities rally as supply constraints become obvious; and as a hedge against a fall in the dollar. Last month we stated that this “equity rally could well continue longer than many market participants believe.” So far we have been right.”

“With the upswing that major markets enjoyed beginning on 9 March, fund managers rankings have been totally turned upside down, with the more conservative dramatically lagging the market and losing most (if not more than all) their advance. In this context, we went on reshaping our balanced portfolio, keeping it quite concentrated but with a bigger stance on growth stocks, themes and areas. From a regional point of view, Japan has been removed as it suited much more the pre-upturn context; Asia ex Japan has replaced it, with a thematic fund designed to take part in the regional stimulus plans.”

“Risky assets rose again last month, as marginally improved economic news, oversold conditions, attractive valuations and some positive trends in corporate earnings fuelled an impressive rally. We are not convinced that we are at the beginning of a new secular bull market, as there are still a number of downside risks – but the increasing risk appetite leaves some room for further gains. Our recommended allocation, which strongly built on credit and reasonable equity exposure was able to post strong absolute returns. We increase the allocation to high yield bonds further – from 4 per cent to 6 per cent and reduce liquidity accordingly.”

“Markets continued to rebound strongly in April with emerging market and Asian funds showing strongly. Another success was Schroder UK Alpha Plus which was up by around 25 per cent in euro terms, having been active in banks and one or two other cyclical areas. The only subdued return came from the TR global bond which delivered around -0.5 per cent in euros, as investors shied away from government bonds on the view that future issuance would be high and economic news was less bleak than expected.”

“The rebound continued to be led by risky assets in April – good news for holdings such as Old Mutual UK Select Smaller Companies (which rose over 20 per cent) and also good for equity funds focused on Asia, the emerging markets and Europe. Government bonds did not do as well, although corporate bonds participated. We remain happy with the blend of funds and assets in our portfolio and undertook no changes this month. Looking ahead, the rally has some momentum now with plenty of bears yet to capitulate but the relentlessness of the rally concerns us in the very short term.”

The financial crisis has resulted in the wealth management industry viewing compliance in a very different way, reports Rekha Menon