Italy’s financial capital of Milan is the venue for the first of PWM’s European Fund Series of half-day conferences addressing the issues of product design and distribution.

Index funds are becoming increasingly popular in Europe, according to a Morgan Stanley report. The development is a particular boon for asset managers such as Barclays Global Investors and State Street Global Advisors, which have long been pushing enhanced indexed products with varying degrees of success.

The fixed income division of French bank BNP Paribas has designed an online platform to market bonds, credit and equity derivatives and notes linked to commodities, inflation and FX to private banks and retail distributors on a global scale.

Pioneer Investments, funds subsidiary of Italian banking giant Unicredito, has entered a strategic alliance to sell its products through branches of Koçbank in Turkey.

US manager Alliance Capital Management is spreading its European distribution network into Italy, the world’s third largest mutual funds marketplace. Its new Milan office is headed by Nicola Meotti, previously running Gartmore’s Italian sales activities. He has also handled Italian sales for ING.

Arguing the case among senior private bankers and their management for the establishment of client focus groups among individuals with net worth in excess of $10m (e7.6m) is still, typically, futile. The common response, given to Scorpio Partnership, is that ultra high net worth individuals (UHNWIs) do not want to come together.

Only the UK and Sweden are equities-enthusiastic in a continent otherwise characterised by a distinct distaste for stocks. Roxane McMeeken reports on a Morgan Stanley study

Joachim Faber, CEO of Allianz Global Investors, tells Paula Garrido about the firm’s expanding continental relationships and the need for a single registration process for funds being sold across Europe

Michael Strobaek’s pan-European sales team reserves the red carpet treatment for its top cross-border distributors. He talks to Yuri Bender

Life insurance companies, until recently seen as a purely institutional client, are also moving into the distribution space, believes Mr Strobaek. “Insurers increasingly want to use pooled vehicles in their solutions,” he says. “They are clearly moving into the space of being buyers or distributors of mutual funds, which they want to bracket or wrap into unit-linked life insurance products.”

Automated, standardised external transaction processes are surprisingly rare in an industry still wedded to the telephone and the postman. Roxane McMeeken explains what’s holding things up

Hugh Griffiths, assistant director to specialist investment management consulting firm Citisoft, explains the weaknesses in the nuts and bolts of the open architecture fund distribution:

Investable hedge fund indicies should be viewed as a complement to funds of hedge funds because the two provide for different needs

As the list of funds of hedge funds managers grows longer, investors should seek out those with experience, relationships, scalable business models and resources

By taking advantage of low cross correlations, this concept can focus on delivering pure alpha

Structured products are gaining in popularity because they soften the pain when entering lucrative yet volatile markets, and provide a steady stream of income for both fund managers and investment banks. Roxane McMeeken examines the various stages to developing a bespoke offering

Interview with Tom Slocock, head of sales at Credit Suisse UK

A lowering of fees has boosted ETF performance but tighter profit margins means further consolidations are inevitable. Simon Hildrey explains

Morgan Stanley survey reveals structured products and other high yielding specialist offerings as well as index trackers pulled in the most new clients last year. Roxane McMeeken reports

“Our balanced portfolio did not move that much in March, since we had already trimmed our equity holdings late in February. Our equity portfolio remains focused on two areas: Europe and natural resources.
“Most of the movement has been on the fixed income side, lately, with spreads expanding quickly as the US interest rate rose, and the eurozone rates resuming their steady downtrend. Our next move will be trim the high yield portfolio.

“In the face of the market’s preoccupation with whether the US Federal Reserve is ahead of or behind the curve, we are looking through this current volatile period into the third and fourth quarters of the year, as this gives us confidence to proceed with an overweight equities view, although we will be watching geographic allocations more carefully in the near term. For now, no changes this month to funds or to asset allocation.”

“Oil and rising US interest rates remain key concerns. Provided the inflation scare proves to be a false alarm, rising rates worldwide this year should be a reassurance that growth is intact rather than a worry that inflation needs to be combated. Equities look attractive if earnings continue to grow and bonds are still uncompetitive with cash. Consequently, a patient approach is recommended, favouring real assets (property and equities), with an accent on quality.”

“The last few weeks were very tough for the markets due to sharply rising oil prices and a change in the US Federal Reserve’s tone on interest rates. The effects were felt acutely in emerging market equities and in the entire bonds sector. Recent dramatic market corrections are in our view only temporary, as is the latest advance of the dollar against the euro. Therefore we remain confident with our current portfolio and do not see any need to make changes

“A low volatility environment provides us with the opportunity to focus on the longer term and on fundamentals. Our global view remains more favourable to equities than to fixed income, based on current yield levels. Our allocation to equities, which is overweight in Europe and Asia, and underweight in the US, has proved positive. We are finding that a highly active approach to fund selection is performing well generally and has contributed positively to our performance.”

“No major changes. Liontrust has recently attracted significant press attention. Disappointing performance of its First Growth Fund combined with negative asset flows led to some serious concerns among investors. We usually do not engage in short-term tactical asset allocation and we maintain our suggested allocation to the Liontrust First Income Fund. Fund manager Jeremy Lang will continue to deliver good returns and with his distinctive investment style and philosophy we expect him to add value to the overall UK equity.”

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.

For a number of years several Scandinavian hedge fund managers have been quietly securing good performance – but now the secret’s out. Roxane McMeeken reports on Nordea’s new product offerings