The increased cost of complying with regulations will drive smaller houses to look to third parties to complement their in-house capabilities

Our special thanks go to the panel of 40 plus decision makers in private banks, life insurers, wealth and asset managers that have contributed to this 8th annual sub-advisory study. They filled in extensive questionnaires, responded to in-depth interview questions and participated in our annual roundtable.

Large institutional clients are driving sub-advisory fund growth at SEB, while sections of the retail space look likely to be brought back in-house

Swiss banking group Syz and Co is looking to appoint new sub-advisers in a range of innovative asset classes such as high alpha equity products

DnB Nor and Goldman Sachs are the only sub-advisers for Norwegian outfit Skandia Fonder, which expects to streamline its fund range in the light of Ucits IV

Italian asset manager Euromobiliare examines the track record and risk management processes of potential partners in order to find a fit

Firms giving mandates are looking for long-term strategic partnerships, as the uncertain economic environment provides an impetus to sub-advisory business

By Kathryn Koch, senior portfolio strategist at Goldman Sachs Asset Management

PWM invited leading players from the sub-advisory arena to discuss the impact of recent market turmoil and how to make partnerships last

Mercer has traditionally focused on institutional investors but the consulting firm believes private banks will increasingly seek the expertise of third parties for advice on portfolio construction. Elisa Trovato reports

PWM’s second annual European Sub-Advisory Summit, held in Paris in November, invited many of the leading players in the industry to discuss what is driving the growth of the business. Elisa Trovato reports

Elisa Trovato directs a discussion on the developing issues in the sub-advisory arena. Eight leading players reveal the factors driving outsourcing, the importance of cost in the decison to sub-advise and opportunities in the Ucits III hedge fund space.

Nick Phillips, Goldman Sachs Asset Management

Goldman Sachs Asset Management’s Nick Phillips tells Elisa Trovato why private banks moving into hedge funds are looking to form partnerships with companies armed with well-resourced research teams

Investec: finding bespoke solutions

The desire for greater transparency, control over investments and bespoke solutions in the hedge fund space drove private bank Investec to sign sub-advisory agreements with two large firms, Goldman Sachs Asset Management and JP Morgan Asset Management, explains Andrew Summers, global head of product and research at Investec private bank in London. The two firms will each run a hedge fund multi-strategy mandate.

In this seventh annual PWM sub-advisory survey, 50 decision makers at private banks, life insurers, wealth managers and asset management companies were asked to give their insights into the European sub-advisory business.

The impact of the financial crisis on the criteria employed to select external fund management companies is one of the key themes emerging from the seventh annual sub-advisory study conducted by PWM.

Risk premiums on corporate credit entered 2009 at near-record levels and show little sign of a reversal in the near term. These risk premiums certainly appear attractive, although the outlook is clouded by a bleak economic backdrop, rising defaults and a global financial system in the throes of recapitalisation. The question of whether now is the time to raise allocations to credit versus other asset classes is certainly pre-occupying many investors. After all, the historically high risk premiums, and relatively ‘cheap’ price of securities are clearly a reflection of a high-risk environment.

The events of the past several months have been unsettling for investors. With mounting concerns about a global recession and a near shutdown of the capital markets, the FTSE 100 has delivered its worst YTD return since 1931. The market has been characterised by fear, panic and forced selling, as mutual funds and levered hedge funds face record redemptions. For those that remain in equities, the top objective has been safety, as cash-rich companies have outperformed those with arguably better growth prospects.

In the past fortnight hedge funds have been tarnished with a critical brush by investors and the media. On the one hand due to “disappointing returns” and also the downward spiral in equity prices as well as commodity speculation. These wide sweeping statements are not completely accurate and the activities of a few should not unjustly implicate the industry as a whole.

A year on from the credit crunch it is time to evaluate where portfolios are standing. At first glance it certainly appears to be a gloomy picture. We believe tighter credit conditions, increased defaults on loans and mortgages by consumers and bank write-downs will continue to create a challenging environment in the year ahead.

Through the latter part of 2006 and the beginning of 2007, the UK press was full of reports about the good returns enjoyed by what were termed ‘the barbarians at the gate’ – private equity managers. By taking advantage of freely available and modestly priced lending over the past few years, deals became increasingly leveraged and the market witnessed a wealth of large public-to-private transactions.