Geographical redistribution of wealth is forcing private banks to re-address their growth strategies, writes Elisa Trovato

The alliance between SG Private Banking and Rockefeller will give the French institution know-how in consolidated reporting, performance analysis and management of non-financial assets, reports Elisa Trovato

Cath Tillotson explains why last year’s results indicate that 2008 could prove to be a good year for the private banking business

Speakers at the recent Inside Wealth Management forum in Zurich highlighted the need to preserve traditional Swiss values in an increasingly global financial world, writes Yuri Bender

Christiaan Sterckx, head of product development at KBC Asset Management, tells Yuri Bender how demand for structured products has led the fund house to expand into territories outside its traditional home markets

Picking up good stocks at low valuations and recruiting quality personnel currently out of work are just two ways that asset managers can benefit from the current market uncertainty. Elizabeth Cripps looks at where the big wins are likely to come from

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.

The increasing use of ETFs, structured products and evolving commodities themes has led to a blurring of the boundary between core investments and their satellite assets. Elizabeth Cripps reports

Investors can use exchange-traded funds as a core investment in a portfolio, but as the exposures offered by ETFs increases, they are also increasingly being used as the satellite says Nick Shellard, head of UK sales at iShares

Large investment houses have developed a diverse range of strategies and products. More and more now seek to optimise that range in pursuit of better risk-adjusted returns. Christophe Lemarié head of Equities, Global Balanced and Convertibles Bonds at Crédit Agricole Asset Management in Paris, answers the questions on CAAM’s multi-strategies approach to equities

Despite warnings of a crash, commodity fund managers are generally optimistic that price rises will continue, writes Simon Hildrey

Investors looking to diversify their satellite hedge fund allocation do not have to take on unsustainable single-manager risk. High-octane returns, single-strategy exposure and de-correlation can be achieved with funds of funds that are a little way off the beaten track, writes Martin Steward

Returning to the US as the new president of NTGI after a successful few years in London, Steve Potter believes there is enormous potential for the firm’s wealth management business. Nat Mankelow reports

“Markets have turned volatile again in June, following Fed and Ecb aggressive stance against inflation. Our portfolio was not significantly changed: we keep structural exposure to absolute return portfolios (JB Absolute return, AMEX Gemar, Parvest Abs return bond) and add exposure to European equity through the GLG European equity fund: performance and style analysis have outlined the very flexible nature of this product, meeting our search of active managers. We maintain energy and gold related funds as a hedge for inflation and commodity related market crises.”

“During the month of May, international investors turned their focus to the development of the commodity markets. The oil price reached a new all-time-high of above $130 per barrel. The main reason for the sharp price increase is the OPEC’s repeated refusal to increase oil production. It remains to see how much of an impact the recent hike in the oil price and the increased volatility in the commodity markets will have on the global economy. We therefore have increased the bond exposure in our portfolio in order to partly avoid the increased volatility in the equity markets.”

“Despite equity markets continuing to make positive progress this month, we remain concerned that the full impact of the credit crisis has not yet passed on the underlying consumer especially in high indebted consumer countries such as the UK. We have reduced our allocation and beta within the UK by selling our existing holding and replacing it with BlackRock Absolute Alpha, a fund that has the flexibility and mandate to deliver positive returns in difficult market conditions. By reducing our market sensitivity and allocation within the UK it also allows us to take slightly more risk within the portfolio in areas we believe remain fundamentally attractive such as Asia.”

“The portfolio rose 1.6 per cent in May. The best performing equity fund was Evli Greater Russia, which was up 7.29 per cent. The fund’s core holdings are mid-cap companies and it offers exposure to growing Russian domestic demand while having a lower exposure to volatile commodity markets. Danske Fund Europe, which invests in European equities, rose 2.79 per cent and year-to-date it has outperformed its benchmark by more than 6 per cent. Over the past 3 years it has delivered a return of 55 per cent, which is also well above the market return. Danske Fund Europe was recently awarded a 5-star rating by Morningstar.”

“During May we did not change the portfolio. The portfolio is mainly built with equity portfolio managers to whom we delegate decisions. In some cases like M&G; Global Basics, Protea Wintergreen, Vontobel Global Value, UOB Kinetics Paradigm, Mellon Global Bond, AllianceBernstein Global Value and ING Global High Dividend we delegate stock picking and asset allocation decisions. For the remaining funds we delegate only stock picking. Ultimately the goal of our activity remains low turnover and good performance over the medium-long term.”

“Over the past month, our European positions led the portfolio’s performance. In particular we profited from a good return on our strategy invested in volatility which benefited from erratic markets. On the other hand, government bonds had a detrimental effect on performance due to strong fears of rising inflation. We introduced the fund ‘AXA Or et Matières Premières’ to benefit from the recent correction in the gold price. This investment also provides us with a hedge against inflation which we deemed prudent in the current environment. We have retained our equity holdings which are supported by low valuations.”

“In May, we made no changes to our portfolio. The best performing fund in absolute terms was the Nevsky Global Emerging Markets Fund with a return of some +3.44 per cent compared to the MSCI Emerging Market Index return of +2.09 per cent. We continue to rate this team. It is also worth highlighting the exceptional performance of the IdB Real Estate fund which managed to post a positive return for the month of 1.5 per cent despite a 3 per cent fall in European property indices. The manager reduced net exposure to as low as 15 per cent during the month by increasing short positions and this helped support performance.” ”

“The defensive tone of the balanced portfolio has been maintained this month, with very little change month on month. The only, really modest, movement that has been done is redeeming one of the two French equity investments, to reinvest half of the proceeds in US growth stocks. This is the second part of a move that had been initiated last month. Going forward, we would expect our overall exposure to remain rather low. But at some point, with so many markets so cheap, a good floor should be found for some sort of (bear market?) rally.”

“Global economic growth is decelerating, mainly due to the effects of high commodities prices. US outlook is a bit more predictable than in the previous months. Last macroeconomics numbers are rather positive except unemployment rate above 5 per cent. On the other hand, we feel less confident about Europe. We believe that a strong Euro could begin to impact negatively on Europeans companies. In such conditions, we continue to be cautious about equities and prefer to invest in low beta investments (eg hedge funds). In terms of geographic exposure, we favour US and Japanese stocks, and continue to underweight Europe.”

“May was a better month for the portfolio with all holdings (bar the Fidelity Bond Fund) ending the month in positive territory, as measured in Euro terms. The stand-out performer was the small cap orientated Atlantis Japan fund which rose by around 15 per cent. This does however need to be viewed in the context of an awful second half of 2007 and beginning of 2008. Nevertheless Japan, for us, remains an interesting contrarian play, given that many foreign investors have thrown in the towel. If anything the GDP numbers look relatively resilient to the Western world plus company valuations do look overly challenging.”

“From time to time there are new investment opportunities emerging that are worth considering for a longer-term asset allocation. Unfortunately some of them are discovered by many investors at the same time, thus causing rapidly advancing asset prices. Often this results in a boom-and-bust cycle of the new asset class. Two of the recent examples are property and infrastructure equities. Usually their performance should be cash-flow oriented and thus value-style. In the case of property securities, huge inflows into the segment caused a significant over-valuation that had to be worked out in a sharp correction afterwards.”

“World equity markets made mixed progress in Euro terms, leaving behind bonds in mild negative territory. Excellent relative and absolute returns from Findlay Park in the US, Rensburg and Old Mutual in the UK, Cazenove in Europe and JO Hambros in Japan helped offset the bond element of the portfolio. We have taken the opportunity to re-align our portfolio construction this month and although no funds have changed, turnover of 20 per cent has occurred with the holdings to adjust the overall stance of the portfolio towards the most flexible managers and those with the most latent potential in our opinion.”

Each month in PWM, 12 top European asset allocators reveal how they would spend €100,000 in a fund supermarket for a fairly conservative client with a balanced strategy

BNP Paribas Securities Services has been expanding geographically as the business moves to servicing the global buy-side. Peter Guest reports

While the success of specialist sub-advisers depends on the level of fees they charge and the nature of their chosen markets, areas such as hedge funds, thematic investments and absolute return are likely to see increased outsourcing, writes Elisa Trovato

Elisa Trovato grills the nine-strong PWM panel about what it takes to keep the sub-advisory relationship going strong, and how a company’s commitment to its fund management delegation decisions is ultimately for the benefit of the client

Experts at the table

Sub-advisory roundtable, June 2008, London, UK. Participants:

Philip Glaze, Chief Investment Officer, Multi-manager, HSBC Global Asset Management

Ian Hale, Director, Collective Investments, Barclays Wealth

Matt Mack, Head of UK Third Party Distribution & Alternatives, Goldman Sachs Asset Management

James Millard, Chief Investment Officer, Skandia Investment Group

Alan Mudie, CEO, Oyster funds – Bank Syz & Co.

Lance Peltz, Director, Head of Investment Management and Guidance (EMEA Pac), Merrill Lynch

Jaime Perez Maura, Fund Selection Director, Allfunds

Nick Phillips, Head of Third-Party Distribution EMEA, Goldman Sachs Asset Management

Georges Wolff, Head of Fund Manager Selection, ING Private Capital Management

Panel Moderator: Elisa Trovato, Assistant Editor, PWM, FT Business

Recent market turmoil is forcing banks and insurance companies to focus on what they do best, and leave the rest to sub-advisers. Elisa Trovato explains how niche asset managers have come to save the day

Now in its fifth year, PWM’s European sub-advisory annual survey can count on a well established and diversified panel of decision-makers of major retail and private banks, insurance companies and fund houses. This year we have also extended the geographical coverage of the study.

Austrian firm wants its clients to get a well-established product right away, writes Elisa Trovato

The multi-boutique approach adds style and interest to the process of alpha generation