Attitudes to wealth management are changing. HNWs want greater control over their assets and banks must be able to offer the

independent advice solutions that clients seek, writes Sebastian Dovey

Distributors are set to abandon the open architecture model to in a bid to preserve their revenue, reports Elisa Trovato. But is this set to be a short-term trend as a respnse to volatile markets or a permanent fixture?

Phil Barker explains how he is planning to utilise the Standard Life brand to boost the company’s investment arm during its continued expansion into the European market, writes Yuri Bender

Rémy Best, managing partner at Pictet & Cie and head of the funds franchise, talks to Yuri Bender about the bank's response to the current crisis

Fund houses and wealth managers are having to react rapidly to a changing environment and are trying to anticipate future demand for their products. But they will have to provide the simple and transparent investment vehicles that investors seek, writes Elisa Trovato

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.

Exchange traded funds have proved very attractive during the recent economic crisis. But as their use has become widespread and clients have become more aware of their benefits, the growth of ETFs looks set to continue way beyond the downturn, writes Elisa Trovato

Alex Claringbull explains how the cheapest valuations since the 1930s are making corporate bonds extremely attractive to professional investors, and why ETFs provide an effective way to access the asset class

The stimulus plans launched by governments worldwide may provide new investment possibilities for canny investors, write EasyETF

Elisa Trovato takes a look at recent developments in index construction and examines the benefits and drawbacks of ETF index replication methods

Most analysts recommend being underweight Europe, believing that the US will lead the way out of recession. But there is still value in quality companies with strong balance sheets, writes Ceri Jones

Three multi-strategy funds of funds and one equity market-neutral fund of funds which came through 2008 relatively unscathed offer some lessons for wealth-protection in stormy times, writes Martin Steward

David Bulteel tells Yuri Bender about his strategies for sourcing and allocating capital in a climate where wealth preservation is paramount

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

“Our portfolio for February changed little from the previous month.

We sold some equity exposure in favour of more corporate bond exposure (AXA and Schroder corporate bond funds). We think that Central Bank intervention will slowly help credit markets - money markets liquidity has already been improving in the last few months. The overall portfolio remains conservative, with exposure to gold and high dividend stocks.”

“Since the beginning of 2009 international stock markets have been marked by a high degree of volatility. Due to negative economic forecasts, mainly triggered by the growing necessity for government intervention in the banking sector, and disappointing quarterly results, equities continued their downward trend. Recent data confirms the scenario of a sustainable global recession. It remains uncertain as to how far the bailout plans introduced by several countries will be able to provide the desired relief. In our portfolio, equities, bonds and real estates were reduced in favour of cash and commodities.”

“Last month’s reduction of Government debt was timely as the asset class witnessed a slight correction as fear of increased supply resulted in negative returns. We continue to favour credit of government debt but remain concerned about both the economic outlook and deleveraging process. While the current credit spread levels all but price in expected defaults associated with a recession, the amount of leverage left in the system is still unknown. Given this outlook we remain positioned within the Bluebay fund. We continue to hold some pure government debt via the Thames River Global Bond fund.”

“We still hold an equity exposure of about 25 per cent because the muddy outlook for the worldwide economic activity and the downtrend of the company earnings are still significant. We believe earnings forecasts for 2009 are still too high. In the last months a problem was the exposure in the bonds border area. We are sceptic about emerging markets and high yield bonds. We have seen a little comeback in these assets and see further potential. We are cautious about government bonds. The economic stimulus packages from the worldwide governments are very expensive and are toxic for a stable budget in the medium-term.”

“In a market scenario of strong risk aversion, for the current month we decided not to change our strategy, which during the past months drove us to reduce the weight of actively managed funds in favour of low tracking error funds.

During the last month we kept both sector and geographic allocation unchanged and in line with the benchmark of the portfolio. We also made no changes in the allocation between equity funds and bond funds.”

“Following a slight respite in December, the equity markets continued to adjust significantly downward in January. Data for the fourth quarter of 2008 reveal an international economy in recession.

Volatility remained high, and during the course of the month any trading days on which prices rose were quickly cancelled out by profit-taking. As a result, returns on our portfolio suffered from the correction on the US and Asian markets while it benefited from our cautious stance on Europe. In the meantime, we were surprisingly penalised by the weakness of bond markets which faced strong issuance levels during the first two weeks of January.”

“We decided to redeem our position in the GAM Star Japan Equity. This change is not due to any specific issue with the fund. We initiated that trade in order to reduce our exposure to the Japanese market. For the time being we are comfortable with the Japan equity exposure that we have in our portfolio via our investment in the global equity funds. The proceeds of the sale have been invested in JPMorgan – Highbridge Statistical Market Neutral. This should offer more de-correlation in this uncertain market environment.”

“Despite a large sell off in property markets, the IdB Real Estate Fund managed to produce a positive return in January. The Pimco Total Return Fund also delivered positive returns. Our emerging markets holdings also performed well. Losses were experienced in the European and US funds. The outlook is grim, the world is extremely bearish and this can result in a rally. We are looking to add exposure to credit and high yield and are considering a reinvestment into soft commodities having sold out almost a year ago.”

“January has been a tough month for most markets, even if Euro-denominated portfolios have been helped by the appreciation of the US dollar. Most selected funds have fared well on the month, with two major exceptions: the fixed-income sovereign ETF and the Absolute Return fund which have been net detractors to the performance. One new fund has been added to the portfolio, albeit in a very minor proportion so far: a high yield portfolio managed in a very conservative way by a specialised boutique. While it would be difficult to shrug off the highly attractive yields on this asset class, anticipated downgradings make us careful.”

“The January rally in equity markets proved to be short-lived, as it faded after three trading days on intensified worries about the global economic downturn. All major equity markets are year to date down again. Global government bond yields rose significantly because of rising funding concerns and risk aversion for long-term paper. Our allocation to high yield bonds paid off because spreads came in from extremely high levels. In terms of portfolio changes, we trimmed the bond allocation by 5 per cent for an EUR money market fund. In equities we increased the S&P; 500 buywrite fund at the expense of US equities in order to benefit from the very high volatility.”

“January proved to be another volatile month for equity investors but some relief was felt in peripheral areas like high yield bonds and funds of hedge funds. The former currently enjoys better liquidity and lower exposure to financial bonds than their investment grade siblings. On the fund of hedge funds front, discount narrowing helped the track record Dexion Absolute IT after a pretty torrid 2008. Schroder UK Alpha Plus has struggled over the last few months, mainly due to the fund’s exposure to banking and mining, but we have high conviction with the manager and his ability to improve returns.”

“The strength of the Euro unwound in February making overseas investment attractive once again. After 2008’s barrage of macro and micro events, in January it was a relief to see our returns dominated by our fund choices. It was a very good month for fund selection results in both absolute and relative return terms for our Euro-denominated strategy. We are optimistic that our portfolio of managers will be able to add relative value this year and the early signs are good that markets are once again differentiating between stocks and sectors. However, our overall stance remains defensive.”