Traditional business models are going to have to evolve to become more sustainable, reports Elisa Trovato

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The valuations of private banking units have dropped substantially, writes Sebastian Dovey, but what does the future hold for the industry?

Fideuram Investimenti CEO Tommaso Corcos believes wealthy clients are looking around for products that meet their needs, and is prepared to go down the sub-advisory route to match them, writes Elisa Trovato

Under the stewardship of CEO Rupert Robinson, Schroders Private Bank has attracted many new clients during the financial crisis, and should now be seen as a global, rather than UK-focused player, writes Yuri Bender

Private banks are re-evaluating their entire due dilligence and fund selection processes, writes Elisa Trovato, leading to a rise in the use of Ucits III vehicles and managed accounts

Clients concerned with liquidity and transparency are shying away from structured products based on hedge funds, reports Ceri Jones, while a desire to particpate in rising markets has led to a resurgence in equity linked structures

Following the regulatory review of the structured product industry in the UK, the collective responsibility of providers and advisers must now be focusing on a client-centric and portfolio-driven approach to using structured investments, writes Chris Taylor

Under pressure from the OECD, governments across the globe have gone a long way towards making the international tax system more transparent, writes Achim Obermann, a partner working in tax consultancy at PricewaterhouseCoopers

ETFs were one of the few asset classes to enjoy inflows during the financial crisis, and the wealth management industry is increasingly using them to reduce costs and offer clients access to new markets. Ceri Jones reports

Private clients are coming back to hedge funds but are investing in different types of vehicles than those they favoured before the crisis, and are now looking for transparency, liquidity and control. Yuri Bender reports

As the ETF industry continues to expand, and is now attracting private clients, these vehicles are widening access to the types of investments that were previously only available to institutions. Elisa Trovato reports

“We turn our attention to European equities which in the main have been unloved and under-owned by international allocators recently. We are attracted to the lower valuations than that of the US and would expect to see European equities outperform at this stage of the cycle in the economic recovery. We have increased our commitment to European Equities by introducing the newly launched New Star Henderson European Special Situations Fund. We have faith in Richard Pease’s unconstrained fundamentally driven bottom-up stock selection approach. This acquisition was funded by reducing our exposure to government bonds.”

“This month we are reducing the equity portion of the portfolio, selling part of some equity funds (Vitruvius European Equity and M&G; Global Leaders) and moving toward fixed income (Julius Baer Absolute Return). The funds choice remains stable, biased toward absolute returns in fixed income, credit exposure and contained duration. The equity portion of the portfolio overweighs dividends and global value funds. The commodity theme is still played through the BlackRock Gold fund. Short duration and gold exposure will help the portfolio in the current very challenging market conditions, with high risks related to monetary and fiscal policies around the globe.”

“In October stock markets suffered from increasing volatility. Research analysts identified weak economic figures and disappointing quarterly reports as the main reason. A substantial number of market participants are also worried by the rising number of bankruptcies in the banking sector. The economic recovery differs from region to region. Asia ex Japan, and most parts of the emerging markets, particularly South America, maintained an upward momentum. Central and Eastern Europe faced greater difficulties. Our portfolio, allocated according to C-Quadrat Best Fonds Strategy, increased its commodity exposure.”

“We did not change our positions this month. We still see the bulk of liquidity as a massive driver for all risky assets. We overweight the equity position and within it, the Euroland position. We hold on to the currency stability of the US-equity fund, because the latest currency developments did not indicate a new trend for the US dollar. In contrast, the upward trend in oil and gold confirms the downside-trend. On the current level of 3.3 per cent for the 10-year German government bonds, we still hold the duration below a neutral level. We would think about an increase of our government positions on a 3.5 per cent level.”

“This month we made no changes in the sector and geographic allocation of our portfolio. The portfolio is well diversified, so we have n0t planned any change to the portfolio in the short term. This month the portfolio registered a good performance over the benchmark, receiving the best contributions to the performance from M&G; Recovery, Vontobel US Value and Nordea Europe Value. On the contrary the main detractors have been Templeton Mutual European and MFS European Equity. The bond portion of our portfolio remains invested in pure Government bond funds, as we maintain our conservative approach.”

“Equity markets maintained their upward trend over the last few weeks but at a slower pace, which in a sense is reassuring as price to earnings ratios have already re-rated significantly. This strong rise in equities is mainly the result of the improvement in the economic environment since March. Our credit and convertibles bets still provided positive returns. Equities should continue to benefit from the recovery in earnings and in the macro environment. We do not see changes in monetary policies as an immediate major risk for equity markets as we are still at very accommodative levels. Thus, we increase the equity exposure by 2 per cent.”

“The recent period has been more volatile for the market as doubts appeared over the sustainability of the market rally. In this environment, we have decided to take profit on our Convertible bonds position that has been successful all year and we have reduced our position in the very defensive Sinopia AF 300. The proceeds will be reinvested in a fund investing in emerging market local currency debt, where we see more potential in the near term versus developed markets. On the equity side, we have reduced our direct allocation to US and Europe to increase our bets on the emerging markets.”

“This is a market in which it is easier to persuade oneself to sell rather than buy. However easy it would be to simply take profits, there is ample scope for risky assets to continue to rise as long as loose fiscal and monetary policies continue. Yields on equities in many markets are at historical highs relative to cash, and as investors move from bond funds, these markets could rerate. We have made no changes to our portfolios over the past month, but continue to monitor underlying managers as many continue to rotate portfolios towards more defensive names.”

“On the asset allocation side, the main building blocks are kept unchanged. Within the equity part of the portfolio, it is pretty much Europe and emerging markets by now. The investment rationale is twofold. First, we are trying to limit any dollar exposure as much as possible. Second, by adding Lazard’s Objectif Alpha Euro, we are adding high octane stock-picking skills to the portfolio: this new investment vehicle is nimble enough to seize opportunities on any part of the EuroZone stock markets with, possibly, a significant turnover, which is really different from the other funds in the portfolio.”

“We believe that the consolidation of the risky asset markets since mid October will be rather short-lived. The debate of market participants focuses on a premature end of quantitative easing and on weakening macro indicators; in other words both too much and too little economic growth. Neither of them have a very high probability of happening. Our analysis suggests that investors have not fully captured the impressive rally since March and that we are far from seeing irrational exuberance. We increase the allocation to Asian equities and to commodities by 2 per cent each at the expense of European government bonds.”

“October marked a month of consolidation across most markets and asset classes generally, as investors began worrying about the next phase in recovery. No changes were made to the underlying portfolio, having freshened-up the list earlier in the summer. The only fund that appears to be struggling relative to its peer group is the Fidelity European Fund and we shall be monitoring this accordingly. Elsewhere our patience with the listed hedge fund of funds, namely Dexion, seems to be paying off, mostly down to discount closing and a more stable sentiment towards and within the hedge fund arena.”

“Equity rallies were cut short during a volatile month and in most cases stocks more than gave up their gains. In these conditions sterling-denominated positions out-performed, otherwise it was a case of limiting the damage. We were pleased with the relative performance of Veritas Asian and Nevsky Global Emerging Markets in particular. Looking further out, risks to growth remain and the question over when and how stimulus is withdrawn will dominate asset class relative returns over the next market phase. For now we are happy to retain a 58:42 split in favour of overweighting equities but the trigger finger is twitchy.”

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

The application of appropriate technological solutions in the period following a merger or acquisition can go a long way towards the overall success of the venture, reports Rekha Menon

Bank of London and The Middle East (BLME) – a newly established, UK-regulated Islamic bank, with its own Sharia Supervisory Board – needed an overhaul of its technology to fulfil its expansion plans. Based since 2007 in London, the largest Islamic financial centre outside the Muslim world, BLME’s focus on high net worth customers demanded a modern yet cost-effective technology solution, enabling it to offer differentiated services to this discerning customer base. Nigel Dennison, BLME’s head of asset management and markets, and Adrian Gayler, head of private banking, explain to PWM the details of their bank’s business model and how they hope to enhance this through the implementation of the Oracle Flexcube private banking solution