Practitioners play down crash worrries and claim risks are still manageable.

Pioneer pushes alternatives in Italy

Unicredito’s Pioneer Investments has continued building up its alternative investments division with the appointment of Paolo Barbieri as head of alternative sales in Italy.

Axa hedge fund makes use of volatility differentials

French funds house Axa Investment Managers has launched a hedge fund to exploit arbitrage opportunities between volatility levels derived from the debt and equity of the same company.

The news that HSBC, a major UK high street bank, plans to offer the funds of up to five external fund managers to 8m retail clients, brings the debate about depolarisation back into the spotlight.

Holding on to money, rather than making more of it, has taken over minds of the wealthy. Roxane McMeeken reports.

Bank searches for greater visibility by basing its meet-the-customers strategy in London.

JPMorgan Private Bank is shaking up its service for European clients. Central to the strategy is the creation of a new department devoted exclusively to the needs of international clients residing in the UK but not domiciled there. The bank estimates this segment of the market has a combined wealth of well over E100bn. Much of this is thought to be held in family companies and large single stock positions.

A large number of European fund distributors have gone against the widespread belief in open architecture during the past year, opting for the ‘do-it-yourself’ model rather than the ‘pay-someone-else’ approach. Some have even advised nervous clients to switch out of equity and bond funds altogether, directing them to in-house money market funds. Andrew Hutchings explains.

Dexia won’t be selling competitors’ products and refuses to choose between either manufacturing or distribution, writes Roxane McMeeken.

In stark contrast to the prevailing trend, Dexia, the Franco-Belgian financial services group, has no plans to operate the “open architecture” system, which has become high fashion among Europe’s banks and fund houses. Again, shooting down current perceived wisdoms, Marc Hoffman, chairman of Dexia’s executive board, believes he can ride two horses, by succeeding as both a top manufacturer and distributor of funds.

Yuri Bender outlines how Gartmore’s European targets have evolved to the fund of funds operations of banks and insurance companies.

Gartmore’s head of European distribution, Steen Steincke, can seldom be found in his headquarters, adjoining London’s Fenchurch Street Station. He is more likely to be visiting potential partners in Madrid, Milan and Frankfurt.

With a strong presence in its local US market, Bisys is banking on distribution solutions to crack Europe, writes Roxane McMeeken.

Any US back-office services provider attempting to break into Europe this late into the game will need to offer something a bit different, if it is to succeed.

How else will it compete with the likes of the Bank of New York and State Street? Through hefty investment in technology and acquisitions, these all-American players are now so ensconced in Europe as to be close to being considered one of the locals.

Asset allocation strategies must account for trends, not just past performance.

For many investors, reviewing their portfolio’s asset allocation is like going for an annual health check. They know it’s the right thing to do, yet it is time consuming and potentially disruptive; as long as there are no outward symptoms, it often gets put off.

A cleverly constructed bonds portfolio can deliver returns in all market conditions.

While an early resolution to the Iraq conflict has seen rising equity and bond markets, the investment outlook remains volatile due to uncertainty over the prospects for economic growth, inflation and even deflation.

Because hedge funds do not fit easily into traditional asset allocations, extra attention must be paid to creating a strategy that can make the best use of their valuable characteristics.

The popularity of structured products is increasing fast. This is because they provide investors with exposure to market performance, coupled with a safety net. They either provide protection on the capital originally invested, or a solid coupon. When interest rates and volatility are favourable enough to allow it, they might even provide both.

There are two ways to approach multi-manager funds: the fund of funds route or via managers of managers. Simon Hildrey writes on the upsides and downsides of both.

SEI claims that it pays to value investment style over skill in the fund manager selection process, writes Roxane McMeeken.

Research from SEI Investments has revealed that most of the performance attributed to an equity fund’s manager is really the result of the fund’s investment style, rather than any skill applied. The US multi-manager making a name for itself in Europe investigates the influence of style on performance as a key part of its manager selection process.

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.

Roxane McMeeken explains why Nordea prefers a practical rather than a theoretical approach.

“We don’t have risk control guys telling us what we can invest in and what we cannot,” says Nordea’s head of investments in Luxembourg, Kim Olsen. This modus operandi appears to be bringing in results in the case of the Nordea I North America Value fund. The fund, which has appeared in two of the model portfolios created by our panel of experts each month, has grown from roughly E100m in December 2001 to nearly E2bn today.

Accessible and transparent, hedge funds are becoming suitable for a wider range of investors.

Fund manager Alfred Jones developed the first hedge fund in 1949. His concept has grown into an industry worth around E400bn, with over 6000 funds active in 2003. Traditional mystique is giving way to increasing transparency, particularly with more institutions entering the marketplace. Once the preserve of the mega-rich, hedge funds are becoming more accessible to mid-range investors.

The European real estate market has slowed, but it is well positioned for a recovery.

First quarter data for European office markets was better than expected. In some cities rents rose and rates of take-up were excellent. But is too soon to start hanging out the flags.

Roxane McMeeken describes how 3i is aiming to sustain this year’s ‘better-than-expected’ results.

In this section of PWM we test the performance and volatility of two investment strategies using model portfolios. Each month we look at a different European and global basket of stocks.