Roxane McMeeken reports on the worry Eliot Spitzer’s campaign is invoking.

Marighetti exits DB

Luca Marighetti, the man who fronted Deutsche Bank’s pioneering “guided architecture” policy, establishing distribution deals with eight preferred external fund management groups, is about to leave the company.

Roxane McMeeken reports on JP Morgan’s targeting of family businesses through a collaborative awards scheme.

Swiss banking giant on track to expand wealth operations in Europe.

Credit Suisse is enhancing its range of Asia Pacific products for Europe.

The pace of private banking mergers and acquisitions has finally shifted up a gear as another E2bn has been pumped into the industry in the second half of October. The spending spree came this time from the British private banking majors – HSBC Republic, Royal Bank of Scotland and Barclays Bank (BPC). Each deal has significant strategic characteristics and it is worth considering how well-placed each business is in terms of absorbing the new partners.

It might have been a grim year for investors overall, but as Sector Analysis research shows, the European funds industry is alive and kicking, especially in the UK, Spain and Italy.

Jörg Brock, Commerzbank’s head of product development, tells Roxane McMeeken about the arduous task of selling open architecture to the bank.
Selling products manufactured by your rivals is corporate suicide. If you have the capacity to create a wide range of investment funds in-house, why on earth would you sell the competition’s products simultaneously?”
This was the argument Jörg Brock came up against when he began advocating the introduction of so-called “open architecture” at Commerzbank in 2001. As head of product development for private clients at the German bank, he believes offering customers access to external funds best serves the interests of the entire firm – both the product sales division and the product manufacturing centre.

As an offshoot of Santander Central Hispano, Allfunds Bank controls half of the Spanish funds market. Yuri Bender explains how open architecture manager Juan Alcaraz plans to build on his success.
Talk to European and American asset managers looking for a Spanish distributor and there is one man’s name on their lips. “Juan Alcaraz is a good guy,” says one suave Italian representative of a US house. “Juan Alcaraz is a personal friend of mine, but he won’t buy my products, whatever I tell him,” ventures another Italian, resignedly. “We have been working very closely with Juan Alcaraz,” the London-based chief of a European house nods knowingly. So who is this man who appears to run the Spanish funds market?

A ‘risk-free’ investment should be the starting point before a solution can be individually tailored.

In order to efficiently manage risk in a fixed income market, one must first understand how to measure it. The introduction of an expanding range of more complex fixed income instruments, each with its own individual risk characteristics, is challenging the traditional asset allocation and risk management strategies employed by fund managers. Developing successful strategies to invest in more “specialist” asset classes such as emerging markets, convertibles and high yield, as well as more traditional fixed income securities, requires both an in-depth knowledge of these new instruments, and, crucially, the expertise to understand and control the risks therein.

As they tend to use more complicated and more aggressive strategies than traditional funds, and are highly dependent on the fund manager’s judgement, hedge funds attract a higher level of volatility. For successful investment, risk limits must be carefully set and correctly monitored.
Hedge funds strategies deserve consideration as many of them offer the opportunity to generate returns independent of the movements of the broad capital markets.
Furthermore, many of these strategies have demonstrated the ability to generate attractive risk-adjusted returns over time.
However, as with any type of investment strategy, there are specific risks associated with hedge funds strategies that must be clearly understood by any potential investor.

Active investor trading has brought about changes in the foreign exchange options market, leading to the revival of older – but still useful – concepts.
Over the past couple of years, drastic changes have taken place in how private investors view and influence the foreign exchange options market. It has gradually become a far better environment in which to control risk.
Specifically in FX, the options market used to be a buyer’s market. Big market-making houses were generally short vega (at-the-money options) and short volgamma (out-of-the-money options). This has changed and there is a direct and a more indirect reason for this revision.

Positive gains build up over the long term, just like the car driver who is going that little bit faster than the others on a lengthy journey.

Western European investors should look beyond the political risks of the Yukos affair, as Russia offers excellent opportunities, particularly in real estate.
Helped by both political stability and economic growth, Russia has been something of an investors’ heaven over the last year. But it remains important for investors to apply correct risk management filters.
On the political side, President Vladimir Putin introduced much-needed law and order, centralising power in the hands of federal authorities, reforming the legal system and bureaucracy.
Structural reforms are underway, with more emphasis on boosting competition and creating a better climate for foreign investors. The state is also introducing more transparent legislation and taxation systems.
Parliamentary and presidential elections in the coming winter and spring are not expected to bring many changes to Mr Putin’s vision, though foreign investors are likely to wait until a new government has been formed.

Now that the integration of Cogent is officially complete, BNP Paribas Securities Services must decide how best to respond to the rise of the wealth management industry. Roxane McMeeken reports.
The European arm of BNP Paribas Securities Services, under head of business development Tony Solway, is beginning to cast a beady eye over the continent’s fast developing private banking market.
BNPPSS, as it is known, holds around E1800bn in assets under custody and administers over 3400 funds. Like most securities services organisations, it has had the highest profile while in the midst of mergers and acquisitions.

Simon Hildrey finds Asia Pacific to have recovered from its 1997-8 crises and to be less dependent on the US economy. Consequently the prospects for further growth look better than elsewhere in the world.

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.

Small fund gets noticed by big players thanks to a limited number
of stocks. Roxane McMeeken reports.

Simon Foxley writes on why providers should aim real estate investment vehicles at the wealthy. Despite the dramatic growth in the number and size of European real estate investment vehicles over the last few years, one group of investors seems to have been regularly overlooked – high net worth investors.

In this section of PWM we test the performance and volatility of two investment strategies using model portfolios. Each month we look at two distinct approaches – one global and one European.