Strict income tax policies in Europe are impeding wealth accumulation

Spain led the rest of Europe in wealth creation during 2003, with the number of high net worth individuals (HNWIs) growing 18 per cent, according to data from the latest Capgemini/Merril Lynch World Wealth report. The Czech Republic, with 12 per cent, the UK with 8 per cent and Russia, with 5.4 per cent, were also above the European average.

German fund provider invests in US-designed business integration system

Fortis first to exploit EU fund regulations

A massive sell-off in shares of Russia’s embattled oil company, Yukos, has brought instability to the market, but bankruptcy is still not an option

The volume of assets managed by the world’s top private banks was up around 15 per cent in 2003, a significant turnaround from 8 per cent decreases in 2002 and 2001, when the performance of the industry had become rickety.

Bella Caridade-Ferreira of FERI FMI explains why everybody wants to do business in Germany

Fines paid, investors compensated, staff changed. Now for the hard work of rewinning distributors’ confidence. Yuri Bender talks to the new broom at Janus

A re-styled First State has emerged, with a decided emphasis on using European platforms to distribute specialist products, writes Yuri Bender

Bigger funds used to charge less for management, but latest research shows some of Europe’s largest, best-selling funds levy the highest total expense ratios. Paula Garrido investigates

With the global economy perched on a tightrope, major long-term portfolio risks must be highlighted

Circus Game
I’m up on a tight-wire
One side’s ice and one is fire
It’s a circus game with you and me
– “Tight Rope” by Leon Russell

Products with the potential to deliver high returns while retaining a focus on capital preservation can cut the mustard during uncertain market conditions

Firm evidence of an economic recovery traditionally prompts investors to switch out of fixed income assets on expectations of generating higher returns from other products. However, while global economic growth remains strong, we believe that during this business cycle the switch will not be as pronounced.

The Danish choice for achieving excess gain in a unique and rock-solid asset class

Mortgage bond funds, which can be marketed on a cross-border basis through an open-ended Sicav structure, are fast developing as a vehicle of choice to achieve premium yields.

For product manufacturers in the Scandinavian market, these yields may be in excess of comparable bond offerings from governments such as Denmark’s. Successful fund managers may use a controlled and selective process of investing in highly secure and higher yielding Danish mortgage bonds, for example.

Private clients are increasingly demanding an investment approach which allows their manager to separate the ability to take fixed income risk into various dimensions

Regulators and securities depositaries are having to come up with a more efficient infrastructure as product distribution arrangements become more complex to accommodate open architecture, writes Paula Garrido

Providers and regulators are beginning to respond to the challenge of developing a more efficient infrastructure and a regulatory framework, which will shape the future of securities clearing and settlement in Europe in an age of increasingly complex product distribution arrangements.

How double-negative figures were turned around to re-establish this hard-to-control product experience – Simon Hildrey reports

“The overall balance between stocks, hedge and fixed income funds remains unchanged this month, still reasonably biased towards equity. This is not what we had expected a month ago but May turned out to bring the stock markets cheaper than they were before: it appeared to us a large part of the decline had gone too far. We are slightly reducing our holdings in Japan, although this may be one of the most top-shaped economies around, but the volatility has become huge on this market and we do not want to capture this much.”

“Our portfolio’s Japanese over-weight gave back some of the gains of the year so far, but elsewhere in peer group terms a number of funds performed well. Both Thames River Global Bond and Mellon Global Bond outperformed their sector. We intend to stick to our asset allocation though this volatile period, as the fundamentals continue to support our stance, and our managers are doing a good job on the defensive tack.”

“There has been a increase in risk aversion, with smaller companies, emerging markets and higher yield corporate bonds all under pressure. Bonds do not yet look attractive. Subject to the risk on oil prices, equity market valuations appear reasonable as earnings growth continues to surprise on the upside.”

“Recent weeks were dominated by high volatility on equity, bond and currency markets. As a result we replaced the DWS Vermoegens-bildungsfonds I with the more convincing M&G; Global Leaders fund, which we expect to further outperform the MSCI World Index as well as the DWS fund. We reduced the Fidelity European Growth fund in favour of the American Express European Small & Mid Cap fund.”

“It is not surprising to see markets behaving in a more tactical way, as investors adapt to the monetary tightening anticipated in the US. It may take a few months before visibility comes back; sector rotation is likely to continue to the benefit of larger caps and companies which have visible and stable earnings growth. We maintain a low exposure to small caps and our stance favouring quality growth. We remain underweight in fixed income, with an overweight on high yield bonds.”

“No major manager changes took place in the model portfolio and the structural asset allocation – 30 per cent IdB MM Zeus, 42 per cent equity and 28 per cent fixed income – has remained intact. New managers have been added to the portfolio of the multi-strategy fund of funds IdB MM Zeus. Within this portfolio the allocation to convertible arbitrage will be reduced as this market is currently characterised by too much capacity, slow new issuance, low volatility and increased event risks.”

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.

MOMENTUM AND VALUE INVESTING IN NON-CYCLICALS
In the November 2003 issue, it was concluded that the medical products sector is the leader on a global and long-term basis. Three different techniques were used in order to illustrate the advantages and disadvantages of each approach.

VALUE AND YIELD APPROACH IN GROWTH STOCKS
The basic value and yield approach was presented in the May 2003 and November 2003 issues.