Investment Management
Review - Issue 7
What's in Issue 7?
Financial centres
Europe is catching up with the US, London with New York. Will the Americans be overtaken?
Private banking
As the rich get richer, the pickings get greater. The ultra-wealthy are less profitable than the impoverished rich.
Mergers & acquisitions
National authorities are obstructing a pan-European industry. Is now a ripe time to sell asset management companies?
Growth
Organic growth and quant techniques are the fastest routes for asset accumulation
Insurance
Life companies are sharpening up their fund management act.
Costs
Excessive pay is a potentially dangerous time-bomb for asset managers
A retail revolution
Supermarkets are grabbing customers from asset managers
Asia-pacific
Banks might be retarding Asian growth
A budding new Nasdaq
London’s Aim market is achieving global clout
Exchanges versus investment banks
Investment banking empires are invading exchanges’ territory
Problems for NYSE and Nasdaq?
While the New York Stock Exchange and Nasdaq are fighting for global supremacy, are they neglecting competitive threats in their own back yards?
Settlement
The ECB trespasses on the private sector in settlement services
Corporate governance
Poor ratings dim the lustre of emerging equities
Research
Unbundling goes global, with France and Japan embracing it
Ratings innovations
Hedge funds come under the scrutiny of the rating agencies. Are covenants strong enough to withstand leverage? Moody’s are casting judgement.
Indices
Fundamental indexation is attracting a growing following, but leading academics are engaged in a furious debate.
Derivatives
Phenomenal growth in credit derivatives continues
Exchange-traded funds
The ETF market continues to grow fast, but with increasing complexity comes increasing criticism.
Major changes afoot
Asset managers face the prospect of declining business as defined benefits are phased out and liability-driven approaches adopted. A pension protection fund takes steps for its own protection. Hedge fund techniques are being copied by retirement mutual funds.
Communication failure
Fund managers are talking a different language than pension funds in the latter’s areas of key concern
Credit crunch
Hedge funds are renowned for profiting from difficult market conditions and some are already getting into place for an expected global credit crunch
Hedge funds
Asia is a strong magnet, but considerable difficulties still abound.
Man exchange takeover
Why is Man, the famous hedge fund group, investing in an ailing exchange?
Hedge fund data
Databases play a crucial role for selectors in selecting from the thousands of available hedge funds, but there lies a major flaw in their compilation
Mixed developments
Goldman’s throne is tottering. A hedge fund tycoon is now negative. Inflows are strong, but failures rising sharply.
Hedge fund managers
Superstars face a problem.
Private equity
Records are broken, but does this signal a peak? Mutual funds are getting into the private equity act. Private equity is aiming to benefit from bankruptcies.
Commodities
It is not surprising when Barclays produce innovative products, but it is another matter when the London Stock Exchange does it as well
Infrastructure
Macquerie remains at the top, but faces growing problems in the short term.
Environment
Gone are the days when being environmentally friendly was just a social duty. It is now one of the fastest-growing sectors for investors embracing a wide variety of technologies and attracting the most sophisticated of the investment institutions, including the leading investment banks.
The zero-sum game is a myth
‘Alpha is a zero-sum game’ is one of the most famous and enduring maxims in the investment world. The arguments for this hypothesis do not hold up against any realistic world view, and the zero-sum game turns out to be a myth.
Investment theory
Fortune magazine strikes a serious blow at the efficient-market hypothesis.
Snippets
Commission-sharing made easier … Research more creative.
Pox-marked or putting green: the distribution landscape for structured products
Scott Levy, a leading authority on structured products, outlines why those involved in the distribution landscape are struggling to cope with the intellectual challenge and complexity of these products, and suggests how the industry should proceed in order to solve the problems.
Making Valuation Useful
Standard valuation measures such as the price/earnings ratio rely on implicit assumptions about growth to perpetuity and are seriously flawed, though used by the entire fund management industry. Daniel J. Obrycki and Rafael Resendes introduce the Economic Margin Model that they developed, comprising a more correct approach and explain how it can be used for picking stocks. This is a powerful message that needs to be taken note of by all equity departments.
European Best Execution Focus: DMA and Algorithms
Jean-René Giraud, CEO of Edhec-Risk Advisory, the consultancy arm of the Edhec Risk and Asset Management Research Centre, presents the main results of a survey of European buy-side institutions carried out by his organisation on the subject of best execution. He concludes with his thoughts on the key trends in buy-side trading and the growing competition with sell-side firms in different arenas.