Investment Management
Review - Volume 2 : Issue 1
What's in Volume 2 : Issue 1?
Key industry developments
Jag Alexeyev, Managing director of Strategic Insight Global, one of the world’s leading research houses, provide a cogent analysis of recent fund flows and key developments for the future in ‘Strategic Insight: fund industry review and outlook’.
A revolutionary EU directive
The markets in financial instruments directive carry far-reaching implications for the financial services industry throughout Europe. The most salient effects are analysed by Jean-Rene Giraud, CEO of EDHEC Advisory, the consultancy arm of the leading European business school, in his article ‘The day of the MiFID’.
Infrastructure – a new asset class
Investors worldwide are avidly searching for new ways of making money and the infrastructure sector is now becoming more available to institutional and retail investors as a potential high reward, low risk investment. Recent developments and the risks and rewards are analysed in ‘Infrastructure – a new long-term asset class’.
Themes in mutual funds
Lipper, the well-known research subsidiary of Standard and Poors, has a bird’s eye view of the mutual fund industry worldwide, with their extensive research teams and access to fund statistics. ‘Lipper’s world view’ identifies some of the most interesting themes.
Convergence of private and investment banking
Private banking caters to the wealthy, while the investment banks focus on corporate clients. In an innovative new business model Citi Group is combining both within the same operation. The whys and wherefores are discussed in ‘A new type of private bank’.
A shake-up in Japanese financial services
The Japanese financial system has been castigated for its lack of competitiveness and for the excessive influence of the State. The privatisation of Japan Post, the country’s State owned postal colossus promises to radically improve the situation. What’s in store for Japan is outlined in ‘The potential upheaval in Japanese finance’.
Who will dominate Asian funds?
The Asian economy is a dynamo and the hedge funds industry investing there is a huge prize to win. The challenge to London and New York’s hitherto commanding position by the local Asian centres is reviewed in ‘Western and local centres battle for Asian funds’.
M&A growth in fund management
Many fund management groups are now finding it difficult to stand on their own feet. There is evidence of an accelerating pace in M&A and the 2 articles ‘More mergers among US managers’ and ‘Fund managers for sale’ highlight a few deals, which have already occurred.
Regulators joining forces
The financial service industry is undergoing rapid globalisation and national regulators cannot keep up on their own, the solution, obviously, is for them to globalise and how they do it is outlined in ‘Globalisation reaches regulators’.
Performance fees not catching on
It is widely believed that performance based fee structures lead to a better alignment of fund managers’ interests with those of their clients. The current situation in the industry is reviewed in ‘Performance fees still only a trickle’ in the light of Janus having introduced performance fees this year.
Japanese pensions taking the US road
Defined benefit schemes are declining in many countries with defined contribution schemes gaining ground. The Japanese industry is following the general trends and in ‘Japan follows the US in 401 (k) type plans’ the potential problems and opportunities specific to Japan are highlighted.
Female dominance in Japan
In the light of Japan’s traditional culture many westerners, in particular, would be surprised to hear of the dominant role played by women in Japan in personal finance as pointed out in ‘Women take charge in Japan’.
European cross-border business advancing
The concept of the single market is slowly moving ahead in Europe. There are however, still many barriers and the progress is detailed in ‘Progress in cross-border business’.
Marketing success by changing labels
One would not expect the investment public to pour more money into a fund merely because of a name change, but this is actually what happens and evidence is provided in ‘Name change – a magnet for money’.
Is sell-side research on the way out?
Some commentators are pronouncing doom for the future of sell-side research, whether these are justified is analysed in ‘Sell-side doomed?’.
The latest in the unbundling saga
Separating research and execution has been a subject beloved of regulators in the last few years. The industry is already taking some steps in anticipation and external bodies are still debating it. Issues raised by 2 important bodies are referred to in ‘Re-shaping of Research’ and ‘Soft dollars – disclosure will do the trick?’.
Growth in commission-sharing
The new emphasis on ensuring efficient execution and optimal commission allocation is leading more fund managers to set up commission sharing arrangements, as detailed in ‘Commission sharing to take off’.
No followers for Fidelity?
Late last year Fidelity adopted unbundling on it sown and there was much speculation as to whether the rest of the industry might follow, why this is not happening is explained in ‘Unbundling – Fidelity on its own’.
Removing an unfair advantage
The huge trading volume generated by Hedge Funds makes them popular with brokers and understandably they get favoured first with brokers’ ideas. An electronic network has been set up to remedy this, as outlined in ‘Stopping brokers from favouring hedge funds’.
Court battle over short-selling
Short sellers hope the share price will go down and it often does, for legitimate reasons, but there is also the potential for market abuse through short-term manipulation and other forbidden activities. A few instances of this have come to light and the latest saga involves a huge legal battle. The journalist concerned have also been put under pressure.Details are given in the two articles ‘Short-selling goes to court’ and ‘Short-selling saga – journalists under fire’.
Exchanges in upheaval
The convergence story in global exchange trading has gathered force in recent months and 6 articles provide a review of important recent developments in this field under the heading ‘Rapid evolution of exchange trading’.
Shareholder activists do good
In many parts of the world corporate governance standards are still abysmal and shareholder activists are exercising pressure of a benign sort. 3 articles ‘Japanese activists on the prowl’, ‘Activists target South Korea’ and ‘Governance reform in emerging markets’ point to the latest situation in different parts of the world.
Potential activist damage
In the UK and the USA activists are now overreaching themselves and do not always act in the best interests of the company and all its shareholders. Their pressurising McDonalds, the restaurant chain is a case in point as highlighted in ‘Another case of short-sighted activism?’.
A serious threat to corporate bonds
Leverage buy-outs and other shareholder related activities, meant to benefit shareholders, are now proving to be a bane for the companies’ bondholders. The dangers are highlighted in ‘More protection for corporate bonds’.
Fund manager knocking his own performance
Fund managers and their employers are prone to exaggerating or blowing up their investment performance. It is not often that one comes across a fund manager doing the opposite. This is exactly what a superstar fund manager has done as outlined in ‘Rare case of scrupulous honesty’.
Enticing clients by paying them
In fund management in particular and in industries in general clients expect to pay for receiving services or products. A company actually paying them instead to become a client is unheard of. How Barclays Global Investors have found it advantageous to do precisely this is explained in ‘Getting paid for being a client’.
Hedge funds – innovation flourishing
There are signs that the hedge fund industry has seen its best days but some of the more venturesome are still coming up with interesting areas for new ways of alternative investments. Examples of the latter are provided in a series of articles, while the former situation is indicated by ‘A new twist to a period of convergence’.
Private equity – a catastrophe in the making?
Private equity Firms are now making an increasing impact on the quoted sector and on the economy at large. There are now some serious concerns about where it might all end up; which are expressed in a series of articles under the heading ‘Private equity – onwards and upwards’.
Snippets
These are recent news items of significance.
Statistical perspectives
As this section is drawn from several different sources, which might use different definitions and timescales, the figures should be taken to represent just orders of magnitude, not the precise picture.