We have launched FTfm Alchemy a new discussion forum focusing on issues affecting the fund management industry.
Find out what experts are talking about and add your voice to the debate at http://discussions.ft.com/alchemy
Wealth management clients might well ask what they are paying for, and whether they are getting value for money.
Although traditionally wealth managers have prided themselves on inhouse research, they are starting to concede they may not be quite up to the job. Recent research found more than 39 per cent of UK wealth managers felt their equity research coverage was inadequate, whether sourced entirely inhouse or using a mixture of inhouse and external sources.
Although they admitted to qualms about the independence of research from the sellside, there seemed to be a general reluctance to shell out money for more independent material.
And as well as worrying about how independent the research is, the wealth managers who responded to Scorpio Partnership’s research for S&P were concerned it might get a bit heavy on facts, so likely to cloud the issue. Apparently what they look for is “the ability to tell an investment story as opposed to getting bogged down in the facts”.
Surely most of their clients, whose money they are managing, are quite keen for investment decisions to be based on those boring facts?
Do fund managers do what they say? Well, it seems not. At least when it comes to the frequency they change portfolio stocks.
Some equity fund managers have higher portfolio turnover rates than they claim, according to Investment Horizons, a report by Mercer, the consultants, and New-York based Investor Responsibility Research Center Institute.
Spain raises protectionist fears – FT
Hedge funds and private equity groups have raised concerns about the risk of creeping protectionism in proposals made by Spanish diplomats to re-write European Union legislation to regulate their industries, report Nikki Tait and Martin Arnold.
The FT journalists found that the compromise proposal is still not ticking all the right boxes. Here’s an excerpt..
Angelien Kemna will effectively be responsible for the pensions savings of a quarter of all Dutch employees. FTfm’s Face to Face interview looks at the task ahead of APG’s new chief investment officer.
Angelien Kemna has been hailed by the Dutch national press as the country’s most powerful woman in finance. Three months ago, Ms Kemna started as chief investment officer of investment company APG, which looks after €205bn of assets, primarily on behalf of national civil pension fund ABP.
It has often been observed that investors can make more money by buying shares in fund management companies than by buying their funds.
On this basis, Affiliated Managers Group, a US quoted company with $231bn under management, could be a particularly good investment. It holds stakes in a range of asset management boutiques, taking a share of revenues in return. Today, it revealed a deal with Artemis Investment Management, the UK-based fund manager that has passed through the hands of ABN Amro and Fortis Investments (now a subsidiary of BNP Paribas).
The Bogleheads forum is buzzing with news that Vanguard has set up an Alternative Strategies Fund in Dublin and filed for “exemptive relief” to allow its US Managed Payouts Funds to invest in the newfangled creature.
Vanguard is cherished by its investors partly for sticking to simple investing formulas that keep costs as low as possible. It is unsettling for them to see the mutual fund group setting off down a path labelled “alternative”. It smacks of hedge funds and other horrors.
FTfm’s Steve Johnson looked into the debate over active vs passive management in our last issue, with reference to Norway’s state pension fund. He also interviewed Yngve Slyngstad , chief executive of Norges Bank Investment Management, the arm of Oslo’s central bank that manages the fund. Mr Slyngstad thinks there is no debate. Here’s Steve’s investigation for FTfm’s Big Picture.
Norway’s active vs passive debate
By Steve Johnson
Like death and taxes, the debate over the relative merits of active and passive investment will probably always be with us.
But the spat in Norway over the future direction of the Nordic country’s NKr2,500bn (£266bn, €307bn, $433bn) oil-powered Government Pension Fund has helped illuminate the debate, at least as it applies to large institutional funds.
FTfm’s new forum is under construction, but some of the fine details are taking longer to iron out than originally thought. So, rather than leave the blogosphere altogether, we will be continuing with our old format until we’re ready for our re-launch.
Apparently more than a thousand amendments have been tabled for the Alternative Investment Fund Management directive, Brussels’ attempt to bring private equity and hedge funds under its loving control.
This unprecedented level of rewriting during the legislative process is a testament to the inexorable sway of the alternative asset management industry. The original, draconian, draft of the AIFM was seen as a shy at the ever popular Aunt Sally of hedge funds, or ‘locusts’ as they are known in Germany. The usually painstaking and thoughtful asset management unit of the European Commission’s internal markets division had apparently come under political pressure to bring out a hardhitting draft directive in a hurry.
At leisure, however, even the European Parliament found regulating a European hedge fund industry too harshly might not be that good an idea. Its own impact study found implementation of the proposed directive as it stood could result in a 0.2 per cent contraction in the combined GDP of the European Union.
Possibly, however, the initial announcement and pained squawks for the industry were enough to satisfy the hedge fund haters, and now the tedious work of actually piecing together something actually workable can be done out of the glare of the media spotlight.
Certainly the number of journalists prepared to dig through all 1000+ amendments is likely to be as slim as the number of readers prepared to read about them.