Alice hears the evidence
`They told me you had been to her,
And mentioned me to him:
She gave me a good character,
But said I could not swim.
I gave her one, they gave him two,
You gave us three or more;
They all returned from him to you,
Though they were mine before.’
These verses from Lewis Carroll’s Alice in Wonderland are usually thought to be meaningless (Alice didn’t believe there was an atom of meaning in it), but they might not be a bad representation of fund management’s stock lending programmes.
Party on: Linzi Stoppard from Fuse
The party atmosphere was definitely lacking in Monaco this year for Fund Forum. Numbers were down and the usual lavish entertainment had been credit crunched. Still, the organisers professed themselves pleased with the turnout, and with the numbers of chief execs who turned up to sit on panels or address the conference.
Some providers were still doing things in style, but they were mostly the asset servicing arms of the banks. I enjoyed an evening at a swanky hotel by the sea courtesy of BNY Mellon, including a performance by electric violin duo Fuse. It was just right for Monaco!
New Zealand has a small but perfectly formed hedge fund industry. With nearly 30 managers signed up to NZara, the New Zealand Absolute Return Association
, they can proudly point to two years of outperformance against global hedge funds, CTAs or equity markets.
It is possible they look good over the two years of their existence because the index is largely made up of global macro funds, which have done well in that time. Anthony Limbrick, chief executive of Pure Capital and guiding light of NZara, claims Kiwi hedge funds do well because you have to be good to survive so far from the centre of things. The challenge is worth meeting, however, because the lifestyle is so good, he says. For dedicated hedgies, the chance to run money while living in beautiful surroundings near home and family is very attractive.
The only question is, if it’s so lovely in New Zealand, why are there so many Kiwis in London?
Lord Turner warned hedge funds might become a target in Europe
Even the European Commission’s own experts think it is going too far with its proposals for regulating the hedge fund industry.
Jaques de Larosière, author of an influential report on financial supervision, told a seminar in London the Commission’s draft directive on alternative investment management went much further than he had recommended. The report came to the conclusion hedge funds were not a systemic issue, but the draft directive proposes regulating some aspects of alternative funds even more tightly than Ucits, the retail investment vehicle.
As leader of a ‘High Level Group’, one might expect M. de Larosière’s words to have some weight.
The seminar, hosted by Business for New Europe, also heard from Lord Turner, chairman of the UK’s Financial Services Authority, who warned hedge funds might become a “target” in Europe, and Lord Myners, the UK financial services secretary to the Treasury, who called the directive “flawed”.
The Alternative Investment Management Association welcomed these comments – as well it might!
UK is bringing out its big guns
The UK is bringing out its big guns in an attempt to shoot down the European Commission’s proposed rules for alternative investment fund managers.
In Monaco, Dan Waters, asset management sector leader at the Financial Services Authority, fired broadsides at several aspects of the directive in a speech at the Fund Forum conference.
Private jets: many of the super-rich have been forced to put their jets up for sale
We are used to hearing the rich are getting richer but the credit crunch last year has taken its toll. Now it seems the rich are getting poorer faster than anyone else.
This is certainly a change of direction for wealthy investors as Merrill Lynch unfurls its global wealth management annual report today.
Fund Forum in Monaco: numbers are significantly down on previous years
Anecdotal evidence has it that attendance at Fund Forum in Monaco this week is significantly lower than in previous years. Some say numbers have halved. Last time I came, two years ago, it was certainly much busier. But what is lacking in quantity is made up for in quality, apparently – the CEOs are here in force.
So are the service providers. I shared a cab from the airport with a woman from SimCorp, have met today with BNY Mellon and JPMorgan, and turned down meetings with Liquidnet, Clearstream and Swift ( I prefer to focus on fund managers at a fund management conference).
There are plenty of issues to occupy the service providers. One that came up at a session today was the question of depositary bank responsibility. The European Commission has raised the possibility of making depositaries stand as guarantors for fund assets, making restitution to investors if money goes astray. This is in response to the issues raised by the Madoff affair, which in Europe focused on a few Ucits funds that invested with Madoff and awarded the sub custody of assets to Madoff as well, so the money disappeared.
One view I have heard is that there is no point even discussing the outcome of such a move as it won’t happen: the regulators are not crazy enough to expect anyone to stay in the business if they have to provide a blank cheque.
Perhaps they are right. But listening to the debate at the session I attended, it seems there is no clear view in the industry of what needs to be done to clear up the grey area in the Ucits rules the Madoff area highlighted. Is it an issue just for Luxembourg and Dublin or a wider one for Ucits?
Threatening to make major changes to the responsibilities of depositary banks has at least started a debate on the issue.
After a hideous year in financial markets last year, many investors might well feel angry with their financial advisers. Most, however, will restrict themselves to grumbling or perhaps the occasional courtcase.
Such mild action is not for the senior citizens of Southern Germany – a group of four unhappy investors kidnapped the financial adviser who had helped them put their money into overseas properties, losing as much as E2.4m between them.
Edward Bonham Carter was happy to share his wasabi peanuts
It is Fund Forum week in Monaco and I have arrived on a wet Monday evening curious to test the atmosphere, having not attended for a couple of years.
There were plenty of conference goers on my easyJet flight over, including Edward Bonham Carter, chief executive of Jupiter Asset Management. He was happy to share his wasabi peanuts on the flight over, and offered to share a cab from the airport too. Sadly, I had a bag to wait for so had to decline.
We had arrived too late to take advantage of the free coaches the conference organisers are laying on this year for cost-consicous fund managers. Taxi fares are a steep E90 from Nice to Monaco. But the conference moved back here from a trial change of scene to Barcelona last year in response to negative feedback.
With FTfm reporting this week on a barrage of reports about the (relatively) parlous state of the fund management industry and the possibility that revenues will not recover to 2007 levels for five years, I am looking forward to networking with a chastened set of managers prepared to contemplate major change to their business models.
Perhaps, though, they are the ones who are not coming to Fund Forum this year.
Crystal gazers see polarisation in the industry
More and more consultants are spending time gazing into the crystal ball and polling asset managers to work out where the industry is heading.
The latest prediction to drop into my mailbox comes from Hymans Robertson, an investment consultant that believes polarisation is going to increase this year, according to its annual survey of UK fund managers. That means bigger firms will get larger, while smaller ones will reduce in numbers.