Investment

Sophia Grene

It would be nice to know where Marcus Svedberg, East Capital’s chief economist, gets his spectacles. They have a beautiful rosy tint.

Admittedly he may well need them, since East Capital‘s specialist region is central and eastern Europe, which has had a tough time in the last 18 months and many parts of which are not yet out of the woods.

Mn Services was none too happy about our pointing out they had won a grand total of zero mandates since opening their London office last year. These things take time, said their UK office’s managing director Remco van Eeuwijk, pointing out it was only in March of this year that they finished sorting out the regulatory paperwork.

Perhaps he is just being modest when he says his goal for the firm’s London office is two clients worth a total of £650m by 2011, but his expectations do not depict a booming scene. This prompts the bigger question: How are asset managers finding new clients in today’s market?

Ruth Sullivan

Specialist pension buy-out companies will not be cheered by the latest analysis of their faltering sector.

Buy-out specialists that sprang up a few years ago to take over liabilities of defined benefit schemes got off to a strong start but the market has fallen flat in the financial crisis.

Ruth Sullivan

First there was the product, then the book and now the movie. Well at least a film of exchange traded funds, starring ETF queen Debbie Fuhr, Andrew Clare, asset management professor at Cass Business School and Justin Urquhart-Stewart, founder of Seven Investment Management. 

Ten months since announcing its opening of a London office, Dutch fiduciary management giant Mn Services has won a grand total of zero UK mandates.

Fortunately for the firm, it already has over €65bn in assets under management, so it can probably absorb one bad year.

The firm itself would never admit to it, but it has to be disappointing. A concept that has proven so popular and successful in the Netherlands has simply not taken off in the UK as they had hoped.

Why not? In the end fiduciary management is just a fancy term for financial service provision. Firms like Mn Services will usually take on an entire pension fund’s operations, managing everything from investment to distribution. Should a fund only require certain services, the fiduciary manager is happy to accommodate.

Several features were written about Mn’s UK move and the verdict was inconclusive. Schemes sounded interested, but were wary of giving away too much control and saw the possibility for conflicts of interest. Some simply didn’t see how it was any different from what was already on offer.

It is still early, and the Dutch manager has only recently finished recruiting for its six-strong UK team. In May 2008 its chairman Ruud Hagendijk said the firm was proceeding with caution. He called the UK a complex market, and said he would be content if they only won one new client in a year’s time.

In that case Mn may be on borrowed time.

Ruth Sullivan

Stay focused

Stay focused

Sun and sand make their siren call in August, tempting investors to a remote island or perhaps a crowded European beach. After all, summer tends to be a quiet time for stock markets with low trading volumes, or at least that’s what holidaying investors like to think.

But what happens if unexpected economic news or currency trends trigger sharp stock market moves, asks Colin McLean, managing director of SVM Asset Management? It has happened before. This time two years ago, world markets were in turmoil as the credit crunch began to bite, and August was an abysmal month for hedge funds as they hit summer blues and most hedge strategies failed to perform.

In July and August 2008 there was a sharp market rotation from resources to financial stocks, while this summer’s surprise is a continuing strong recovery in commodity prices, driven by encouraging growth in China, Mr McLean reminds us.

And today Barclays unveiled interim profits of nearly £3bn, helped by BarCap, the bank’s investment banking arm, while equities rose to the highest levels of the year.

But whether the markets head north or south, Mr McLean recommends staying cool and avoiding any hasty decisions. So just in case there is a really big surprise over the next few weeks, shake the water out of your eyes, make sure your laptop screen is not obscured by the sun, and take a deep breath before pressing send.

Sophia Grene

There is a hoary old chestnut about the professor of economics walking through the City with a graduate student. They see a £20 note lying on the pavement across the street, and the student makes as if to cross the road to pick it up.

“Don’t bother,” says the professor. “It must be a fake. If it were real, someone would already have picked it up.”

Ruth Sullivan

Protectionist stance

Protectionist stance

The European Union’s draft rules on alternative investments have drawn a storm of protest from hedge funds, equity funds and even investment trusts. Today, the global hedge fund industry association took the battle a step further.

Such a ruling will make it so difficult and expensive for non-EU funds and managers to access the EU market that it would have huge consequences, particularly in North America and Asia Pacific, the Alternative Investment Management Association warns.

Pauline Skypala

Legal & General Investment Management has commended the investment consultation paper from the Personal Accounts Delivery Authority to trustees of defined contribution pension schemes. It offers a level of insight “unparalleled in terms of quality and depth” and has the advantage of being free, says Ian Richards, head of DC strategy at LGIM.

Personal accounts will become the benchmark by which other DC schemes will be measured, he says.

It is encouraging to see life companies, which have dominated the DC market in the UK, taking an interest in Pada’s paper. There is much work to be done on designing default funds that have potential to offer reasonable return without high volatility and on the way retirement income is delivered.

Some life companies have already started down this path, but judging by a recent meeting I had with Scottish Life, have yet to work out how to communicate the benefits of their products effectively.

I was hopelessly confused by the presentation by two gents from Scottish Life, who wanted to tell me about their clever pension plans supposed to resolve the governance problems of contract-based DC plans, where no-one is looking after the interests of the members of the scheme.

The plans have some modern features, including a risk-profiling tool, multi-asset portfolios, rebalancing, and a lifestyle overlay that starts working 15 years before retirement. But they are designed to appeal to independent financial advisers rather than scheme members, and it shows.

Too many bells and whistles, I concluded, and some features that just seemed odd, such as moving the fund entirely into cash if a member wants to buy an annuity at retirement rather than draw an income from investments. Where is the protection against annuity rates moving to a member’s disadvantage in that? The aim is to maximise the real value of the pension pot at retirement, was the answer. I was none the wiser.

Maybe when IFAs have to be paid fees for their advice rather than taking commission from life companies, it will be what customers need that takes priority. Having to measure up to the personal accounts benchmark should also force a rethink.

Sophia Grene

Some people believe Africa really is the land of opportunities, despite dire warnings about its economies from the IMF and OECD. That’s the only conclusion one can draw from the fact that nearly 50 overseas investors went to Zimbabwe‘s recent International Investment Conference.

Ayo Salami, Africa fund manager at Duet Victoire, confessed he had been taken aback by the level of interest, but said he had noted investors’ interest in the continent generally had not been totally destroyed by the dramatic crash of emerging markets last year that smashed the myth of decoupling.

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.


Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.

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