FTfm staffing levels will drop over the festive season as the team try to use up their left-over entitlements before the holidays expire. So we won’t be blogging much… if at all.

When we are all back in January this blog will be migrating to a new platform that will hopefully accommodate the way we have noticed you using it. Topics that interest you will stay open, and visible, for longer. You will also be invited to add your comments to columns written by our regular contributors.

We’ll let you know more as soon as we’re back. And, in the meantime… Best wishes for Christmas and the New Year from FTfm!

Pauline Skypala

The exchange traded fund industry has been feted as offering low cost access to a wide range of investment opportunities. It has occasionally had its knuckles rapped for getting over-enthusiastic about short and leveraged products that may not track in the way investors expect. But generally, the plain vanilla FTSE 100 or S&P 500 ETFs have been seen as A GOOD THING.

 Now along comes Watson Wyatt to throw a bucket of cold water on the ETF party. The consultant says institutional investors can get a better deal elsewhere. There are institutional index products with lower fees, a better tax structure, and less or no counterparty risk.

Sophia Grene

Remember when exchange traded funds seemed like the good guys? When they were a cheap, efficient and transparent way for investors to track an index?

Those days are long gone.

Synthetic ETFs using derivatives, inverse and leveraged ETFs, unsecured exchange traded notes, all of these are muddying the waters for simple folks who just want good value investment. They do presumably all have their place, but they tend to undermine the proposition of ETFs as simple and transparent.

The latest is a reverse convertible ETF, shortly to be launched in the US by Rich Investment Solutions, run by Kevin Rich, who was previously responsible for Deutsche Bank’s initiative in bringing commodity ETFs to the US. Reverse convertibles are a structured product too complicated to explain here*. Press releases claim the ETF will simplify this structure, although I’m confused on how an index writing “down and in” options each quarter on the 12 most volatile stocks in the S&P 500 is really simple.

Again, there may be nothing wrong with this product at all, but if I were a physical ETF producer, I would be lying awake at night worrying about the brand. It’s hard to tell people you have a product they can understand when they can see something with the same name tracking reverse convertibles.

Sophia Grene

One in three Americans believes aliens have landed on Earth and are dwelling among us. There are quite a lot of things they do not believe in, however, including the importance of the fluffy stuff in investment.

Parallel reports from the European and US social investment forums on the perception of environmental, social and governance issues among investment consultants seem to show American consultants are much less comfortable with the concepts and less inclined to see them as a natural part of investment consultancy. This despite a general belief (expressed by 88 per cent of respondents) that client interest in these matters will increase in the next few years.

The Pensions Regulator is to launch a new effort aimed at improving the governance of company retirement schemes in the UK

Edmund Truell’s Pension Corp has reached a deal to repair the £450-plus deficit in the pension scheme of Telent

Sir Callum McCarthy, former chairman of the UK’s Financial Services Authority, has been appointed European chairman of JC Flowers, the US private equity group

Dead Russian lawyer’s colleague ‘threatened’

The hedge fund sector looks to be going through the early stages of recovery according to Huw van Steenis

Australians strike carbon deal boosting its hopes of being able to play a major role at next month’s climate change summit

Galleon founder attacks wiretap

Pauline Skypala

If any fund manager deserves an award for trying to change the world, or at least start a real debate, it must be Hermes.

The fund manager, owned by the BT pension scheme, the UK’s biggest, today co-hosted a conference with the lengthy title: Creating sustainable wealth through responsible asset management and ownership.

Last week, it handed out awards for transparency in governance, in collaboration with the Institute of Chartered Secretaries and Administrators (ICSA).

Hedge funds and other investors stand to make billions of dollars from their holdings in a bankrupt US mall owner, General Growth Properties

Canberra faces legal challenge on compensation for Australian power operators in relation to a proposed carbon emissions trading scheme

Madoff liquidator seeks fees of $22.1m

Private equity chief in rallying call to defend industry against ‘misguided’ EU regulation

Gartmore confirms plans for IPO

Rising portfolio value bolsters KKR

UK regulator faces pensions dilemma

Paulson starts gold fund amid record prices

Ministers defend new FSA powers

Informant says Galleon tips came from Asia

Worried nations try to cool hot money

Trichet warns on bank bonuses

Electronic rival for convertible bonds planned

FTfm columnist John Dizard was, apparently, just tapping into the global zeitgeist when he wrote of the debate surrounding shale gas reserves. In his November 1 column, Shale gas numbers may not add up, he described what sounded like the lone voice of a softly spoken shale sceptic, Art Berman.

At the time that we went to press, Art Berman was a columnist for World Oil and the editor of World Oil was Perry Fischer. By the end of the week both those facts had changed and  Art Berman now finds himself a star on energy blog spots.

John Dizard, meanwhile, has promised to return to the shale gas issue with “ever more tedious levels of detail”. He says: “Mr Berman is not the only professional who has raised questions about producibility, cost, and decline curves.” We’re hoping whoever the other professionals are that they enjoy being in the limelight.

Ruth Sullivan

Hand cradles a globe above the cracked earth

Half of UK consumers would like to check the ethical credentials of their next investment

Post credit crunch, most people would expect investors - or would-be ones - to focus on how to gain returns from any financial product, while other considerations such as ethical concerns have headed out of the door.

Not so, it seems. An Ipsos Mori/Eiris consumer survey that dropped into my email box today, showed nearly half of UK consumers are keen to find out about the ethical credentials of their next investment. Given that most of those polled are already investors, they are likely to have some relevant views.

They felt banks and other financial institutions should prioritise concerns such as protecting human rights, investing in fair trade, protecting the environment and tackling climate change. These are now the hot issues rather than the more traditional ones of manufacturing relating to alcohol, tobacco and gambling, says Eiris, the Ethical Investment Research Service.

But there is still a long way to go. Awareness of ethical financial products is low as is trust, with more than a third not believing claims made by financial providers. But only 15 per cent thought ethical products were likely to underperform similar standard products.

They might want to take a look at a report brought out this week by Mercer, the consultant, that lays out volumes of academic research on how taking account of environmental, social and corporate governance issues can have a positive impact on portfolio returns.

One thing is sure. Green, social and ethical funds have grown considerably in number and size in Europe over the past year, in spite of the fall-out from the financial crisis.

The number of retail funds increased over the year to the end of June to 683 from 537, or by 27 per cent, according to Vigeo, a corporate social responsibility ratings agency, and Morningstar.

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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