FundForum International 2010 - an overview

An Article by Beverly Chandler.

Beverly Chandler will be covering FundForum International 2010, 28 June - 2 July in Monaco

The European asset management industry had just earned a brief moment to draw breath and evaluate where it was at the end of the prolonged period of upheaval caused by the sub-prime crisis when, lo and behold, along came violent volatility caused by continuing fears of credit risk across Europe.

These spread from Greece, but panic is, as we have seen, contagious, and fears have threatened to spread through the Euro zones in Spain, Portugal, Ireland, and into the Sterling-led UK to any European country that has a cripplingly high level of national debt.

The sub-prime crisis sparked off other dramas. We appear to have forgotten Dubai and its many financial problems which have been swept under the UAE carpet but played its part in rocking financial markets earlier this year.

Against the backdrop of loss and indebtedness, we have our perennial Western problem of an ageing population.  The question of who will fund the retirement years of a population dominated by people retired, not working, has been at the heart of a push to achieve above average investment returns for at least 20 years. Our original pension model of today’s workers funding today’s retired was predicated on a healthy balance of the two, the current and ex-workforce.  Demographics have put paid to that.

And where perhaps before, saving a portion of your income as a matter of course was embedded in a national psyche that had come through two world wars and a great depression, saving went right out of fashion.  Particularly in the UK where there always seemed to be another easier source of capital available to give you that money in the bank feeling which fuelled the ‘I’m worth it’ generations into spending more than they earned, often borrowed at easy  interest rates.

Within the UK, that money came from the UK’s flourishing property market where everyone it seemed could buy a house, make a quick return on it and move on. In an even more extraordinary extension of that pattern, ordinary people with no background in property development or property investment could build up a portfolio of properties and let them at a profit to others who were just waiting to get onto the same cycle.

It is a truth universally acknowledged that savings rates need to go up, in every sense of the phrase – we need to save more but we also need to earn a greater reward for saving. While interest rates remain dismally low for savers, they need to look elsewhere for returns on their money.  Across Europe, despite the shock and awe and the volatility experienced by those invested in equities over recent years who experienced a massive loss, a massive rally and then quite a bit of both, many traditional fund groups have experienced net inflows over the last year.

We live now in a financial world where neither banks nor governments have the appetite or the resources to lend money any more. Net inflows into funds suggest that investors are choosing investment in funds to secure their futures.  Actively managed funds, achieving better returns than those available on deposit, are what is needed to encourage investors to save and to offer them returns that are worthy of that effort.  The investment industry in its widest definition is at a crucial point in this process and must step up and produce the returns that will secure the financial security of future generations.

About Beverly Chandler

Beverly Chandler has been a specialist financial writer for a number of years, writing for most of the trade press, a number of national newspapers and publishing a couple of books on the Hedge Fund industry.  She will be covering the FundForum International 2010 conference, producing a daily digest of the key outtakes from the event, and interviewing speakers & delegates about prevailing industry trends, their views of the future and why FundForum International is the “must attend” conference in the annual calendar.

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