Posts Tagged “Asset Management”

Asset Management in the Middle East: Ten big changes to watch for in the next decade

October 4, 2020

An article by Andrew Hutchings

Andrew Hutchings, Chairman and co-founder of Universal Copywriters (Uniwriters)

Developments over the last thirty years in other parts of the world indicate where the industry could be headed in 2010-20.

In asset management, as in other industries, the short-term excitement about a change often exceeds reality. Regulatory changes, entry of new competitors, movement of high profile executives, development of new products and distribution deals can generate interesting headlines, but very rarely result in profound changes to the landscape. The changes that really matter actually come from trends that operate over five-to-ten years, if not longer.

It is now nearly 30 years since yields on U.S. Treasury bonds peaked, providing the impetus for a secular bull market in equities, which ran to the year 2000 in the U.S. and for longer in other countries. The rise in the U.S. stock market, and the international investment opportunities that became available as a result of the lowering of barriers to capital flows, shaped the development of the U.S. mutual fund industry in the 1980s and the 1990s. In Europe, the key factors were the Undertakings for Collective Investments In Transferable Securities (UCITS) directive(s), from 1985 onwards, and the widespread realization that demographics were such that individuals would have to do more to provide for their own retirement incomes. In Asia, the key issues are that economies are likely to generate superior growth rates for the foreseeable future and that capital pools are enormous and/or expanding rapidly. In all three regions, information technology has contributed to better solutions for investors.

All this begs the question: what are the ten things that really matter for asset management in general, and investment funds in particular, in the Middle East?  The starting point must be that[1] capital pools in the region, which are already substantial, will continue to grow. Over the next decade, the Middle East will continue to be a major source of natural resources – especially hydrocarbons – for the rapidly developing economies of East and Southeast Asia. The Gulf Co-operation Council (GCC) countries that are running large current account surpluses thanks to exports of oil and gas will amass additional savings in Sovereign Wealth Funds. The corollary of this is that, like China now or Japan in the 1980s and early 1990s,[2] the Middle East is a natural source of investment capital for the rest of the world. Because the GCC currencies (and most others in the Middle East and North Africa) are pegged to the U.S. dollar, investors can invest in the U.S., Hong Kong and various other places, with minimal currency risk: in this respect, the Middle East has a huge advantage relative to China and Japan.

One implication of this is that the[3] Middle East is an obvious market for the distribution of UCITS funds that are domiciled in Luxembourg or Ireland. The UCITS funds are already in existence, and provide access to every conceivable asset class that an institutional or individual investor might need. The UCITS ‘brand’ is a trusted one and is synonymous with first class regulation and transparency. As is the case in Asia, there are local asset management companies in all of the GCC countries. Most are affiliated with local universal banks or other local corporate groups. However, very few have achieved the absolute size that would give them the economies of scale enjoyed by large asset managers in  the rest of the world. Therefore, [4] many banks in the Middle East are likely to come to the conclusion that there is more money to be made from distributing investment funds than managing them. This is what happened in continental Europe in the 1990s and what is happening in China now. Nevertheless, as the fragmented financial services industries consolidate over the coming decade [5] it is a near certainty that at least one very substantial Middle East based asset management company will emerge: its business will not be confined to one country in the region.

Of course, universal banks are not the only organisations that can embrace Open Architecture and seek to profit from the distribution of products that are sourced from other companies. Thanks in part to the development of health insurance, insurance premiums are rising rapidly from low bases in almost all countries in the region.  Within the coming decade, [6] Middle Eastern insurers will turn to fund distribution as their industry matures. It is also a safe bet that [7] the growth in Open Architecture will be accompanied by a strong increase in distribution of Sharia-compliant funds. Sharia-compliant banking and Takaful have had to overcome a number of challenges, but are growing rapidly in many GCC countries and in certain countries outside the Middle East, such as Malaysia. The decade to 2020 will probably be seen as the decade in which Islamic finance moved to the mainstream.

In differing ways, the governments of Dubai, Abu Dhabi, Bahrain and Qatar have all sought to promote their states as offshore financial services centres. That each has some control over local Sovereign Wealth Funds (and, often, other institutions as well) means that they have some ability to nurture a local asset management industry. This is a formula that the government of Singapore, for instance, has made to work well. However, unlike Singapore or Hong Kong, none of the Middle Eastern centers has access to a massive hinterland (like Southeast Asia or Greater China). The implication is that [8] the Middle Eastern centers will flourish, provided each focuses on a different niche, with the result that they can develop through collaboration rather than competition.

Financial services is, of course, not the only industry that regional governments are looking to develop as economies are diversified away from energy. Massive new infrastructure projects across the region will require innovative funding. [9] Infrastructure funds and other locally-focused vehicles could well be in the mainstream of the Middle Eastern asset management industry by 2020.

Finally, it is often forgotten that the Middle East and North Africa is home to well over 200 million people. In most countries in the region, people are poor and financial services under-developed as a result of structural problems. However, most countries are making some progress towards resolution of the problems. [10] In the next ten years a very substantial funds industry will develop in at least one of Egypt, Algeria and Morocco.

By 2020, the asset management industry of the Middle East will be much larger and more sophisticated than it is today.

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About Andrew Hutchings

Andrew Hutchings is Chairman and co-founder of Universal Copywriters (Uniwriters), a consultancy that works with global investment managers, private banks, institutional banks and publishers of commercial intelligence. He has written extensively on asset management, investment fund distribution and financial market infrastructure - in the Middle East, the Asia-Pacific and Europe. He has worked as a Co-ordinating Editor for Global Custodian and has extensive experience as a Research Editor.

Post Under: Asset Management

A complete round up of news and views from FundForum International 2010

July 6, 2020

FundForum International is the “must attend” annual asset management conference.  The 2010 event continued that tradition, 20 years in the making.    On behalf of our co-sponsors, CACEIS & KPMG, we would like to thank all the delegates and speakers and look forward to bringing you an even more energised event in 2011.

In addition to the coverage of the event by Beverly Chandler,  we’ve gathered the leading articles and commentary from the business news websites to give you a comprehensive review of this years hugely successful event.

We have captured a series of video interviews with some of the industry leaders which will be posted on this site over the coming weeks.   To make sure you don’t miss out, either add the RSS feed to your reader or sign up for email alerts.

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A Twitter Overview:

reutersClaireM: IBM’s Suzanne Duncan stirred up the Forum with research that showed the trust gap between providers and investors has worsened this year

reutersClaireM‎: Marshall says doesn’t regret not gating in crisis although assets collapsed. Believes hedge fund industry did itself no favours by gating

Dumes618Fund Forum Exclusive: AEGON appoints Citi as Fund Administration Service Provider to a new Global Macro Absolute Return Fund

reutersClaireM‎: Broderick says as Europe transfers burden of retirement provision to private sector, it will expect costs to fall.

JenLoewiAdams‎: Regulator Eddy Wymeersch says not often that he gets to talk face to face with the industry, so thumbs up FundForum#ffi10

reutersClaireM‎: Faber believes prospects for active mngt are good and a lot of passive strategies will face limitations in volatile low growth world


Fund Fees and self-loathing in Monaco - Financial News

The number of attendees rose this year by a fifth compared with last year. More than 70 companies had stands at the Grimaldi events centre, located on the Monaco beachfront, including KPMG, JP Morgan and Citigroup.

Each morning delegates attended lectures and panel sessions featuring leading industry figures such as Jamie Broderick, chief executive in Europe for JP Morgan, Todd Ruppert of T Rowe Price and Jim McCaughan of Principal Global Investors…. more here

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Chiefs told to concentrate on clients - Financial News

The first step in solving any problem is to admit you have one. Amid the yachts, Ferraris and champagne receptions, delegates at the annual Fund Forum conference in Monaco did precisely that.

The tone of the conference was set at the start by speaker, Jamie Broderick, chief executive of JP Morgan Asset Management in Europe.  He said the asset management industry needed to focus more on clients, and those who did not would be left behind.  Investors were concerned about three issues, he said: high fees, an obsession with creating products rather than finding solutions, and a lack of clarity about what was really going on with their money…. more here

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The full round up by Claire Milhench of Reuters can be viewed here.  We’ve put some of the key topics from her review below.

Marshall not so gaga for Osbourne - Reuters

Lord Myners played a cheeky game of bull and bear with Paul Marshall, the co-founder of hedge fund company Marshall Wace, at the close of his Q&A session at the Fund Forum in Monaco this morning… more here

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Doubts grow over fund firms’ Asia dash - Reuters

Asset managers are ramping up their presence in Asia to tap the cash of the growing middle class but some industry managers are warning that the quick bucks these funds are chasing may be elusive.  Establishing an identity and building distribution networks takes time. Regulatory bottlenecks and a stubborn attachment to traditional bank savings will also act as a brake on business.

“Asia will continue to hog the limelight as a source of new assets but it won’t be the next gold rush,” Amin Rajan, chief executive of consultancy Create, said at the Fund Forum in Monaco…. more here

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Allianz plans to boost PIMCO with new hires - Reuters

Allianz Global Investors, the funds arm of German insurer Allianz (ALVG.DE), plans to add about 100 staff this year, with bond manager PIMCO the biggest beneficiary as investor appetite for fixed income products continues.  AGI Chief Executive Joachim Faber said the head count had increased across the entire group by 100 people last year and he expected to repeat that this year.

“The PIMCO business is growing very strongly so it has had the most people added,” said Faber in an interview on the sideline of the annual Fund Forum in Monaco… more here

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Fund Managers under pressure to rebuild trust - Reuters

Fund managers have failed to rebuild relationships with investors that soured when the global financial crisis left them nursing billions in losses, leaving their clients even more disgruntled.

Trust between fund managers and their clients has continued to deteriorate two years on from the crisis, a survey by research organisation IBM Institute for Business Value showed, and managers at the Fund Forum in Monaco said the industry faces an uphill task to restore clients’ confidence. “We’d be kidding ourselves if we thought that our institutional or our retail clients thought we (as an industry) did a good job in the downturn. We need to be more transparent and keep products simple,” Martin Gilbert, chief executive of Aberdeen Asset Management (ADN.L) said. … more here

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Reprieved fund firms face up to failings - Reuters

Fund managers meeting in Monaco this week for their annual summit may have been given a reprieve by last year’s stock market rally but it helped to paper over the fundamental cracks identified at the 2009 conference.

Industry bigwigs such as Martin Gilbert of Aberdeen Asset Management (ADN.L) and John Flint of HSBC Asset Management (HSBA.L) will debate the best business models for these turbulent times, with managers who fail to reposition their businesses likely to find themselves in difficulty.  The 2010 Fund Forum conference, which runs from Tuesday to Thursday, comes at a time when the sovereign debt crisis has triggered another bout of volatility and investors are showing a reluctance to load up on equities… more here

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Fund firms see second wave of M&A - Reuters

The asset management industry is poised for a fresh round of consolidation as economies teeter on the edge of a fresh slowdown, leaving weaker operators rescued by the 2009 rally looking vulnerable all over again.

Delegates to the industry’s annual Fund Forum in Monaco are expecting further M&A, with smaller firms struggling under the weight of new regulations before being picked off by larger rivals, while continuing financial turmoil is expected to put more balance sheets under pressure…. more here

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To view articles from the Financial Times, you must have a subscription, details here

Call for greater transparency on EFTs - Financial Times.

Greater calls for transparency have dominated talks at this year’s Fund Forum. Several chief executives say the market needs to make an effort to restore more here

Fund managers told to embrace new rules - Financial Times

Fund managers attending last week’s Fund Forum in Monaco were told to embrace new regulations rather than fear them. more here

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Nordic Fund Selectors panel at FundForum International - FundSelection

Successful panel with Nordic fund selectors The room was packed when I moderated a panel with fund selectors from the Nordic region at the FundForum in Monaco this week. It was an honest discussion and the public was very pleased with the openness of the selectors… more here

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Paul Marshall offers caution on UCITS - WSJ

A founder of one of the U.K.’s largest hedge funds has warned that investors may be “disappointed” in the more heavily regulatedUCITS funds, which have increased in popularity since the financial crisis… more here

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Fund managers gathered here perhaps got a little indigestion along with their breakfast at the first address of the day - MarketWatch

The managing director of Cerulli Associates got things off to a rousing start with a prediction that global funds under management this year are unlikely to repeat the not-so-spectacular growth from last year — a 16.2% gain. But there was even more gloom tinged in that. Shiv Taneja, addressing a crowded room of early-rising managers said that gain from 2009 came wholeheartedly from a recovery in markets… more here

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Double Dip? Better Be Nimble And Quick - MarketWatch (video)

Invesco portfolio manager Bernard Aybran talks about the dangers of a double dip recession for global economies and keeping a portfolio protected… more here

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Keeping the customer happy and the money flowing - MarketWatch

Tall orders, but those seem to be the general themes for this week’s Fund Forum International, which will gather over a 1,000 asset allocators and 35 chief executives in the small sovereign city-state surrounded by France, known best for its status as a tax haven and refuge for wealthy foreigners.

Whereas last year gathered a group of shell-shocked asset managers who were looking for day-to-day strategies for survival, this year, managers and CEOs will be looking for ideas on how to create sustainable, long-term gains at a time when markets are volatile and investors still haven’t had their faith in managers fully restored… more here

Post Under: Asset Management, General

EFAMA leads the asset management industry in a call for pan-European long-term savings product in closed door session at FundForum International 2010

July 2, 2020


Jean Baptiste de Franssu, President, EFAMA speaking at FundForum International 2010

Eddy Wymeersch, Chairman, CESR at FundForum International 2010

In an intense and wide ranging meeting which included those representing the regulatory view, the investment industry and investor representatives today, five key issues were debated in the new closed door session at FundForum International 2010.

The panel, moderated by Tom Brown, Partner at KPMG, consisted of Eddy Wymeersch, Chairman of CESR; Jean-Baptiste de Franssu, President of EFAMA; Consumer advocates Mick McAteer and Guillaume Prache; Marc Garvin, Chairman International Business, Treasury and Securities Services of JPMorgan as well as the members of the EFAMA President Advisory Council: Juan Alcaraz, CEO of Allfunds Bank and Santander Asset Management; Dominique Carrel-Billiard, CEO of AXA Investment Managers; Alain Dromer, CEO of Aviva Investors; Roderick Munsters, CEO of ROBECO, Martin Gilbert, CEO of Aberdeen Asset Management; Allan Polack, CEO of Nordea Savings and Asset Management; Peter De Proft, Director General of EFAMA and Claude Kremer, Vice-President of EFAMA.

First up on the agenda was the issue of long term savings and distribution in particular on the back of the report entitled Revisiting the landscape of European long-terms savings published by EFAMA at the beginning of the year.

The attendees were supportive of creating a pan-European long-term savings product which will meet the needs of the ageing population of Europe, one of the greatest challenges facing Europe today. It is the European asset management industry’s aim to provide a solution to this problem. European consumers need a product that is simple, cost effective and transparent to encourage long term savings which the investment management industry can provide. Effective distribution and advice on savings products across Europe are major challenges, from a regulatory, supervisory and commercial standpoint.

The second issue under debate was shareholder engagement, both in terms of activism and stewardship. Asset managers need to go beyond a short termist approach and engage in a long term dialogue with the companies in which they invest. The group acknowledged that it is essential to find the right balance between their fiduciary duties to their investors and their role as investors in a company, and to find proper mechanisms for effective engagement.

The third item on the agenda was the evolving supervisory framework in the EU and how it will impact on the asset management industry. ESMA, one of the three new authorities will be an independent body not comparable to the SEC, operating as a co-ordinating rather than guiding force. The aim is that will ultimately lead to a more harmonised approach in regulation across Europe.

Turning to the issue of new regulation for depositaries, the industry representatives said that the existing global custody model has served the industry and investors well but there is a legitimate argument for strengthening investor protection. The industry representatives on the panel felt that new regulation should not lead to an overhaul of a well established body of practices.

The session concluded with a look at the growing fund group of ETFs. Panellists discussed how the characteristics of these funds have an impact on existing distribution models.

FundForum International 2010 - an overview

June 24, 2020

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.

Land of Milk and Honey but can it continue?

June 14, 2020

Jonathan Willcocks, M&G Investments will be speaking at FundForum International 2010 28 June - 2 July in Monaco

An interview with Jonathan Willcocks, Managing Director, M & G Investments

Speaking on the expert panel on the UK session entitled “Land of Milk and Honey but can it continue?”, Jonathan Willcocks, managing director of M & G Investments, feels that the UK market is still well placed for its asset management industry to thrive.

“The UK market has always been a savings market and there is an increasing burden on savings for retirement” he says. “The burden of paying for retirement by the state has become less of a factor because the state just doesn’t have the money to pay for it.”

For Willcocks, irrespective of how you save, most of it flows back into asset management. “It’s the Pentium chip inside” he says. “The asset management industry is the conduit of capital coming from those who need to invest and save and going to those who need the funding for developing their businesses going forward.”

Historically, that conduit was provided by a combination of capital markets, banks and the state, argues Willcocks. “But the banks and state sector no longer have the money to lend and, indeed, are unwilling to lend so the only key way to get money to those who need it is via the stock market  - so the outlook is very positive for asset managers as governments across Europe realise the importance of savings, moving the burden for providing for people’s retirement back onto individuals.”

The last two years of high volatility and dramas have not caused much of a loss of confidence in UK investors, according to Willcocks. “I have not seen a loss of confidence in UK investors” he says, “but across Europe, investors who came into investment relatively late, at the end of the 1990s have definitely had their confidence shaken but in the UK and the US we just haven’t seen that. Buying in the dip is in the UK mentality because of a longer history with investment – we are much more resilient in the UK.”

Evidence of this is that for M & G Investments years 2007 and 2008 saw net inflows. In fact every month since the sub prime crisis happened has seen net inflows at M & G. “A lot has been written in the media about a lost decade” says Willcocks, who says that while that may be true if you were investing in an index, actively managed funds have outperformed. “An actively managed fund from the top 10 of the UK All Companies sector over the last 10 years to the 31st of March 2010 has, on average, delivered a140 per cent return so it’s not a lost decade” he says.

The economic uncertainty certainly exists, says Willcocks. “It clearly resides and it is difficult to work through because you definitely have a debt burden that has moved from the corporate to the sovereign space and taxes going up can be deemed to be an economic dampener.”

However, Willcocks says: “You can do well if you invest in the right companies for the client.”

He is also bullish about the significant long term trend of power moving from west to east in the world which started at the beginning of the millennium. “You can buy Asian markets or companies that benefit from Asian trends” he says.

“As an asset manager whenever I look across UK and Europe, I realise that savings rates, the amount of money that people save, have to go up so it’s currently 4,5,6 per cent per household and it may go to 10 per cent and it won’t just sit on deposit with rates where they are at the moment. This is good business for the asset management industry.”

Turning to Fund Forum International 2010, Willcocks says: “I like Fund Forum because it’s where you get the greatest concentration of asset managers and distributors at one event so you can get a temperature check of the industry as a whole.”

Post Under: Asset Management

Managing success in a volatile market

June 4, 2020

Laurent Ramsey, chief executive officer, Pictet Funds

Laurent Ramsey will be speaking at FundForum International 2010

Laurent Ramsey is CEO of the investment fund division of the Pictet Group. He is responsible for a group that offers over 80 different products, mostly Luxembourg-based, and distributed over 25 countries to three main client groups. These are institutional clients, wholesale fund buyers, (mainly discretionary portfolio managers) and the retail networks.

Ramsey’s role covers product development, product structuring, product management, marketing and distribution. The only part that he is not responsible for is the actual asset management. Ramsey feels that there have been two main challenges over the last two years. “If we go back in time, our first challenge was to cope with the huge risk aversion that came throughout the sub prime crisis” he says. “We had to cope with clients moving out of any type of risky assets and back into cash.”

This Pictet faced by launching a new range of funds. “We launched a sovereign money market fund, covering all the currencies, which allowed us to capture a lot of the outflows in tough market conditions.”

Not only did it slow the outflows of money, Pictet found new clients during the difficult patch. “We could gain new clients because we had managed to launch such a conservative product offering at the time.” Read more »



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