Funds Hub

Money managers under the microscope

Risk Management: Did fund managers learn their lesson?

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By Detlef Glow, Head of EMEA Research at Lipper. The views expressed are his own.

In the last decade investors and fund managers faced two major crises in the stock markets, the popping of the technology bubble in 2001 and financial crisis starting in 2006.

Portfolio managers suffered average losses of about 50 percent in the wake of both crises, leading investors to question what their fund managers learned.

A Lipper and Avana Invest study on the maximum drawdown of actively managed funds found that those fund managers must have introduced new risk management tools after the bust of the technology bubble. Still, they failed to meet investor expectations on managing risk.

That’s all folks

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The mood at this year’s Fund Forum, if not exactly upbeat, has been less sombre than last year’s introspective summit, with a few more cocktail parties around the stands, but asset managers remain on the whole subdued.

The continuing market volatility has a lot to answer for, with renewed worries about a double-dip recession overshadowing events. But if nothing else, the recession has forced exhibitors in the Forum’s trade hall to be a bit more imaginative in their freebies this year.

Piggy in the middle

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Piggy picFitch’s annual review of the European asset management industry dished out some home truths for fund firms hoping they can begin to put that horrible financial crisis behind them.

Unveiling highlights from Fitch’s upcoming report at a briefing this week, Manuel Arrive, a senior director at Fitch Ratings, said he expects assets under management to rise more slowly and pressure on revenues to continue as investors shift to lower margin products.  “Asset managers remain vulnerable to a renewed market downturn,” he said.

from Summit Notebook:

Time private bankers got professional

It's hard to imagine that a banker who represents multimillionaires would be anything but professional - but a top executive at a leading global bank thinks that's precisely the wealth management industry's problem.

"There is so much mediocrity in the industry we have to raise the bar here," said Gerard Aquilina, vice chairman of Barclays Wealth, at the Reuters Global Wealth Management Summit in Geneva.

from Summit Notebook:

Everyone needs a private banker

Everyone needs a private banker. Full service means exactly that for one speaker at the Reuters Wealth Management Summit. The 'normal' range of extras that wealth managers are offering super-rich clients under the banner Lifestyle Management has expanded as they scramble to keep on board clients whose massive wealth was rendered a little less massive during the financial crisis.   Citigroup's private banking arm keeps an art curator on staff to make sure clients don't overspend at auctions and maximise the value of their collection - it's a real problem apparently.   But one of the smaller banks represented at the summit goes a lot further than that. "We do pretty much whatever they want." On further investigation this stops short of walking the dogs but it does include managing fleets of vehicles, relocation for tax exiles, school selection for the rich in-waiting, wine cellar stocking, art advice (of course) and payroll services for the hired help.   But what was the most unusual request he has ever had from a client? "We were once asked pick up some strange medication and we organised the redecoration of the interior of a private jet in questionable taste," said one private banker. He wouldn't say any more, but some might think that was too much detail already.
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