Funds Hub
Money managers under the microscope
Morning Line-up: Investors get picky with emerging markets, BlackRock sets sights on U.S. retail
News and views on the asset management industry from Reuters and elsewhere:
Warier investors seek specialized emerging market funds – Wall Street Journal
Morning Line-Up: BlackRock bullish, IPOs, Tower Australia
News and views on the asset management industry from Reuters and elsewhere:
BlackRock founder upbeat on growth potential – FT
Volatility a fact of life for BlackRock’s Lyttleton
By Deborah Cicurel
After a month or two of volatile equity prices and a yo-yoing stock market, steady returns seemed about as likely as France lifting the 2010 World Cup.
However, Mark Lyttleton, co-manager of the Blackrock UK Absolute Alpha fund sees a way out, claiming his fund — which made money in 2008′s falling markets but underperformed equities in 2009′s rebound and in Q1 2010 – can navigate its way through the current macroeconomic worries.
He argues the fund’s two main themes, namely “that financial markets would continue to heal and that corporate discretionary expenditure would rebound strongly”, are still working.
And he has recently bought shares in IT hardware and software companies “in expectation that corporates will be reinvesting in their business”.
“We have introduced a short position in the UK life assurance sector,” he added, “partly to hedge the financial exposure elsewhere in the fund, and partly because of the likelihood that capital pressures will intensify.”
However, Lyttleton concedes that “market volatility is a fact of life” — so while the worst share turbulence may be over, the stock market may not be smooth sailing just yet.
Regulated are the cheesemakers
Poul Nyrup Rasmussen, seen by many as the bane of the UK’s hedge funds industry for his input into the highly controversial EU directive on Alternative Investment Fund Managers, no doubt expected a hostile reception today at the Guildhall when he appeared at a debate hosted by Open Europe on the directive.
Whilst widely welcomed for his bravery in appearing, Rasmussen nevertheless came in for heavy criticism from City Minister Paul Myners, fellow panellists and an audience full of hedge fund and private equity representatives, making what was probably an uncomfortable lunchtime for the president of the EU assembly’s socialist bloc.
Opposition to the directive focuses on many things, including its proposed controls on leverage, perceived lack of industry consultation, a “one size fits all” approach to many different types of funds and what is seen by some as protectionism – by limiting EU investor choice to those funds with EU managers and EU service providers and stopping investors buying funds outside the EU.
However, for all the wide range of hostility, Rasmussen, who was accused by Myners of “tilting at mythical windmills”, was probably not expecting criticism on the subject of cheese.
BlackRock’s Doug Shaw cited Rasmussen as saying the directive had “more holes than Swiss cheese”.
He went on: “I would encourage Mr Rasmussen to make the most of his non-EU cheese analogy whilst he still can, even under the EU Cheese Directive — and if it doesn’t exist today maybe it will in the future.
“EU cheese-eaters will only be able to buy EU-produced cheese from EU milk, from EU herds, fed EU grass grown in EU fields.
from DealZone:
Goldman’s Viniar: Why pay twice?
Turns out Goldman Sachs is a staunch advocate of going organic -- when it comes to the money management business.
As Barclays auctioned off its Barclays Global Investors unit this year, Goldman was widely seen as a likely acquirer. That is until Blackrock In under Larry Fink emerged as the buyer with a $13.5 billion deal.
Lots of other money managers are expected to be sold, as the industry consolidates and cash-strapped banks look for valuables to pawn. But Viniar told analysts Goldman's preference is to grow the business without deals, and appeared to question the very idea of money manager deals.
"If there were an acquisition that made sense financially for us to do, we would certainly consider it," he said, something he says every three months to calm down excitable analysts. "When we look at the prices of most of the acquisitions, we think that they haven't made sense in that you've had to assume really heroic growth rates that we don't think are realistic."
Jefferies Putnam Lovell recently said it counted 35 management deals in the second quarter, compared with 52 deals a year earlier. Besides the BGI takeover, Aquiline Capital Partners acquired Conning & Co, JPMorgan Chase bought the remainder of its Highbridge Capital Management hedge fund unit and Woori Finance purchased Credit Suisse's 30 percent interest in a joint venture.
Yet Viniar notes money management firm deals are tricky, since buyers have to pay a premium for the company and then put up more money to retain star managers. And even as billions of profits come sloshing into Goldman's coffers, Viniar apparently doesn't like to part ways with the firm's cash.
"It has taken a while, but we've grown (the asset management business) quite successfully, almost exclusively organically." he said. "And the high likelihood is that is the way we are going to continue to grow it in the future."
Watch BlackRock’s Mark Lyttleton give his market view
Mark Lyttleton, manager of the 1.5 billion pound BlackRock UK Absolute Alpha fund, gives his view on the recent rebound in the equity market and his outlook for the rest of the year and beyond.
Hedge fund diversification
Tuesday’s Treasury Select Committee grilling of the hedge fund industry proved a lively affair (if somewhat hot in a crammed Westminster room), but you have to wonder how well diversified their choice of witnesses is.
As well as Chris Hohn, co-founder of TCI, the Committee picked BlackRock’s head of alternatives Douglas Shaw — a previous employee of TCI.
Another witness was Marshall Wace’s Paul Marshall. Paul was former chief investment officer for continental European equities at Mercury Asset Management – now part of BlackRock.
But then again, this isn’t the biggest of industries to choose from.
