Money managers under the microscope
from Global Investing:
Banks and financials stocks have had a pretty good year. The Thomson Reuters Global Financials index is up by more than 20% in the last 12 months, and although the detritus of the financial crisis still offers the occasional sting, investors are starting to see brighter spots for the industry.
That confidence is increasingly obvious in the fund flows.
Our corporate cousins at Lipper track more than 7,000 mutual funds and ETFs which are dedicated to specific industry sectors. Dig a little into the data in this subset of funds, and you start to get a pretty good picture of where the biggest bets have been placed.
Just shy of 500 of these funds are focused entirely on banks & financials. Together they hold more than $46 billion in assets.
Last month, they suffered a total net outflow of just about $1 billion, but on a one-year view, 10 months of net inflows have driven an injection of over $10 billion. It amounts to a concerted bet on the sector, particularly in the U.S. where the bulk of assets are held, with the inflows equating to 22% of the latest published assets under management. You can see the evolution over the year in the chart below; cumulative gains or losses over the 12 months are shown in the blue area; monthly flows are shown by the red bars.
News and views on the hedge fund industry from Reuters and elsewhere:
Hedge funds exit from Europe bets - The Wall Street Journal
South African government to clamp down on hedge fund oversight - Business Report
from Summit Notebook:
By Neil Chatterjee
The U.S. has promised it will hunt down tax evaders.
And it seems tax evaders are on the run.
DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
Is this the end of offshore private private banking?
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
from From Reuters.com:
At least 20 of the 30 biggest hedge funds boosted their positions in financial institutions in the last quarter, a sign that Wall Street is ready to bet on more risky sectors in the hope of longer-term rewards.
The push into financials indicates fund managers including Steven Cohen and John Paulson -- closely watched as barometers of risk -- have shifted from routine merger arbitrage plays to directional bets with more reward potential.