Funds Hub
Money managers under the microscope
from Global Investing:
Clearing a way to Russian bonds
Russian debt finally became Euroclearable today.
What that means is foreign investors buying Russian domestic rouble bonds will be able to process them through Belgian clearing house Euroclear, which transfers securities from the seller's securities account to the securities account of the buyer, while transferring cash from the account of the buyer to the account of the seller. Euroclear's links with correspondent banks in more than 40 countries means buying Russian bonds suddenly becomes easier.And safer too in theory because the title to the security receives asset protection under Belgian law. That should bring a massive torrent of cash into the OFZs, as Russian rouble government bonds are known.
In a wide-ranging note entitled "License to Clear" sent yesterday, Barclays reckons previous predictions of some $20 billion in inflows from overseas to OFZ could be understated -- it now estimates that $25 to $40 billion could flow into Russian OFZs during 2013-2o14. Around $9 billion already came last year ahead of the actual move, Barclays analysts say, but more conservative asset managers will have waited for the Euroclear signal before actually committing cash.
Foreigners' increased interest will have several consequences. Their share of Russian local bond markets, currently only 14 percent, should go up. The inflows are also likely to significantly drive down yields, cutting borrowing costs for the sovereign, and ultimately corporates. Already, falling OFZ yields have been driving local bank investment out of that market and into corporate bonds (Barclays estimates their share of the OFZ market has dropped more than 15 percentage points since early-2011). And the increased foreign inflows should act as a catalyst for rouble appreciation.
Each of these points in a bit more detail:
a) Foreigners' share of the Russian bond market is among the lowest of major emerging markets. Compare that to Hungary, where non-residents own over 40 percent, or South Africa and Mexico, where foreigners' share of local paper is over 30 percent.
from Global Investing:
Winners, losers and the decline of fear
Lipper has released its monthly look at fund flow trends in Europe, and as ever, it throws up some intriguing results.
August saw bond funds again dominate inflows, pulling in a net 20.8 billion euros and just a tad down on July's record. Stocks funds continued to suffer, as British equity products led the laggards with close to 2 billion euros withdrawn by clients over the month. North American equity funds and their German counterparts also saw big outflows.
from Global Investing:
Funds will find a chill Wind in the Willows: Lipper
"Asset managers are emerging from their comfortable burrow to face a battery of lights."
Sheila Nicoll, Director of Conduct Policy at Britain's Financial Services Authority (FSA), had perhaps been reading Kenneth Grahame before her recent speech, and her words are likely to have sent a chilly wind through the willows of the UK funds industry.
from Global Investing:
LIPPER-ETF tiddlers for the chop?
(The author is Head of EMEA Research at Thomson Reuters fund research firm Lipper. The views expressed are his own.)
By Detlef Glow
The exchange-traded fund (ETF) market has shown strong growth since its inception in Europe. Many fund promoters have sought to capitalise on this, seeking to differentiate themselves from rivals and match client needs by injecting some innovation into their product offerings. This has led to a broad variety of ETFs competing for assets, both in terms of asset classes and replication techniques.
from Global Investing:
GUEST BLOG: Is Your Global Bond Fund Riskier than You Thought?
This is a guest post from Douglas J. Peebles, Head of Fixed Income at AllianceBernstein. The piece reflects his own opinion and is not endorsed by Reuters. The views expressed do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio-management teams.
Global bond funds continue to attract strong inflows as near-zero interest rates lead many investors to look abroad for assets with attractive yields. As we’ve argued before, global bonds provide many important benefits, but it’s crucial that investors select the right type of fund.
from Global Investing:
Certain danger: Extreme investing in Africa
The Arab Spring, for all its democratic and political virtues, put a big economic dent in the side of participating North African countries, particularly when it came to attracting foreign investment in 2011.
According to a recent UNCTAD report:
Sub-Saharan Africa drew FDI not only to its natural resources, but also to its emerging consumer markets as the growth outlook remained positive. Political uncertainty in North Africa deterred investment in that region.
from Global Investing:
Investors hungover after wine binge
During this depression, it would appear that investors are no longer finding solace in turning to the bottle.
Fine wines are being hit hard by the global downturn, with the Liv-ex Fine Wine 100 index down 7.4 percent on the year, according to July’s Cellar Watch Market Report.
from Global Investing:
Lipper: Getting serious about giving
"Wouldn't you rather your donations achieve a lot rather than a little? Then you'll need to get serious and proactive. If you do it wrong, you can easily waste your entire donation."
Caroline Fiennes is not one to pull her punches when talking about charitable giving, but the more I talk to her, or read her new book - 'It Ain't What You Give It's The Way That You Give It' - the more it becomes apparent that her philosophy is not all that different from that of a professional fund manager.
from Global Investing:
The ETF ‘Death List’
Our colleagues at Lipper have put together some eye-catching data on developments in the ETF industry. You can read the slides here.
Most intriguing is the idea of a slumbering cohort of 241 exchange-traded funds forming what Lipper calls a 'Death List'; ETFs which are more than three years old, but which have failed to drive assets up to the 100 million euro-mark.
10 years of fund industry evolution: Lipper
“A game of two halves” is a footballing cliché in the UK, but was particularly apt for the European funds industry in 2011. The stock market falls that began in July not only ended the healthy sales activity that had started the year, but triggered a wave of redemptions that rolled through the industry. While these outflows ebbed slightly in the final quarter of the year, there were few who did not feel the cold chill of investors withdrawing from mutual funds by the year-end.
Net sales of long-term funds (i.e. excluding money market funds) in 2010 (305.8 billion euros) exceeded not just those of 2009 (257.7 billion), but also the level achieved in pre-crisis 2006 (265.9 billion). Expectations were therefore high when the first half of 2011 saw inflows of 96.1 billion euros, but this was followed by outflows of 155.9 billion, so that the year as a whole ended in the red (-59.8 billion) for only the second time in a decade (the 2008 total was -391.4 billion euros).
