Direct and indirect foreign investors fled from Africa as the credit crisis sparked a flight to safety, or at least familiarity, but Ayo Salami, manager of the Duet Victoire Africa Index fund believes domestic demand can step in to underpin growth.

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."

(Photo: A customer walks past organic products in an organic food chain store in Taipei/Pichi Chuang)

More than a “nice to have,” investor sentiment is running heavily on the side of environment, social and governance (ESG) factors, according to the latest Thomson Reuters Perception Snapshot.

Feedback from 25 global buy-side investors found that 84 percent evaluate ESG criteria to some degree when making an investment decision.

The remaining 16 percent say ESG issues are not considered until a company’s ability to generate high returns is hindered by these factors.

Some of the selected comments:

“ESG only plays a role to the extent that it is an overhang on the stock. There is no moral component to investing. We are value neutral when it comes to our investment decisions, but we are not value neutral in our lives. We have a fiduciary duty to our clients, to the people who give us money to manage to maximize returns, which means that we can not be limited by our own personal morality. If I see a cigarette company that looks interesting I may invest in it even though I might not like it
personally.” - U.S. Hedge Fund Investor

“I am convinced that companies that follow the philosophy of social and economic responsibility are performing better in the long-term than those that do not.” - European Core Growth Investor

The report dovetails with Tuesday’s push by U.S. President Barack Obama to push for tougher industrial standards aimed at lowering greenhouse gas emissions.

Obama ordered the U.S. auto industry, where the hand of government is firmly in control (GM and Chrysler, but not Ford) to make more fuel-efficient cars to cut emissions and increase gas mileage.

The House of Representatives started its debate on the 946-page Democratic bill on Tuesday. Republicans are arguing the legislation would burden the economy with higher energy costs.

Does that matter, when scientists reported on Tuesday that global warming’s effects this century could be twice as extreme as estimated just six years ago?

Massachusetts Institute of Technology scientists estimate the Earth’s median surface temperature could rise 9.3 degrees F (5.2 degrees C) by 2100. That’s up from the 4.3 degrees F (2.4 degrees C) estimate in 2003.

The U.N.’s Intergovernmental Panel on Climate Change said seas would rise by between 18 and 59 cms (7-24 inches) this century. But it pointed to big uncertainties about ice sheets in Greenland or Antarctica — one IPCC estimate was that this ice could add up to 20 cms to sea level rise.

Master-fraudster Bernie Madoff is the invisible guest at an annual fund fest in Luxembourg, the European capital for fund administration.

Even though the former Nasdaq chairman is under arrest thousands of miles away from this discreet financial centre nestled between Belgium, France and Germany, his presence was omnipresent. Fund managers just can’t stop mentioning him.

 One example: “The hedge fund bubble has popped. The market bubble has popped, and to put a cherry on the top you had the Madoff probe in December,” said Ken Kinsley-Quick from hedge fund Thames River Capital.

Other speakers have gone into deep soul-searching, accepting that more transparency and due diligence is needed. But few would openly beat their chest and admit any wrongdoing as they all seemed to agree that if the Securities and Exchange Commission could not catch Madoff’s wrong doing over 20 years, no-one could.

“Except for a few whistle blowers no-one had expected anything. I really do not think that custodians did not take their role seriously. But it’s not helping the industry,” Yves Francis, a partner from Deloitte said.

Even Luxembourg’s budget minister, Luc Frieden, got into the act, suggesting that a deal should be made out of court to compensate Madoff investors who had gone through Luxembourg-based investment vehicles.

He clearly wanted Madoff to just go away.

(Reuters photo: Mike Segar)

Wealth managers at Citi Private Bank are telling their clients to stay neutral in their exposure to hedge funds at the moment, whether the strategy be event driven, equity long/short or macro. The main reason is that capital markets are still stressed and many hedge funds still need to deleverage.

The firm points out, however, that hedge funds had a good news-bad news kind of year in 2008. Based on the HFRX Global Hedge Fund Index, it was the worst performance on record. The index lost 23.3 percent. Its next worst performance was 2002 — and that was only a 1.5 percent decline.

Losses were widespread across all kinds of strategies. Only merger arbitrage and systematic macro gained anything. 

The good news, so to speak, was that that this dreadful performance was better than what you would have got from just plain equities. The S&P 500, for example, lost 38.5 percent, meaning that the hedge fund index outperformed by a whopping 15.2 percentage points.

It was that kind of year.