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Fund managers acting more cautiously
September 8, 2010--The latest findings from independent financial research company Defaqto suggest that fund managers are acting more cautiously than 12 months ago because of growing fears of a double-dip recession.
Fraser Donaldson, Defaqto’s Insight Analyst for Funds, said: “The level of confidence and uncertainty
in the market is usually reflected by the cash element in funds.
A year ago we saw these levels falling
to less than 5%, the lowest for several years. There was a confidence that the recession was over and
that the first green shoots of sustained recovery were being seen. However, the levels of cash in July
2010 – almost 2% more than October 2009 – indicate a dip in confidence.”
In July 2010, cash accounted for 6.6% of fund asset allocation. In this period, UK equity exposure also fell to its lowest level for several years – 30.8% – while property and alternative asset classes increased as managers looked further afield to achieve positive returns.
Defaqto’s free guide to multi-managers has been updated and provides IFAs with the investment information they need when selecting multi-manager funds for their clients. It includes an updated statistics section, with both asset allocations and performance-related data as at 1 July 2010. The issues and events that have affected the industry over the past six months are also included.
view guide
Source: Defaqto
London Stock Exchange: New Multi Market Order Routing Service For Exchange Hosting Clients -
QuantHouse service provides access to all major US and European markets from central London location
Complements existing ultra low latency market data feeds
Free One Month Trial
September 8, 2010--The London Stock Exchange today announced that QuantHouse is to offer an ultra low latency order routing service to clients located in the Exchange’s hosting facility. The new order routing service operates on QuantLINK, an ultra fast network, and provides access to all major European and US execution venues.
Quanthouse is offering all LSE hosted clients a free one month trial of the new order routing services, alongside its multiple market data feeds. Both services are available within the Exchange’s central London data centre, strategically located to provide optimal average latency to multiple UK trading venues.
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Source: London Stock Exchange
MEPs: financial regulation on track but this is only the beginning
September 8, 2010--MEPs on Wednesday welcomed the financial supervision package that was endorsed by the Council on Tuesday but insisted this was the first step towards a regulatory system and not the final product. They also commented on the moves to introduce a "European semester", allowing monitoring of national budgetary and economic policies, and held a lively debate on the idea of a financial transaction tax.
Taking the floor for the Council Presidency and the European Commission respectively, Didier Reynders and Michel Barnier briefed the house on the outcome of the ECOFIN meeting and the steps ahead for financial and economic regulation in Europe. They particularly focused on the state-of-play of the discussion on introducing bank levies and a tax on financial transactions.
Financial supervision
Corien Wortmann-Kool (EPP, NL) and Udo Bullmann (S&D, DE) praised the EP rapporteurs for their persistence in the negotiations and congratulated Mr Reynders and Commissioner Barnier on the result.
Sylvie Goulard (ALDE, FR) insisted the new European supervisory authorities should be given the appropriate room for manoeuvre without introducing too many safeguard clauses for European action, as the Council had so insistently attempted to do previously. "It will be important to ensure that the text's occasionally vague wording does not prevent us from going further", she said. Hans-Peter Martin (NI, AT) criticised the package, comparing it with the American system: "Theirs is stronger!", he said.
Economic policy co-ordination - European Semester
Members broadly agreed on the need for further economic and budgetary co-ordination and applauded the introduction of a "European Semester", which would allow the Commission and Council to monitor national budgets and economic policies in parallel during a six-month period every year. The idea emerged from the Task Force on Economic Governance, chaired by European Council President Herman van Rompuy. Miguel Portas (GUE/NGL, PT), however, warned that this system must not undermine the prerogatives of national parliaments: "That would lead to a situation in which Germany is telling Greece what to do. We can't rob the national members of parliaments of their freedom of choice concerning their budget."
view Council of the EU - results of 7 September 2010 meeting
Source: European Parliment
STOXX launches new Risk Control Index
September 8, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today announced the launch of the EURO STOXX 50 Risk Control 20% Index. The new index measures the performance of a hypothetical portfolio which aims to control the risk of the underlying EURO STOXX 50 Index. The portfolio consists of an investment into the EURO STOXX 50 Index and the money market (EONIA). In order to achieve risk control, the asset allocation is shifted between the two investments, targeting a risk of 20%.
“The EURO STOXX 50 Risk Control 20% Index is based on an innovative index concept which increases or decreases exposure to assets as volatility falls or rises,” said Hartmut Graf, chief executive officer, STOXX Ltd. “With the launch of this index, we are offering market participants a tool to combine equity investing with risk control, based on Europe’s leading equity index.”
The EURO STOXX 50 Risk Control 20% Index replicates a portfolio that allocates varying investments into the EURO STOXX 50 Net Return Index and into the money market as measured by EONIA. The exposure to the underlying EURO STOXX 50 Index can be adjusted from 0% to 150% in order to meet the targeted risk of 20% for the portfolio. If the expected risk, which is measured by the VSTOXX, steadily exceeds the target risk level, the portfolio’s exposure to the EURO STOXX 50 Index is decreased and that to the EONIA investment increased respectively. If the expected risk falls below the targeted risk level, the portfolio will be adjusted towards the EURO STOXX 50 Index, but only until a maximum exposure of 150% towards the underlying index is reached.
The EURO STOXX 50 Risk Control 20% Index is available in total and excess return version. The excess return index measures the return of the EURO STOXX 50 Risk Control (TR) Index less the EONIA return. The index is calculated in EUR. Daily history is available back to May 18, 1999.
The EURO STOXX 50 Risk Control 20% Index is part of the STOXX Strategy Index family. Further information on the STOXX Strategy Indices is available at www.stoxx.com.
STOXX changes composition of STOXX Sustainability Indices
September 8, 2010--STOXX Limited, a global index provider and
creator of the leading European equity indices, today announced the results of the regular annual review of the STOXX Sustainability Indices.
Effective with the open of European markets on September 20, 2010 the number
of components in the STOXX Europe Sustainability Index will increase to 156 from
previously 155 components, and the number of components in the EURO STOXX
Sustainability Index will increase to 86 from previously 85 components.
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Source: STOXX
Cult of equity’ is over, says leading fund manager
September 8, 2010--The “cult of equity” is dead as dividend yields in most of the west have risen above bond yields, according to one of Europe’s leading equity fund managers.
Alister Hibbert, a fund manager in European equities at BlackRock, told the Financial Times in a video interview that the cult started when dividend yields fell below bond yields about 60 years ago.
“We have now moved decisively the other way ... and that seems to be in relatively normal market times. So I think the cult of equity is dead,” he said.
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Source: FT.com
Demand in emerging markets powers European recovery
September 8, 2010--The German economy is striding into recovery, pulled by its formidable export machine and diverging from France which is struggling with a trade deficit, latest data shows while small Europe countries jostle for recovery on the sidelines.
Analysts say momentum in Europe is being powered by strong demand for imports in emerging markets, notably Asia, with Germany particularly well-placed to cash in.
But there is also concern in some European countries that Germany, Europe's largest economy, is not doing enough to stimulate domestic demand.
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Source: EUbusiness
STOXX changes composition of STOXX Sustainability Indices
September 8, 2010--STOXX Limited, a global index provider and
creator of the leading European equity indices, today announced the results of the regular annual review of the STOXX Sustainability Indices.
Effective with the open of European markets on September 20, 2010 the number
of components in the STOXX Europe Sustainability Index will increase to 156 from previously 155 components, and the number of components in the EURO STOXX
Sustainability Index will increase to 86 from previously 85 components.
The following stocks will be added to and deleted from the STOXX Europe Sustainability 40 Index...
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Source: STOXX
EDHEC Risk Institute Supports the Objective of Better Regulation of the Derivatives Markets for Commodities but Criticises the Motivation behind the French Position on the Subject
September 8, 2010--In an open letter1 to European Commissioner Michel Barnier, EDHEC Risk Institute supports the idea of better regulation of the derivatives markets for commodities requested by France in a recent report sent to the commissioner by the French Ministers of the Economy, Energy and Agriculture, and which serves as a basis for the French position ahead of its future presidency of the G20, but criticises the motivations behind the French request, which it considers cannot be a starting point for a credible European initiative.
According to EDHEC Risk Institute, the objectives of improved transparency and security of transactions carried out on the derivatives markets are praiseworthy and are in line with the consensual conclusions of the Pittsburgh summit, but it would be regrettable if the necessary support of all actors for strengthening the regulation of the international markets comes up against ideological presumptions and preconceptions that could ultimately lead to a genuine misunderstanding on both sides of the Channel or the Atlantic.
The assumption that underlies the French initiative, namely that derivative instruments are currently one of the causes of the high level of volatility in commodity prices, has absolutely not been demonstrated and is contradicted both by EDHEC Risk Institute’s own work2 and also by two recent empirical studies conducted by the two main international economic organisations with whose work the European Union is associated, namely the IMF and the OECD3.
This absence of a genuine and serious cause behind the request to regulate the derivatives market for commodities does not make the French position credible and in EDHEC’s opinion cannot seriously lead to support from all the European countries and more globally, the countries concerned by the subject.
In these conditions, EDHEC Risk Institute thinks that the European Commission should not commit to regulatory initiatives that are as important for the structure of the financial markets without the facts and arguments being clearly and objectively established.
Source: EDHEC
35% rise in European high net worth sustainable assets, despite crisis: Eurosif
September 8, 2010--The level of sustainable investments in European high net worth individuals’ (HNWIs) portfolios is estimated to have increased significantly since the beginning of the current financial crisis despite a drop in overall wealth assets during the same period, according to research by the European Sustainable Investment Forum (Eurosif).
Eurosif’s latest survey of European wealth managers and family offices, calculates the 2010 European level of sustainably-managed assets to be approximately €729 billion, which would represent an average of 11% of European HNWIs’ portfolios as of December 31, 2009. Eurosif said the figure represented a 35% rise since it
surveyed the market two years ago.
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Source: Responsible Investor
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