The latest statistics from the UK Investment Management Association revealed funds under management of £378 billion ($710 billion) in August...

The latest statistics from the UK Investment Management Association revealed funds under management of £378 billion ($710 billion) in August, a rise of 1 per cent from July and 21 per cent higher than in August 2005. ISA funds under management of £48.4 billion saw an increase from the £48 billion in July and were 14 per cent up on the previous year.

Total net sales in August were £1.7 billion with equities accounting for inflows of £662 million. Of the £1 billion net retail sales, £558 million was invested in equities and property, followed by £247 million in bonds.

European fund managers have held down dealing commissions through tough negotiations on price and a move towards trading portfolios of shares and using lower-cost electronic trading systems. This, despite recent increases in trading volumes and equity assets under management according to a survey by US-based consultancy Greenwich Associates.

Although fund managers’ holdings of equities increased by up to 15 per cent in the first quarter of 2006 to about €3,100 billion ($3,977 billion) total commissions paid on all equity trades only rose 2 per cent to €4.3 billion.

The average commission rates on cash agency trades have fallen from 18 basis points to 17 bps, according to Greenwich, and the average rate on self-directed electronic trades of European shares fell from 10 to 7 bps.

New UK rules on “unbundling”, which require fund managers to break down how they reward brokers for research and execution, will also put downward pressure on commissions.

Global provider of outsourced asset management, investment processing and investment operations solutions, SEI, has released an Executive Quick Poll that shows that wealth managers are rapidly moving toward implementing open architecture.

An overwhelming majority of poll respondents (85 per cent) said that within the next twelve months the decision to offer open architecture investment solutions and expertise will be a top priority for wealth managers.

Fifty-one wealth management executives responded to the online poll. They were asked a series of questions to determine their level of interest and perceived challenges in implementing open architecture investment solutions.

According to the poll, forty-eight per cent of respondents said the desire to be seen by clients as free from conflicts of interest is the biggest reason they offer, or are moving toward, open architecture.

Twenty per cent said they prefer an open architecture investment solution because it allows them to focus more resources on client-facing activities; 18 per cent said the competitive landscape demands that they offer more than proprietary products.

A majority of respondents (57 per cent) offer a mix of proprietary and open architecture investment products. Just eight per cent offer only proprietary investment products. Eighty-six per cent of respondents say their banks plan to offer a "hybrid investment architecture" that blends open architecture with proprietary products”.

Private banks have doubled their average suggested allocation to private equity in client portfolios over the last three years to up to 10 per cent, according to research by Hotbed, the private investor network.

Two-thirds of UK private banks surveyed said that a typical allocation for a client in private equity would now be between 5-10 per cent, say Hotbed.

And some UK private banks said that the proportion could be even higher if clients have the appetite, sufficient liquid wealth and the required understanding of the asset class to make this appropriate.

Three years ago, only one third would have had such a high allocation, with the majority saying that 0-5 per cent was then the norm. Almost all (92 per cent) said that they have seen client interest in private equity as an asset class increase in the last three years.

The net asset value of funds under administration in Jersey has reached the record level of £159.7 billion ($300 billion) a rise of £3.7 billion in the second quarter, according to new statistics from Jersey Finance.

The number of new expert funds established in the island increased by more than 26 per cent in the last quarter from 169 to 214 and their net asset value grew by £3.8 billion to £21.7 billion.

The aggregate value of bank deposits decreased by £4.3 billion to £183.7 billion during the quarter, primarily as a result of a single transaction undertaken by an institution as part of a group re-organisation.

The total value of funds under investment management in Jersey increased by £0.8 billion to £59.1 billion in the quarter.

Funds under management and administration in Guernsey grew by £3.4 billion ($6.3 billion) an increase of 3 per cent over the quarter ended 30 June 2006 to reach a total of £114.8 billion, according to figures released by the Guernsey Financial Services Commission.

For the year since 30 June 2005, values increased by £30.7 billion, an increase of 36.5 per cent.

Guernsey domiciled open-ended funds grew by £479 million (0.9 per cent) over the quarter and by £12.4 billion (30 per cent) over the year since 30 June 2005 to reach a new record total of £53.9 billion.

Closed-end funds also grew, with increases of £4.8 billion (14.2 per cent) over the quarter and £13.4 billion (53.5 per cent) over the year since 30 June 2005, to reach £38.6 billion, also a new record.

The Initiative for Private Equity Investment Trusts – iPEIT - has been formed to improve awareness and understanding among retail investors, smaller institutions and investment managers not already involved in private equity investment, about private equity in general and PEITs in particular.

Even among large institutions which invest in private equity limited partnership funds, this complementary route to the sector has not always been appreciated, it is felt.

iPEIT aims to clarify a number of issues that commonly arise in members’ conversations with investors, including liquidity, net asset value, cash drag and the difference between PEITs and VCTs – a common confusion. iPEIT’s website www.ipeit.com together with links to data and proprietary research shortly to be published, offers explanation and information on all aspects of private equity and PEITs.

Standard Bank Offshore has launched a second tranche of structured products focussing on property and commodities after taking in $18 million from the first series last year.

The products offer clients access to a basket of commodities consisting of aluminium, copper, zinc and Brent crude oil or a European property growth basket, which links potential returns to the FTSE EPRA/Nareit real estate index.

The bank said the investor is guaranteed a minimum return of 40 per cent as long as the basket achieves positive growth at maturity in four years. If the growth exceeds 40 per cent, the investor will receive unlimited additional potential growth over and above 40 per cent.

Man Investments Canada, a division of UK-listed hedge fund manager Man Group, has launched the Man AHL Diversified (Canada) Fund, a managed futures investment designed to deliver returns independent of stock and bond investments.

The Man AHL Diversified (Canada) Fund is managed by AHL, one of Man Investments' core investment managers, which oversees $16.2 billion globally. The fund has been structured to provide access to the AHL Diversified Programme.

Sanlam Private Investments, the private client portfolio management and stockbroking subsidiary of South Africa’s Sanlam Group is partnering with Swiss private bank, Pictet & Cie to enhance its high net worth offering.

“Through our partnership with Pictet, SPI clients will gain access to geographically diversified investment options as well as Pictet’s extensive product range. These include bespoke portfolio management, traditional and specialised funds and alternative investments,” said Daniël Kriel, chief executive officer of SPI.

Some of Sanlam’s best funds are also currently being considered for inclusion on Pictet‘s open architecture platform, which will provide Pictet’s international client base with access to these funds for the first time.

“Pictet has a wide global reach with investments spread across more than 80 countries. We believe that SPI shares our culture of excellence and this partnership provides the opportunity for Pictet to reach the South African market. Our focus on wealth management and investment in human capital means that through SPI we are able to offer the South African investors world class advice and investment opportunities,” said Jean-Francois Demole, one of Pictet’s eight managing partners.

Pictet Funds has launched the PF (LUX)-US Equity Selection, managed by Daniel Becker and Philip Sanders, both vice-presidents at Waddell & Reed, an investment management firm based in Kansas City.

The fund invests in US large cap growth stocks. It is actively managed with a bottom-up approach and with a focus on fundamental stock research. It focuses on companies believed to have superior growth prospects and sustainable competitive advantage. The fund typically invests the bulk of its assets in four primary growth sectors, healthcare, technology, consumer and financial services.

The fund is available to institutional, private banking and retail investors in European countries including Switzerland, Germany, Spain, Italy, France and the UK.

Fidelity International is planning to build a global multi-manager business based on its existing UK-distributed multi-manager offering.

The new platform will offer a comprehensive range of investment strategies to both retail and institutional clients according to the company.

Fidelity is launching 12 new Luxembourg-listed multi-manager SICAV funds for investors across Europe – three multi-asset portfolios designed to be core holdings and nine single strategy funds for specialist holdings reflecting more specialist objectives.

Data shortly to be released by research company Cerulli Associates shows that new sales of multi-manager products have far outstripped sales of conventional funds. Worldwide, net growth in new sales of multi-manager portfolios have grown at 17 per cent per annum over the past five years, compared with 5 per cent per annum for all mutual fund assets, according to Cerulli.

“Multi-manager assets are forecast to grow even faster over the next few years, averaging an annual rate of 18 per cent between now and 2009 - three times higher than mutual fund assets overall. Investors and advisors are increasingly appreciating the merits of a multi-manager approach, said Simon Fraser, President of Institutional Business at Fidelity International.

The 12 new funds will be offered to investors across most European markets and will be domiciled in Luxembourg.

The SICAV range complements the five-strong family of MultiManager OEICs in the UK, including the recently launched Fidelity MultiManager Distribution Fund, a multi-asset product mixing equities, bonds and property securities funds.

The SICAV funds fall into two broad categories:

Core multi-asset portfolios: the diversified and balanced products give investors exposure to a mix of cash, bonds, equities and other asset classes, while the global high income product invests in income generating assets.

Specialist portfolios: these nine funds include a group of high alpha equity products (Global, European, US, Asia, Japan), two sector portfolios (Natural Resources and European Property) and two emerging market portfolios (Global and Europe).

The current holdings for Fidelity’s new MultiManager Distribution Fund are as follows.

Equity Income: Artemis Income Fund, JO Hambro Capital UK Equity Income Fund, Neptune Income Fund and Standard Life UK Equity High Income Institutional Fund.

Fixed Income: ECM Danube Fil Institutional Fund, GS Libor Plus II Portfolio, Cazenove Strategic Bond Fund and Pall Mall High Yield Europe Plus Fund.

Property: Fidelity Global Property Fund, Henderson HF Pan European Property Equities Fund and Morgan Stanley Asia Property Fund.
Fidelity International has also announced that restrictions on its American Special Situations Fund will be lifted on 23 October 2006, reopening the fund to new investments.

The initial charge on the fund was increased to 5.25 per cent in November 2003 to stem the large inflows of new money. This charge will be reduced to Fidelity’s standard charge of 3.5 per cent.

Initial commission for advisors has also been reinstated on the fund at 3 per cent and on-going trail commission of 0.5 per cent will be paid on new investments.

Previously run by Neal Miller, the fund is now managed by Bob Haber, who took over this July.
In response to “strong demand from users of fund platforms and life company wrappers”, Fidelity International has produced an OEIC version of the Fidelity Global Property Fund, which invests in property stocks and real estate investment trusts worldwide.

It is available in this form on Cofunds, FundsNetwork, Lifetime and Transact: from 12 September 2006, it will also be available via Skandia.

Complementing the SICAV launched at the beginning of 2006, the OEIC is invested in exactly the same way and offers the same commission features.

Peter Hicks, Head of IFA Channel, Fidelity International, said: “Since the successful launch of the Global Property SICAV in January, life companies have been asking for a UK-domiciled version of the product. Many life companies and platforms are still unable to include SICAVs in the range of funds they offer, and adviser demand for Fidelity’s Global Property Fund has been so strong that we are now offering an OEIC version”.

The fund gives exposure to the global property sector by investing in the stocks in a diversified portfolio of property sectors including: industrial, retail, office, residential and hotels. It invests in liquid property securities rather than physical property.

UK smaller company fund manager, Octopus Investments, has launched its Octopus Protected Inheritance Tax Service.

This development of its existing ITS mitigates inheritance tax by investing in a diversified portfolio of 20–40 companies listed on the London Alternative Investment Market, typical market capitalisation £90 million($169 million).

Money invested in AIM companies is exempt from tax if it has been held for more than two years at the time of death instead of the more usual seven. In addition, investors retain access to their money.

The plan, at a minimum, will preserve the value of the original investment as a tax-free inheritance. This is achieved by the inclusion of a group life assurance policies that will cover any losses that may have occurred in the portfolio at the time of death, with no age limit for entry into the scheme and no minimum holding period.

Julius Baer-owned fund manager GAM has launched a new FSA-recognised Irish UCITS fund, GAM Star Asian Equity. The fund is managed by Michael Lai, based in GAM’s Hong Kong office.

GAM Star Asian Equity will share its investment approach with GAM’s existing Asian offshore fund. The launch allows GAM to offer its Asian strategy to a wider investment audience.

GAM Star Asian Equity seeks to achieve capital appreciation through investment in quoted securities in the Asia Pacific region (excluding Japan but including Australia and New Zealand).

The minimum investment is £6,000 ($11,200) or currency equivalent.

Collins Stewart Portfolio Management is to launch a Guernsey-registered, closed-ended fund of hedge funds, which is intended to be listed on both London's junior market, AIM and the Channel Islands Stock Exchange in October.

This will be the first London-traded fund that invests in third party hedge funds not to levy an annual management fee. To ensure a close alignment of interests between the managers and shareholders of the fund, performance fees only will be charged.

The fund hopes to raise up to £50 million ($93 million); the target client base will include pension funds and other institutions as well as UK investment managers who previously may have wished to access this asset class but were unable to do so because of regulatory or tax constraints.

Five European equity funds managed by Merrill Lynch Investment Managers have been rated “A” by Standard & Poor’s the ratings agency.

The five are: MLIIF European Growth Fund and MLIIF Continental European Growth Fund, both managed by Niall Gallagher; ML Continental European Fund, managed by James Macmillan; MLIIF Euro Markets Fund, managed by Alice Gaskell, and MLIIF European Fund, managed by Gavin Corr.

ML European Dynamic Fund, managed by Niall Gallagher and MLIIF European Value Fund, managed by James Macmillan already hold “A” ratings from Standard & Poor’s.

Firmwide, assets under management at MLIM were $589 billion as at 30 June 2006.

The wealth management division of Dubai Islamic Bank has launched a shariah-compliant 3-year commodity linked individually capped performance note, which DIB believes is the first of its kind.

The notes will be linked to a basket of commodities comprising gold, crude oil, copper, aluminum and zinc.

The notes are capital protected and will be co-branded with Deutsche Bank. The minimum investment is $10,000.

Société Générale Corporate & Investment Banking has expanded its successful private investor brand, Adequity, into the UK independent financial advisor market for the first time.

The specially designed UK version comprises two ranges: an OEIC aimed at retail investors who are looking for packaged investment solutions and a UCITS 3 SICAV offering wealth managers new components to use in portfolio construction.

By offering financially engineered solutions in open-ended fund wrappers, SG aims to make structured products transparent, easy to use and appropriate for the different tax wrappers used by UK IFAs.

The first Adequity fund to be launched under the OIEC umbrella is SG Adequity Best Asset Protected Fund which has been designed in conjunction with large IFA network clients to meet their appetite for diversified asset class exposure combined with 100 per cent capital protection.

It offers exposure to five different asset classes: UK equity, US equity, real estate, commodities and hedge funds in a single fund holding, with full capital protection on the downside and systematic performance management on the upside.

The first two Adequity funds within the SICAV range are both enhanced trackers designed to maximise the performance captured by a client if their portfolio or investment manager has made correct asset allocation decisions.

The SG Adequity Enhanced Growth UK Tracker offers 185 per cent participation in any growth in the FTSE 100 whilst only participating one for one in any fall.

The SG Adequity Optimised Income Global Tracker is based on four major equity indices and combines 100 per cent participation in any growth with the opportunity to earn an enhanced dividend of up to 7.5 per cent per annum.

UK-based Strutt & Parker Real Estate Financial Services has launched a second tax-efficient property development fund.

SPREFS Property Development Fund II is designed to provide investors with an annual return of 10 – 15 per cent over its five year life and to mitigate 100 per cent of UK inheritance tax liability as well as to obtain the benefits of business asset taper relief.

SPREFS Property Development Fund I was launched at the beginning of the year and is now nearly fully invested.

The second fund, with a minimum investment is £500,000 ($935,000) will invest in a wide range of developments across all sectors of the market and is expected to raise over £30 million.