The alternative management group Gottex Fund Management Holdings has announced the acquisition of the Hong Kong-based alternative management firm Penjing Asset Management. Assets under management at Penjing total about USD434m. Gottex says in a statement that the activities of Penjing will contribute to operating profits for the group from the first year, largely due to the effects of synergy. The transaction is taking place via an exchange of Gottex shares and cash, all of which is payable over a period of two years, with a final amount to be determined depending on the evolution of assets under management at Penjing. Ronnie Wu, founder and CIO of Penjing, will join the Gottex group as senior executive for Asia.

According to sources familiar with the matter cited by the Wall Street Journal, the alternative asset management firm Magnetar Capital is being investigated by the SEC over trades it made on collateral debt obligations which contributed to the outbreak of the financial crisis. If the investigation results in civil charges, it will be the first time a hedge fund goes to court over a case related to CDOs.

The division responsible for trading losses at JP Morgan Chase now estimated at about USD3bn has built up a portfolio of over USD100bn in ABS and structured products, the Financial Times reports. This portfolio comes in addition to credit derivatives which provoked trading losses at the centre of investigations by regulators on both sides of the Atlantic.

The US asset management firm Vanguard has carried out its plans to cross the Atlantic. On 16 May, it announced that it is planning to release its first five ETFs on the London Stock Exchange, as they have recently received licenses from the Irish central bank. TERs for the funds range from 0.09% to 0.45%, which Vanguard highlights by terming them “low cost.” All of the funds rely on physical replication. Assets in the Vanguard group’s tracker funds total GBP741bn, while ETFs represent GBP109bn. Fund AMC/TER LSE Ticker (GBP) LSE Ticker (USD) Vanguard FTSE 100 ETF 0.10% VUKE --- Vanguard S&P 500 ETF 0.09% VUSA VUSD Vanguard FTSE All-World ETF 0.25% VWRL VWRD Vanguard FTSE Emerging Markets ETF 0.45% VFEM VDEM Vanguard UK Government Bond ETF 0.12% VGOV ---

Allianz Global Investors (Allianz GI) has launched four multi-asset class funds with risk objectives aimed at British investors, Investment Europe reports. Elizabeth Corley, chief executive at Allianz GI, claims that definitions and understanding of risk vary significantly from one European country to another, to the point that it is not realistic to launch a standard cross-border product. Allianz GI already has about GBP33bn in continental assets in similar strategies, but in formats which allow for easier adaptation to client needs. The four funds launched in the UK aim at various risk levels, from 7% to 11% per year for the defensive strategy, 10% to 14% for the conservative strategy, 12% to 17% for the moderate strategy, and 15% to 20% for the growth strategy.

Insight Investment has launched a UCITS IV-compliant version of its absolute return bond fund, Investment Week reports. The new fund, BNY Mellon Absolute Return Bond Fund, managed by Peter Bentley, head of global and British credit, invests in government bonds (4%), investmnt grade corporate debt (8%), corporate high yield debt (11%), ABS (28%), emerging market debt (9%), cash and money market instruments (40%). Meanwhile, Standish Investment Management is reportedly about to launch an emerging markets debt fund which will be managed by Alexander Kozhemiakin, managing director of emerging debt, and his team. The fund will invest in emerging market debt denominated in US dollars as well as in local currency. Standish already manages three emerging market debt funds, whose cumulative assets under management total USD4.2bn.

In Europe, style ETFs, with a value, growth or cap size bias, remain marginal. Value/growth ETFs represent only USD0.45bn, while equity style ETFs have USD115bn in assets in the United States, Isabelle Bourcier, head of development at Ossiam, has said at a round table at the InsideETFs Europe conference, on investment based on risk factors. This difference is due first of all to the fact that US investors are more sensitive to management styles than Europeans, which reflects a more unified market on the American side of the Atlantic, and a more fragmented market in Europe. Boucier also cites the typology of European investors in ETFs, who are largely funds of funds, private bankers, etc. These investors are primarily interested in geographical diversification in Europe. But those who are interested in management styles may be put off by the heterogeneity of the methdologies of index providers, which leads to vastly different baskets of assets, which require an excess of work. “Investors who are seeking exposure to a style prefer to turn to active managers,” says Bourcier. The head of development at Ossiam also claims that ETFs based on risk factors (to which style ETFs belong as well as funds based on volatility, momentum, etc.) should be used more as a “toolbox,” in an opportunistic manner, rather than for long-term investments. Arne Stall, director, head of systematic strategies and tracker products for Europe at Barclays Capital, agrees. He feels that ETFs based on risk factors may be used ni a tactical manner, or to hedge a portfolio. “One must be aware that these ETFs cannot function over a whole market cycle.” He claims the combination of different types of factors makes sense. Paul Kaplan, CEO of Morningstar, claims that ETFs based on risk factors may both serve the interests of short-term investors and long-term invetors, for example, whose who estimate that a long-term investment in a value style will outperform. However, he estimates that some factoral ETFs, such as funds based on the VIX, commodities, and leveraged and inverse ETFs, which are rather ETFs for playing short-term trends, are absolutely not appropriate for retail investors. He points out that style ETFs are still bets against the market, and that investors need to be aware of that.

Kurt Jovy has joined UBS Real Estate in Munich as head of acquisitions & dispositions for Germany and central and eastern Europe. He had previously been vice president, acquisition & sales, at Credit Suisse Asset Management Immobilien in Frankfurt.

Harcourt, an affiliate of Vontobel Asset Management, has recruited Jan Viebig and Georg Wessling as head of alternative investments and deputy head of alternative investments, respectively. Viebig, currently head of emerging market equities at Credit Suisse, replaces the former CEO of Harcourt, Stephan Fritz, who has decided to leave Vontobel Asset Management. Wessling is currently head of hedge fund advisory at Harcourt.

Axa Investment Managers (Axa IM) on 16 May announced that it has received permission from the local authorities to open a representative office in China, which comes as an addition to Axa IM’s operations in Asia. “The representative office of Axa IM in Beijing will aim to conduct market studies and build relationships with Chinese institutional investors,” AXA IM explains in a statement. AXA IM also plans to take part in the rapid development of the asset management industry in China, where there are now about EUR3.5trn in assets under management, largely for institutional clients, and where competition is intensifying and the product range available to retail and institutional invetors is rapidly growing. Ying Du has been appointed as head of the representative office. She will report to Terence Lam, head of sales and marketing for Axa IM in Asia. Ying joined AXA IM in 1998. She served in a series of various positions, before joining the customer relations team in Hong Kong in 2005, where she led the team in charge of institutional clients.

From 1 June 2012, shares in the Banque Cantonale Vaudoise (BCV) and shares in the real estate business Swiss Prime Site (SPS) will be listed on the MSCI segment of the Swiss stock exchange.

The new CEO of Bellvue Group, Urs Daniel Baumann, has acquired a stake of slightly under 3% from one of the founders of the firm, Hans Jörg Graf, according to reports by the SIX Swiss exchange. Last month, another longstanding member of the bank, Dieter Albrecht, announced that he was reducing his stake in the bank’s capital to less than 3%.

As Borja Fernández-Galiano has joined Lazard Frères Gestion in Madrid (see Newsmanagers of 19 January), Oyster Funds (Syx & Co) has recruited Alberto González as its director for Spain, Andorra and Portugal. González had been director of sales for the German firm Deka in the Iberian peninsula, Funds People reports. Currently, Oyster has 23 funds on sale in Spain to institutional clients. At Deka, Ana Guzmán, recruited in 2008, replaces González. She will report to Rüdiger Daberkow, director of institutional sales for the German group, and will have a supporting team of four people.

The billionaire investor Warren Buffett and the chief executive of Goldman Sachs, Lloyd Blankfein, are two of the heads who will potentially testify in the insider trading case against the former head of McKinsey, Rajat Gupta, the Financial Times reports.

Global demand for gold fell by 5% in first quarter 2012, but Chinese demand has set record highs, topping even that of India, the World Gold Council (WGC) announced on 17 May. Demand for gold worldwide was down to 1,097.6 tonnes in the first three months of the year, valued at an estimated USD59.7bn, as the price of gold was 16% higher than in first quarter 2011, the WGC says in its report. Rising investment in gold could not compensate for a decline in demand on the part of central banks, jewellers and the IT sector. Chinese demand increased 10% in the first three months of the year, to a record 255.2 tonnes, topping India, due to investor concerns about inflation, the WGC observes. Indian demand is 29% down compared with first quarter 2011, at 207.6 tonnes, affected by a jewellers’ strike, a weak Indian rupee and government policy which aims to reduce the presence of gold and a large trade imbalance in the country.

Boon Sim, global head of merger and acquisition activities at Credit Suisse, has been recruited as president & head of North America at the Singapore sovereign fund Temasek Holdings, the Wall Street Journal reports. At the Swiss group, he will be replaced by Scott Lindsay, currently co-chairman of the glober mergers & acquisitions gorup with Steven Koch.

The California pension fund CalPERS and its real estate specialist partner GI Partners on 16 May announced the launch of TechCore, a real estate fund with USD500m in assets. As a top priority, the new fund will acquire data centres, internet portals, and business campuses for companies active in the IT sector located in core metropolitan cities.

BNP Paribas Securities Services on 15 May announced the appointment of Viraj Kulkami as head of securities services for Intia. Kulkami, who has served in operational positions at Morgan Stanley and JP Morgan Chase, recently worked at a consulting firm.

The new firm Financière WDD, founded on 9 May 2012 by Dominique Ceolin and Weber Investment, on 10 May acquired 4.8% of capital in ABC Arbitrage (FR0004040608), where Ceolin is also the chairman of the board of trustees, while Weber Investissements is listed as a “significant shareholder” in ABC Arbitrage. Capital in the holding company Financière WDD is 50.01% controlled by Ceolin, who has told the board of directors at ABC Arbitrage that the objective of the holding company is to build a significant bloc of shares in ABC Arbitrage, though he has no intention to achieve a blocking minority stake or to launch a takeover bid. Due to his position as director of the ABC Arbitrage group and his status as a majority shareholder in the holding company, Ceolin has also stated that Financière WDD will declare all future transactions to the Autorité des Marchés Financiers (AMF).

The asset management firm Qualium Investissement on 16 May announced the recruitment of three representatives, Julie Khayat, Antoine Schricke, and Nicolas Mutschler. Khayat previously worked at Morgan Stanley, Schricke at Vestar Capital Partners, and Mutschler at the Compagnie des Alpes. Qualium Investissement manages EUR1.5bn from its sponsor, the Caisse des dépôts, and from over 40 institutional investors, who invest in SMEs with strong potential for growth.

In January-March 2012, the US asset management firm Nuven Investments has posted a net loss of USD42.6m, compared with net profits of USD5.3m in the corresponding period of last year. Assets as of 31 March totalled USd226.72bn, compared with USD220.09bn three months earlier, and USD206.1bn one year previously. In first quarter, Nuveen posted net outflows of USD6.41bn, compared with net subscriptions of USD4.95bn in January-March 2011, with net redemptions largely imputable to institutional managed accounts at nearly USD5.25bn. The asset management firm says that the departure of its co-chairman and CIO of its affiliate Tradewinds Global Investors has resulted in an increase in outflows from international value products, totalling USD9.9bn. These outflows were partially offset by net subscriptions to municipal funds and the inclusion of inflows at Gresham, an asset management firm which Nuveen acquired a 60% stake in earlier this year (see Newsmanagers of 16 November 2011 and 5 January 2012).

The financial ratings agency Fitch on 17 May cut its long-term debt ranting in currencies and in euros for Greece to CCC from B- previously, citing “increased risk” of an exit from the euro zone. The currency short-term debt rating has also been reduced to C from B previously. “The lowering of the sovereign debt ratings for Greece reflect increased risk that Greece may not be able to maintain its participation in the European economic and monetary union,” Fitch explains. “The high result for anti-austerity parties in the parliamentary elections of 6 May and the subsequent failure to form a government are a sign of lack of political and public support for the EUR173bn European Union and IMF programme,” the agency adds.

With Universal-Investment, the German private bank Berenberg between 11 and 14 May (for institutional I-class and retail R-class shares, respectively) launched the bond and strong currencies fund Berenberg Hartwährungsanleihen, managed by Dirk Springer, director of the bond and private management team at Beremberg. To be included in the portfolio, bonds must be issued by a country whose debt level is under 80% of GNP, the annual deficit is under 4%, and the internal inflation rate is under 3%. The local bond market must also be large and liquid. Consequently, the fund invests in countries such as China, Brazil and Mexico, as well as Switzerland, Norway and Canada. Duration, issuers and currencies are actively managed. Characteristics Name: Berenberg Hartwährungsanleihen Asset management firm: Universal-Investment Manager: Berenberg Bank ISIN codes:Retail (R) shares: DE000A1JUU12 Institutional (I) shares: DE000A1JUU20 Front-end fee: 5% (R share class) Management commission: R share class: 1.10% I share class: 0.50% Minimal subscription: I share class: EUR1m

The German asset management firm Deka Immobilien has announced the acquisition of the Viñoly office property in Amsterdam (29,600 square metres) from the open-ended real estate fun CS Euroreal (Credit Suisse Asset Management Immobidlien Deutschland) for about EUR140m. The property will be added to the portfolio of the open-ended real estate fund Deka-ImmobilienEuropa, whose allocation to the Netherlands now increases to 6.5% from 5.2%.

In April, the on-book daily trading volumes for ETFS on the European markets of NYSE Euronext incrased to EUR297.1m, compared with EUR253.3m in March and EUR237.3m in February. But these volumes are down 14.8% compared with the corresponding month of last year. Total on-book trading volumes have risen 1.3% month on month, to EUR5.6bn. Bloc trades accounted for EUR840.9m in March and EUR992.6m in February, represdenting 12.7% of trading volumes, compared with 13.1% the previous month, and 16.6% in February. The number of ETFs listed (695) has not changed compared with March (see Newsmanagers of 12 April). The median spread was 29.58 basis points in April, as in March.

The 29 largest international banks will need to raise anotehr USD566bn, or reduce their balance sheets by about USD5.5trn by 2018 in order to comply with the new Basel III regulations, according to a study by the financial ratings agency Fitch Ratings, published on 17 May. This additional owners’ equity will represent a 23% increase compared with the level of owners’ equity observed at the end of 2011. These estimates are the first to attempt to measure the impact of Basel III, including supplementary measures for establishments considered systemic.

In an update to an international study of ETFs (“Synthetic ETFs Under the Microscope: A Global Study,”) Morningstar claims that the degree of protection for investors is improving. A large majority of synthetic ETFs worldwide are subject to regulations which limit counterparty risks. Most providers manage their funds in a way that offers far higher protection than required by local regulations. In general, synthetic ETFs have better total expense ratios (TER) than traditional ETF funds, with the notable exception of a few Asian ETFs, and better tracking errors, which measure risks. This is particularly true of ETFS whose underlying asset classes are more limited and/or less liquid, such as emerging markets equities, for example. However, in all regions studies, transparency and security represent a priority, both in the eyes of investors, providers and regulators. From this point of view, and despite warnings from numerous regulators, common standards are still sorely missing in the classification of synthetic ETFs, transparency and collateral held, counterparties and costs. In some cases, particularly in Hong Kong, regulators have taken steps in this direction. Elsewhere, such as in Europe, the question has not yet been raised: it remains to be seen, therefore, where regulators will initiate the process which will move towards more harmonisation and better practices.

The ratings agency Moody’s announced on 17 May that it is lowering its long-term credit ratings of 16 Spanish banks, due to economic difficulties in the financial sector generally, public finance problems, and “restricted access to financing.” The reductions to the ratings vary from one to three notches, with Santander and BBVA, the two largest banks in the country, seeing their ratings lowered by three notches, to A3. The outlook is negative for ten of the banks. For the other six, the rating remains on watch. The ratings of the major Spanish banks “now range from A3 to Ba3, with an unweighted average of Baa2 to Baa3,” Moody’s says in a statement. “This average is lower than for most banking systems in Western Europe, which reflects the major repercussions on Spanish banks of difficult national conjuncture and the continuing euro zone debt crisis,” the agency says.

Sir David Cooksey, former chairman of UK Financial Investments, the structure in charge of the British government’s stake in banks bailed out during the crisis, has joined the board of advisors at Strategic Value Partners, a hedge fund founded by a former Merrill Lynch employee, with assets under management totalling about USD4bn, the Financial Times reports.

Santander Asset Management has recruited David Stewart as chief investment officer, Investment Week reports. Stewart will succeed John Bearman, who is leaving the firm, and will take on similar responsibilities at Thomson Miller Investment. Stewart previously worked at Butterfield Bank as chief investment officer and senior vice president.