In order to settle class action legal proceedings in which Merrill Lynch had been named, filed among others by public pension funds (including the Mississippi state fund), Bank of America Merrill Lynch (BofAML) has agreed to pay USD315m to reimburse invetors who lost money on mortgage-backed securities, the Wall Street Journal reports. BofA had already set aside funds for the payment.Wells Fargo, for its part, had already agreed to pay USD125m to pension funds in a similar case.The WSJ points out that there is a number of similar class-action lawsuits underway against US banks. BofA is the most exposed, due to its acquisition of Countrywide Financial in 2008, and Merrill Lynch in 2009.

There is a mismatch between long term actual and expected returns for private equity strategies, reveals bfinance in a global survey of institutional investors issued yesterday. Responses from institutional investors highlight a significant difference between expected returns from private equity strategies and the reality of realised net of fees returns in their portfolio. 93% of institutions set their private equity funds a performance target (net internal rate of return - IRR) of over 10% yet less than half generated an actual net IRR of more than 10%.However expectations and experience varies greatly by investment strategy. In terms of individual strategies, institutions considered expected returns from private debt investments as the most closely aligned with actual returns.74% expected a net IRR of over 10% and nearly 70% achieved this. In contrast investors’ sentiment on venture capital shows the largest difference between expectations and past experience with 87% of all investors expecting over 10% net IRR and only 44% of such investors having achieved 10% or above net IRR from prior venture capital investments.Also according to bfinance, 88% of investors identified «portfolio return enhancement» as the first or second most important reason to invest in private equity. A similarly important rationale for investing in private equity is the ability to obtain returns from sources not accessible through public markets: 81% of all investors say this as the first or second reason for investing. In contrast, only 24% of investors saw «risk diversification» as being amongst the first two reasons for allocating to private equity.

Van Eck Global has recently launched Market Vectors Index Solutions (MVIS), a German-registered firm which will develop, sell and license the Market Vectors range of indices. The indices are currently used as the basis for many ETF funds from the US firm. Lars Hamich has been appointed CEO of MVIS.

The Wealth-X company, a specialist in research into the ultra-high net worth (UHNW) client segment, on 6 December announced the appointment of Steve Farrer as vice-president and head of development for activities in China. Farrer will be based in the Hong Kong offices of the firm, and will lead a strategic expansion of the company in China. Wealth-X already has an office in China, in Guangzhou. Farrer previously worked for the World-Check and Mastercard International companies, as a consultant specialised in financial services, and particularly regulatory risks and deontology. According to the most recent research by Wealth-X, China has 11,475 private individuals whose wealth totals at least USD30m, while in Hong Kong there are 3,200 such people.

UBS Wealth Management has recruited Valerie Chou for the newly-created position of head of clients for the global family office (GFO) unit, Asian Investor reports. Chou will be based in Hong Kong; she previously worked at Morgan Stanley, and will report to Amy Lo, head for high net worth clients in the Asia-Pacific region. The appointment is a sign of the importance UBS attaches to the Asia-Pacific region for this family office activity. The group has refused to give figures about assets, but says merely that staff are increasing in the region. UBS Wealth Management has also recruited Linda Kwo, previously of BNP Paribas, as country head for Hong Kong.

Following the announcement by SIX, the Swiss stock exchange, that ETF funds from the French firm Ossiam, an affiliate of Natixis Global Asset Management, had been admitted to trading in Switzerland (see Newsmanagers of 6 December), the issuer has provided a list of the products concerned, which will be available on the Swiss market from Natixis Global Associates, the distribution arm of Natixis Global Asset Management.The funds replicate strategy indices. They are the Ossiam ETFiStoxx Europe Minimum Variance and Ossiam ETF US Minimum Variancem which replicate the evolution of indices (net dividends reinvested) that provide exposure to equities while limiting portfolio risks. The Ossiam ETF Euro Stoxx 50 Equal Weight NR and Ossiam ETF Stoxx Europe 600 Equal Weight NR replicate strategy indices (net dividends reinvested), which give the same weight to all shares in the Euro Stoxx 50 and Stoxx Europe 600 funds, respectively, in order to avoid concentration on companies with large cap sizes.As of the end of November, Ossiam had ETF assets of USD285m.

Mirabaud Asset Management has decided to extend its Parisian product range (euro zone equities, France equities, funds of hedge funds, profiled asset allocation funds) to include convertible bonds, with the Luxembourg-registered fund Mirabaud – Convertible Bonds Europe, managed by Renaud Martin, who has recently been recruited (see Newsmanagers of 21 October).The new product invests in European convertible bonds which have a relatively short maturities, and aims to outperform the Exane Convertible Europe (ECI) fund. “This fund is designed on the principle of absolute returns. The portfolio (EUR35m in seed capital) has a short duration (2.5 years), returns of 5%, and a 25% sensitivity to equity markets. We are aiming for about EUR300m for the fund eventually,” Martin tells Newsmanagers.The manager adds that in light of a focus on convertible bonds issued by mid-sized businesses, the added value of the new fund “resides largely in credit analysis. We have good cash visibility for two years on securities that offer high returns.” In addition, “mid-sized companies offer more potential in terms of returns, and in terms of corporate events, since ratchet and poison put clauses created to protect the investor in case of a takeover favour convertibles,” the manager says.CharacteristicsName: Mirabaud – Convertible Bonds EuropeISIN codes:I shares: LU0689233525A shares: LU0689230778Minimal initial subscription: I shares: EUR0.5mPerformance commission: 20% of outperformance, with high watermark

AXA Investment Managers (AXA IM) on 6 December announced the release of the AXA World Funds Framlington Natural Resources fund. AXA WF Natural Resources was launched on 31 August 2011 as a Luxembourg-registered SICAV which meets the requirements of the UCITS III directive. The fund is currently on sale in Luxembourg, France, and other European countries (Germany, Austria, Belgium, and the Netherlands). The fund seeks growth opportunities on international equity markets among businesses in the commodity sector. It invests in businesses whose activities are related to industrial and precious metals, energy and soft commodities throughout the value chain (oil exploration to refinery, from agricultural machinery to fertilizer), and in all cap sizes (from USD1bn to USD350bn). The fund, aimed at investors of all types, holds an average of about 70 to 90 positions, and combines macro and bottom-up approaches in order to limit the correlation between various positions. It joins the AXA WF Framlington Hybrid Resources and AXA WF Framlington Junior Energy, which have a total of nearly EUR276bn in assets as of the end of October 2011. Main characteristics of the fund Share A I Type of investor All types of investors Institutional investors only Code Isin (USD) LU0645147686 (USD) LU0645148577 (EUR) LU0645147769 (EUR) LU06451 48650 Minimal initial subscription 0 EUR5,000,000 Minimal subsequent subscriptions 0 EUR1,000,000 Maximal management fees. 1.5% 0.6% Real management fees 1.5% 0.6% Maximum front-end fees. 5.5% 0 Maximum withdrawal fees. 0 0 Legal format Sub-fund of a Luxembourg-registered SICAV

The sovereign fund institute SWF Institute on 6 December announced that it has added IPIC (Abu Dhabi) to its transparency index. As of third quarter 2011, the transparency index, the LMTI (Linaburg-Maduell Transparency Index), includes nine sovereign funds with a maximal rating of 10. The PIF fund (Saudi Arabia) and ADIA (ABU Dhabi Investment Authority) have improved their ratings to 4. The Malaysian sovereign fund (Khazanah Nasional), for its part, has improved to 5. Nearly 20 sovereign funds have a rating lower than the average of 5 for a total of 44 funds included in the index.

In a joint statement cited by Handelsblatt, MSCI, S&P Indices and FTSE have announced that they may create a professional association of index providers, but add that discussions are at a very early stage.The organisation would in principle be open to all index providers, and would thus probably be a global association, as most actors operate internationally.

The Swiss firm Stoxx Limited has announced that from 19 December, shares in Imperial Tobacco Group will be included in the Stoxx Europe 50 index, while Axa will be removed from the index. For the Stoxx Asia-Pacific 50 and Stoxx Global 150 indices, Nissan Motor Co will replace Nippon Steel Corp.

The French financial market regulator, the Autorité des Marchés Financiers (AMF), on 24 October issued a sales license for the Luxembourg sub-fund Allianz RCM Renminbi Currency, which was launched on 18 October (see Newsmanagers of 13 May and 4 October), with assets totalling about USD80m. The fund is managed by Helen Lam.Allianz Global Investors (AGI) had previously launched a bond fund denominated in Chinese offshore yuan (CNH) in spring, which was closed to subscriptions after attracting EUR450m in one week, due to liquidity considerations. Due to the exponential growth of the offshore yuan-denominated deposits market in Hong Kong (CNH) since third quarter 2010, the German asset management firm has chosen to orient itself towards this highly liquid segment, Arne Tölsner, head of development at RCM Europe, a member of the RCM European Investment Management Group and a specialist in Asian markets, explained at a presentation in Paris.Tölsner says the product presents three decisive advantages: it allows subscribers to diversify their currency exposure, and the profit from appreciation of the Chinese currency against the US dollar, while avoiding the duration risks inherent in bonds. However, the vehicle does not aim to generate high yields.The fund, which presently invests in deposits with a dozen banks considered solid, aimed at the general public, will be primarily of interest to funds of funds and high net worth private clients via private banks and family offices. Returns are higher than for retail savings accounts, due to the size of the investment.CharacteristicsName: Allianz RCM Renminbi CurrencyRetail A (H2-EUR) share class: LU0665628672Retail A (USD) share class: LU0665630819I (institutional) H2-EUR share class: LU0665629993Front-end fee: A euro-hedged or US dollar: currently 2% (3% maximum)Management commission: A shares: currently 0.50% (1.50% maximum)I shares: currently 0.40 % (1 % maximum)Administrative fees A shares: currently 0.15% (0.50% maximum)I shares: currently 0.11 % (0.50 % maximum)Minimum investmentI share class: EUR1m

Are we heading towards the disappearance of the shareholder? The question may be an exaggeration, but the fifteenth annual report from Proxinvest about general shareholders’ meetings raises it anyway. In France, there has been a decrease in the participation of shareholders, by number (16,309, down from 17,411, for the CAC 40), with a percentage of resolutions challenged which has fallen, but remains among the highest in Europe. For the CAC 40, thia rate comes out at 5.9%, compared with 6.3% in 2010. In the companies of the SBF 250 index, the rate is 4.79%, compared with 5% in 2010, 4.6% in 2009, and 4.1% in 2008. The number of resolutions not passed, against recommendations, which peaked at a record 64 in 2010, was only 44 in 2011, lower than the level in 2007. Shareholders have been critical of clauses to protect management in the case of a takeover (average contestation rate of 35.3%), with two such highly visible resolutions voted down at Essilor International and Publicis Groupe. Shareholders have also opposed the abrogation of their preferential subscription rights in 21 cases, including at Air France-KLM,GFI Informatique, Publicis Groupe, Rubia, Saft Groupe, and SOI TEC. They are now able to individually reject certain directors, with 7 of them rejected in 2011, including at Altran Technologies and Gascogne; they exercise serious control over the stock and option plans, with 7 such plans rejected (including Saft Groupe, Seb, Rubis and Ubisoft Entertainment), and over regulatory conventions when they include elements that concern management pay scales (Alten, César, Delachaux, Groupe Gorgé, Risk Group, Theolia). The number of external proposals or resolutions, which were seen at GDF Suez, Safran and Total, has fallen from 62 to 24 in 2010, and has fallen further in 2011, to only 12 initiatives, a level near the level in 2005 of 11. The first resolution on an environmental subject ever to be presented in France, which dealt with the operation of oil shale mines in Alberta, was not passed by the board at Total. Proxinvest deplores that it is necessary to go before the courts, as has occurred in recent years at Total, Lagardère and Société Générale, in order to present a resolution not approved by the board.

From 5 December, ETFs will be subject to more flexible regulations in China, Asian Investor reports. The new rules published by the Shanghai and Shenzhen stock exchanges stipulate that it is not possible to adopt short positions on ETFs. The number of shares eligible for margin call operations and securities lending have been tripled, from 90 to 285. The new list includes the seven largest ETFs in the country (SSE50, SSE180, SSE Dividends and SSE Corporate Governance on the Shanghai stock excchange, and SZSE100, SZSE mid- and small-cap and SZSE Composite in Shenzhen).

Baring Asset Management (Barings) on 6 December announced the appointment of Michael Siciliano as head of sales for North America. He will report to George Harvey, head of sales, development and client services. Michael Siciliano previously worked at Merganser Capital Management in Boston, where he was director of sales. Barings plans to increase its offerings of multi-asset class products to North American clients, strategies which Siciliano knows particularly well, Barings says in a statement.

Cinco Días notes that the asset management group Capital World is the largest shareholder in McGraw-Hill (with a stake of 10.26%), which owns Standard & Poor’s (S&P), and that its stake in Moody’s is even higher (12.6%). Vanguard holds 4.58% of MacGraw-Hill, and 5.02% of Moody’s. Alliance Bernstein controls 1.67% of S&P and 3.94% of Moody’s. Intech, an affiliate of Janus Capital, has a 1.30% stake in S&P and 1.89% in Moody’s; the stakes of BlackRock International, State Street and Independant Franchiser are 2.46 %, 3.24 % and 1.86%, respectively, while their stakes in Moody’s come to 2.18%, 4.25% and 2.51%.In addition to that, Morgan Stanley, JP Morgan, Invesco and BNY Mellon are also shareholders in the agencies, and Berkshire Hathaway, the portfolio firm for Warren Buffett, holds 12.8% of Moody’s.The situation is different for Fitch, which is an affiliate of the French Fimalac group.

BNY Mellon has announced that it has recruited Ron Bruder as managing director for its wealth management team dedicated to ultra-high net worth families and family offices. Bruder had previously been head of subscriptions to the primary market of the Chicago Board Options Exchange at the bank Goldman Sachs.

Handelsblatt reports that Fidelity Investments has submitted a license application to the SEC to create ETFs based on equity and bond indices of both US and foreign securities. The asset management firm is apparently planning to launch ETFs based primarily on fundamental rather than cap-weighted indices, including indices from Wisdom Tree, as well as short ETFs. These plans will only be achieved after some time, as the time required to obtain licenses is a matter of months, and may be over a year.

BNY Mellon Asset Servicing on 6 December announced that Touchstone Investment Advisors, a wholly-owned subsidiary of Western & Southern Financial Group, has retained it for administration, accounting and transfer agency services for its 42 mutual funds, with assets of over USD7bn in 110,000 client accounts. These services had previously been provided by JP Morgan.

Banque Heritage has launched the Chilton Global Strategies fund, a UCITS long/short hedge fund managed by Richard Chilton, a star manager of the hedge fund universe, Agefi Switzerland reports. Banque Heritage and Chilton Investment Company (nearly USD7bn in assets under management) have been working together since the inception of the US asset management firm in the early 1990s, and the bank was one of its first investors. The fund is probably the first global UCITS long/short equity fund managed in the United States. It is composed of six specialised portfolios: Flagship Strategies, European Equities, Small Caps, Global Natural Resources, Asian Equities et Hedged U. S. Equities, and covers all equities worldwide: all regions (excepting Japan) are represented, as are all sectors and market cap sizes. Chilton personally manages the U.S. Equities portfolio, and ensures the coherence of allocations.

The Association of British Insurers (ABI) has sent a letter to the five major banks in the United Kingdom – HSBC, Barclays, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland, calling for a “significant reduction” in bonuses paid to bankers, La Tribune reports.

Schroders is preparing a contingency plan in case of a euro zone break up, the Financial Times reports. Alan Brown, chief investment officer at the British asset management firm, which has GBP182bn in assets under management, says that Schroders is avoiding banks which clear their trades in euros through the most vulnerable euro zone countries, and is favouring the ones which work with Germany. The asset management firm has also shortened the list of collateral it will accept.

The Swiss asset management firm Partners Group (about EUR20bn in assets) on 6 December announced that it has been included in the MSCI Switzerland index since 30 November, after being included in the SMIM (Swiss Small & Mid Cap Index), which includes the 50 largest publicly-traded companies in Switzerland.The MSCI Switzerland index is a part of the MSCI World Index (developed markets) and thus in the MSCI All Country World Index, which is thus included in the MSCI All Country World & Frontier Markets Index.Partners Group has announced that its inclusion in the MSCI Switzerland index has resulted in a signifiant increase in demand from active and passive investment vehicles.

On 6 December, the Norwegian finance ministry decided to place Alstom SA on a list of businesses under watch due to gross and unacceptable corruption risks in its activities.In a letter to the finance ministry on 1 December 2010, the Ethics Council recommended that Alstom be removed from the investment universe from the Government Pension Fund – Global (GPFG), the former Oil Fund.The ministry has instructed the Ethics Council to place the company under observation for a period of four years, and to monitor its efforts to fight corruption and develop corruption prevention systems. The Counsel will provide an annual update and issue a new recommendation at the end of the observation period.In his statement, the ministry states that he attaches importance to the fact that Alstom is currently facing legal actions in several countries, and that the outcome of these actions is not yet known.

On the recommendation of the Ethics Council, the Norwegian finance ministry has removed the US firm FMC Corporation and the Canadian Potash Corporation of Saskatchewan (Potash) from the invesment universe of rhte Government Pension Fund Global (GPFG), the former Oil Fund, due to particularly grave violations of ethical principles. The violations are related to purchases of phosphates from the Moroccan Office Chérifien des Phosphates (OCP), which mines the mineral in Western Sahara, a territory which has no government of its own, and no recognized sovereign administrator.In a letter dated 30 September 2011, the finance ministry instructed Norges Bank (which manages the GPFG via its affiliate NBIM) to sell shares in FMC and Potash. The sales have now been completed. As of the end of 2010, GPFG held shares valued at NOK300m in FMC, and NOK1.57bn in Potash.

Le Premier ministre s’est déclaré hier soir hostile à une hausse du prix du gaz supérieure à 5% en janvier 2012. François Fillon a prédit une hausse «très inférieure» à 10%. «Je souhaiterais que ce soit inférieur à 50% de cette somme», soit 5%, a-t-il ajouté. François Fillon n’a par ailleurs pas exclu de possibles nouveaux ajustements budgétaires en fonction de la réalité de la croissance française de 2012.

Face à une crise de la dette en zone euro qui menace de faire dérailler sa fragile reprise, l’Irlande alourdit la fiscalité. Dans le cadre de la présentation devant le Parlement de la seconde partie d’un nouveau budget de rigueur, le ministre des finances, Michael Noonan, a dévoilé 1,6 milliard d’euros de recettes supplémentaires. L’augmentation de deux points du taux de TVA permettra de dégager 670 millions d’euros, tandis que le relèvement d’autres impôts indirects apportera 330 millions. 600 millions proviendront enfin de mesures fiscales reconduites pour le prochain budget. Le gouvernement a par ailleurs abaissé de 1,6% à 1,3% sa prévision de croissance du PIB l’an prochain. Il estime que l’objectif de réduction du déficit reste valable mais qu’une dégradation supplémentaire des perspectives de croissance pourrait le contraindre à présenter un budget encore plus sévère en 2013 et au-delà.

En prévision du prochain sommet, le président du Conseil européen propose que le MES recapitalise directement des banques en difficulté et se voit donner le statut d’institution de crédit. Il suggère également que ses décisions ne soient plus prises à l’unanimité et plaide pour une révision de son plafond de ressources. Enfin, il estime que ses statuts doivent indiquer clairement que le cas de la Grèce restera «unique et exceptionnel».

Le parlement grec a adopté le projet de budget 2012 du gouvernement de Lucas Papadémos qui prévoit de nouvelles mesures d’austérité très décriées, conformément aux conditions du plan d’aide de 130 milliards d’euros du FMI et de l’UE. Un budget qui vise à ramener le déficit de 9% du PIB à 5,4% l’année prochaine.

Les députés français ont adopté le nouveau projet de loi de finances rectificative pour 2011, le quatrième de l’année, qui inclut plusieurs mesures du dernier plan d'économies présenté le 7 novembre par le gouvernement. Le Sénat, où la gauche est désormais majoritaire, examinera à son tour ce texte à partir du 13 décembre.