Brian Bollen's Blog

Risk Aversion Beats Yield: State Street

State Street Corporation is keen on publicity for a new investment servicing solution it is offering to support small to mid-sized asset managers with their investment operations needs. This, it says, is based on its successful outsourcing platform, which supports many of the world’s leading asset managers.

“Asset managers are confronting a range of challenges from heightened complexity as well as data and reporting needs, to regulatory changes that put added pressure on their existing platforms,” said Jeff Conway, executive vice president and global head of State Street’s Investment Manager Services team.

Brian Bollen's Jungfrau Marathon Highlights

Anyone interested in sampling my Jungfrau Marathon experience of September 8 can follow highlights from before the race to the finish line on Facebook. Anyone interested in attempting it for themselves next year should know it's a phenomenal experience, but one that requires a certain amount of dedication. Some people go teetotal for months beforehand, train like monks, attend special training weekends (see http://richithecoach.mediamedia.ch), follow customised programmes and have friends dotted around the course with additional supplies of their own specially concocted drinks.

Me, I went to bed early the night before, stone cold sober (a major feat on a Friday night for a Scottish journalist) and took a couple of small Mars bars in my runner's utility belt. I finished one minute and 16 seconds behind my carefully calculated estimate, while a pal who took the monastic route finished a whole 25 minutes ahead of me. Was it worth the months of denial, I wonder???

Hope is not a strategy... Perception is not always reality

Mint – Blain’s Morning Porridge September 17 2012

So everything in the garden is rosy? Euro-crisis fixed and bond yields "normalising"? US economy back on track and the stock market heading to five- year post-crash highs? Time for a major rethink…. These markets are changing, and the moment of the big asset allocation shift is when the maximum gains can be made.

As a friend put it on Sunday: “All these pension funds that jumped out of equities and into bonds are in for a helluva shock.” Bond markets don’t seem to have fully priced in the policy shift in the US. Where the US leads, the rest of the world follows – usually with the UK tripping directly in the US wake! At the moment the market seems to be looking at weak US data and stuff like this morning’s FT story about broken US mortgage markets to justify denial of the “growth at any cost Fed” direction.      

The Revolution Will Be Analysed

StatPro Group plc, which blushingly describes itself as a global leader in portfolio analytics and reporting services, reports breathlessly that its StatPro Revolution thingy has been enhanced with over 250 bond pricers, up from three previously.

StatPro Revolution, it adds by way of explanation for neophytes, is a cloud-based risk, performance, attribution and reporting platform. It says this increased coverage, which is included with a $100 per month subscription to StatPro Revolution, provides fixed income managers with greater transparency and consistency when running fixed income attribution analysis.

IFIA Does Shanghai

The Irish Funds Industry Association (IFIA) says it is to have a presence in Shanghai, Frankfurt and Sydney bringing its total number of representative offices around the world to 10.

The announcement of these new offices, in partnership with IDA Ireland, (the Irish Government’s inward investment agency) was made at the IFIA Annual Global Funds Conference in Dublin.

State Street Global Advisors Launches MLP Strategy

State Street Global Advisors (SSgA) reports the launch of the SSgA S&P MLP Index Strategy. This passive strategy offers institutional investors the opportunity to gain exposure to master limited partnerships (MLPs) and other related securities of companies in the energy infrastructure sector, including those typically engaged in the transportation, storage, refining, marketing, exploration, production, and processing of minerals and natural resources.

Sell Bonds, Buy Diamonds…

Mint – Blain’s Morning Porridge September 14 2012

I am reminded it's five years since we were watching the first UK bank run in living memory as UK depositors desperately queued to get their money out of Northern Rock.. The spark that ignited the global banking crisis was completely and absolutely avoidable. If only the Bank of England had the practical intelligence of a five-year old. But it had the very very clever and academic Mervyn King instead. The rest, as they say, is history.

Pre-2007 banks were sacrosanct. They commanded the tightest borrowing spreads, and if their stock underperformed it was only because they were so successfully dull, boring and predictable they didn’t attract whoosh money. And there were billions of them.

HFA Asks SEC For JOBS Clarity

The Hedge Fund Association, (the HFA), an international not-for-profit organisation representing investors, hedge funds and service providers, says that it has today asked the Securities and Exchange Commission (SEC) in a comment letter to specifically tell private fund managers what they will need to do to safely verify whether investors are accredited, should they want to advertise after the rules in the Jump Start Our Business Start-ups Act (JOBS Act) are finalised.

Rogue Trades And Wet Ears

Mint – Blain’s Morning Porridge September 13 2012

Sooner or later someone will bet he can make the Jack jump out the pack and squirt cider in your ear. Don’t take that bet – you will end up with a wet ear.

The last two weeks back in the market have been fascinating. For a market looking tired, lethargic and directionless in June, it’s now pretty damn active. We’ve seen market mood brighten – fuelled by a number of factors: the sheer momentum of the primary markets, long-term low rate confirmation, and positive Euro news. Sentiment shifts. Now we may even have seen a capitulation point for many short and caught the Euro rally!

The intense negativity surrounding the prospects for the Euro, GIPSI economies, banks, BRICs, and the global economy is intellectually still firmly in place – for good reasons – but many of these rogue asset classes have rallied substantially. It’s a tough call for accounts – follow the market higher, or stick with your conviction the Euro’s a hollow façade…. Tough.

East Capital Macro Monitor September 2012

East Capital’s most recent Macro Monitor looks at trends in the current financial markets and identifies that the current “extraordinary situation” is disliked by most: 

·         East Capital identifies that investors on the whole are very bearish and staying away from any asset that is deemed risky, while asset managers are frustrated that their fundamental analyses matter less than political action and sentiment;

·         Whilst it is easy to be pessimistic, East Capital highlights that the last year has been good in terms of equity market performance;

Beautiful, Beautiful Airdrie: It's Official!

http://local.stv.tv/airdrie/news/189741-airdrie-named-best-small-city-in-the-beautiful-scotland-awards/

Nope. I've checked the date, and it's not April 1. Airdrie, the Airdrie in North Lanarkshire, central Scotland, the buckle in central Scotland's rust belt, not the one in Alberta, Canada, has been named best small city in the Beautiful Scotland awards for the second year in succession. I'm not often speechless, but words literally fail me...

The Rewards Of Investing Sustainably: Towers Watson

Research project produces roadmap for integrating sustainability considerations into decision making

Asset owners, asset managers, consultants and governments are struggling with what it means to be a sustainable investor with many finding the practical implications and applications of sustainability off-putting according to Towers Watson research. The global research project that derived these results was conducted in conjunction with Oxford University and was supported by 22 asset managers and eight prominent investment thinkers.

Everything You Ever Wanted To Know About Hedge Funds: PerTrac

From Alfred Winslow Jones coining the term “hedged fund” in 1949 to the recent passage of the JOBS Act, Illuminating the World of Hedge Funds, the new infographic released today by PerTrac, provides a top to bottom look at the hedge fund industry for asset management industry professionals as well as the general public (says PerTrac itself).

“With hedge fund advertising just around the corner, we thought this would be the perfect time to showcase the hedge fund industry from a variety of perspectives,” said Jed Alpert, managing director of global marketing at PerTrac.

“Not only does Illuminating the World of Hedge Funds provide an overview of key industry metrics and historical factoids, but it also details common statistics and terms that investors are likely to encounter when allocating to hedge funds.”

The infographic includes key data points such as:


Where the most hedge fund assets are concentrated - the U.S. and the U.K. take top honors

How much smaller funds have outperformed larger ones since 1996

How much lower the volatility has been for larger funds as compared to smaller funds

The most popular fund strategies - long/short equity wins the top spot, accounting for 29% of funds

The Commodity Trading Advisor (CTA) “Billionaire Club,” those CTAs managing more than $1 billion, hold fully 78.1% of assets invested in these types of funds

Why investors should pay attention to tail risk


For free downloads of Illuminating the World of Hedge Funds, click here.

How many impossible things shall we trade before breakfast?

Mint – Blain’s Morning Porridge September 12 2012

So much to talk about this morning... real things like German judges, Dutch voters, China demand, FOMC and trying to work out how much longer this market will continue to defy expectations with Euro sovs tighter.. but let’s start with the new issue market.

Open the NIM4 monitor on your Bloomberg. It highlights this September is a vintage new deal year. A funding binge allowing even the most unlikely issuers (who said Spanish banks?) to complete annual funding while panicky underinvested asset managers scan the offerings for whatever magic is missing from their portfolios.

Miserable unreadable markets and investors staying long cash means there is a staggering amount of liquidity. Something like $170bn of new deals since start of the month! With so much money in the system even humdrum deals are attracting massive oversubscription and being bid up. The scramble for bonds is on.

Every asset manager is weighing up the new deals, hoping and wishing their friendly investment banks will treat them fairly when it comes to allocating the deals. As allocations largely depend on how hard bank salesman will push their clients to their respective syndicate managers, fixed income salesmen have seldom felt so popular. (Maybe the effort of being nice to investment bankers is why so many asset managers I speak to are so grumpy this week?)

Jungfrau Marathon Photos

I don't know if there's something wrong with my host, Typepad, but I can't seen any content on my blog. I'll post this as something of a test. If you haven't already seen them, you should be able to see some snaps of me in action over the weekend:

http://www.marathon-photos.com/scripts/event.py?event=Sports/GKDE/2012/Jungfrau%20Marathon&match=2762&name=Brian

If anyone would like to think about commissioning an article on the experience, I'm up for grabs.

Confusion never stops… closing walls and ticking clocks

Mint – Blain’s Morning Porridge September 10 2012

An interesting week in prospect.. but aren’t Mondays always so…?

All eyes on Fed Policy in the wake of last week's miserable US jobs number. When will the US authorities intervene with QE3? Although Thursday’s FOMC is expected to extend its low-rate horizon, it’s illuminating just how negative analysts and commentators are becoming about QE. "Pump priming economies by pushing on a piece of string", and just look at the Japanese experience - a directionless economic era. The problem highlighted in FT and others this morning is economies are stalled, but Central Banks seem powerless.

This strikes me as remarkably similar to sailing – economics and sailing are both dynamic. When a yacht loses "way", the airflow over the sails, and most importantly the waterflow over the keel and rudder (both of which provide the lift powering the yacht), break down and stall the boat. You can see the sails flapping uselessly, but you can only feel the lack of action on the rudder - just like you can clearly define unemployment rising and economic activity crashing, but other dynamic factors like confidence and sentiment can only be felt.

Jungfrau Marathon: Mission Accomplished

Apologies in advance to those of you who are already tired of hearing this, but I am delighted to be able to report that I completed the Jungfrau Marathon on Saturday (September 8). Mission accomplished.

I crossed the finishing line in 6h 31m 18s compared with my target of 6.30m, in much better physical condition than I could possibly have expected. My first words to my wife, waiting at the finish, were 'Is that it?' (that's a joke, that is, I fully intend never to run it again; if you'd like to know why, go and look at my piece elsewhere on these pages about the Eiger Gletscher; fully populated to maximum density on Saturday it looked even scarier than I remembered it).

If you'd like to know more about the Jungfrau Marathon as an event, and possibly enter next year's, visit: http://www.jungfrau-marathon.ch/en/. If you'd like to learn about customised training including dietary advice and take part in pre-race training weekends on location, email race director Richi Umberg, Swiss former marathon record holder, citing me as your source: [email protected] (website:www.richithecoach.ch/).

What Richi doesn't know about marathon running isn't worth knowing. I'd like to thank him and his colleagues for making my participation special, although I'm sure they'd all be horrified at my concept of special training, which was, basically, to have an early night on Friday...

Free For All: Trusted Insight Launches New Job Board

Trusted Insight, Inc., a networking site for institutional investor LPs, reports that it has launched a new job board. LP job seekers, it says, now have the ability to access listings that explicitly state salary, carry, and bonus. A free service, institutional investors that are hiring can post jobs with the expectation of reaching the very best candidates. Furthermore, existing job sites have been integrated to build what it claims to be the largest global LP job database.

Hiring managers are capable of receiving applications from candidates that have a verified investment track record. These records are verified by the candidate’s peers and show off unique track records, experience and skills with the security of knowing that the candidate has experience.

Trusted Insight says it provides institutional investors (pension funds, family offices, endowments, foundations, and sovereign wealth funds) knowledge and content through their trusted peers while creating a community-based understanding of new assets and geographies. 

This digital paradigm, it adds, establishes a model for collaboration that can be used in investor communities around the globe.  Over 25,000 individual institutional investors engage with each other weekly through Trusted Insight.

Trusted Insight’s platform is not just designed for institutional investors to find ideas for outperformance. The service also helps investors develop professionally by providing institutional investors with a safe and trusted environment for exchanging information for due diligence and portfolio management.  

Users also gain access to breaking news, a rich conference and events page, as well as exclusive invitations to digital media.  There is no cost associated with being a basic user of Trusted Insight and interested institutional investors may join the community at www.thetrustedinsight.com.

Rapidly growing from a community of 500 institutional investors in October of 2011, Trusted Insight says its community now includes over 40,000 LPs, each with over $1bn in assets.  The average size of an LP on Trusted Insight is $5bn in assets under management.  25,000 LPs are engaging with Trusted Insight on a weekly basis.  Trusted Insight is funded by leading angels, including the first investors in LinkedIn, Facebook, and Mint.com.

For more information: [email protected]

First Closing Of Idinvest Secondary Fund

Idinvest Partners, a European private equity firm, has announced the first closing for its new investment vehicle which is exclusively dedicated to secondary transactions: Idinvest Secondary Fund. It says the fund has already received €100m in commitments. The fund’s investors are European financial institutions, one third of which are new LPs, it adds.

BNP Paribas Hails Top Ratings

BNP Paribas announced today that its Securities Services business in North America was among the highest ranked in Global Custodian's 17th annual Hedge Fund Administration survey. The survey polled industry clients on their hedge fund administration service providers.

In the 2012 survey, it notes, service providers were judged based on 69 rating questions across the following service areas: client service, value, fund accounting and valuation, audit support, investor services, reporting to investors, reporting to fund managers, compliance and taxation, corporate administration, fund structuring, fund of funds administration, middle-office services, registered alternative products and technology.

The results of the survey bestowed Top-Rated status on the North American division of BNP Paribas Securities Services, scoring higher than the average reported results of other administrators. Overall, the division was rated Best in Class (BIC) in all service categories on the survey.

BNP Paribas was additionally awarded Commended status in both the European and global market categories.