Australian investment bank Babcock & Brown is reportedly planning a new €1 billion fund to invest in European rail, airport and water assets...

Australian investment bank Babcock & Brown is reportedly planning a new €1 billion fund to invest in European rail, airport and water assets.

Australian reports, quoting “two people with knowledge of the plan,” claim that Babcock & Brown – Australia’s second ranked investment bank after Macquarie – was planning a private equity fund for Europe, to be launched in the first quarter of next year.

A spokesman for the company declined to comment but in June, Babcock & Brown executive director Martin Rey said the bank was pondering two European funds, one for infrastructure and the other for property.

In November, Babcock & Brown scuttled plans for a listed European retail property fund, which was a joint venture with the GPT Group.

If the European infrastructure fund does go ahead, Babcock & Brown will be following in the footsteps of Macquarie Bank, which raised almost A$1.6 billion for its second European infrastructure fund, which played a role in the $9.5 billion purchase of RWE AG’s Thames Water unit.

Following the launch of the first UK government bond exchange traded funds available to UK investors, Barclays Global Investors/iShares has expanded its range by launching a further five new fixed income ETFs focused on inflation-linked and government bonds in the US and major Euro countries.

Jennifer Grancio, head of distribution for iShares in Europe, said:“The new products are part of our ongoing product development effort to provide clients with a comprehensive investment toolkit, which empowers them to make their own asset allocation decisions.“

iShares has 181 ETFs trading globally, registered in 10 countries and amounting to approximately $272.2 billion in assets (as at 1 December 2006). In Europe, iShares has ETFs registered in the UK, the Netherlands, Switzerland, Germany, France and Italy.

UK-based F&C Asset Management has called for a UK-specific stock market index, to complement the current FTSE All-Share index and to help fund managers who are trying to a invest only in British companies.

According to F&C, major companies such as BP and Shell, which alone represent almost 13 per cent of the index by value, dominate the FTSE All-Share Index of 679 companies and are so international they should be grouped with rivals such as Exxon and other oil majors listed on other exchanges.

The top 20 UK-listed companies are now so large that they represent 52 per cent of the market.
And the top 10 listed companies are exclusively in the banking, oil, telecoms and pharmaceuticals sectors, which generate the bulk of their revenue from outside the UK.

Indices are becoming "increasingly divorced from the economies with which they are nominally associated, and the investment mandates that are based on them being defined around increasingly outmoded measures," according to F&C.

FTSE International is currently reviewing the nationality component of its indices following a spate of companies from emerging markets to list in London.

Nikko Asset Management and Mumbai-based Ambit RSM Private have reached an agreement to set up an asset management joint venture between the two companies in India.

Nikko AM will acquire 74.9 per cent of equity of the joint venture company while Ambit will own the remainder. A definitive agreement is expected early in 2007.

Nikko AM has been active in the offshore Indian asset management market for over a decade and was an early adopter of the Foreign Institutional Investor designation in India via the group's regional base in Singapore.

Ambit has offices in four Indian cities and in Singapore.

Rabobank-owned asset manager Robeco, and Swiss-based Sustainable Asset Management Group, have launched what the firms claim to be the world’s largest platform for sustainability investments.

The strategic co-operation between the Dutch asset manager and SAM Group will open new business opportunities and generate promising growth potential for the combined group, according to a statement.

SAM Group is known for its water and energy funds and constructing and licensing the Dow Jones Sustainability Indexes, a joint initiative with Dow Jones Indexes and STOXX.

SAM Group currently has assets under management of SFr3.6 billion ($3 billion) and assets under advice of SFr6.4 billion. Its core offering includes institutional asset management and innovative theme investments funds such as water and smart energy.

The joint offering will be aimed at both retail and private investors as well as sophisticated institutional investors.

Within the joint platform, Robeco will take a 64 per cent stake in SAM Group and 36 per cent are held by SAM Group’s management and employees.

SAM will act as the centre of excellence for sustainability investing within the Robeco Group. In return, Robeco will contribute its expertise in various areas such as structured products, funds of private equity funds, emerging markets and fixed income expertise and its global sales and distribution platforms in Europe, Asia, North America and in the Middle East.

Despite positive trends in the value of the funds they manage, global asset managers must take forceful initiatives to improve the integrity of their businesses if they hope to remain competitive as industry dynamics shift in step with demographic patterns, according to a new report by global management-consulting firm, Boston Consulting Group.

The new report, Playing the Long Game: Global Asset Management 2006, examines the current state of the industry, offers a detailed analysis of the market for retirement assets, and outlines specific actions that asset managers can take if they seek both to raise profitability and achieve a leadership position in the industry.

According to the report, which is based on a study of 28 national markets, the value of professionally managed assets — those for which a management fee is paid — grew by around 15 per cent globally to $49.1 trillion in 2005, with capital inflows driven largely by growth in Europe and Asia.

BCG says that asset managers, in order to improve the integrity of their overall businesses, must optimize distribution networks, enhance segment and asset-class expertise, explore the development of innovative products, foster investment-manager autonomy, enhance scale, and continue to cut costs.

European Islamic Investment Bank, the first independent Shariah-compliant Islamic investment bank to be regulated by the UK’s Financial Services Authority, has launched a Shariah-compliant real estate fund.

The EIIB Pan-European Islamic Real Estate Fund is structured as a tax-efficient Shariah-compliant vehicle that will directly purchase commercial real estate assets in the office, retail and industrial sectors in and around major cities in the UK and Western, Central and Eastern Europe.

EIIB has appointed Knight Frank Investment Management as the property fund advisor, to source real estate deals and actively manage the properties.

The fund is closed-end with a fixed term of five years plus up to two years wind-down. With a target size of between €200 million ($391 million) to €500 million at launch, the fund may consider a listing on a stock exchange after the initial capital is deployed.

The fund's target return is 11 per cent IRR per annum net of fees and expenses, and will be targeting income of 7 per cent per annum net of fees and expenses.
Funds under management and administration in Guernsey grew by £5.7 billion (5 per cent) over the quarter ended 30 September 2006 to reach a total of £120.5 billion, according to the Guernsey Financial Services Commission.

For the year since 30 September 2005, values increased by £28.8 billion, an increase of 31.4 per cent.

Within these totals, closed-end funds grew, with increases of £5 billion (13 per cent) over the quarter and £15.8 billion (56.7 per cent) over the year since 30 September 2005, to reach £43.7 billion, a new record.

The value of new fund approvals in the open-ended sector meant that, despite falls in market value suffered by some existing funds, overall, Guernsey domiciled open-ended funds grew by £62 million (0.1 per cent) over the quarter and by £9.7 billion (22 per cent) over the year since 30 September 2005 to reach a new record total of £54 billion.

In the year to 30 September, a total of 32 new open-ended funds, 172 new classes of open-ended funds and 83 new closed-end funds were approved by the commission. This compares with 30 open-ended funds, 92 new classes and 48 closed-end funds approved in the equivalent period of 2005.
JP Morgan has proposed an industry standard for US retail structured products that would increase transparency, alleviate investor confusion and make comparison easier among various investments.

The proposal, submitted to the Structured Products Association, would create a standard classification system for structured products, allowing investors to quickly separate prospective investments by their respective features. The nomenclature project is expected to be adopted by other leading issuers and implemented as a pilot program in 2007.

“We have found that a significant hurdle to increased acceptance of structured investments in the United States is the difficulty for investors to compare products among different providers – and we want to help change that,” said Scott Mitchell, vice president of structured investments at JP Morgan.

“A classification system with standard definitions will better serve investors as they learn about these products,” he said.

Retail structured products are increasingly popular investments in the US: according to the SPA, approximately $50 billion of structured products were issued in the US in 2005, up by more than half from a year earlier. Specifically, JP Morgan has significantly expanded its offerings and currently distributes its structured products through more than 125 brokerages, up from 30 at the beginning of 2006.

Investors can now express a view on one currency rather than taking bilateral views with single currency crosses with the launch of iBoxxFX trade-weighted foreign exchange indices.

According to independent bond and credit derivative indices provider, International Index Company, the new family of indices is the first step towards an industry-wide benchmark and further growth in the FX index business.

“In addition to trading bi-lateral currency pairs, as FX market participants have always done, customers can now trade single currencies or specific macro-economic blocks," said David Mark, chief executive of IIC.

"This will facilitate the development of structured products based on the indices in this increasingly important asset class," he said.

The indices are calculated tick-by-tick from Monday morning in the Far East to Friday’s close on the US west coast and are based on each central bank’s basket exchange rates, which track the performance of a currency against a basket of currencies.

Each basket is limited to the five currencies with the largest weights in the relevant central bank’s official index.
BNP Paribas said its decision to set up a joint asset management venture in Taiwan was taken following the growth of its onshore wealth management operation since its launch two years ago.

The French bank has signed a preliminary agreement with the Taiwan Cooperative Bank for strategic cooperation in asset management and in combined banking and insurance activities.

Helene Delannoy, a spokeswoman for BNP Paribas in Paris, told WealthBriefing: "The growth of our high net worth business in Taiwan has been the driver for this deal. The rationale for the partnership is that we gain access to their distribution network so we can provide them with the design, execution and management of our range of products."

BNP Paribas declined to give figures for client assets in Taiwan, where foreign banks such as Citigroup and ABN Amro have also set up onshore operations in recent years.

Ms Delannoy said cooperation in asset management will involve the creation of a joint venture in Taiwan although she said there is no timeline.

The banks are considering different options, including the acquisition of an existing Taiwanese Securities Investment Trust Enterprise.

An index of companies deemed ethical by “numerous sources” has outperformed the S&P 500 by more than 370 per cent over five years, according to Corpedia, a service provider in risk assessment and e-learning for ethics and compliance. The claim is that organisations that live up to moral principles or codes of conduct are likely to be more profitable over time.

The Ethics Index created by Corpedia tracks the stock performance of publicly traded companies that are “recognised for their corporate citizenship, ability to attract and retain employees, and sustainability practices”.

Alex Brigham, president and chief executive of Corpedia said: "Based on this evaluation, it's clear that consumers want the companies they frequent to do business in a manner they can respect. The legal departments tasked with creating ethical programs in compliance with government regulations can now justify them with more than a simple 'it's the right thing to do'. The financial implications are clear: to be ethical means to be profitable."

The average five-year return on the Ethics Index was 102 per cent compared with 26 per cent for the S&P500.

The companies in the Ethics Index include Intel, Starbucks and the Timberland Company. According to Corpedia, independent experts repeatedly included these companies on lists of quality corporate citizens, admired companies or best companies for which to work.
The former chief investment officer of Bank of Ireland Asset Management, Chris Reilly, is targeting clients of the group’s private banking arm with a new global equities fund with an entry level set at €5 million ($6.65 million).

Mr Reilly plans to raise €500 million for the new fund and to double clients’ investment over five years.

Mr Reilly was recently ranked by Global Investor as the joint second most consistent international equity manager in the world over the past 20 years. He was recently in charge of €57 billion of clients’ money at BIAM.

“We have already raised half the targeted amount and expect the fund to close at the end of January,” said Mark Cunningham, managing director of Bank of Ireland Private Banking.

UK-based Rocksure Property has launched an aspirational new investment and lifestyle vehicle, The Rocksure Property Alpha Fund, which provides investors with the opportunity to own a share in six exclusive properties located in some of the most glamorous locations in the world.

The “House for All Seasons”, portfolio will consist of six exclusive properties, worth an average of £800,000 each. The innovation behind this portfolio is that through a commitment of £159,000, up to 36 investors gain access to the properties for an average of four rent-free weeks every year over the fund’s seven year lifecycle as well as benefiting, as owners, from gains accrued through the properties’ appreciation, which will be returned to investors at the end of the fund’s life.

The six locations that have been identified are: Buzios in Brazil; Phuket in Thailand; Marrakech in Morocco; The Algarve coast in Portugal; Breckenridge, Colorado and New York City.

Each of the properties is to be bought outright by the fund and, with no gearing to affect costs, all but a fraction of subscription funds will go directly into purchasing the properties and their furnishings. Running costs of the properties, including cook/housekeepers, maids, gardeners and pool cleaners, are covered from two sources, an annual management and maintenance contribution paid to the fund by each unit holder (£1,500 in 2007/8) and the net proceeds of renting a proportion of the available weeks.