The Financial Services Authority, the UK financial regulator, has said it is striving for a “level playing field” between fund managers when...

The Financial Services Authority, the UK financial regulator, has said it is striving for a “level playing field” between fund managers when it comes to the cost of their funds. But the charging structures might have little effect for high net worth individuals.

Last year the regulator introduced a requirement for unit trust and open-ended investment managers to show the total expense ratio of funds in the simplified prospectus they send to clients.

The total expense ratio covers the entire operating costs of a fund. This includes management, trustee, audit and administration fees, sales and other transaction fees, stockbroker costs and any interest costs. These are not generally included in a fund’s annual management charge.

To illustrate the difference, an annual charge might be 1.5 per cent, but once additional costs have been added, the total expense ratio would be 2.3 per cent a year.

The FSA’s new rules will focus mainly on bundling and soft commissions. These will be released later this month and will become law by the end of June.

But the FSA explained that strictures aimed at bringing the optimum degree of information to customers can be waived in the case of high net worth individuals.

An HNWI can declare his or her status, demonstrating a certain level of sophistication, and once the firm has accepted this, a fact-find, for example, can be omitted.

Robin Gordon Walker, a spokesman for the FSA told WealthBriefing: "It’s not that the firm treats you in any more of a cavalier way of course (if you are a HNW).

"Although this is interesting in itself; it concerns how you would classify a ‘sophisticated investor’. It becomes confusing when you consider a lottery winner for instance."

With lighter-touch regulation comes more risk and an FSA regulatory statement of HNW certification means that a so-called sophisticated investor waives recourse to the FSA, the Financial Ombudsman Scheme, and the Financial Services Compensation Scheme.

The certificate also requires a sophisticated investor to have an income of at least £100,000 ($174,000) and net assets of £250,000 not tied into a primary residence or pension.

The Singapore Stock Exchange has tabled a framework for the listing of hedge funds, as the asset class has grown in Asia. The exchange said it will reach a finalised proposal after consultation ends on 28 March.

The Singapore exchange has set out certain listing requirements, such as allowing hedge funds to offer units to institutions and accredited investors only. The minimum asset size of a listed hedge fund will be S$12 million ($7.4 million).

Singapore would be competing with exchanges in Dublin and Luxembourg, which opened their doors to investment funds at the end of the 1980s. The SGX will add an additional level of due diligence to hedge funds listed, according to the SGX.

Listing hedge funds on the SGX is also expected to increase the amount of those funds starting up in the region.

Merrill Lynch Global Private Client has launched new tax efficient share classes of the Merrill Lynch Global Selects Fund specifically designed for UK investors.

Global Selects was first launched as a Dublin-registered OEIC in February 2003. It currently has $2.9 billion of assets under management, but has hitherto been tax-inefficient for UK onshore investors.

Now, with distributor status, the capital gains tax treatment of the shares for UK individuals will be the same as an investment in an equivalent UK fund.

The new Sterling Distributor Status share classes of the Global Selects range will be available on an advisory and discretionary basis and with lower limits of £100,000 and £500,000 respectively are being aimed at the high net worth and ultra high net worth markets.

Both existing and new clients will be targeted by Merrill with the new classes.

Global Selects is a flexible benchmark-driven open architecture funds programme. It invests in a broad range of asset classes using different investment styles and five risk profiles ranging from conservative to aggressive.

Global Selects portfolios are managed mostly by independent established investment managers from around the world, who undergo a rigorous selection process and are regularly monitored against strict quantitative and qualitative criteria, said Merrill Lynch.

“The funds are available either with or without currency hedging,” Paul Holmes sales manager, Global Selects told WealthBriefing.

“The new share classes give clients access to institutional type advice with diversification across types of mandates and styles, along with the ability to hedge currencies and transparency of holding,” Nick Tucker, market leader for UK and Ireland for Merrill Lynch, told WealthBriefing.

A further innovation is that clients will be offered an online daily snapshot of their holdings.

“This is the next generation of open architecture products,” Mr Tucker said.

“With 43 UK Distributor Status portfolios in Global Selects, we are able to offer our UK clients one of the most comprehensive ranges of open architecture funds in the market place.

“Global Selects has provided our off-shore clients with access to a comprehensive range of top-tier money managers for the past three years. With the introduction of UK Distributor share classes, we are now able to take this premier service to our UK client base,” he said.

Merrill Lynch Global Private Client has $1.4 trillion of assets under management.

GAM, the UK-based asset manager, has launched GAM Star Worldwide Equity, a new UCITS fund based in Dublin, comprising transferable securities to be marketed within all the countries in the European Union.

The new fund will transfer assets from an existing offshore fund, GAM Worldwide, domiciled in the British Virgin Islands, which will become a feeder fund operating in UK sterling, Euro, Swiss Franc and US Dollar classes.

The GAM Star Worldwide Equity will share the same portfolio as the S&P AAA-rated GAM Worldwide.

A spokeswoman for GAM told WealthBriefing: “Because of the structure of our existing GAM funds a lot of investors were excluded. With this fund we are opening up to a lot more investors.

"There are two ways of investing in the new fund. Firstly the managed route will involve putting money into a composite fund across a portfolio which includes underlying GAM funds.

"The other approach is the DIY option whereby you do your own asset allocation and choose how much risk you want to be subject to and what, geographically, might affect your portfolio choices. This option might be attractive to high net worth individuals or family offices."

This fund is managed by one of GAM’s long-standing external fund managers, Taube Hodson Stonex Partners, which has managed GAM Worldwide Equity since its inception in May 1983.

Jupiter, the UK investment manager, has appointed Kevin Scott, formerly an international sales manager at Old Mutual, to launch a range of offshore products under its own brand name. The firm runs funds for the European market under the name of owner, Commerzbank.

Mr Scott’s role will be to build sales in global markets including the Channel Islands, the Middle East, the Far East and South Africa. The aim is to target domestic investors and UK expatriots.

Mr Scott was executive director of Old Mutual’s UK and offshore businesses. He will join a team which includes high profile figures such as Income Trust star Tony Nutt and Jupiter Financials manager Philip Gibbs.

New Star Asset Management, the UK-based fund manager led by Jupiter Asset Management founder, John Duffield, has opened an office in Madrid with a view to growing its business in Spain.

Mauro Lorán García, the newly appointed regional director for Iberia, will head up the new Spanish operation.

Mr Lorán was previously the managing director for ABN Amro Asset Management in Spain, where he was responsible for third-party fund distribution, institutional sales and relations.

He also worked at ABN Amro Asset Management head office in Amsterdam, where he was responsible for developing the institutional business in Portugal and Latin America.

Mr Lorán said he believes there will be strong demand for New Star’s funds among Spanish institutional investors and private banking clients.

New Star has filed a range of investment products with Spain’s Securities Market Commission, comprised of sub-funds of the Irish-domiciled, New Star Global Investment Funds.

New Star has a presence in London, Dublin, Bermuda, Hong Kong and Zurich and currently employs more than 290 people.

VAM, the Isle of Man-based boutique fund manager is moving its US and international equity funds to Luxembourg. The transfer of four long only US and international funds VAM Funds will take place on March 31.

In the process the funds will become fully regulated in Luxembourg under UCITS III regulations, discarding their former unregulated Experienced Investor Fund status in the Isle of Man.

The funds benefiting from this transfer are American Special Opportunities Fund, Elite, Blue Chip and International Special Opportunities Fund.

The funds will change their names to the American Special Opportunities fund, the US Small Cap Growth Fund, the Elite: US Micro Cap Growth Fund, the Blue Chip US Large Cap Growth Fund, and the International Special Opportunities: International Growth Fund.

“Full UCITS III regulation will enhance the marketability of the funds to a wider group of investors, this will enable the funds to increase assets under management and will improve cost efficiencies for the shareholders,” said VAM.

Since its launch in March 2002, VAM now has $250 million under management.

Jersey-based Close Investment Services, part of the Close Private Bank Group, is to launch an international series of six multi-manager multi-asset funds - Close Discretionary Strategies.

The series will follow progressive and dynamic investment styles and will be available in sterling, euro and US dollars.

The range will hold between 17 and 20 funds at any time that will invest in equities, fixed income, hedge funds, property and commodities. It will have an annual management fee of 1.6 per cent and no redemption charge.

The new launch is targeted to a wider range of investors than Close’s existing All Weather Fund that was launched two years ago.

The progressive strategy is designed to maximise returns on capital by placing equal weight on preservation and growth in the medium to long term.

UBS and Credit Suisse funds were found to be among the worst performers in Switzerland last year, according to a funds survey from Standard & Poor’s.

Out of 70 investment fund managers rated by S&P, UBS ranked 64th and Credit Suisse a marginally better 62nd. The performance measurement was over one year.

The annual survey, quoted in Le Temps, compared the performance of Swiss and foreign investment funds available in Switzerland over three different time periods.

First place went to Fidelity, followed by Investec and Allianz in the one year time period.

But UBS and Credit Suisse funds performed better over longer time periods, with 20th and 21st places respectively over a five-year period. And over ten years Credit Suisse was rated 11th and UBS 13th.

Fidelity made the top three in all time categories of fund performance, coming second for both five and ten year time periods.

Union Bancaire Privee, the fourth-largest Swiss private bank, is introducing high net worth individuals and institutional investors across Europe to its latest tie-up agreement with Calamos Investments, the US money manager.

The European road show features the Union Bancaire Asset Management Calamos US Equity Growth Fund, which was launched in April last year, and has grown quickly with about $530 million in assets currently under management.

During a recent breakfast briefing at UBP’s headquarters in London, Andre Gigon, managing director, UBP in London, told WealthBriefing that he expects the new fund to have crossed the $1 billion mark by the end of 2006.

UBP relies on a tried and tested selection process when it comes to choosing fund managers. The bank has been selecting hedge funds managers for example, for the last 25 years. “We never manage, we select managers and incorporate these choices into a fund of funds,” Mr Gigon added.

Calamos also adheres to a set of rigorous processes, mostly developed in-house by the firm. John Calamos, chairman and chief executive officer, Calamos Investments, detailed some of these processes during the morning meeting.

The equity growth fund follows a structure that Callamos has employed since 1991 and which did well to preserve capital through the down phase of the markets around 1999-2000, according to Mr Calamos. A quantitative analysis is the first part of this strategy.

The Calamos equity fund is the latest addition to UBP’s existing “club” of investment vehicles, which includes the UBAM Neuberger Berman US Equity Growth fund, German and Japanese equity funds, and corporate Euro bond and convertibles Europe products.

Allfunds Bank, the firm backed by the Grupo Santander, the Spanish financial services firm and Italy’s Sao Paolo IMI, is opening an office in London.

Allfunds Bank focuses on the investment fund industry, where it acts as a platform to match fund managers with fund distributors. Its clients include private banks and it is seeking to expand its wealth management business with the London office.

Allfunds’ new office will provide execution and administration, advisory and information through its open architecture platform to asset managers across Europe. It currently has €29 billion ($34 billion) in assets under administration.

The firm will provide data research, transaction and custodial services for funds of asset managers across Europe.

Allfunds said it aims to add the funds of 25 asset managers to its those of the 120 managers it already counts as clients in Continental Europe, representing a further €4 billion in assets to administer.

Banque Safdie, the Swiss private bank, has launched its first fund of hedge funds entirely focused on Latin America, the Safdie LatAm Fund.

The Safdie Fund is currently formed by 11 funds, 82 per cent from Brazil, 4 per cent from Argentina and 14 per cent from elsewhere in Latin America.

The bank said it intends to increase this number to 20 funds, and is aiming to produce a double-digit annualised target return with 5 per cent to 8 per cent volatility.

The Brazilian market represents 95 per cent of the total Latin American hedge funds market, and the return on Brazilian securities is expected to be around 10 per cent in US dollars during the next year.

Based in Geneva, Banque Safdie was formerly known as Multi Commercial Bank and was founded in 1965. The bank adopted the name of the Safdie family, who are its only shareholder, in 2003.

The bank has a strong presence in Latin America with a subsidiary and a representative office in Sao Paulo, Brazil (Multi Commercial Bank DTVM), and representative offices in Buenos Aries, Mexico and Rio de Janeiro.

The bank also has subsidiaries in Grand Cayman, Luxembourg and New York.

Edmond de Rothschild, the French-based investment management firm, is trumpeting four years of standout performance in alternative and traditional multi-management.

Edmond de Rothschild Multi Management, founded in 2002 and chaired by Pierre Palasi, has amassed about €2.3 billion ($2.74 billion) in around 30 funds.

A subsidiary of La Compagnie Financière Edmond de Rothschild, the multi-manager division saw assets under management grow by nearly 100 per cent in 2005.

The multi-manager’s alternative investments team led by Olivier Neau, which handles €1.2 billion in assets, claims to have out-performed the sector average of approximately 11 per cent for 2005. It adopted a strategy of going overweight in long/short and event-driven styles and exposure to natural resources.

The firm’s clientele is split roughly half between institutions and private clients or wealth management advisors. Alternative management is steadily gaining ground especially among a broad institutional clientele, with outstandings now exceeding those of the company’s traditional clientele of wealthy private clients.

In terms of comparative performance, Edmond de Rothschild Multi Management said over the period 2000-2005 the firm saw a market decline followed by a rally that has been, “less volatile than equities, outperforming bonds.”

Edmond de Rothschild Financial Services has launched a new mutual fund, which will invest in the energy and commodities sectors.

The new fund, Gaia Multiclic, is managed by RFS Gestion, a subsidiary of Edmond de Rothschild Financial Services specialising in structured assets.

Last year Edmond de Rothschild Financial Services saw assets under management increasing by 79 per cent to €2.5 billion ($2.9 billion). RFS Gestion is directly regulated by the French Financial Markets Authority and specializes in the management of structured, guaranteed-capital and unit trust funds.

LCF Rothschild Group has itself been active in alternative multi-management for 37 years and employs more than 70 people dedicated to these activities in London, Geneva, Luxemburg and more recently Paris. It has around $8 billion in assets and around 15 alternative funds of funds.