In this issue we examine a number of trends in investment management. On page 5, we report on a very innovative approach Perpetual Investments Australia, (which opened an Irish operation in 2004), is taking with its domestic fund strategy. The firm strongly believes that the Australian stock market is over-priced, and that domestic stocks are trading at a premium to international ones. As such, the firm is looking to include international stocks, which it believes are better bets than their domestic equivalents, into their Australian fund portfolios.
This is a very novel approach to ensuring that consistent returns are achieved, and is an example of how hedge funds, and their constant search for ‘alpha’ are changing the traditional landscape of long only fund managers. With hedge funds aggressively targeting high returns, it seems that traditional fund mangers are no longer content to sit back and watch their funds produce single digit returns.
Another growing trend in fund management is the growth in popularity of multi-manager funds, and on page 5 we look at the pros and cons of such funds.
According to the Investment Management Association in the UK, sales of such funds have almost trebled in the last year, and multi-manager funds accounted for more than a third of the ?3.2 billion net retail sales in the last quarter of 2005. And it’s not just in the UK that they are so popular, with an increasing number of Irish fund managers offering such products to their clients. In 2004, KBC Asset Management joined forces with US manager Northern Trust, to distribute a jointly-managed manager of managers pension product, and AIB Investment Managers has also joined the fray, with its Multi-manager–Managed Fund.
Despite high charges, investors are keen to buy into such funds, due to the investment flexibility and potentially higher rewards they offer, and it is estimated that inflows into multi-manager products within the Irish marketplace, will be in excess of €1 billion by 2007.
In this issue we also examine how precious metals are growing in popularity, due to their counter cyclical nature, as investors seek to diversify their portfolios. Platinum, the rarest of all precious metals, rose to a record high of $1085/ounce in January, as hedge funds and investors bought the metal used in jewelery and catalytic converters for cars to diversify their portfolios and seek high returns. On page 6, Mark O’Byrne of Gold and Silver Investments offers advice on the pros and cons of investing in platinum. |
