Tag Archives: Investment management

Deutsche Bank To Review Its Global Asset Management

Deutsche Bank announced on Tuesday that it is conducting a strategic review of its global Asset Management division. All strategic options are being considered, the bank says in a press release.

“The outcome of this review will be driven first and foremost by our fiduciary duty to, and the interests of, our clients.”

Kevin Parker

 

This is one of those interesting press releases where the most interesting stuff is what the releasing company is NOT saying.

When any company is reviewing the strategy of a whole division it is almost certain that there will be some changes.

Deutsche Bank do not say anything in today’s press release about what part of the asset management it will cut lose.

But the largest bank of Europe emphasize what it will keep:

“While the Bank remains committed to asset management, this review is part of the Bank’s continual effort to maintain an optimal business mix and be among the market leaders in each of its businesses.,” DB writes.

“All strategic options are being considered. The review covers all of the Asset Management division globally except for the DWS franchise in GermanyEurope and Asia, which the Bank has already determined is a core part of its retail offering in those markets.”

According to the bank is the strategic review of the asset management division focusing in particular on how recent regulatory changes and associated costs and changes in the competitive landscape are impacting the business and its growth prospects on a bank platform.

Kevin Parker, Global Head of Asset Management and a member of the Deutsche Bank Group Executive Committee, says in commentary:

“The outcome of this review will be driven first and foremost by our fiduciary duty to, and the interests of, our clients. Our aim is to find the best strategic option to maximize the performance and potential of the Asset Management division.”

Fiduciary duty? I had to look it up:

“A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to one, who for example has funds entrusted to it for investment. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts,” according to Wikipedia.

“A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the “principal“): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.”

Now, who is “the principal” (or “principals”) of Deutsche Bank? I wonder…

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Chaos in Financial Markets are “Potentially Dangerous for Humanity”

You don’t say! What I find most surprising, however, is that there actually ISCentre for the Study of Capital Market Dysfunctionality: It was founded in 2007 by British Paul Woolley, after working several years as a stock broker, and as economist and adviser at the International Monetary Fund (IMF). Guess he knows what he’s talking about. In an interview with Spiegel Online, Britain’s new found financial guru, Dr Paul Woolley says the market stress in not only dangerous for those who work there, but also for everyone else. And he has some investment advise.

“Stop paying performance fees to managers who increase the worth of funds because it encourages gambling.” 

Paul Woolley

“The developments in recent weeks have made it quite clear that the markets don’t function properly. Things are spinning out of control and are potentially dangerous for society. Only a fraternity of academic high priests connected to the finance markets is still speaking of efficient markets. Still each market participant is pursuing their own selfish interests. The market isn’t reaching equilibrium — it’s falling into chaos,” Dr. Paul Woolley says.

 

Here are some more highlights from the Spiegel interview:

“The finance sector can – and is – growing until it overwhelms the economy. In good years the US finance industry cashes in on more than 40 percent of all corporate profits.” 

“Most fund managers follow only the newest trends and strengthen them by doing so. In the short term that leads to success, but in the long term it leads to a crash. “

“The finance industry is characterized by many innovations. Because the customers hardly understand their innovative products, banks make amazing returns. “

“The big investors are in a position to force their service providers, the banks, fund managers and bankers into better behavior. “

” Big investors should also insist that trading take place on a public market. “

Paul Woolley’s career has spanned the private sector, academia and policy-orientated institutions.

After several years of practical experience in a firm of stockbrokers, latterly as a partner in his firm, he studied Economics at the University of York (UK) receiving BA (1970) and D Phil (1976).

He held the Esmée Fairbairn Lectureship in Finance at York 1970-76, also serving as Specialist Advisor to the House of Lords Committee on the EEC 1975-6.

He then moved to the International Monetary Fund 1976-83, initially as an Economist and later as Advisor and then head of the Division responsible to the Fund’s borrowing and investment activities.

Returning to the UK, he was for four years a Partner and Director on the main board of merchant bank, Baring Brothers and its various subsidiaries.

In 1987 he co-founded, and was Managing Director of, GMO Woolley, the London affiliate of GMO, the Boston-based fund management firm. He was a Partner and served on the main GMO board (1998 – 2003).

He retired as Chairman of GMO Europe in 2006.

He returned to academic life in 2007, funding the Paul Woolley Centre for the Study of Capital Market Dysfunctionality at the London School of Economics.

He is now also Chairman of the Advisory Board for the Centre and a full-time member of the research team.

Similar centres have been set up at the University of Toulouse and at UTS in Sydney.

Mr. Woolley is an Honorary Professor of the University of York, Senior Fellow at LSE and an Adjunct Professor at UTS.

Read the full interview with Dr. Woolley at Spiegel ONLINE.

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Hedge Funds Even More Bearish on US Equities, But Still Buying

The percentage of hedge fund managers who are bullish to the US stock market have dropped to 25,6 in February, down from 46,2 in December last year, They belive – and are probably right – that the FED‘s QE2 have been the major force behind the upswing, and expects a severe downturn when Uncle Ben runs out of money, the latest research from TrimTabs/BarclayHedge show. However; they’re still loading up the boat…

“If one of the Fed’s goals was to ignite speculation and greed then it has succeeded famously.”

Vincent Deluard


Hedge Fund Managers Turn Bearish on US equities, according to the latest money flow survey from TrimTabs/BarclayHedge. Most managers attribute the recent rally in equities to the QE2, while many feel the rally will end when the quantitative easing stops. But the funny thing is; they’re still buying stocks in buckets and barrels. Why?

Hedge fund managers have turned bearish on US equities, according to the TrimTabs/BarclayHedge Survey of Hedge Fund Managers for February, released last week.

About 40% of the 89 hedge fund managers the firms surveyed in the past week are bearish on the S&P 500, up sharply from 26% in January, while only 26% are bullish, down from 37%.

“Bullish sentiment less bearish sentiment is negative for the first time since November,” says Sol Waksman, founder and President of BarclayHedge.

Adding: “Increased caution might owe in part to excellent recent performance. The Barclay Hedge Fund Index has posted a positive return for six straight months.”

About 37% of hedge fund managers are bearish on the 10-year Treasury note, while only 15% are bullish. Bullish and bearish sentiment on the U.S. dollar index are balanced at 31%.

Meanwhile, 18% of managers aim to increase leverage in the near term, while only 15% plan to lever down.

“Managers aim to lever up even though they are bearish on both bonds and stocks,” Vincent Deluard, Executive Vice President at TrimTabs notes.

“Why? They still have a large incentive to gamble with borrowed money because short rates round to nil. If one of the Fed’s goals was to ignite speculation and greed then it has succeeded famously.”

About 52% of hedge fund managers feel the rally owes primarily to QE2, while 35% cite the end of quantitative easing in June as the biggest threat to the rally.

TrimTabs points out that the level of the S&P 500 and the size of the FED’s balance sheet have exhibited a positive correlation of 88.4% since the start of QE1 in March 2009.

Meanwhile, managers are concerned about oil prices. About 24% believe oil is more likely to hit $150 per barrel than the S&P 500 is likely to ascend to 1,600.

“We’ll take the other side of that action,” Deluard says.

“We did see a similar surge to $150 from $100 in 2008, and tension in the Middle East is obviously higher now.  But oil spiking to $150 from here represents a move of nearly seven standard deviations, while the S&P 500 climbing to 1,600 represents a move of less than three standard deviations. The market participants who agree with us that concern about sharply higher oil prices is overdone might consider capitalizing by selling long-dated out-of-the-money call options on oil futures.”

Related by the Econotwist’s:

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