How to generate more income from the savings of the GCC was the theme of MEED's first global asset management conference held at Le Royal Meridien in Bahrain on 29-30 January. The conclusion was that investors should review their investment strategies in light of the market-shaking events of 2001 and divert more money into direct and portfolio investments in Bahrain and the GCC.
More than 150 delegates and guests attended the event, which was sponsored by Gulf International Bank (GIB), State Street and EFG Hermes Asset Management. They came from Bahrain and 18 other countries. One third of the delegates came from the GCC. The rest came from the UK, France, Germany, The Netherlands, Switzerland, the US, Canada, India and Pakistan.
Sheikh Ahmed bin Mohammed al-Khalifa, governor of the Bahrain Monetary Agency (BMA - central bank), set the scene in an opening address. 'It is appropriate that Bahrain was chosen as the venue for this conference as it has international status as a home of choice for the regional financial services industry,' he said. 'The government seeks to ensure that its administrative, legal and regulatory regimes are constructed and executed in total transparency. From this concept of a level playing field, the financial services industry is expected to provide technical competence, training and development of staff, design and implementation of systems that deliver products at costs acceptable to both the institutions and the customer.'
David Waite, GIB's head of asset management, reminded the audience of the importance of establishing investment objectives and monitoring them. Waite tipped investment grade, high-yield and emerging market bonds for 2002 and examined equities as well as the opportunities offered by alternative investments. 'Alternatives are fast becoming acknowledged as the fourth asset class,' said Waite. 'They can be used to reduce volatility and increase returns.'
Peter Stanyer, managing director of strategic asset management at Merrill Lynch, highlighted the management of risk. 'People lose financial wealth by not understanding or seeing risk,' Stanyer said. 'Risk should only be taken when there is an expectation of getting rewarded for it.'
The opportunities offered by alternative investments were examined by Philip Winder, director and head of the Middle East at Schroders Investment Management International. He tracked the rise of the sector and examined trends in the private equity and hedge fund industry.
Prashant Kolluri and Vinod Kurup, members of Investcorp's asset management team, explained how their bank has successfully constructed a fund of funds programme that now has more than $2,800 million under management. They stressed the importance of an intensive manager selection process and ongoing portfolio monitoring.
This message was reinforced by Errol Rudnick, the chief investment officer at Weston Capital Group, who outlined the components of a multi-manager programme. 'Diversification is key to this industry,' he said. 'Multiple approaches to markets and the use of multiple instruments produce a more controllable portfolio.'
Arjen Soederhuizen, ABN AMRO's senior vice-president, global head of structured asset management, introduced structured products. He went on to explore the attractions of actively managed structured products and how they can be tailored to suit the precise needs of investors.
Jamille Jinnah, managing director of Almeida Capital, described the rapid growth of the private equity market. Cory Pulfrey, a Morgan Stanley Dean Witter's managing director, looked in detail at the emergence of a second market in private equity.
Riyad Bank executive vice-president Basel Algadhib said that the market for mutual funds in Saudi Arabia is booming. Dr Tristan Clube, executive director of EFG Hermes Asset Management forecast that Gulf equity markets were in the early phases of an upswing. Terence Allen, head of treasury and investment banking at National Bank of Abu Dhabi (NBAD) said the conditions were ripe for further development in regional capital markets.
Rodney Ringrow, vice-president in the global investor services group of State Street, said the region had time to avoid the problems emerging in the West due to the aging of the population. Now was the time for business and government to set up schemes permitting private pension provisions.
Geert-Eisso van der Zande, regional head of Gulf countries at Credit Suisse, examined the benefits of having market-neutral long/short equity funds. Andrew Tice, managing director for global private banking at Royal Bank of Canada, outlined the benefits of fiduciary services.
Prince Abbas Hilmi, chairman of the Swiss Egyptian Portfolio Management Company, outlined new ways of managing private portfolios in the Middle East. Mohamed BuQais, general manager of ABC Islamic Bank, described the opportunities in sharia fund management. Toby Lanyon, vice president of equity derivatives at BNP Paribas, reported on developments in Islamic asset management in the GCC.
The conference closed with a presentation on currency overlays by Eric Lafeuille, head of Middle East institutional asset management at BNP Paribas.
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