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Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Categorized | Financial

Wells Fargo buys into Rock Creek

Posted on December 18, 2012

Wells Fargo has taken a minority stake in Rock Creek, a fund of fund business, in a further sign of consolidation of the embattled sector.

It comes as investors continue to shun actively managed stock funds in favour of cheap index and exchange traded funds, pushing the established asset managers to look for alternatives such as hedge funds to attract assets.

    “We see a natural opportunity with this deal to fill in one of the few areas in our current business where we don’t have a capability,” said Mike Niedermeyer, chief executive of Wells Fargo Asset Management. He said customers are “seeking out this type of investment”.

    The bank has taken a 35 per cent stake in the asset manager, which has $7bn in assets under management, and has the option to increase that over time. Terms were not disclosed.

    The move is the latest of several deals in the fund of funds industry, which is under pressure as assets shrink and hedge fund returns diminish.

    In May, FRM, another long-established fund of funds with $8bn under management, sold itself to Man Group for a token consideration.

    Franklin Templeton earlier this year acquired a majority stake in the fund of funds business K2, and this week Legg Mason said that it would acquire Fauchier Partners and add it to its existing fund of funds arm Permal.

    At the peak of the financial boom, funds of funds – which pool client investments and then invest them in a selected portfolio of separate hedge fund managers – were once responsible for the bulk of the hedge fund industry’s assets under management.

    But with fewer private individuals now investing in hedge funds and more pressure on fees, funds of funds have struggled to retain assets.

    Rock Creek is one of the few to buck that trend. “The new model of fund of funds – who are transparent and provide tailored portfolios for their clients – that has good growth prospects . . . in the case of Rock Creek, their assets have grown from $3.7bn in 2008 to $7bn currently,” said Mr Niedermeyer.

    Wells Fargo Asset Management has more than $450bn in assets under management. Rock Creek will be added to the group’s Affiliated Managers Division, which operates several different asset managers trading under their own brands. The group said that it did not expect to make further fund of funds acquisitions.