The Wealth Issue: Make money, not war

By Gillian Tett

Published: September 22 2006 12:43 | Last updated: September 22 2006 12:43

The man about to arrive in a restaurant next to the Bank of England in the City of London is coming to talk about religion. Not the Christian creed that has shaped the City of London over the centuries, but the religion that currently begets unease in many westerners – Islam. More specifically, why, at a time when parts of the Muslim world appear to be at war with the west, some of the world’s biggest investment banks are pouring resources into “Islamic finance”.

He has been described as one of Deutsche Bank’s leading figures in its quest to win Islamic business. His colleagues say he is a genius at creating schemes that enable rich Muslims to use their money in accordance with their beliefs. When he arrives, not only does he not look like a Muslim; he doesn’t even look like a hotshot banker. With a sober shirt and understated manner, he looks more akin to an accountant. (In fact, he is a qualified actuary.) Wearily, he introduces himself as Geert Bossuyt – and rubs tired eyes. He has come off a flight from Dubai, where Deutsche Bank is building up a business on the back of the Middle Eastern oil boom.

Memorandum on the Issues, Opportunities, and Challenges Facing Portfolio Managers in the Coming Decade

By: Khaled Sultan
Date: April 28, 2006

Introduction

Today’s investment environment is a challenging one for all of its participants. Things have come a long way since the turn of the past century, and a deeper analysis of the investment industry is required to understand how it will change in the future. The following memorandum aims to discuss the various issues, opportunities and challenges facing portfolio managers of large balanced mutual funds over the next decade. We will begin with a brief description of portfolio management and some historical background on the industry. We will then continue the discussion around the underlying issues. Some of the issues we will put forward are arguably as old as the profession itself, including the fiduciary duty a manager has to her clients. Other issues, on the other hand are expected to gain some light in the upcoming decade, especially issues such as ethical and environmentally friendly investing. We will also address some of the upcoming challenges in this business including the various management and research fees charged to clients by their fund managers, and the degree of transparency of those fees, or lack thereof. Our discourse will also highlight the future investment environment which is expected to continue to be constrained by growing regulation, and compliance burdens. The memorandum will aim to be comprehensive, however much of the discourse will be focused on the major issues expected to gain prominence over the upcoming years.