Funds update: finance bloodletting

Article Abstract:

British financial funds have faced problems, while technology funds have performed well. TechMARK, launched in Nov 1999, has helped technology funds. Financial funds have had problems achieving growth, and this reflects problems in the British banking industry. Lloyds TSB is one bank that has underperformed the FTSE All-Share, despite having a low cost-to-income ratio. Older banks face new competition in the mortgage market. Telephone and internet banking also represent competition.

Financial Services, Finance and Insurance

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When bigger doesn't mean better

Article Abstract:

Open-ended funds may attract too much money at the peak of a boom. Fund managers prefer to be cautious when stock prices are expensive. New money can be invested in low-risk vehicles, but this affects performance. Very large funds have to invest across a wide range of stocks and can become like tracker funds, which affects theirperformance. Managers may also be attracted to stocks about which less is known. Solutions include changing rules to allow limited-issue funds with a limit to amounts being managed.

Investment Banking and Securities Dealing, Portfolio & Funds Management, Portfolio management

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Savings products off the shelf

Article Abstract:

United Kingdom supermarkets are moving financial services and have been joined by other new entrants such as Virgin Direct and some life insurers which have set up banking units. The initial move was made by Sainsbury's which has opened open 800,000 customer accounts. Tesco set up a JV with Royal Bank of Scotland called Tesco Personal Finance, and Safeway and ASDA are among other new entrants. This trend reflects the end of personal relationships with bank branches and the rise of telephone banking. Strong branding can help the new entrants, but their financial services operations may take some time to develop.

Supermarkets and Other Grocery (except Convenience) Stores, Grocery stores, Supermarkets

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