A daunting year ahead for fund managers in Portugal

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2012 will be a difficult year for Portugal and the Portuguese asset management industry which will face rising competition fort scarce resources and an uncertain global environment.

Mutual funds and discretionary management are key products, Dwyer says. Mutual funds, with a fully open architecture allow clients access to some of the world’s best fund management quickly at minimal costs, while discretionary management provides a diversified, risk controlled framework with asset allocations best suited for each client.

In the current market environment a diversified approach is more important as it helps to keep a view of the big picture with an emphasises on long term returns.

Other interesting products include short-term credit funds, given market expectations for higher interest rates in the medium to long term, inflation protected bond funds and some hedge funds

But whatever the strategy, most analysts believe that 2012 will be a difficult year until Portuguese banks are able to regain access to funding in the inter-bank market.

Measures agreed at the December EU summit are expected to help though Portugal already has an adjustment programme in place. Moves that help advance towards a resolution of the European sovereign debt crisis, limiting contagion, volatility and instability in the markets and that can contribute to building a more sustainable and stronger Europe will all be positive for Portugal, Dwyer says.

The market environment has been challenging for asset managers as it can be influenced in the short term by politicians and knee-jerk political actions rather than fundamentals, says Dwyer.

But it is not all gloom. Veiga Sarmento says better days will follow the turbulence. “We believe that financial instability will begin to calm down in 2012 and this change, even if it happens very slowly, of the conditions will reinitiate a process of inflows of savings through the asset management industry. One of the major lessons of this crisis is that we should never forget that private savings are crucial to the stability of the economic and financial systems. And we are certain that the time for the lessons to be applied, will come sooner [rather] than later.”

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