“This fund invests in physical gold without using derivative instruments. The investment objective is to replicate the return from gold on the spot market. The two funds Xmtch II on Gold hedged CHF and Xmtch II (CH) on Gold hedged EUR also allow investors to invest in currency-hedged ETFs to avoid being subject to fluctuations in the exchange rate of the US dollar,” the bank said.

Meanwhile, in the red corner sits UBS, looking somewhat seasick and a bit punch drunk after making heavy weather over its investments in subprime and its brawl with the US tax authorities over claims that it allegedly helped US citizens avoid paying taxes.

The bank which the Economist newspaper famously described as “The world’s biggest manager of other people’s money,” has reportedly been laying off staff even as its rival Credit Suisse has been hiring. It was reported to be planning to get rid of 4000 heads in April and in late September another 200 were thought to be leaving its wealth management unit. This would bring the total number of job losses at the bank to almost 20,000 since the markets went into meltdown two years ago.

Chief Executive Oswald Gr¸bel has also denied that it is selling off its US wealth management business. “We’ve had a lot of inquiries from potential buyers, but it wouldn’t make sense to sell at current valuations,” Gr¸bel told the Financial Times.

“It is true that the reputation of Swiss private banking has suffered in recent months. Some people may argue that the adoption of the global OECD standard on administrative assistance in tax matters and the settlement with the US regarding UBS have permanently weakened bank client confidentiality,” Hans-Ulrich Doerig, the Chairman of the Board of Directors of Credit Suisse Group said in Neue Z¸rcher Zeitung.

“In addition, Switzerland is in the process of conducting further negotiations with other countries. However: once it has made certain adjustments – some of which may prove painful – Swiss private banking will remain the undisputed global leader in the industry and will be able to further consolidate its position,” he said optimistically.

"IT IS A KNOWN FACT THAT FUNDS GENERALLY PERFORM WORSE THAN THE RESPECTIVE INDICES BUT THE FACT THAT THE SELF-CLAIMED WEALTH MANAGEMENT SPECIALISTS HAVE PERFORMED SO MUCH WORSE THAN THE MARKET, IS VERY DISAPPOINTING."

However, wealth managers will really have to raise their game if a new report by MyPrivateBanking.com is anything to go by. It makes for grim, but unsurprising reading for anyone who has lost money with private banks in the past two years. Credit Suisse, which said that it wants to attract six per cent in new funds from clients each year, has come close to the bottom of MyPrivateBanking.com’s list of worst performing equity funds.

It said that the equity fund returns of the 15 biggest wealth managers and banks worldwide are “mostly worse” than the respective benchmark indices.

The report analyses equity funds with a focus on the US, Europe, Asia and global coverage. During the last five years about 80 per cent of the funds have returned below average returns and only funds from Deutsche Bank (DWS), the provider Black Rock associated with Merrill Lynch and Lombard Odier were able to perform better than the benchmark indices.

“It is a known fact that funds generally perform worse than the respective indices but the fact that the self-claimed wealth management specialists have performed so much worse than the market, is very disappointing,” said Steffen Binder, Research Director of MyPrivateBanking.com, summarising the result of the study.

“As the providers often include in-house products in the portfolio for their clients, these are often paid for twice, once due to the high fund charges and again through lost profits.”

The total expenses of the analysed funds were between 1.08 per cent and 2.35 per cent of the investment amount per year but this is not the only reason for the bad result according to Christian Nolterieke, Managing Director of MyPrivateBanking.com

“In the case of half of the providers, the negative divergences vis-‡-vis the indexes are in the double-digits and this is not only due to costs but also due to bad investment decisions. Particularly if, like in the case of the Asian equity funds, not a single fund outperforms the benchmark.”

EQUITY FUNDS
In case of equity funds focusing on the US, five providers could at least outperform the index. In the case of those focusing on Europe only three could outperform the index. And in the case of funds focusing on Asia all the providers performed worse than the index.

In other news, Julius B‰r Group reached an agreement to acquire the Swiss arm of ING Bank for CHF 520 million ($505.1 million) in cash, including surplus capital of CHF 170 million ($165.1 million) based on a target Tier 1 ratio of 12 per cent. B‰r had long been odds on to acquire ING’s Swiss business, so the acquisition has come as no real surprise.

HSBC, meanwhile, is thought to be one of the main contenders to win ING’s Asian wealth management business. Chris Meares, the CEO of HSBC’s global private banking arm told Reuters that, “What’s attractive (about ING) is that you never see these businesses come up for sale. It’s really the rarity of a business, you know, coming off for sale -- 150-odd relationship managers and the assets under management... It is very unusual for people to sell an Asian business.”

Meares didn’t say if HSBC was eying the ING arm, although he did say that they were upping their headcount by “a few per cent.” Is HSBC focusing on a lot of its energy on Asia? It seems to be, especially given the news that Michael Geoghegan, HSBC’s Group Chief Executive is moving to Hong Kong, in line with what HSBC says is its strategy to focus on emerging markets.

Bloomberg reported that HSBC Bank Middle East Chairman and Group Managing Director Youssef Nasr has been appointed the Chairman of the bank’s global private banking unit. Nasr’s move is expected to be completed by February 2010.

In Saudi Arabia, the furore over the Saad Group/ Algosaibi debacle is continuing. Sheikh Abdullah Al Manee, a member of Saudi Arabia’s Muslim Scholars Authority was reported in the UAE’s Emirates Business 24/7 newspaper as saying that there should be new laws and regulations to organise the businesses of family companies and protect them from disintegration when the company’s founder is dead.

DISINTEGRATION
“Some of these companies control billions of dollars in investments but they face the danger of disintegration or disappearance,” he said. “I am also talking about persistent disputes within these institutions when their owner or founder is dead... these disputes are mostly among inheritors and could often lead to the fragmentation or liquidation of the company. This poses a serious threat to the national economy.”

Human Al Shamaa, advisor at Al Fajr Securities, told the newspaper that the CEOs of some banks considered only the financial bonuses they will receive when they decided to lend heavily to the Saad and Algosaibi groups.

“Banks have typically gone on a name basis and personal guarantees,” Dr. Nasser Saidi, Chief Economist of the DIFC Authority admitted. “This can be a very expensive form of finance and we have seen some experiences of that. As a result of the crisis, there is going to be a shift away from name-based financing towards debt markets and market-based financing. This transition process is obviously going to take time. It is not going to happen overnight, but I think it will be very beneficial for the region and for the family businesses which are the bulk of the businesses in the region.”