Review

In the year under report, we registered a very positive growth in custodian bank business. The number of mandates we administered climbed from 185 to 198. Consequently, we are the market leaders in Liechtenstein and administer the largest number of custodian bank mandates. In 2009, we were able to acquire a major fund of hedge funds for which we now serve as the custodian bank.

Intermediary business was marked by the restraint shown by investors. Thanks to regular contacts and intensified advisory services, we were able to deepen existing client relationships. Besides intermediary business, we focus on investment fund management. Due to the expanding demand in this sector, transparent and supervised fund domiciles are becoming ever more important. As one of the largest fund vendors in Liechtenstein, we were able to take advantage of this trend. Moreover, we have benefited from the loss of trust in other banks.

Successful private label business

Private labelling is of particular strategic importance for us. Since 2005, profits from this business have grown on average by 25 percent per year. Thanks to our proprietary process model, we can ensure the highest quality standards in this business area.

In the year under report, we launched 7 new private label funds. As per 31 December 2009, we therefore managed 48 private label funds. We increased our fund volume by around 40 percent to CHF 1.1 billion. On the one hand, this increase is attributable to successor products launched by our clients; on the other, we introduced innovative funds, for example in conjunction with physical gold coins.

Improvement of processing efficiency

We are constantly improving our business processes. In the year under report, we added new functions to our «LLB Fund Cockpit». This workflow-driven database precisely replicates all the steps in the realisation of a private label fund. From the submission of an offer to the launch of the fund, the entire process is standardised. This enables us to carry out the administrative work involved in setting up a fund efficiently and systematically.

In striving to optimise the risk management for private label funds, we have developed a special scoring model. This enables systematic analysis and simplifies risk monitoring. Finally, we have also enhanced the processes involved in ensuring fund investment compliance and standardised them within the LLB Group.

Above-average performance of LLB funds

In 2009, we made targeted investments in our strategic asset allocation with the aim of improving diversification, and hence reducing our performance dependency on equities. Accordingly, we added other asset classes such as real estate stocks, high-yield and emerging market bonds as well as commodities to our strategies. Furthermore, by hedging our foreign currency exposure we increased the reference currency proportion. As a result, our strategies now exhibit a lower level of risk, and above all, a broader risk spread while retaining the same return expectations.

These changes have already borne fruit. Our Strategy Funds posted an excellent performance in 2009, both in relative and absolute terms, in comparison with the previous year. According to Lipper, the prestigious fund rating agency, our Yield Strategy Fund was ranked first among 51 comparable products, while our Growth Strategy Fund was ranked number two among 72 competitors. Our fixed-interest products also did well. In the Lipper universe, our Money Market Funds were among the best 25 percent in their category. Our Equity Funds ranked in the middle of their product category.