Short positions... ETF giants in merger talks

■ Fund manager Invesco is in talks to merge with State Street’s asset management business, says The Wall Street Journal. The talks might not result in a deal, but if it went ahead it would be one of the industry’s biggest mergers in recent history: State Street manages nearly $4trn in assets and Invesco oversees $1.5trn. Both firms have large exchange-traded funds (ETF) businesses, which have grown in popularity as investors shift from active funds that charge higher fees. Deals have boomed among asset managers as they try to cut costs to stay competitive, says Breakingviews. In this case, State Street and Invesco might be able to generate $160m in annual savings. However, in the end these mergers are still “a pit stop in a race to the bottom”. Cutting costs won’t do much to change “the fee-crunching trend”, while the deals can also create new problems as portfolio managers leave, “demand chunky sums to stay or just grumble over culture clash”.

■ Michael Hasenstab (pictured) has seen his Templeton Global Bond fund shrink from $43bn to $5.75bn over several years of underperformance , says Citywire. Now fund research firm Morningstar is questioning whether this decline poses any dangers. Hasenstab’s strategy is known to “make up ground in a hurry” but it’s volatile; that, coupled with the “spectre of persistent outflows”, raises the “risk of liquidity trouble”. Templeton disputes this, saying the fund invests “among the most liquid markets in the world” and is “designed to navigate volatility and liquidity risks”.