A third is the growing use of local fund managers: a US or Japanese fund would tend to have European assets

A third is the growing use of "local" fund managers: a US or Japanese fund would tend to have European assets managed locally rather than from New York or Tokyo, but for much European investment London is the local centre.So much of the advance of London is a result of being strong in the right sectors. However, the building up of that expertise in the first place shows something more than luck. For example, identifying the emerging markets as a key growth area was an important strategic decision which a number of London fund managers made about seven years ago and which has paid off very well.There is, however, a bigger issue behind these figures which deserves attention: whether the cult of the equity is itself likely to go into a retreat. These figures are all about equity investment rather than investment in fixed-interest securities.

Viewed from the perspective of the fund management industry it makes sense, for equity business is where the added value is greatest. Fixed-interest research is basically a macro-economic skill needing a tiny handful of people who make decisions based on data; equity research needs lots of bodies to assemble the knowledge base on hundreds, maybe thousands of companies.From a UK perspective there are several reasons why one might expect a trend back to bonds: the downward trend in inflation; pressure here in Britain for mature pension funds to start to shift assets into fixed- interest because of the regularity of the stream of interest payments; pressures on pension funds to match the maturity of assets and liabilities. (If you have pensions to be paid out in 25 years' time it is convenient to have bonds which mature at the same date.)These forces have been cited as an explanation why here in the UK there seems to have been some switching in pension funds from equities to fixed- interest in recent months. However, there is as yet no similar trend elsewhere in the world. Rather the reverse: the British cult of the equity (which is even stronger than the US cult) seems to be gaining converts elsewhere.There are several reasons, on the demand and the supply side, why this seems set to continue.

These include the build-up of private pensions on the Continent which will seek a fair proportion of equities in their portfolios; the long historical advantage equities have over fixed-interest in the rate of return they provide (even in periods of low inflation); and the spread of privatisation, which will massively increase the supply of equity.Finally, the case that fixed-interest investments were less volatile than equities was rather blown to bits last year with the worldwide collapse of the bond markets. Few people in London thought that collapse would be wonderful for their business, but in investment, as in so many things, it is an ill wind. .Top 10 investment centresInstitutional equity holdings (end 1994)$bnTokyo 1,523London 754New York 678Boston 425Zurich 379Geneva 242Paris 231San Francisco 199Los Angeles 189Toronto 144International Target Cities Report 1995, Technimetrics, New York. Given the run of grim news from Comet-to-Woolworths retail group Kingfisher, the recent vow of silence from chief executive Sir Geoff Mulcahy is not entirely surprising. A profits warning in January, the departure of four directors with payoffs of pounds 2.7m and a share performance that was the worst in the FT-SE 100 last year, would have been enough to send the most hardened company boss scurrying for the bunker.

The problems were spelled out in results for the year to January, which saw profits down from pounds 310m to pounds 281.5m, the first decline since the group's formation in 1982. Comet made a pounds 2m loss and Woolworths' profits fell by a third after stock problems and uncompetitive pricing affected sales. By the end of the financial year, the shares had fallen to 389p, barely half the 774p reached at the beginning of 1994. Ignoring calls for his head, Sir Geoff put up the shutters at Kingfisher's Marylebone Road headquarters and started hammering out a plausible recovery story. In the last week or two he has emerged blinking into the sunlight to tell the tale, the part relating to problem child Woolworths anyway.A four point plan to put the wonder back into Woolies now involves focusing its 780 branches on home and family products, keeping prices low and segmenting the chain into three different types according to location.All well and good but the worry persists that Sir Geoff is still not addressing Woolies' core problems, the most pressing of which is that many of its core products are offered in greater depth elsewhere In toys it is up against Toys 'R' Us and Argos. In childrenswear it battles against a rejuvenated Mothercare and an improving Adams. In entertainment, competitors include WH Smith and the supermarkets are increasingly turning their attention to CDs and videos.Analysts also fret that Kingfisher's management now has so much on its plate that resources will be stretched to breaking point. The loss-making Comet electricals chain is being moved back to lower price items after last year's mistaken foray upmarket but still faces a cut-throat sector.