The global economic downturn and financial markets have bottomed out - and it is now only a matter of how long it will take them to recover.

That is according to Massimo Tosato, vice-chairman of Schroders plc, who was over visiting the Bermuda office last week and gave his views about the market outlook, how the fund management industry has been adapting to the economic crisis and the best place to put your money, among other topics, in an interview with The Royal Gazette.

Other subjects covered ranged from the future of hedge funds, the end of the financial turmoil and lessons learnt from the crisis.

Mr. Tosato, who is in charge of the commercial side of the business worldwide, reckons there could be signs of a recovery in the second half of 2009, there having been in a recession for the past two or more years.

He said there were a number of factors which might impact that recovery, including the outbreak of swine flu in Mexico which has spread to other parts of the world, from the US and Canada to the UK and Europe.

But he admitted that the number of cases reported were limited compared to the millions of people affected by regular flu every winter. However, he added that the Mexican economy would feel the impact, while the markets and travel, airline and hotel industry (including resorts and restaurants) may also suffer the knock-on effect as a result.

The World Bank has already estimated that global Gross Domestic Product will be hit by five percent in the event of a repeat of the 1918 Spanish flu pandemic, but that is balanced with a number of countries being well-prepared and making contingency plans for such an outcome as a result of earlier fears about an outbreak of avian flu.

Furthermore, the recent outbreak of SARS in Hong Kong suggests there will be an impact on retailers, airlines and hotels, putting pressure on cash flows and requiring banks to be more flexible in their lending, according to Schroders' latest newsletter to investors.

However, if the outbreak of swine flu is contained, there may be no permanent effects on output, which should eventually bounce back, as individuals delay their decisions to spend money, the report added.

Mr. Tosato, who makes regular trips to all of Schroders' bases around the world, visiting its Bermuda operations for the second time on this excursion, said there were two schools of thought - one that believes the bear market will subside in the summer and the recovery will start in 2010 or later, and the other that thinks the economy is already turning around, via evidence such as from US data and confidence in Germany's markets.

Speaking about strategies for investment, he said the weighting of portfolios depended on wealth, liquidity and age profile, but pointed to his clients worldwide, who had enjoyed a significant return on their investments in corporate bonds mid-January, and the return from emerging market equities, as areas where some investors had benefited.

Asked about his impressions of the Bermuda market and business for Schroders, Mr. Tosato said: "It seems to me that the insurance business is certainly the business as far as an asset management business goes, because that is their biggest segment.

"Clearly, the insurance business has been built around a set of tax incentives and we will have to see what the new administration of America will do about that."

Mr. Tosato, who is from Venice in Italy and was educated at the University of Rome and received an MBA from Colombia Business School, founded Cominvest S.p.A., an investment banking and asset management organisation and became CEO in 1981.

Having established the business as a significant independent financial services company, 10 years later he sold it to Cassa di Roma Group, while co-founding and then serving as chairman of Tonic-Ata-Ecom, an advertising company, between 1982 and 1987.

In 1994, Mr. Tosato co-founded Viasat Assistance S.p.A., which was subsequently sold to the Telecom Italia Group in 1997, joining Schroders as managing director of investment management in Italy in the interim, in 1995.

He relocated to London in 1999 to take up the post of head of Schroder Investment Management for Continental Europe and the Middle East and two years later he was appointed group managing director of retail and joined Schroders plc's main board and group executive committee.

In 2003, Mr. Tosato was appointed global head of distribution at Schroders, responsible for managing the company's institutional and retail businesses globally across the group, prior to becoming vice-chairman in May 2007, in addition to his management of the fund of hedge funds subsidiary, NewFinance Capital.