Thornburg Plans Leadership Transition

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Photo courtesyJason Brady, president & CEO de Thornburg Investment Management

Thornburg Investment Management, a global investment firm that oversees $42 billion in assets, announced that Jason Brady intends to step down later this year from his role as president & CEO and portfolio manager, as well as from the Board of Directors of Thornburg, and depart the firm.

Mr. Brady will continue in his role to allow for a smooth transition while Thornburg’s Board of Directors undertakes a search for his successor.

“Since joining Thornburg in 2006, I am proud of what we have achieved, particularly the strength of the team we have developed, and I’m grateful for the opportunity to serve as the firm’s president and CEO for nearly eight years,” said Mr. Brady.

“This is the appropriate time for a new leader to step in and I remain fully involved and engaged while the Board searches for a successor,” he added.

“I thank Jason for delivering strong results across our business and notably assembling an experienced group of world-class leaders at the organization,” said Chairman Garrett Thornburg. “Our 41-year foundation leaves us well positioned to make the next phase of our growth the most exciting in our company’s history.”

Record Debt and Soaring Interest Costs Mean Governments Face a Reckoning, but Investors Stand to Benefit

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Governments face a painful reckoning as record debt and higher interest rates mean borrowing costs will double over the next three years, according to the annual Sovereign Debt Index from Janus Henderson. This will put significant strain on taxpayers and public services, but there are opportunities for investors.

2022 and 2023 have seen dramatic changes for government finances around the world. By the end of last year, the total value of global government debt had leapt by 7.6% on a constant currency basis to a record $66.2 trillion, double its 2011 level. The US government accounted for more additional borrowing in 2022 than every other country combined.

Costs are mounting sharply. Government interest bills jumped by almost over a fifth in 2022 (+20.9% constant currency basis) to a record $1.38 trillion. This was the fastest increase since 1984 and reflected both rising rates and the swelling stock of sovereign borrowing. The effective interest rate, which includes older, cheaper borrowing, rose to 2.2% in 2022, up by one seventh, year-on-year. 

This cost continues to rise as new bonds are issued at higher interest rates and older, cheaper debt is retired. The effective interest rate in 2025 is set to be 3.8%, almost three quarters more than 2022’s level. 

This will prove very expensive for governments. By 2025, the governments around the world will have to spend $2.80 trillion on interest, more than double the 2022 level. This will cost an additional 1.2% of GDP diverting resources from other forms of public spending or requiring tax rises. The US is particularly exposed on this measure. 

On top of this come losses on central bank portfolios of QE bonds which must be filled by tax dollars, reversing the pre-2022 flow of profits on these bonds paid by central banks to government finance departments. 

Ongoing annual deficits mean debts will continue to rise, reaching $77.2 trillion by 2025. The global debt burden will rise from 78% of GDP today to 79% of GDP in 2025.

Jim Cielinski, Global Head of Fixed Income at Janus Henderson said: “The level of government debt and how much it costs to service really matter to society, affecting decisions on taxation and public spending and raising questions of generational fairness. Since the Global Financial Crisis, governments have borrowed with astonishing freedom. Near-zero interest rates and huge QE programmes by central banks have made such a large expansion in government debt possible, but bondholders are now demanding higher returns to compensate them for inflation and rising risks, and this is creating a significant and rising burden for taxpayers. The transition to more normal financial conditions is proving a painful process.

We expect the global economy to weaken markedly in the months ahead, and for inflation to slow more than most expect. The market expects the world economy to have a relatively soft landing – a slowdown in growth, but no outright contraction, except in a handful of national economies, he added. Cielinski said that believe this is incorrect.

The sheer volume of debt owed by governments, corporates and individuals nevertheless means that rates do not need to climb as far as in the past to have the same effect. The interest rate tightening cycle is nearing its end. 

Investors stand to benefit. Bonds of all maturities are likely to see yields fall in the year ahead, meaning prices will rise. Short-dated bonds offer higher yields at present because they are more closely connected to central bank policy rates. This is good for those wanting income and tolerating lower risk, but they will see less capital appreciation. The scope for capital gains is significantly greater for longer-dated bonds which we expect to perform very well in the next year as the economy comes under pressure.”

Barbara Reinhard named Chief Investment Officer for Voya Investment Management’s Multi Asset Strategies and Solutions platform

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Voya Investment Management (Voya IM), the asset management business of Voya Financial, Inc. (NYSE: VOYA), announced that Barbara Reinhard, CFA, has been named chief investment officer and head of Asset Allocation for Voya IM’s Multi Asset Strategies and Solutions (MASS) platform, effective Nov. 1, 2023.

Reinhard will succeed Paul Zemsky, CFA, who will retire at the end of 2023. Reinhard will report to Matt Toms, Global Chief Investment officer, Voya IM.

“Barbara is a seasoned investment professional with 30 years of investment experience. She is well respected both within our industry and with our clients,” said Toms. “Since joining Voya seven years ago as head of asset allocation for MASS, Barbara has been a key driver of alpha and risk management for our multi-asset platform and has both attracted and developed a strong team of talented investment professionals.

“In the nearly 20 years since Paul founded the MASS team, it has grown to over $31 billion in assets. In addition, Paul has served as a mentor to many of our employees and has been instrumental in the creation and evolution of Voya IM’s award-winning culture. I know our MASS team will build upon the success and client-centric commitment to delivering results that was started by Paul,” added Toms.

Reinhard joined Voya IM in 2016 and most recently served as head of asset allocation. She is also a portfolio manager on Voya IM’s target date and multi-asset strategies. Prior to joining Voya IM, Reinhard was a managing director and chief investment officer in Credit Suisse’s private banking division.

“We are focused on the needs of our clients and investing in our firm. Equally important, we want to prioritize the continuity of our portfolio management teams while elevating the next generation of our leaders — both of which we have done today,” said Toms.

Voya IM also announced today that Lanyon Blair, CFA, CAIA, Head of Manager Research and Selection, will join Reinhard as a named portfolio manager on the firm’s target date and multi-asset strategies. Blair joined Voya IM in 2015 and is responsible for manager research and selection activities across equity, fixed income, real estate and commodities asset classes for all of MASS’s multi-manager solutions.

Liontrust to acquire GAM Holding AG

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Liontrust announces that it has conditionally agreed to acquire the entire issued share capital of GAM Holding AG (GAM), a global investment management firm with GAM’s Investment Management division having AUMA of CHF 23.3 billion (£20.9 billion) as at 31 March 2023.

The Proposed Acquisition of GAM will accelerate Liontrust’s strategic progress and growth through the broader investment capability and global distribution of the enlarged company, according the firm press release.

Liontrust will provide an environment to enable the investment teams to focus on managing their portfolios without distractions within a strong risk and compliance framework and with the support of the rest of the business to deliver performance and a growth in assets.

The broad range of funds and asset classes will enhance Liontrust’s product range. The expanded range will offer the potential to grow the combined client base and provides Liontrust with differentiated performance across the fund range through the market cycle.

GAM’s existing product offering is complementary to Liontrust’s especially in fixed income and alternatives. GAM will strengthen Liontrust’s fixed income offering, adding capabilities in: Asset Backed securities, Emerging Markets debt, Global Credit, Global Rates, Catastrophe bonds and Insurance Linked Securities.

Equities will continue to be the largest product for the enlarged company, with GAM adding and strengthening capabilities in: Asia, Japan and Emerging Markets, Thematic Global Equities, Europe, Luxury Brands and UK Income. GAM will also expand the multi-asset and alternatives propositions and provide a capability in wealth management.

This increased product depth will be expected to support growth in Liontrust’s market share over time and enable us to better mitigate against market volatility and changing demand for investment styles. The Proposed Acquisition will lead to a step change in scale, with 12 funds having more than £1 billion of AuMA (two for Economic Advantage, one for Global Fundamental, four for Sustainable Investments, four for GAM Fixed Income and one for GAM Multi-Asset).

Liontrust intends to rebrand all GAM funds as Liontrust as soon as possible after completion of the Proposed Acquisition and for the GAM business to operate under the Liontrust brand.

The acquisition will enhance distribution globally and the opportunity to increase sales and market share. GAM is geographically diverse with 3,500 clients based in almost every continent, with 2,700 in Europe. Switzerland, Germany, Italy, the US, Iberia and Latin America are GAM’s largest markets outside the UK.

Liontrust and GAM are both focused on providing excellent client service and the enlarged company will deliver engaging experiences for investors globally.

The fund managers and other employees at GAM will benefit from the environment at Liontrust, the enhanced distribution, strong brand and marketing, and the resources of the enlarged company.

John Ions, Chief Executive of Liontrust, said: “We have been impressed by the quality of the investment teams at GAM. There is commonality in that Liontrust and GAM are both committed to independent and distinct processes for each of their investment teams. Liontrust specialises in providing an environment in which investment teams can thrive, including through the excellence of our sales and marketing and a robust business infrastructure, strong risk and compliance culture, and the stability that comes with financial strength.”

Peter Sanderson, CEO of GAM, said: “I am delighted we have agreed this transaction with Liontrust. Our distinctive approaches to investing and culture are closely aligned, and this combination represents the best opportunity for our talented team of professionals at GAM to continue to provide clients with high conviction active investment strategies. The resulting business will have a strong balance sheet, a broader array of excellent investment products, and a global distribution footprint from which to deliver growth that our shareholders can participate in the future.”

David Jacob, Chairman of GAM, said “I would like to thank all my colleagues at GAM for their hard work and dedication while we worked to determine the best option for the future of the firm.  I am confident that the loyalty of our clients will be rewarded since they will now benefit from the increased capabilities and stability of the combined firm. Our shareholders have been patient, and I and my fellow Board members are unanimous in our recommendation that they should tender their shares in response to the offer from Liontrust.”

Advisors’ Front-Office Technology Is Here to Stay

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Driven by the need to facilitate a digital work environment, advisor use of front-office technology has evolved significantly over the past three years. New research from Cerulli, State of U.S. Wealth Management Technology 2023, finds front-office technology has made a lasting impact on both client satisfaction and advisor productivity.

Between 2019 and 2022, the greatest rates of growth in advisor adoption occurred with technologies that facilitate a digital work environment, such as e-signature, client portals, and video conferencing, driven largely by the needs imposed by the pandemic. Advisors tell Cerulli that these technologies were critical to their ability to operate effectively during the pandemic, but that the benefits experienced go well beyond that. Thus, many patterns of technology use that emerged during the pandemic are likely to continue into the post-pandemic world.

The technologies that are most frequently cited as positively impacting the client experience include e-signature (77%), video conferencing (75%), and client portal (64%). Likewise, the technologies that are most frequently cited as positively impacting advisor productivity include video conferencing (75%), e-signature (73%), and CRM (70%).

“This data aligns with the many conversations Cerulli has had with financial advisors who share how e-signature technology has drastically reduced the time and effort required for clients to open accounts, and create linkages between accounts, for example, obviating the need for papering and re-papering of accounts,” says Michael Rose, associate director. The same applies to virtual meetings, which were rare prior to the pandemic, and are now often a preferred meeting option for clients and advisors. “The precipitous rise in advisors’ use of these applications over the last three years underscores the importance of creative, outside-the-box thinking when it comes to the ways in which they do business altogether,” he says.

Overall, the ways in which advisors source technology varies between affiliation models. For instance, 88% of advisor practices affiliated with captive broker/dealers (B/Ds) source their suite of technology from their home offices with relatively little control over product selection. Independent registered investment advisors (RIAs) represent the other end of the spectrum, with 50% building custom technology stacks sourced entirely from third parties.

“The diverse ways in which advisor practices source their technology are testament to the varying approaches for operating a wealth management practice in the modern day,” concludes Rose.

Morgan Stanley Capital Partners Acquires RowCal

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Investment funds managed by Morgan Stanley Capital Partners (“MSCP”), the middle-market focused private equity team at Morgan Stanley Investment Management, have acquired RowCal. MSCP is partnering with the current management team led by CEO Jake Christenson, who founded the business in 2018, the firm said in a press release.

Headquartered in Minneapolis, Minn., RowCal is a provider of outsourced homeowner association (HOA) property management services, offering a comprehensive solution to better manage and maintain HOA communities. RowCal currently serves the Minnesota, Colorado and Texas markets and has scaled rapidly through market-leading organic growth and strategic add-on acquisitions.

The company’s differentiated approach, which leverages advanced technology and an integrated care team to enhance the customer experience, has enabled RowCal to quickly emerge as a leading and trusted provider in the space since inception.

Adam Shaw, Managing Director and Head of Business Services at MSCP, said: “We are delighted to partner with Jake and the RowCal team as they continue their mission of building a leading HOA property management provider. RowCal’s impressive growth trajectory coupled with a client-focused culture are a testament to what the management team has built since its founding. We look forward to working together to advance RowCal’s vision to serve its client base and pursue continued expansion of the company through robust organic growth and M&A.”

MSCP’s acquisition of RowCal is consistent with the team’s focus on target subsectors where MSCP has deep institutional knowledge and domain expertise. It is MSCP’s third acquisition in 2023 following those of Apex Companies and Allstar Services.

“Since founding RowCal in 2018, the company has experienced strong growth through our focus on delivering a high-quality experience to HOA managers. We believe our partnership with MSCP will enable us to continue our national buildout and growth trajectory by investing in the capability set to drive organic growth and expand our geographic footprint,” said Jake Christenson, CEO of RowCal.

Debevoise & Plimpton served as legal counsel to MSCP. TD Cowen and William Blair served as financial advisors to MSCP. Robert W. Baird & Co served as financial advisor to RowCal.

The Siegel Group Enters Florida With Its Siegel Select® Extended-Stay Brand

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The Siegel Group, a real estate investment and management company, announced that it had acquired the former Stay Suites of America located in Orange Park, Florida.

The property, which suffered from deferred maintenance and management issues, was purchased in an all-cash transaction for $7 million and quickly closed in under 30 days. This acquisition increases the number of Siegel Suites® and Siegel Select® properties throughout the United States to 61 and marks the brand’s first location in the Florida market. This location is in addition to the company’s significant presence throughout Nevada, New Mexico, Arizona, Texas, Tennessee, Louisiana, Mississippi, Alabama, Ohio, Oklahoma, South Carolina, and Georgia.

The Siegel Group, which operates a sizable commercial real estate portfolio consisting of apartments, extended-stay hotels, flexible-stay apartments, hotels, retail, office, and development projects, will be operating the property under its successful Siegel Select® brand which provides the option of either short-term daily stays or longer term extended-stay accommodations.

The property, which will be renamed Siegel Select Orange Park, is located directly off Interstate 295 and in close proximity to Downtown Jacksonville. Built in 1998, the 3-story exterior corridor property totals approximately 57,060 square feet and is comprised of 144 units that are all equipped with kitchenettes. The Siegel Group will be making a number of improvements including updating flooring and cabinetry, as well as installing new furniture and appliance packages in all units. Additionally, the exterior of the property will be painted along with other cosmetic upgrades, including branding and signage that are characteristic of the Siegel Select brand.

Chigozie Amadi, Chief Financial Officer of The Siegel Group stated: “We have been looking for the right opportunity to enter the Florida market and are excited to introduce our Siegel Select brand to Orange Park. Now that we have established a presence in this new market, we plan to further expand our Siegel Select and Siegel Suites brands throughout the state.”

Dynasty Financial Partners To Launch Dynasty Investment Bank

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Dynasty Financial Partners announced the launch of Dynasty Investment Bank.

Going forward, the firm will leverage its M&A and capital strategies capabilities to offer buy-side and sell-side advice for independent wealth management firms inside and outside the Dynasty Network as well as for other types of firms that are in need of independent and objective strategic advice in the wealth and asset management industry.

“At Dynasty, we are facing substantial demand for M&A and investment banking services from advisors in our Network and outside our Network. Whether a CEO desires to acquire an RIA or tuck-in a group of advisors, want to explore selling their business, or are seeking a valuation to understand the value of their equity, RIA management teams seek high quality and objective advice. With our deep expertise and years of experience working with hundreds of leading advisors, we are well-positioned to offer RIAs a wide range of investment banking capabilities in this ever-complicated market” said Shirl Penney, CEO of Dynasty Financial Partners.

According to Harris Baltch, Head of Dynasty Investment Bank, “The independent wealth management industry has accelerated its pace of consolidation and maturation over the last decade. The headwinds of aging advisors, the valuation gap of succession and a higher interest rate combined with the influx of different capital providers and a multitude of business models will create a long runway for consolidation in the years to come. We believe this will create significant opportunity to provide independent, objective advice to CEOs, management teams and investors to execute M&A from start to finish.”

The Dynasty Investment Bank employs a team of seasoned investment bankers, former private equity professionals and other former Wall Street executives that have deep transaction experience advising founders, CEOs and other C-suite professionals on M&A, capital structure optimization and succession. The firm cumulatively has professional experience of more than 100 years and has advised on over $25 billion in transaction value across dozens of advisory mandates.

Over the last twelve months, Dynasty has advised on over 14 transactions including the recent announcement by DayMark Wealth Partner’s tuck-in of a $450 million team and Americana Partners’ tuck in of a $700 million team from major wirehouses in the United States.

Texas-Based Wealth Team Combines Forces with Dynasty Financial Partners to Launch Precedent Wealth Partners

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Photo courtesy

Harold Williams and George Williams announced that they have partnered with Dynasty Financial Partners to launch a newly independent firm called Precedent Wealth Partners.

Based in San Antonio, Texas, Precedent Wealth Partners will also introduce a unique program that enables clients to share in the success of the firm through a fee-rebate program called ‘WillShare’. They plan to open a Houston office in August.

“We launched Precedent Wealth Partners largely because we want to partner with our clients by creating an advisory entity that cannot easily be sold. We want our clients to feel they can count on our permanence and alignment with them,” said Precedent Wealth Partners’ co-founder Harold Williams. “Our WillShare program aligns the clients’ interests with that of the owners, as we plan to share 33% of our distributable after-tax net income with our clients, via fee credits every year. We don’t know of any firms out there that are doing anything like this – it’s a new precedent being established in the wealth management marketplace. We’re proud of what we’re doing, and we’re excited to get going.”

The team previously managed over $1 billion in assets at Linscomb & Williams, a Houston-based wealth management firm named to Barrons Top 100 in the most recent release.

Mr. Williams added, “We look to expand our message and grow organically rather than focus on growth through acquisition. All too often, RIAs launch and then begin a “race to sell” within the next 5-10 years, whether to private equity, a bank, or other buyers. This may not work out so well for the clients. We want to be different: we want our clients to feel they are treated like fellow-owners. Our WillShare program will foster that feeling and lay the foundation for an enduring firm which they can count on to stay committed to its principles for many years to come.”

“We welcome Harold, George and the whole Precedent Wealth Partners team to the Dynasty Network and we look forward to working with them in building out their firm,” said Shirl Penney, CEO of Dynasty Financial Partners.

The name ‘Precedent’ speaks to the firm’s passion for setting a new precedent in the field of financial advice. Precedent Wealth Partners is in the unique position of benefitting clients with a share of their after-tax profits.

Precedent Wealth Partners works with clients in the areas of investment management, wealth planning, estate planning, tax strategy, insurance/risk management, and retirement planning.

Franklin Templeton Hires Damian Zamudio to Develop Firm’s Americas Offshore Business

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Photo courtesyDamian Zamudio, Franklin Templeton

Franklin Templeton announced the hiring of Damian Zamudio, as Vice President Offshore Sales Executive, to further develop and expand its offshore business with clients in New York City and the greater Northeast.

Based in New York, Zamudio reports to Marcus Vinicius Goncalves, CFA, Head of Americas Offshore Sales.

“Damian brings two decades of wealth and asset management experience to his new role, where he will be focused on providing an exceptional client experience,” said Goncalves. “We continue to be focused on offering clients a broad range of investment opportunities and differentiated capabilities, including alternatives, short duration fixed income and income solutions, to meet their needs in this market environment.”

Zamudio previously served as Regional Sales Manager International at abrdn Plc, where he spent more than 10 years supporting all aspects of the sales and business development life cycles across the Americas offshore markets. He was also a Vice President at BlackRock, where he was responsible for sales of a wide variety of sophisticated solutions and platforms tailored for the private bank and international clients. In addition, he was an Assistant Vice President at Merrill Lynch Wealth Management, where he consulted domestic and international financial advisors.

Zamudio holds a Bachelor of Arts from San Diego State University, with a major in International Business.