Unicorn Strategic Partners(UnicornSP) and iCapital announced an exclusive partnership to distribute private market and hedge fund investments to financial advisors in Latin America and intermediaries in the US servicing non-resident LATAM clients.
UnicornSP will serve as a local distribution partner and product specialist introducing funds available on the iCapital flagship platform to wealth managers in the region.
UnicornSP will add new senior hires fully dedicated to private markets to its teams in Argentina, Brazil, Chile, Colombia, Mexico, Uruguay, and the United States.
On the other hand, iCapital will provide UnicornSP with product support through its in-house research and diligence team, and a bespoke suite of educational tools.
“This is a new chapter for Unicorn Strategic Partners and its clients. It underscores our commitment to providing wealth managers and their clients broader access to an array of diverse investment opportunities,” said David Ayastuy, Managing Partner at UnicornSP. “In launching our partnership with iCapital, we are powering our ability to meet high-net-worth investors’ growing demand for private market and hedge fund strategies, and better support their desired portfolio outcomes.”
UnicornSP services clients including private banks, broker-dealers, registered independent advisors, multi-family offices, and external asset managers across the Latin American markets and financial intermediaries in the US servicing non-resident LATAM clients.
iCapital and UnicornSP see significant demand for private market and hedge fund investments in LATAM alongside a desire for comprehensive educational support.
“We are delighted to strengthen our presence in the Latin American market in partnership with Unicorn Strategic Partners,” said Marco Bizzozero, Head of International at iCapital. “Latin America is of strategic importance to iCapital. This partnership represents our commitment to the wealth managers in the region by providing them with the relevant private markets and hedge fund investment solutions, expertise, and education to help them achieve their clients’ investment objectives.”
Daniel Viera has been hired by UBS International for its wealth management division in New York, the company reported on LinkedIn.
“We’re pleased to announce that Daniel Vieira has joined our International Division as a part of the New York International Wealth Management Office,” posted Catherine Lapadura on LinkedIn.
Viera, with more than 20 years in the industry, comes from Delta National Bank and Trust Company in New York where he worked for more than 15 years.
Prior to Delta, he worked for more than 6 years in Sao Paulo, first as a financial advisor and then portfolio manager, according to his LinkedIn profile.
“Backed by the extensive intellectual capital and the expertise of UBS Wealth Management, Daniel is positioned to help UHNW families and individuals in Latin America, simplify their complex financial lives, maximize the value of their businesses, and create lasting family wealth,” the release added.
He studied business and finances at Columbia Business School and the New York University.
Roberto Martins has been promoted to head of International Solutions at Itaú Asset Management.
Martins, with more than 20 years in the industry, posted on LinkedIn about his new role at the Brazilian firm.
He worked in Credit Suisse between 2001 and 2003.
Subsequently, he worked for a decade at Citi where he became head of Private Bank of Brazil.
In 2013, he landed at Itaú where he headed GWS International private banking until now he assumed the position of head of International Solutions.
Martins holds an MBA from the University of California, Berkeley, Haas School of Business and, among other studies and certifications, the Data Science Program of the Massachusetts Institute of Technology.
Reinsurers facing shrinking balance sheets amid rising rates and increasingly volatile catastrophic losses have effectively utilized the insurance-linked securities (ILS) market to manage risks and topay insured losses. However, ILS investors not properly compensated for risk or facing elevated losses amid fallout from Hurricane Ian may choose to reinvest capital elsewhere, which would exacerbate the demand/supply imbalance of the reinsurance sector, which is especially acute in the Florida property market, Fitch Ratings says.
ILS include catastrophe (cat) bonds, collateral reinsurance, sidecars and industry loss warranties, representing around 20%, or $100 billion, of global reinsurance capacity. Cat bonds are approximately 30% of the ILS market. Commentary from the Monte Carlo Rendezvous 2022 indicated a pipeline of ILS deals of $5 bil. of additional reinsurance capacity, which would benefit insurers facing a hardening market.
However, the ILS market will assume a fair share of losses from Ian, with Fitch estimating total insured losses of $35 billons.-$55 billons., second only to Hurricane Katrina at $65 bil. ($90 bil. in 2021 dollars).
As frequency and severity of losses have increased in the past 10 to 15 years, modeling catastrophic losses and pricing risk effectively is challenged by secondary peril costs and potential effects of climate change on catastrophe events. Escalating inflation and litigation expenses also make controlling claim costs more difficult.
Major hurricanes have hit Florida in five of the past six years, following a 10-year reprieve after Katrina (2005). The state remains attractive with its population growing over 16%, or three million people from 2010 to 2020. Estimated losses from Ian will make the tenuous Jan. 1 renewal season much more difficult.
ILS investors are compensated for possible principal loss due to natural catastrophe risk. Since 2017, with insured losses from Hurricanes Harvey, Irma and Maria, the number of cat bonds not returning full principal to investors totals 55 individual tranches with either a full or partial loss to investors, a dramatic increase compared to 75 tranches in totality since 1990.
Nearly 33%, or $10 billons (bil.) of outstanding cat bonds, have some exposure to Florida wind damage. ILS investments exclusively or predominantly exposed to Florida wind or the southeast region and Hurricane Ian are $2.9 bil.
Without proper compensation, investors will look elsewhere. Cat bonds become unattractive if investors perceive they are not adequately compensated for “loss creep” and “trapped capital” due to settlement delays, which can last three to four years. During this time, Cat bond investors may forego investment opportunities from other asset classes or be stuck with ILS deals at lower spreads. ILS-trapped capital from Hurricane Ian is estimated at $15 bil. – $18 bil. according to Trading Risk.
Fitch rates two catastrophe bonds, Stratosphere Re Ltd., 2020-1 and Long Point Re IV Ltd., 2022-1. These bonds are not at risk of principal loss given the former’s structural features and the latter’s predominantly northeast U.S. insured property value.
Several cat bond indices provide initial market reaction to Ian, reflecting preliminary estimates based on pricing sheets and not reported claims from sponsors. September sequential-month returns for Swiss Re Global Total Return, Eurekahedge ILS Advisers Index and Plenum Indexes were -8.6%, -7.6% and -5.2%, respectively, versus the ‘BB’ High Yield index return of -3.8%.
ILS indices prior to September were positive and performing very well in 2022 to financial asset classes, showcasing non-correlation benefits. However, ILS performance has trailed the 3 to 5-year ‘BB’ rated High Yield Index over the past five years. Spread attractiveness and diversification benefits for ILS investors may fall with rising interest rates, which may reduce investor appetite in dedicating time and resources to a sector that has plateaued between $90 bil. and $100 bil. of outstanding issuance.
Northern Trust Asset Management (NTAM) announced that Antulio Bomfim has been hired as head of Global Macro, a newly created position within its global fixed income group.
The expansion of NTAM’s global fixed income team, responsible for $470 billion in fixed income assets under management, is designed to enhance capabilities as the team serves the evolving needs of fixed income investors worldwide, the firm said.
Bomfim joins NTAM with nearly 30 years of experience spanning roles within investment management and the Federal Reserve Board System.
Most recently, he served as special adviser to the Fed Board as well as special adviser to Chairman Jerome Powell.
Previously, Bomfim was with Macroeconomic Advisers as a senior managing director, co-head of Monetary Policy Insights. Prior to that, he served as a portfolio manager and co-head of interest rate strategy for OFI Institutional Asset Management, a division of Oppenheimer Funds.
A longtime advisor, consultant and award-winning author, Bomfim brings deep practical and theoretical knowledge of the economy and financial markets. His fields of research include asset pricing, monetary policy, macroeconomics, investments and financial markets. He holds a Ph.D., MA and BA in Economics from the University of Maryland, as well as a MS in Mathematical Finance from the University of Oxford.
In his newly created role within NTAM’s Global Fixed Income Group, Bomfim has overall oversight responsibility for the Global Macro Group, which is responsible for interest rate strategy, systematic volatility, liquidity, and monitoring systemic risk globally. Bomfim is also responsible for the firm’s global liquidity management business.
He reports to Chief Investment Officer of Global Fixed Income Thomas Swaney.
“Within the Global Fixed Income team, our fundamental tenet that investors should be compensated for the risk they take manifests itself in our management of four key risks – interest rate, volatility, prepayment and credit,” Swaney said.
Assets in managed accounts programs grew 23.8% in 2021, reaching a high of $10.7 trillion, according to Cerulli’s latest report, U.S. Managed Accounts 2022: The Future of Personalized Portfolios.
As sponsors evaluate drivers for long-term growth, they are prioritizing helping advisors manage portfolios more effectively and developing personalized investment solutions through direct indexing.
A majority (56%) of managed account sponsors are prioritizing providing better portfolio construction resources to advisors. This comes as securing consistent investment outcomes and scaling advisory practices have long been competing goals at sponsor firms.
“Sponsor firms realize that discretion is a powerful tool for advisors. Instead of trying to take it away from underperforming advisors, they are instead giving their advisors tools to be better portfolio managers,” according to Matt Belnap, associate director.
“This has become an important selling point for sponsors, especially as advisor mobility becomes an increasing threat,” he added.
At the same time, nearly all managed account sponsor firms plan to increase their direct indexing and separately managed accounts (SMA) customization capabilities.
Within the direct indexing sphere, sponsors are most interested in tax optimization (93%) and tax management (83%).
“This makes intuitive sense; tax savings are a tangible story that advisors can explain to their clients to easily highlight the benefits of the product,” remarks Belnap. How direct indexing evolves beyond taxes will depend on which target market the sponsor firm intends to prioritize.
Sponsors also realize the importance of personalization as they seek to attract the next generation of investors through ESG investing.
In four of five managed account program types, the share of ESG assets increased from 2021 to 2022. Cerulli sees this as an indication that advisors and clients are showing an increased interest in ESG, and that products on managed account platforms are proliferating to service this demand.
In an increasingly crowded wealth management space, with fee awareness growing and differentiators more difficult to identify, sponsors need to offer advisors and investors flexibility and customization.
MFS is enhancing its Fixed Income Department’s leadership team with the addition of two co-chief investment officers. Pilar Gomez-Bravo and Alexander Mackey will join current CIO Bill Adams to form a global leadership team of co-CIOs to lead the department.
“Pilar and Alex are experienced and highly regarded members of our global research platform and have demonstrated the leadership skills necessary to help lead the department to continued success globally,” said MFS CIO Ted Maloney. “Together with Bill, they will lead the continued execution of MFS’ multidecade strategic priority of growing its presence in fixed income markets around the world to the benefit of our clients,” he added.
With more than 25 years of investment experience overall, Gomez-Bravo joined MFS in 2013 and has been instrumental in establishing the firm’s London-based fixed income team. She is a portfolio manager on several fixed income strategies and serves on investment committees and working groups across asset classes.
Mackey began his career in 1998 with MFS and in 2001 joined the firm’s Fixed Income Department, where he has worked as both an analyst and portfolio manager. During his tenure, he has helped guide the firm’s US high grade corporate credit research process and portfolio management efforts.
“Having worked closely with both Pilar and Alex during their time at MFS, I’ve seen firsthand the positive impact their leadership has had on the fixed income team globally. I look forward to working with them in this role and to sharing our collective expertise and experience as we take fixed income at MFS to the next level,” added current Fixed Income CIO Adams.
Adams, Gomez-Bravo and Mackey will report to Maloney.
As of June 30, 2022, MFS managed more than US$94 billion in fixed income assets worldwide. The firm offers global, international, emerging market and domestic fixed income strategies for clients around the world. Since 2017, MFS’ fixed income assets have increased by more than 23% following a buildout that began more than a decade ago that has seen the firm double the size of its fixed income team globally while adding new capabilities and enhancing existing strategies to meet client needs, according the firm information.
“Today, with nearly 100 years of investment experience behind us, we have the people, capacity and strategies we need to create value for a diverse set of fixed income clients around the world. Markets will always present new challenges, and we look forward to the continued guidance Pilar and Alex provide the investment team as we work together to help our clients meet those challenges,” said Maloney.
Principal Financial Group announced its investment unit will be doing business as Principal Asset Management as the company intensifies its focus on asset management. This name will highlight the firm’s deep, local knowledge, and global perspectives across all asset classes to help drive long-term investment outcomes for clients, the press release says.
“Asset management is a core growth driver for Principal, adding significant value to the company both financially and strategically in our goal to provide holistic financial solutions,” said Dan Houston, chairman, president, and chief executive officer for Principal. “As markets mature and fluctuate, and demand for global investment solutions increases, Principal Asset Management is well positioned to help our clients achieve their financial goals.”
Principal Asset Management has been working to unify and strengthen its investment teams, processes, distribution model, and products to execute on a forward-looking strategy that reinforces its specialized investment expertise, the release adds.
“The $507.1 billion asset manager is leveraging talent, technology, and its global footprint to bring the firm’s public and private market capabilities together to best serve its diverse client-base, which includes more than 800 institutional, retirement, retail, and high net worth investors across more than 80 markets”, according the firm information.
Resources have been devoted to building new products and alternative investment options such as model portfolios and direct lending, respectively, the company said. Strategic hires have been made to support growth initiatives like global wealth alternatives and liability driven investments. And the client experience is being transformed with a digital strategy that combines data analytics with market insights from Principal Asset Management investment experts to help clients optimize portfolios and to deepen their relationships.
“We’re building and strengthening relationships with investors in over 80 markets, aligning our growth strategy to their needs and the evolving market opportunities to solidify a consistent global identity,” said Kamal Bhatia, chief operating officer for Principal Asset Management. “Principal remains focused on identifying compelling opportunities by providing clear perspectives that are harnessed by the power of our diverse, local investment talent. A global asset management platform that brings deep, specialist capabilities will continue to actively unlock insights and opportunities for all our clients.”
BNY Mellon announced that its Digital Asset Custody platform is live in the U.S. With clients now able to hold and transfer bitcoin and ether, this milestone reinforces BNY Mellon’s commitment to support client demand for a trusted provider of both traditional and digital asset servicing, the press release says.
BNY Mellon formed an enterprise Digital Assets Unit in 2021 to develop solutions for digital asset technology, with plans to launch the industry’s first multi-asset platform that bridges digital and traditional asset custody.
“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said Robin Vince, Chief Executive Officer and President at BNY Mellon. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.”
A recent survey sponsored by BNY Mellon highlights already significant institutional demand for a resilient, scalable financial infrastructure built to accommodate both traditional and digital assets. According to the survey, almost all institutional investors (91%) are interested in investing in tokenized products. Additionally, 41% of institutional investors hold cryptocurrency in their portfolio today, with an additional 15% planning to hold digital assets in their portfolios within the next two to five years.
“With Digital Asset Custody, we continue our journey of trust and innovation into the evolving digital assets space, while embracing leading technology and collaborating with fintechs,” said Roman Regelman, CEO of Securities Services & Digital at BNY Mellon.
BNY Mellon has been working closely with market-leading fintechs. The firm tapped digital asset technology specialists Fireblocks and Chainalysis to integrate their technology in order to meet the present and future security and compliance needs of clients across the digital asset space.
“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.”
More advisor practices are adopting the use of model portfolios to help advisors better serve clients and develop their business, according the latest Cerulli Edge—U.S. Advisor Edition.
When used appropriately, model portfolios can be an effective tool that can free up time advisor practices spend on portfolio management, allowing them to reallocate that time toward other highly valuable functions, not the least of which includes the delivery of financial planning services and asset gathering.
Cerulli expects that the industry’s slow and steady transition toward a financial planning-oriented service model will be a powerful impetus for the adoption of model portfolios.
Among advisor practices, insourcers—those who either customize portfolios on a client-by-client basis or use practice-level resources to build a series of custom models—spend 18.5% (practice models) and 29.5% (customizer) of their time focused on investment management. Model portfolio use allows advisors to reduce that time commitment to less than 10%.
“This saved time can be put toward client-facing activities, a particularly important activity, for example, for younger advisors that are focused on asset gathering and building a book of business,” says Brad Bruenell, associate analyst.
The way in which model portfolios can fit into an advisor’s practice varies significantly, depending upon the individual circumstances of each advisor and their practice. For example, for younger advisors focused on building a book of business, model portfolios can be an effective tool to maximize the available time to spend on asset gathering. For larger, more experienced advisory practices, model portfolios can be an effective way to efficiently service younger, less affluent clients, such as the future expected inheritors of an advisors’ wealthier clients, enabling advisors to serve the financial needs of multiple generations of a family.
“The effective use of model portfolios can increase advisor efficiencies and service offerings in both maturing and fully mature practices, in a variety of ways depending upon the preference of the practice,” says Bruenell. “We anticipate this trend will continue to gain traction among advisors in the future as they seek to improve their scale and service differentiation,” he concludes.
