Robeco Launches Equities Strategy Focusing On Net-Zero Transition With Real-World Impact

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Robeco has launched RobecoSAM Net Zero 2050 Climate Equities, a high conviction climate transition strategy, classified as article 9 under SFDR and investing in global equities at the forefront of the transition to a low-carbon economy. The strategy aims to invest in the pathways to a net zero world alongside delivering attractive financial returns.

The new strategy will specifically look for companies that make an active contribution to mitigating climate change, following a decarbonization pathway of around 7% annually on average. Beyond clean tech, EV and battery storage solutions, the strategy also explores a broader set of opportunities such as mining equipment suppliers, nature-based assets or transition capital providers.

The strategy’s portfolio covers a mix of between 30 and 40 promising stocks from best-in-class leaders and companies with serious improvement potential to have real-world impact in transitioning to net zero, in a diversified approach encompassing all sectors. The strategy will also actively engage with those companies most affected by the transition to net zero, particularly addressing the social dimension in their climate change strategies to encourage a fair transition to net zero.

RobecoSAM Net Zero 2050 Climate Equities uses a dedicated climate transition benchmark, the MSCI World Climate Change Index, not only for assessing carbon footprint purposes, but also for performance measurement. This makes  it easier to judge the strategy’s success. The new strategy will be managed by an investment team of seasoned professionals who cover global fundamental equities, climate and SDG strategy and active ownership. Chris Berkouwer and Yanxin Liu are the strategy’s portfolio managers.

Chris Berkouwer, Portfolio Manager commented: “I’m very excited to be managing the RobecoSAM Net Zero 2050 Climate Equities strategy together with the team and allowing our clients to invest in a wide range of profitable companies that are leading the way in transitioning to net zero and that have the potential to make real-world impact.” 

On the other hand, Yanxin Liu, Portfolio Manager added: “I am thrilled about the launch of RobecoSAM Net Zero 2050 Climate Equities and I’m particularly looking forward to exploring opportunities that are not just buzzwords.”

 

‘Expert’ investors more empowered to prioritise their values and principles

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Investors globally are focused on allocating to funds that meet their personal needs and principles, Schroders Global Investor Study 2022 has found.

Schroders’ flagship study surveyed over 23,000 people who invest from 33 locations globally. The results show that investors who class themselves as being ‘expert’ are more focused on the role that their principles and values can play in their investment decisions.

Our research shows that more than half of these ‘expert’ investors stated that their personal principles are
‘very important’ to them – significantly higher than those who class themselves as having an intermediate
level of investment knowledge (16%) and those in the ‘rudimentary’ category (10%).

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Furthermore, the importance given to values and principles by investors increases with age, with more than three-quarters (76%) of people aged 71+ more likely to prioritise these aspects, perhaps indicating that older investors are more confident and set in their views.

In addition, the results show that people feel overwhelmingly that as shareholders they should have the power to influence the companies they are invested in. This applies across the investment knowledge spectrum; from those who class themselves as having a ‘beginner’ level of investment knowledge, through to the ‘experts’.

A formidable 95% of ‘expert/advanced’ investors believe they should be empowered to do so, as well as 69% of ‘beginners’.

Climate issues are seen as the most important engagement priorities in all but three countries – Mexico, South Korea, and Belgium – all of whom instead ranked issues of natural capital and biodiversity as the most crucial, demonstrating the significance of environment-related issues.

Knowledge is power

However, despite the positive intentions, a gap remains in terms of investors who feel genuinely empowered to make the right investment decisions for their future. Some 82% of ‘expert/advanced’ investors feel they have sufficient knowledge to feel confident in making investment decisions for their financial future, while only a quarter (26%) of ‘beginner/rudimentary’ investors’ feel knowledgeable enough to do so.

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This highlights the need for better financial education and the role financial providers have to play. Over half (51%) believe that investment companies should be responsible for ensuring that people have sufficient levels of knowledge on personal financial matters, and 39% think it should be the responsibility of financial advisers.​

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Significantly though, 44% believe that educational institutions have a role to play in educating people about financial matters, while a quarter (24%) view this as their personal responsibility.

Greater knowledge also driving private asset focus among retail investors

Furthermore, the Study indicates that people now feel more confident in accessing investments that might previously have been seen as off-limits. A particular example of this comes in private assets, with 47% of investors feeling empowered to access both private equity and digital assets.

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However, while most people feel empowered to invest in private assets, some asset classes are still perceived as complex, requiring additional support from financial providers and advisers in order to access them. This is particularly the case for infrastructure where investors were more likely to invest through a third-party product such as a mutual fund (41%) rather than directly (37%).

In short, the greater the level of perceived investment knowledge, the more likely people are to be interested in investing in private asset classes. For example, one third of ‘beginners’ feel infrastructure is beyond their grasp compared with 11% of ‘expert’ investors. This suggests the trend towards the democratization of private assets is likely to be linked to greater levels of financial literacy.

Stuart Podmore, Schroders’ Investment Propositions Director, commented: “This Study demonstrates that perhaps now more than ever before, investors of all levels of experience are increasingly wanting to express their views if companies are unable to justify their actions.

If the pandemic has taught us nothing else, it is that companies, as well as governments, are under closer scrutiny than ever to mitigate environmental, societal and governance risks in a sustainable way. What’s so interesting about our survey this year is that societal and governance risks are starting to rise up the list of priorities for investors.

“Increased investment knowledge appears to support people confidence in supporting corporate decision- making. As an active asset manager and guardian of our clients’ assets, we are committed to engaging in year-round dialogue on their behalf, to support better investment outcomes.

Sheila Nicoll, Schroders’ Head of Public Policy, commented: “This year’s results reinforce the increased need to support people in informing themselves about investment, and engaging in their finances. This needs to be from earliest schooldays, throughout the education system, and during the course of changing circumstances in life. At Schroders, it is our priority to support our clients in finding the best investment solutions which meet their needs while ensuring they have all the right tools to make their decisions.”

Georg Wunderlin, Global Head of Private Assets, Schroders Capital, commented: “Schroders Capital, our private assets business, is well placed to support the ‘democratization’ of private assets. We’re seeing increasing interest from individual investors to build a holistic portfolio comprising private and public investments, as evidenced by our Global Investor Study. Our teams are able to offer private investors access to this world through a range of specialist private asset vehicles and blended solutions which encompass both private and public assets. 

Funds Targeting the Agricultural Sector Provide Optimism Amid Deteriorating Market Conditions

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Agriculture- and natural resources- based funds in the commodities and equities segment have fared well in 2022, despite a challenging market and macroeconomic scenario in Europe and at the global level, according to the latest issue of The Cerulli Edge—European Monthly Product Trends.

Such funds have benefited from rising inflation and increased attention from investors seeking ways to protect their portfolios from the ill effects of current market conditions.

“The agriculture- and natural resources-based fund sector remains relatively small in terms of assets under management (AUM), but is growing, with different product providers targeting agriculture in various ways—for example, via direct exposure to commodity prices or by focusing on technology as an enabler of enhanced food production,” says Fabrizio Zumbo, director, European asset and wealth management research at Cerulli Associates.

The commodities space is one of the few areas of the market where investors and managers have been rewarded so far this year. Annual inflation in the euro area was 7.5% in April 2022, according to Eurostat, resulting in increased conversations between asset managers and clients seeking investment protection against rising consumer prices, for instance in food and energy, and their potentially negative effects on asset prices.

AUM in funds exposing investors to the price of commodities such as wheat, corn, and soybeans more than doubled in the first four months of the year, rising from $130.3 million to $283.77 million, according to Morningstar data.

The price and supply of wheat is a major talking point from Russia’s invasion of Ukraine. The two nations together account for more than a quarter of the world’s supply of wheat. International buyers have turned to other source countries, such as India. However, India’s recent move to restrict exports, amid severe heat waves in the country that are hurting crop growth, sent wheat prices noticeably higher.

Zumbo notes that some asset management firms have launched products at the intersection of agriculture and technology, with a focus on the latter’s ability to enable enhanced production. Other managers have wrapped their conviction for the agricultural industry within broader commodities products.

Many emerging market investors have suffered this year, with the fallout from the war in Europe and rising cases of coronavirus in China, shifting the outlook for several developing nations.

However, some countries—in Latin America, Africa, and the Middle East, for example—have been aided by rising energy and food prices. AUM in Brazilian equity funds rose 62.2% in the four months to the end of April, increasing from $1.48 billion to $2.43 billion. Brazil, a key commodity exporter of resources such as soybean and corn, has benefited from rising prices.

Banco Sabadell Miami Extends Partnership with Wealth Dynamix

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Banco Sabadell Miami and Wealth Dynamix have extended their working partnership for a further five years, heralding a decade-long commitment to the delivery of end-to-end client lifecycle management for HNW and UHNW individuals, the technology company said in a statement.

This extended partnership is a move that cements Wealth Dynamix as a core technology provider within Banco Sabadell, Miami Branch’s technology infrastructure. 

Banco Sabadell Miami centres its banking activity in two areas of specialization that encompass a wide offer of products and services: Private Banking and Corporate Banking and has used WDX1 from Wealth Dynamix already for five years to manage client lifecycle management for its HNW and UHNW clients in the US, the firm said.

“WDX1 is a secure, scalable, and fully digital Client Lifecycle Management (CLM) solution. It fully supports Banco Sabadell, Miami Branch’s goals by delivering a digital end to end experience for client engagement, client on-boarding and CRM that enhances the productivity of relationship managers as well as operations and compliance specialists,” according the statement.

Gary Linieres, CEO and Co-founder OF Wealth Dynamix said: “We are absolutely delighted that Banco Sabadell, Miami Branch have re-signed with Wealth Dynamix for a further five years after an original five-year contract with us. As such, we will be working for over a decade together. This underscores their commitment to Wealth Dynamix and further endorses the power of our WDX1 solution and its benefits within their business.”

Carlos Fernandez at Banco Sabadell, Miami Branch said: “We have been working with Wealth Dynamix for the last five years and they have proven to be an effective partner for the Bank. The integration of WDX1 facilitates our delivery of adaptable and personalised experiences for our clients reflecting their individual requirements and investment strategies. We look forward to our continued working relationship with Wealth Dynamix”. 

Janus Henderson Appoints Two Senior Members to North America Sales Team

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Janus Henderson announced the appointments of Aaron Kilberg as Head of North America Institutional Sales, and Patrick Caragher as Institutional Sales Director.

Kilberg is based in New York, and in his new role is responsible for leading the North America Sales team and also covering the East region with a focus on corporate plans and public pensions. Caragher is based in Chicago and is responsible for covering corporate and public pensions in the Midwest.

Both Kilberg and Caragher are part of the North America Institutional team, which is led by T.F. Meagher, Head of North America Institutional Distribution.

Kilberg joins Janus Henderson from abrdn, where he was a Senior Business Development Director responsible for developing new business relationships and solutions with institutional clients. Prior to this he most recently held positions at UBS Global Asset Management and Aviva Investors.

Caragher was most recently a Senior Director on Aegon Asset Management’s US institutional team. Prior to Aegon, he held positions at Henderson Global Investors and Aon Hewitt Investment Consulting.

“The North America institutional market is a major focus for Janus Henderson. Having new team members of the caliber of Aaron and Pat join the existing strong team will enable us to build upon the momentum and success seen across our institutional business globally.” said Nick Adams, Global Head of Institutional.

“Both Aaron and Pat have proven experience and successful track records in the US institutional market. They both bring a ‘solutions minded’ approach to partnering with institutional investors to solve their complex problems. We are thrilled to have both of them on our team.” said T.F. Meagher.

These strategic appointments build on the strength of Janus Henderson’s institutional team and reinforce Janus Henderson’s continued investment in hiring top talent across the organization.

Bit5ive Launches New Investment Fund for Bitcoin Mining

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Bit5ive announced the launch of its new bitcoin mining investment vehicle. The Fund provides both institutional and individual investors exposure to bitcoin mining activities via a regulated fund structure.

So what is Bitcoin mining? Mining is the process by which transactions on a blockchain network are verified and added to its public ledger. Miners, who are members of the network, confirm transactions by solving complex mathematical problems and are rewarded for this work with bitcoin.

Robert Collazo, CEO at Bit5ive, says: “We are excited to offer this product and opportunity to accredited and off-shore investors. Bitcoin mining has several advantages. First, it allows individuals to acquire bitcoin at the cost of production, which is significantly lower than the market price. It’s also less volatile than trading the cryptocurrency itself. By mining, investors can avoid the crypto market fluctuations and price manipulation that often plagues traders.”

“The rise of cryptocurrencies has been one of the most exciting developments since I started working in finance,” says Claudio Izquierdo, Bit5ive Fund’s Co-CEO. “We believe cryptocurrencies have a bright future and will continue to play an important role as a store of value, so we are excited to provide investors with new ways of gaining exposure.” 

By partnering with Bit5ive, all the technical know-how and learning curves are reduced, leaving investors with a financial instrument you can see on your brokerage statements. Their fund also allows financial advisors on and off-shore to keep custody of the investments using their custodies accounts in platforms like Allfunds, Pershing, Axos, and others, the firm said.

Established in 2015, Bit5ive is an American technology company and leader in cryptocurrency mining and infrastructure. Currently, the company has over 1,500 MWs of clean energy under contract, making it among the largest in the United States.

U.S. Inflation Worries Analysts Ahead of Looming Recession

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U.S. inflation surprised with a CPI increase of 9.1% in June, versus the 8.8% expected by analysts’ consensus, representing a new record since November 1981, and the rise in the core inflation index worries analysts as recession looms.

Energy continues to be a key driver of overall inflation as fuel oil rose sharply. However, the core inflation figure at 5.9% is also quite solid and above economists’ forecast of 5.7%, says an AXA IM report accessed by Funds Society.

While energy and food contributed significantly (7.5% and 1%, respectively), price increases were broad-based, say the fund manager’s experts.

The underlying CPI rose by 0.7% and was also higher than the Bloomberg consensus forecast of 0.5%. The categories that rose the most were transportation services +2.1%, used cars and trucks +1.6% and clothing +0.8%. Components that tend to be more durable, such as housing and medical care, continued the upward trend of recent months with +0.7%. Within the core components of the basket, only airfares fell -1.8% after rising 12.6% last month; hotels also declined. These two components appear to have softened, but should be supported in the coming months as the summer vacations begin.

Nominal rates rose following this stronger than expected inflation figure and inflation breakevens rose. With inflation surprising to the upside, the Fed may be forced to tighten the aggressiveness of its monetary policy, increasing the likelihood of a stagflation scenario.

Under this backdrop, AXA IM continues to favor exposure to inflation-linked bonds, as indexation will remain elevated and continues to surprise to the upside, providing inflation-linked bonds with a solid rate of return.

“Elevated indexation should also cushion against interest rate increases. We have also taken advantage of the increase in long maturity real rates to add duration to portfolios as the risk of a recession increases,” the report said.

On the other hand, PIMCO says that for the Fed, this inflation data amounts to “a five-alarm fire”.

Core inflation appears broadly entrenched across all goods and services and, as a result, we raise our core CPI inflation forecast, and now expect core CPI inflation to end 2022 at 5.5%, the manager’s report says.

“At a minimum, we expect the FOMC to announce another 75 basis point hike in July and September, and a 100 basis point hike is now also likely. Today’s data will increase the confidence of Fed officials that tight monetary policy is appropriate,” the experts say.

In addition, Wednesday’s inflation reading “should also increase the odds of recession, which we now estimate is likely sooner rather than later and possibly more severe.”

 

UBS International Hires Luis Sánchez Kinghorn to Its New York Office

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Luis Sánchez Kinghorn se unió a UBS Internacional en New York procedente de Citi.

“Please join me in welcoming Luis to our New York International family at UBS! Luis brings with him a breadth of experience and knowledge, along with a genuine care for his clients. Welcome Luis!”, published Catherine Lapadula, Managing Director, Market Head en UBS New York International in LinkedIn.

Sanchez has more than 25 years in the industry, starting in 1996 in the San Francisco office of Wells Fargo, according to his LinkedIn profile.

However, his first Finra record is from 2001 for Citi in Miami where he stayed until 2007 and then returned in 2017 until last week when he moved to UBS in New York, according to his BrokerCheck profile.   

He holds an MBA from Texas McCombs School of Business and completed an Executive Program from The London School of Economics and Political Science and another from Stanford University. 

Crypto-Assets and Decentralized Finance through a Financial Stability Lens

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Although heralded as a fundamental break from traditional finance, the cryptocurrency financial system turns out to be susceptible to the same risks that are all too familiar in traditional finance, such as leverage, liquidation, opacity and maturity and liquidity transformation, Fed Vice Chair Lael Brainard said in a speech at the Bank of England in London.

“As we work to prepare our financial stability agenda for the future, it is important to ensure that the regulatory perimeter encompasses cryptofinance,” said Brainard who also reviewed that “recent volatility has highlighted serious vulnerabilities in the cryptocurrency financial system.”

Distinguishing responsible innovation from regulatory evasion

New technologies often promise to increase competition in the financial system, reduce transaction costs and settlement times, and channel investment into new productive uses. However, new products and platforms are often fraught with risks, such as fraud and manipulation, and it is important, and sometimes difficult, to distinguish between hype and value.

If past innovation cycles are any guide, for distributed ledgers, smart contracts, programmability and digital assets to fulfill their potential to bring competition, efficiency and speed, it will be essential to address the basic risks that plague all forms of finance. These risks include leakage, crowdselling, deleveraging, interconnectedness and contagion, along with fraud, manipulation and evasion. In addition, it is important to be alert to the possibility of new forms of risk, as many of the technological innovations underpinning the cryptocurrency ecosystem are relatively novel.

Far from stifling innovation, strong regulatory barriers will help investors and developers build a resilient digital native financial infrastructure. Strong regulatory barriers will help banks, payment providers and financial technology companies (FinTechs) improve the customer experience, streamline settlement, reduce costs and enable rapid product enhancement and customization.

“We are closely following recent events where system risks have crystallized and many crypto-investors have suffered losses,” he warned.

However, despite the significant losses suffered by investors, the cryptocurrency financial system does not yet appear to be so large or so interconnected with the traditional financial system as to pose a systemic risk.

“Therefore, this is the right time to ensure that similar risks are subject to similar regulatory outcomes and similar disclosure, in order to help investors distinguish between genuine, responsible innovation and the false allure of seemingly easy returns that conceal significant risk,” the vice chairwoman said, according to text posted on the Fed’s website.

In addition, Brainard called for establishing which cryptocurrency activities are permitted for regulated entities and under what restrictions, so that spillover effects on the core financial system remain well contained.

Due to the cross-sector and cross-border reach of cryptocurrency platforms, exchanges and activities, it is important for regulators to work together domestically and internationally to maintain a stable financial system and address regulatory evasion, the vice chair of the U.S. monetary authority reflected.

In applying a principle of “same risk, same regulatory outcome,” we should start by ensuring basic consumer and investor protection. Retail users must be protected against exploitation, undisclosed conflicts of interest and market manipulation, risks to which they are particularly vulnerable, according to a large body of research. If investors lack these basic protections, these markets will be vulnerable to runs.

Second, because trading platforms play a critical role in cryptoasset markets, it is important to address non-compliance and loopholes that may exist.

“We have seen that crypto trading platforms and crypto lending companies not only conduct activities similar to those in traditional finance without comparable regulatory compliance, but also combine activities that should be separate in traditional financial markets,” he commented.

Third, all financial institutions, whether in traditional finance or cryptofinance, must comply with regulations designed to combat money laundering and terrorist financing and to support economic sanctions.

The exchange of assets without permission and tools that conceal the origin of funds not only facilitate evasion, but also increase the risk of theft, hacks and ransomware attacks. These risks are particularly prominent in decentralized exchanges that are designed to avoid the use of intermediaries responsible for customer identification and may require adaptations to ensure compliance at this most fundamental layer.

Finally, it is important to address any regulatory gaps and adapt existing approaches to new technologies. While regulatory frameworks clearly apply to DeFi activities just as they do to centralized cryptographic activities and traditional finance, DeFi protocols may present new challenges that may require adaptation of existing approaches.

By way of conclusion, Brainard says that innovation has the potential to make financial services faster, cheaper and more inclusive, and to do so natively in the digital ecosystem.

“Allowing responsible innovation to flourish will require that the regulatory perimeter encompasses the crypto financial system in accordance with the principle of similar risk, similar regulatory outcome, and that new risks associated with new technologies are adequately addressed. It is important that the foundations for sound regulation of the cryptocurrency financial system are established now before the cryptocurrency ecosystem becomes so large or so interconnected that it may pose risks to the stability of the broader financial system,” he concluded.

The text is an excerpt from Fed Vice Chair Lael Brainard’s speech at the Bank of England in London. To read the full text you can access the following link. 

 

Itaú Unibanco to Buy 35% stake in U.S. broker Avenue

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Itaú Unibanco informs that entered into a share purchase agreement, through its subsidiaries, with Avenue Controle Cayman Ltd and other selling stockholders, providing for the acquisition of control of Avenue Holding Cayman Ltd (Avenue).

After obtaining the required regulatory approvals, Itaú Unibanco will initially acquire 35% of the total and voting capital of Avenue through a capital contribution of $30 million and a secondary acquisition of shares, totaling approximately $92 million.

After 2 years from the closing date of this first tranche, Itaú Unibanco will acquire an additional stake of 15.1%, for an amount to be determined based on a predefined multiple of adjusted revenues, achieving the control with 50.1% of the total and voting capital. After 5 years from the closing date of the first tranche, Itaú Unibanco will be able to exercise a call option for the remaining equity interest held by the current stockholders of Avenue.

Avenue holds a U.S. digital securities broker, incorporated 4 years ago, aimed to democratize the access of Brazilian investors to the international market and currently has over 229 thousand active clients, 492 thousand accounts enabled and approximately R$1.2 billion under custody, according the press release.

In line with initiatives already announced, such as the acquisition of Ideal Corretora and the launch of the Íon platform, this operation strengthens Itaú Unibanco’s strategy of setting up an investment ecosystem that prioritizes customer satisfaction by providing products and services through the most convenient channels for each client profile.

Avenue’s investment intermediation services offered through Itaú Unibanco’s wide distribution franchise and client base will enable the increased access to the foreign investment market and the functionality of opening an international current account, the international diversification of products and services through a simple, streamlined self-service experience, and the reliance on Avenue’s renowned professionals’ talent and expertise.

The operation and management of Avenue will remain separate from Itaú Unibanco, which will become one of the institutions that will make Avenue’s services available to its clients abroad.

The completion of this operation is subject to the approval from the regulatory bodies in the proper jurisdictions.

This transaction is in addition to Itaú’s purchase of XP.