Allianz Global Investors (“AllianzGI”) announced that it had entered into a memorandum of understanding with Voya Financial relating to a strategic partnership whereby AllianzGI would transfer selected investment teams and assets comprising most of its US business (“AGI US”) to Voya Investment Management (“Voya IM”) in return for an up to 24% equity stake in the enlarged asset manager.
Definitive documentation is anticipated to be finalised in the coming weeks, and completion of the transaction is subject to customary closing conditions.
Underpinning the partnership will be the anticipated transfer of highly complementary and internationally established investment teams, select client service and sales professionals, and associated assets under management from AGI US to Voya IM.
The in-scope investment teams, which include income & growth, fundamental equities and private placements, manage approximately $120 billion.
On a pro forma basis, Voya IM’s AUM would increase to approximately $370 billion. The addition of AllianzGI’s income & growth, fundamental equities and private placement teams would complement Voya IM’s existing capabilities and investment platforms, including fixed income and alternatives.
Following completion of the transfer, US vehicles and clients of the transferred investment teams will continue to be managed and advised by those teams.
A second, important pillar of the planned partnership will be the establishment of a global, long-term, strategic-distribution partnership whereby AllianzGI distribute Voya IM’s investment strategies outside the US, providing its global client base with a broader range of complementary investment strategies.
As consideration for the transfer of assets, AllianzGI will receive an equity stake in Voya IM of up to 24% of the enlarged US manager.
Commenting on the announcement, Tobias C. Pross, CEO of AllianzGI, said: “We are very much looking forward to beginning a new chapter in AllianzGI’s development with a partner in the U.S. that complements our own strengths and footprint, and supports long-term growth for both firms. AllianzGI’s stake in Voya IM will underscore our commitment to the global success of their soon-to-be enlarged business.”
Further details of the transaction will be announced upon execution of definitive agreements. AllianzGI and Voya are working expeditiously to finalize the terms of the transaction and are targeting execution of a definitive asset purchase agreement and distribution agreement within the next several weeks.
Execution and ultimate completion of any definitive transaction remains subject to conditions.
Morgan Stanley has hired Billy Krauss for its Coral Gables office.
This is the fourth time Krauss will report to Morgan Stanley. He began his career as a fixed income analyst at the same firm from 2005-2007 and then returned from 2008-2012 as a senior sales associate. Both experiences were in New York.
The third was in Miami between 2013 and 2018, according to his BrokerCheck profile.
He arrived in Florida as a sales manager at Merrill Lynch, in its Coral Gables offices, from where he returned to Morgan Stanley as vice president. He has more than 13 years of experience in the industry.
The advisor will be Executive Director and Deputy Complex Manager, according to his LinkedIn profile.
In addition, from 2012-2013, he served at Merrill Lynch in Coral Gables.
Prior to returning to Morgan Stanley this month, Krauss worked for two years at J.P. Morgan in Miami.
John C. Castronuovo and Robert E. DeForest, UBS Private Wealth Advisors in Palm Beach, Florida office, have been named to the Forbes/SHOOK Research Best-In-State Wealth Advisors list for 2022. This is the fourth consecutive year they have been named to the list.
“We are extremely proud that John and Robert were recognized on this prestigious list for the fourth time,” said Karl Ruppert, South Florida Complex Director at UBS Private Wealth Management.
“They continue to provide clients with the highest level of expert financial advice with responsive, personal service,” he adds.
Castronuovo has more than 35 years of experience working in the financial services industry. He focuses on comprehensive wealth management strategies for select entrepreneurs and business owners, executives, and retirees, as well as charitable organizations. Is a member of the Financial Planning Association, the East Coast Estate Planning Council and Advisors for Philanthropic Impact, and the UBS’s Presidents Council, which recognizes the firm’s top financial advisors. John has the Certified Financial Planner® (CFP®) certification and is a Chartered Advisor in Philanthropy. He currently serves as a board member of Adopt-A-Family of the Palm Beaches, Inc., where he is a past board chair, according the firm’s information.
De Forest has began his career in finance in 1997. He joined UBS in 2011 and is a founding partner of Palm Beach Wealth Consulting Services, an advisor team at UBS Private Wealth Management. As the lead portfolio manager, De Forest focuses on portfolio construction for individuals and institutions, investment manager selection and analysis, discretionary portfolio management and custom investment vehicles. He is active in the UBS Veteran Mentoring Program and has the Certified Investment Management Analyst (CIMA®) designation. He serves as a member of the Investment Management Consultants Association which enables him to interact with some of the brightest minds in the industry.
This year’s Forbes/SHOOK Research Best-in-State Wealth Advisors list is comprised of more than 6,500 advisors across the country, managing a collective $10 trillion. Each advisor is chosen based on an algorithm of qualitative and quantitative measures including telephone, virtual and in-person interviews, compliance records, revenue generated and assets under management.
You can see all the information related to the Forbes/SHOOK list in the following link.
US inflation has slowed marginally in April thanks to a fall in used car prices and gasoline. Fed rate hikes will bring demand into better balance with supply, but in the absence of major improvements in supply chains, labour shortages and geopolitical tensions the descent back to the 2% target will be slow, according to an article by ING Bank.
We think that March 2022 will have marked the peak for annual inflation. Mannheim used car auction prices are down 6.4% over the past three months so used vehicle prices should fall further and they have quite a heavy weight of 4.1% of the total basket of goods and services within CPI. The shift in consumer demand from goods, whose availability has been significantly impacted by supply chain issues, towards services should also contribute to a gradual moderation in the rate of inflation. Nonetheless, we remain nervous about the impact from gasoline and the growing price pressures within services, says ING’s expert, James Knightley.
Moreover, substantial declines in the annual rate of inflation are unlikely to materialise until there are significant improvements in geopolitical tensions (that would get energy prices lower), supply chain strains and labour market shortages.
Unfortunately, there is little sign of any of this happening anytime soon – The Russia-Ukraine conflict shows no end in sight, Chinese lockdowns will continue to impact the global economy while last Friday’s jobs report showed a decline in the labour force participation rate leaving the economy with 1.9 job vacancies for every unemployed person in America.
At the moment consumer demand is firm and businesses have pricing power, meaning that they can pass higher costs onto their customers. This was highlighted by yesterday’s National Federation of Independent Businesses survey reporting that a net 70% of small businesses raised prices over the past three months, with a net 46% expecting to raise prices further. We haven’t seen this sort of pricing power for the small business sector before and we doubt it is any weaker for larger firms.
Fed has a lot more work to do
This situation intensifies the pressure on the Fed to hike interest rates. The central bank wants to take some of the heat out of the economy and bring demand back into better balance with the supply capacity of the US economy. This potentially means aggressive rate hikes and the risks of a marked slowdown/recession.
This message was re-affirmed by several officials over the past couple of days and we look for 50bp rate hikes at the upcoming June, July and September FOMC meetings. With the Fed running down its balance sheet we expect the Fed to revert back to 25bp from November onwards with the target rate peaking at 3.25% in early 2023.
Even with this Fed action and hopefully some improvements in the supply side story we have doubts that CPI will get back to 2% target before the end of 2023.
To read the complete article you must access the following link.
Doodles, a web3 NFT, media & entertainment brand, announces the appointment of Julian Holguin as Partner and CEO.
His move to Doodles signals an exciting new era in NFTs where Holguin will work closely with the Doodles founding team to scale and transcend the current NFT market and lean into music, gaming, premium content and consumer goods, according the company information.
Holguin brings more than 14 years of media and entertainment executive experience, where he led several leadership roles across national companies.
Throughout his career, he has scaled and monetized premium IPs. Most recently, he held the position of President of Billboard and was responsible for transforming the brand from a music trade magazine to an international multi-platform experience for fans. He has previously held leadership positions with MRC Studios, Dick Clark Productions, and NBC Universal.
“I couldn’t be more excited to join Evan, Jordan, and Scott on this journey. What they’ve been able to accomplish and the way they have innovated in such a short time is truly remarkable. Doodles has already shown that a blockchain-based media company can and will change how we engage with and value content fundamentally. I look forward to helping build Doodles into one of the world’s next great brands and push blockchain and NFTs into the mainstream market,” said Julian Holguin, CEO of Doodles.
Holguin has been transforming brands with his varied experience across media, digital publishing, social media, streaming, television and live events. This combined with Doodles’ worldwide reach places the preeminent NFT brand as the leading driver of NFTs into the next era of becoming large scale entertainment and lifestyle consumer brands.
“Julian’s vast experience as a music and media executive will help Doodles reach billions of fans by leading next-generation partnerships with the world’s largest artists and companies,” added Co-founder Evan Keast. “This level of executive appointment is a web3 first and affirms our commitment to go mainstream. We’re thrilled to welcome Julian to Doodles,” he added.
In the coming weeks, Doodles will be announcing groundbreaking projects under Holguin’s leadership to land globally transformative partnerships and scale the brand to billions, while onboarding the next wave of millions of new crypto users. This is just the first of a series of upcoming announcements slated for the next few months as Doodles continues to color our curiosity.
CI Private Wealth US, a subsidiary of CI Financial Corp., announced that it has applied for a charter to establish and operate a South Dakota trust company (“CI Trust”). Once chartered, CI Trust will offer administrative trust solutions to clients through CIPW’s national wealth management platform.
“CI Trust will allow us to offer clients a variety of robust trust solutions and further enhance the elite client experience that CI Private Wealth provides,” said Kurt MacAlpine, Chief Executive Officer of CI.
Trusts are a critical part of meeting the complex wealth management and estate planning needs of ultra-high-net-worth and high-net-worth clients, added MacAlpine.
“CI Trust will offer comprehensive, customized administrative trust solutions designed to satisfy each client’s goals, while CIPW manages the trust’s assets to ensure alignment with the client’s overall wealth management plan.”
CI entered the U.S. registered investment advisor (“RIA”) sector in January 2020 and quickly “became one of the fastest-growing wealth management firms in the U.S. Once all outstanding acquisitions are completed, CI’s U.S. assets will reach approximately US$134 billion (based on assets as of March 31, 2022),” the company said.
“Establishing CI Trust is an important step in our mission of building the country’s leading wealth management firm for ultra-high-net-worth and high-net-worth investors,” Mr. MacAlpine said.
“It will build on other successful enhancements to our service offerings, such as the launch earlier this year of our Family Office Services platform, which completed approximately 1,000 tax returns for our clients in its first year of operation,” he concluded.
CTH Group (CTH), a company witch works in Web 3 infrastructure and blockchain ecosystem, announced it is establishing its global headquarters in the City of Miami.
“Miami has proven it wants to be a global leader in the Web 3 and crypto space. It was an easy decision having seen first-hand the efforts the city is making to attract the businesses, talent and capital that drive our industry”, saids Raymond Yuan, founder of the Group, according a press release.
CTH is the holding company of three distinct businesses: Fundamental Labs, a crypto venture capital firm with over 300 portfolios; IDEG, an institutional digital asset manager; and Atlas, one of the world’s largest Web 3 infrastructure service providers.
The company has offices in Singapore, Hong Kong, New York, San Francisco, Austin, Almaty and Vancouver.
Since 2016, CTH has established a global presence across North America, Asia, and Europe.
The company highlighted the work Miami has been doing to become the epicenter of Web 3 technology and the Crypto ecosystem.
“Miami has set bold ambitions to be the capital for Web 3 in the same way Silicon Valley ruled Web 2. The explosion of growth of the ecosystem, at a global scale, is fuelled by a passionate and enthusiastic community that prides itself on inclusivity and collaboration”, the firm saids.
CTH also highlighted the importance of the actions of the city’s governance during the pandemic in attracting international conferences, forums and events on the subject in question.
“Miami seized on the opportunity during the pandemic to lure many international conferences, forums, and events focused on Web 3, blockchain and digital assets – and the institutional investment has followed. Coupled with a growing digital asset savvy population and policies to encourage greater adoption for daily commerce, the environment in Miami is primed for rapid growth and officials expect more industry leaders such as CTH to establish headquarters or operations in the city”, adds te PR.
The assertion that South Florida is an emerging startup hub is no exaggeration. Investment and next-stage startups in this state have actually increased several-fold year-over-year with Miami companies leading the gains.
Yuan emphasized how important this ecosystem is for the success of his company.
“For CTH Group to be successful we need to be close to the innovators in the space. In Miami we do not have to go far to meet entrepreneurs with new ideas, renewable energy companies hoping to collaborate with Web 3 infrastructure providers, or traditional investors looking to deploy their capital in this fast-growing sector. CTH has ambitious growth targets and our pursuit for excellence has led us to Miami to achieve them,” concluded the executive.
While persistent inflation and looming rate hikes have emerged as top concerns for most investors, the same may not be true for corporate defined benefit (DB) plan sponsors, according to the latest Cerulli Edge—U.S. Institutional Edition.
Instead, corporate DB plans may benefit from the current environment as inflation and federal intervention provide tailwinds to these pension plans’ financial position (or funded status).
Funded status serves as a proxy to the overall financial wellbeing of a DB plan. Future liabilities are discounted using a rate tied to investment-grade corporate bond interest rates. As such, corporate DB plan sponsors have experienced a decrease in liabilities (beginning in 2021) due, in part, to increasing inflation.
As of February 2022, the funded ratio of the 100-largest corporate pension plans reached 102.4%, according to Milliman’s Corporate Pension Funding Index (PFI) the highest it has been since 2007. Moving forward, Cerulli expects corporate pensions to increase fixed-income allocations to derisk portfolios.
Regulatory tailwinds have come to the aid of plans with funding deficits. On March 11, 2021, President Biden signed a relief bill into law that assisted single-employer corporate DB plan sponsors. The American Rescue Plan Act of 2021 (ARPA)—an extension of the earlier Coronavirus Aid, Relief, and Economic Security (CARES) Act passed a year prior—in effect artificially raised discount rates, translating to higher funding statuses and resulting in decreased required minimum contributions.
“The legislation also provides additional breathing room for plan sponsors that can amortize their funding shortfalls over 15 years rather than seven, allowing for further portfolio derisking,” says Jacob Conecoff, analyst.
Corporate sponsors’ cash contributions could also be preserved if inflated input costs can be passed along to the end customer and margins remain steady.
“Even in a low-interest-rate environment, plan sponsors are required to make a minimum contribution to plans tied to the present value of future benefit obligations. This is easier now with ARPA,” states Conecoff.
ARPA includes a provision on interest rate smoothing using a 25-year average.
The Act allows plan sponsors to look back to 2020 and recalculate their contribution requirements based on the narrowed corridors. These changes can materially decrease the required minimum plan contributions, thus relieving some burden for the plan sponsor.
Although corporate DB portfolios are typically more concentrated in domestic fixed income (46.7%) than Taft-Hartley (27.8%), sponsors of both will be exposed to inflationary impact specifically on longer-duration investments.
Allocating to specialty vehicles such as Treasury Inflation-Protected Securities (TIPS) or funds containing these instruments can help plans hedge inflation risk.
“Corporate DB sponsors must remain aware of the inflationary climate as it relates to their current allocations,” says Conecoff. “Their main considerations should be return impacts, liability effects, and the cash contributions necessary to achieve fully funded status. Inflation will, however, ultimately assist with funding status,” he concludes.
Industry veterans Lars Jensen, Jorge Letelier, Roberto Teperman, and Christian Blomstrom have launched FDS, Fund Distribution Services, specializing in both institutional and retail channels in US Offshore and Latin America. This is a lift out of the senior Legg Mason team that has worked within the region for the last two decades.
FDS has reached an agreement with Arcano Partners focused on maximizing value creation for their clients while seeking to increase the positive impact on society and the development of a more sustainable world.
“We are thrilled to partner with Arcano, who have extensive experience providing relevant, innovative, and timely investment solutions to their clients. We think that our mutually client centric strategies and values are an exciting fit and opportunity for our clients in the region”, saids Lars Jensen, Managing Partner FDS.
Pedro Hamparzoumian, Managing Partner- Investor Relations stated that “Arcano has always been committed to innovation, but now we are taking another step forward in our growth strategy in this market with the agreement reached with FDS, with whom we share objectives and values. We are sure that this alliance represents a great opportunity and that it will add great value to our clients”.
FDS offers a holistic approach to the business with local presence in the United States, Chile, and Brazil. The goal is to partner with managers whose strategies are innovative and strategic to Latin American investors, according the Press Release.
Arcano Partners, is focused on maximizing value creation for its clients while seeking to increase the positive impact on society and the development of a more sustainable world. The company has two business areas: Alternative Asset Management: with more than €7.5 billion managed and advised since our inception in 2006, Private Equity, Credit Strategies, Real Estate, Sustainable Infrastructure, Venture Capital, and Asset & Capital Finance, with a strong focus on sustainability and responsible investment and Investment Banking for companies in a variety of sectors.
Arcano has a staff of more than 200 professionals with offices in Madrid, Barcelona, Bilbao, Seville, Milan, New York and Los Angeles. It has become one of the leading independent firms in the European alternative finance market.
The volatility in U.S. stock and bond markets stemming from the Federal Reserve’s move toward tighter monetary policy has made its way to global currency markets, with the U.S. dollar soaring compared with global rivals. So far this year, the dollar is up about 8% against a basket of other major currencies. It has risen a staggering 13.6% over the past 12 months and recently hit a 20-year high.
Though some observers believe the hawkish Fed and investors’ flight to the relative safety of the dollar amid geopolitical strife is driving the rise, Morgan Stanley’s Global Investment Committee thinks today’s currency dynamics may be more complicated, with divergent central-bank actions also driving relative weakness in other currencies. To understand this dynamic, consider:
- Japan, where the central bank is implementing “yield-curve control”—an effort to actively manage borrowing costs across different maturities—alongside money-printing to engineer higher structural inflation and a path away from nearly 40 years of deflation. Accordingly, the yen recently tumbled to a 20-year low against the dollar.
- Europe, where weakness has emerged in the euro, as the risk of recession grows around the Russia-Ukraine war and as the European Central Bank tries to delay inevitable monetary tightening.
- China, where implementation of zero-COVID policies has weakened the outlook for an economic recovery and pushed its central bank toward easing policy, causing the yuan to depreciate.
The implications of a stronger dollar for financial markets and the economy are also more complex than many realize, making the path ahead riskier for investors and policymakers alike:
- The typical investing playbook for a strong U.S. dollar may not work well in today’s market. For instance, commodities usually move inversely to the dollar, so theoretically we should see prices fall. But we haven’t. Instead, commodities-based inflation remains significant, due to the dual supply shocks caused by COVID-19 and Russia’s invasion of Ukraine. A strong dollar also tends to bode ill for emerging markets that are dependent on dollar-denominated debt by making it harder for these regions to service this debt. Today, however, many emerging-market regions are in excellent fiscal shape, with plenty of foreign-exchange reserves. In fact, those that supply fuel, fertilizer, food and metals, as is the case for much of Latin America, actually stand to benefit from the global supply squeeze. And in equities, many investors today are favoring defensive stocks and not names that would typically benefit from a strong dollar, such as retailers and homebuilders.
- The soaring dollar adds risks for the Fed as it seeks to tame inflation without slowing the economy into a recession. In the near term, the stronger dollar may bolster the purchasing power of companies and consumers when it comes to imports, thus helping ease inflationary pressures. But the dollar’s strength can also hurt U.S. exports and the translation of overseas profits by U.S companies, posing headwinds to growth. Longer term, the currency’s strength may help further tighten financial conditions, just as the Fed is shrinking its balance sheet and international flows into the U.S. market could be slowing in line with recoveries elsewhere.
In short, continued U.S. dollar strength could complicate the outlook for the economy and markets, implications that may be underappreciated by investors at the moment. We think investors should watch real yield differentials for signs that the U.S. dollar is peaking and consider rebalancing international exposure, especially in equities. The U.S. dollar may peak in the next three to six months, and a tailwind may develop, enhancing regional market recoveries.
This article is based on Lisa Shalett’s Global Investment Committee Weekly report from May 2, 2022, “Watch the Greenback.” If you want to read the full text, please click on the following link.
