U.S professionally managed assets grew nearly 11% and boast an 8% 10-year compound annual growth rate, according to the latest research by Cerulli Associates.
The largest institutional client segments are insurance general accounts, corporate defined contribution (DC): 401(k) plans, and state and local government defined benefit (DB) plans. Collectively, these three channels represent more than 60% of the total institutional addressable market.
Cerulli points out that as institutional investors increasingly seek greater portfolio customization, enterprise risk management, and access to co-investment opportunities, they are growing their reliance on intermediaries—investment consultants, outsourced chief investment officers (OCIOs), or financial advisors—to select investment products and/or manage their portfolios. “Institutional investors demand more than returns and want an investment partner that exceed performance expectations and more,” remarks Brendan Powers, associate director of the firm.
The research also shows that growth of the retail segment of professionally managed assets has outpaced that of institutional over the subsequent decade, accounting for 49% of the total. As of year-end 2020, distribution through third parties, such as broker/dealers (B/Ds) and registered investment advisors (RIAs), account for 75% of total retail channel assets. The strongest channel growth occurred among hybrid RIAs (20%) and independent RIAs (16%).
In response to this evolving dynamic, Cerulli believes that asset managers should devote time and resources toward considering how they plan to address the retail segments. “From platform-level product placements to the introduction and adoption of asset allocation model portfolios, retail channels are increasingly demanding the levels of sophistication and dedicated service formerly reserved for institutional gatekeepers,” comments Powers.
While the fragmented nature of the retail channel will continue to pose challenges, the opportunities will outweigh the costs. “As commoditization and shrinking fees threaten many market competitors, managers will need to rethink their priorities as retail channels seem poised to account for the majority of client assets in the near future,” concludes Powers.
Inflation, tapering, valuations… what should we expect from global fixed income the year going forward? Jeff Klingelhofer, co-head of Investments at Thornburg IM, shares his view onthe biggest opportunities and challenges in 2022.
With 2021 in the rear-view mirror, what are the biggest lessons you’ve learned over the past year? Did anything take you by surprise?
Navigating 2020 was not an easy feat, but after coming to grips with a global pandemic—and with the assistance from fiscal and monetary policy- makers around the world—the global economy and financial markets not only regained their footing but delivered extraordinary 2021 results that astonished investors. The biggest lesson in 2021 was that we should never discount the market’s ability to rally in the face of unknowns and adversity. The other lesson was to never discount the consumer’s ability to power the economy and drive company earnings growth. Bolstered by rounds of relief checks from the federal government, in the first half of 2021 consumer spending quickly recovered from its modest 2020 contraction and became the clear driver of economic growth.
Turning to fixed income specifically, the bond markets likewise did not follow the script many had expected. Buoyed by the central bank’s accommodative policies, as well as the government’s multi-trillion-dollar pandemic relief package, credit spreads between U.S. corporate debt and Treasuries narrowed to their lowest levels in more than a decade. A similar story held true for the high-yield bonds, where spreads collapsed and prices rallied.
Looking ahead to next year, what are your expectations for inflation and economic growth in 2022?
Our perspective is that inflation has been broadly a transitory phenomenon, as we expect supply bottlenecks to heal to some degree in 2022— although not dramatically. We also believe consumption demand will slow, as consumers have long ago tapped into their stimulus checks and personal savings levels are decreasing. Taken together, the supply-demand imbalance seen in the past year will improve, but wages will likely remain higher. So, we expect overall inflation to remain elevated, but it should begin to soften and remain moderate in 2022. Our expectations for economic growth next year will hinge on these questions: How fast will the labor market heal? And will the labor-market recovery be robust enough to replace the stimulus payments that will be fading away? We are cautiously optimistic that the current economic recovery will continue well into the new year, but that it will slow down due to structural headwinds in 2022, such as waning savings and easing of pent-up consumer demand.
How have inflationary risks and the potential for rate hikes impacted your portfolio positioning?
It remains to be seen whether inflationary pressures absolutely mean higher rates next year. The driving cause of inflation is critically important to understand when it comes to determining how quickly and by how much the Fed will raise rates—and in this case we think this will largely depend on whether inflation is predominantly driven by rising wages or by the ongoing supply-demand imbalances. If it’s the former, we think the labor market will be able to sustain higher wages than those of pre-COVID-19,as we’re coming off multiple decades of suppressed wages. Higher overall labor costs will feed into higher inflation, but not by a lot. On the other hand, if inflation is driven more by supply-demand imbalances and persists, we believe the Fed will act more aggressively to rein in inflation and won’t allow the markets to run hot. At the end of November, the Fed Chairman as well as other officials retired using the word “transitory” to describe the US inflation situation. We expect the Fed will be closely watching incoming data and will react appropriately to prevent run away inflation.
With rising rates set to knock on the door in 2022, many investors are questioning the role of fixed income. We continue to believe that bonds have had a long history of serving as a ballast in a portfolio during risk- off periods and that they can continue doing so by providing downside protection and diversification. We have therefore adjusted our portfolio positioning to be more defensive: We are favoring shorter-duration opportunities and will be even more discerning with our credit selections. For example, over the past couple years US investment grade issuance has doubled and companies have taken on meaningful amounts of debt due to the ultra-low interest rates. It will be more important than ever to select corporate credits from companies with strong cash flows that can service their debt coming out of the pandemic. We currently see opportunities in securitized markets that are backed by healthy U.S. consumer spending.
What are the risks worth keeping an eye on in 2022? What’s keeping you up at night?
Return forecasts will be arguably low going forward compared to previous environments where investors enjoyed double digit returns from equity markets for many years. The returns seen over the past years are not sustainable in the medium term. So the key risk lies in these concerns: How will investors prosper in an environment where we are unwinding from 30 years of falling fixed income rates and how do you continue to generate attractive returns? It will take a great deal of creativity to deliver positive outcomes for our clients and active managers will be best suited to meet that challenge.
Thornburg is a global investment firm delivering on strategy for institutions, financial professionals and investors worldwide. The privately held firm, founded in 1982, is an active, high-conviction manager of fixed income, equities, multi-asset solutions and sustainable investments. With $49 billion in client assets ($47 billion AUM and $1.9 billion AUA as of December 31, 2021) the firm offers mutual funds, closed-end funds, institutional accounts, separate accounts for high-net-worth investors and UCITS funds for non-U.S. investors. Thornburg’s U.S. headquarters is in Santa Fe, New Mexico with offices in London, Hong Kong and Shanghai. For more information, please visit www.thornburg.com.
Foto cedidaMarc Braendlin, responsable de los mercados latinoamericanos de Lombard Odier.. Lombard Odier nombra a Marc Braendlin como nuevo responsable para el mercado latinoamericano
Lombard Odier has announced the appointment of Marc Braendlin as Head of Latin American Markets, with a special focus on Brazil. He will take over from February 1st with the aim of strengthening and expanding the group’s coverage of this region.
Braendlin will be based in Zurich and will report to Stephen Kamp, Head of Southern Europe & Latin America for Private Clients. The company has pointed out that the nomination marks its commitment to further expansion within Latin America, and growth in key strategic markets.
“We are pleased to welcome Marc to Lombard Odier. With more than 20 years’ experience in the banking sector, he has a solid track record of growing businesses in Latin America. This expertise, along with his key client relationships, will enable him to ensure the Firm’s continued growth, particularly in the strategic market of Brazil”, Kamp stated.
Braendlin began his career at Credit Suisse in 1998 where he was promoted to Vice President at Credit Suisse Group’s M&A/ Corporate Finance team in 2005. He then joined Julius Baer where he worked for 13 years, eventually holding the position of Deputy Region Head Latin America and heading the Brazilian market where he expanded the business. Most recently, Marc was Head of Latin America Zurich at Pictet. A Swiss national, he holds a degree in Economics and Business Administration from the University of Basel.
UBS and Wealthfront, an automated wealth management provider serving the next generation of investors, have signed an agreement whereby the bank will acquire the plataform in an all-cash transaction valued at 1.4 billion dollars.
UBS has revealed that through this acquisition, it will accelerate its growth ambitions in the US, broaden its reach among affluent investors and expand its distribution and capabilities. To do so Wealthfront will become a wholly owned subsidiary of UBS and will operate as a business within UBS Global Wealth Management Americas.
The transaction is currently expected to close in the second half of 2022, subject to closing conditions including regulatory approvals.
With over $27 billion in assets under management and more than 470,000 clients in the US, “Wealthfront’s award-winning, state-of-the-art platform helps clients easily manage their wealth by providing access to financial planning capabilities, banking services and investment management solutions”, the firms say.
Following the transaction, Wealthfront and its clients will benefit from access to UBS’s leading wealth management capabilities, including the UBS Chief Investment Office’s best-in-class thought leadership, an unrivaled global footprint, and deep products and services shelf.
“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the US,” commented Ralph Hamers, Group Chief Executive Officer of UBS.
The platform’s primary focus is on millennial and Gen Z investors, a client segment with significant domestic growth potential. With more than 130 million investors in the US alone, millennials and the Gen Z population together comprise a high growth segment that will own an increasing share of the world’s wealth.
In addition, Wealthfront will expand UBS’s existing offering through the firm’s Wealth Advice Center, which focuses on serving core affluent clients, and its Workplace Wealth Solutions business, which works with employees of corporate clients on equity plan participation, financial education and retirement programs.
“Partnering with UBS will allow Wealthfront to offer our clients additional value-added services and best in class research that will help accelerate our vision to make growing wealth delightfully easy,” said David Fortunato, Chief Executive Officer of Wealthfront.
Foto cedidaMatt Christensen, director global de Sostenibilidad e Inversión de Impacto de Allianz GI. . Allianz GI crea una unidad dedicada a las inversiones de impacto en los mercados privados
To enhance its commitment to impact investing, Allianz Global Investors (AllianzGI) has announced the creation of a dedicated Private Markets Impact unit within its Sustainable investment platform. This new area will be led by Matt Christensen, Global Head of Sustainability and Impact Investing.
The Private Markets Impact unit combines existing equity and debt investing expertise with a newly created impact measurement and management capability. The firm has revealed in a press release that this 12- strong unit, which will be overseen by Christensen, will complete the Sustainability platform created in 2021 to push the boundaries of sustainability for its clients.
Three impact teams
Martin Ewald, Lead Portfolio Manager, heads the Private Equity Impact Investing team, which seeks to invest in real assets and private companies that contribute to solve global environmental and/or social issues. He is currently responsible for EUR 500 million committed through the Allianz Impact Investment Fund and AfricaGrow initiative, and also the Emerging Market Climate Action strategy (EMCA) launched at COP26 by AllianzGI in cooperation with the European Investment Bank.
In this sense, AllianzGI reveals that with a target size of EUR 500 million, EMCA will invest in climate-focused investment funds and projects active in emerging markets and developing countries, with a focus on climate mitigation, climate adaptation, and access to electricity.
Meanwhile, Nadia Nikolova, Lead Portfolio Manager,is heading the Development Finance & Private Debt Impact Investing team, which currently invests in de-risked sustainable loans in emerging and frontier markets. The team brings together the expertise from the AllianzGI Private Credit platform with an impact investing lens. It focuses on building partnerships with Development Finance Institutions and Agencies, Donors and commercial investors to mobilize private capital for sustainable development, and already raised over USD 2 billion since 2017.
Also announced at the recent COP 26, the team manages the vehicle for the recently announced Managed Co-Lending Portfolio Program (MCPP) between Allianz and the International Finance Corporation (IFC), a member of the World Bank Group. “The new program, MCPP One Planet is the world’s first cross-sectoral portfolio of emerging-market loans aligned with the Paris Agreement”, the company explains.
In addition, AllianzGI announced the creation of an Impact Measurement & Management team, led by Diane Mak, and the launch of an impact framework to facilitate the due diligence and selection of investments that contribute to material and positive impact. The approach supports rigorous measurement and management of impact over the lifecycle of the investment to ensure that impact is being delivered. Diane Mak joined AllianzGI in August from Y Analytics where she oversaw TPG Global’s impact assessments and management activities.
“Impact investing is fast-growing out of its niche. Investors want to see a positive change for the planet while generating a return, and impact investing offers a solution to these twin goals. The future growth trajectory of impact investing depends on asset managers demonstrating how the impact can be measured and reported. Our new Impact Measurement & Management approach enables us to measure impact in private equity and debt investments and will allow us to develop further our offering according to the best standards”, said Christensen.
Foto cedidaEquipo de Unicorn Strategic Partners. Foto cedida
Calamos Investments, a global investment management firm with more than 40 billion dollars in assets under management, has signed a strategic agreement with Unicorn Strategic Partners for the distribution of its UCITS investment solutions in the Latin American region.
In a press release, Unicorn revealed that it will serve both the retail and institutional business. Until now, Calamos covered the Latin American business under the guidance of Carlos Soriano, Head of US Offshore and Latam, who will now be responsible for the Unicorn relationship and will work directly with the team to continue to grow the business in the region.
Unicorn SP was launched at the end of 2017 and has become one of the premier fund distribution firms within the US Offshore and Latam market. They have a team of 16 professionals based in NYC, Miami, Buenos Aires, Montevideo and Santiago de Chile.
Florencia Bunge, partner in charge of the Latam retail business, commented that such an event is “a great milestone” for Unicorn SP, as it continues to enhance the list of high conviction strategies. In her view, these funds provide an integral and comprehensive solution to client’s investment portfolios in the region. “Our objective at Unicorn SP is to offer best-in-class strategies and avoiding any overlap between our menu of offerings at all times”, she added.
“Calamos is one of the most recognized firms in the industry for its Convertible strategy. Many clients in the region are familiar with Calamos and we are certain that they will greatly appreciate the daily coverage and presence of a local team”, Bunge concluded.
Alex. Brown, a division of Raymond James, has welcomed Fernando Campoo in Miami. He joins the firm from Citi, where he worked for 21 years.
“I couldn’t be prouder to announce that Fernando Campoo has joined the Alex Brown/ Raymond James family as managing director to serve clients in Central America. The sky’s the limit, Fernando,” posted Eric Termini, Alex Brown’s director for South Florida.
Campoo worked since 1997 for Jefferson Pilot Securities in Fort Wayne and then moved on to other firms in Windsor and Puerto Rico until landing at Citi, according to his BrokerCheck profile. He managed a portfolio of Central American clients with AUMs of approximately $200 million, according to industry sources.
Fernando Mattar Beyruti has taken over as the new Global Head of Itaú Private Bank.
“It is with great joy that I share the information that I have assumed, as of now, the position of Global Head of Itaú Private Bank”, the executive posted this week on his LinkedIn account.
Beyruti has been based in Miami since 2019 when he was appointed CEO of Itaú USA. However, he has an extensive career within the bank, originating in his native Brazil.
“I want to thank the entire team at Itaú Private, with whom I am extremely proud and pleased to work side by side and with the certainty that together we are building the best global platform to meet the specific needs of our clients – in Brazil and around the world”, he added.
With more than 20 years at Itaú, Beyruti was senior Private Banker, Superintendent at Itaú Private Bank, and Director of Itaú Asset Management in São Paulo.
His newly assumed position had been vacant since March 2021 when Luiz Severiano Ribeiro left the company.
Dynasty Financial Partners has filed for a public offering to raise up to $100 million, according to the document disclosed to the SEC. The firm is offering shares of Class A common stock, but it hasn’t been priced yet.
“We intend to use a portion of the net proceeds of this offering to purchase common units of Dynasty Financial Partners, LLC from existing Dynasty Financial Partners, LLC unitholders, at a per-unit price equal to the per-share price paid by the underwriters for shares of the Class A common stock in this offering”, reads the IPO document filed with the SEC.
The RIA services platform also intends to use any remaining net proceeds to facilitate the growth of its existing business, to make strategic acquisitions of businesses that are complementary “and for other general corporate purposes”.
Dynasty highlighted that its revenues increased from $32.7 million in the nine months ended September 30, 2020 to $49.2 million in the nine months ended September 30, 2021, representing an increase of 50%. “Our net income was $10.6 million and $2.9 million in the nine months ended September 30, 2021 and 2020, respectively, an increase of 266%”, the document reveals.
As of September 30, 2021, the Dynasty network includes 46 Network Partner Firms representing more than 292 financial advisors who maintain $64.6 billion in Billable AUA on the Dynasty platform, with an average AUA per advisor of $221 million.
Panamanian financial services firm Inexco has announced the opening of a RIA office in Miami.
“Inexco is pleased to open a US-based Registered Investment Advisor (RIA) with dedicated investment services for financial advisors throughout Latin America and the state of Florida and their clients who wish to have top-notch service and advice,” posted Luis Alfredo Cercos, CEO, on his LinkedIn account.
Inexco obtained SEC approval on January 14, 2020 for its Brickell Avenue office, according to information available on the U.S. regulator’s website.
The wealth banking, investment and securities brokerage firm is focused on providing financial services to a select base of affluent clients, corporations and financial intermediaries in Latin America. The company also focuses on affluent and high net worth individuals and institutions, as well as financial intermediaries and their clients.
This market movement is in addition to several Latin American companies that have landed in Miami, such as Puente or Bancolombia, which is still subject to regulatory approvals.
