Global Assets in ESG Funds Neared 2 Trillion Dollars Boosted by Record Inflows

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Pixabay CC0 Public Domain. Los activos en fondos ESG alcanzan los 2 billones de dólares apoyados por los fuertes flujos de entrada en Europa

ESG investing continues to grow. According to the latest report by Morningstar, the global sustainable universe attracted 185.3 billion dollars in net inflows in the first quarter of 2021, up 17% from 158.3 billion in the previous quarter. Specially supported by strong inflows in Europe, global assets neared the 2 trillion mark, up 17.8% from the last quarter.

The universe of the Global Sustainable Fund Flows review encompasses open-end funds and exchange-traded funds that claim to have a sustainability objective and/or use binding ESG criteria for their investment selection. The report divides it into three segments by domicile: Europe, United States, and Rest of World.

Thus, it shows that Europe took in the bulk of the flows during the first quarter of the year (79.2%), while the U.S. accounted for 11.6% of them. In the rest of the world, they were considerably higher than in previous quarters, clocking in at 17.1 billion dollars for Canada, Australia and New Zealand, Japan, and Asia. This is compared with 13 billion in the fourth quarter of 2020, a spike that can be largely attributed to an uptick in flows in Japan and China combined.

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Europe accounts for 83% of global assets, followed by the United States with 12%. The past three years have seen a steady increase in assets in sustainable funds globally. “With currently 4,523 sustainable funds available and many more that now formally consider ESG factors in a nonconstraining way to better manage risks and improve returns, Europe is by far the most developed and diverse ESG market“, highlights the report.

Furthermore, product launches globally remained strong in the first quarter, with 169 new ones entering the market. This is down from the all-time record set in fourth-quarter 2020 with 215 launches but up from the first quarter of 2020. Morningstar explains that product development always slows down in the first quarter relative to the fourth one. The majority of the launches (65.6%) took place in Europe, while Canada and Asia ex-Japan both saw new 17 products, followed by Japan with 13 and U.S. with 11.

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U.S. market

The analysis shows that, once again, sustainable funds in the United States attracted an all-time record level of flows in the first three months of 2021. In that period, U.S. sustainable funds saw nearly 21.5 billion dollars in net inflows. That’s slightly more than the previous record, USD 20.5 billion, set in the fourth quarter of 2020, and more than double the 10.4 billion seen one year ago, in the first quarter of 2020. It was also about 5 times greater than first-quarter flows in 2019.

Also, sustainable passive funds dominated their active peers in attracting flows. During the first quarter, passive funds claimed nearly 15 billion dollars, or 70% of all U.S. sustainable flows. In this sense, the five funds attracting the most flows in the first quarter of 2021 were all passive equity funds.

Meanwhile, assets in U.S. sustainable funds have stayed on “a steady growth trajectory”, says Morningstar. As of March 2021, assets totaled nearly 266 billion dollars. That’s a 12% increase over the previous quarter and a 123% increase year over year. Active funds retained the majority (60%) of assets, but their market share is shrinking because, as the report highlights, three years ago, they held 82% of all U.S. sustainable assets.

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European market

Europe was the key to the good figures registered in the first quarter of 2021. European sustainable funds attracted inflows of 120 billion euros in the first quarter of 2021. This is 18% higher than in the previous quarter, and it represents 51% of overall European fund flows. Besides, sustainable fund assets increased by 17.5% over the quarter, reaching a record high of 1.3 trillion euros.

The report also shows that index funds and ETFs garnered 36.5 billion euros in sustainable fund flows, accounting for 30% of first quarter flows, up from 32.8 billion euros in the previous quarter.

As for product development, in the first quarter of 2021 it remained high in Europe, with 111 new sustainable fund launches identified by Morningstar. The firm expects this high level of sustainable product development to continue to be spurred by the Sustainable Finance Action Plan of the European.

HSBC AM Names Bhaven Patel Global Head of ETF Capital Markets

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Foto cedidaBhaven Patel, responsable global de ETF Capital Markets de HSBC AM.. HSBC AM nombra a Bhaven Patel responsable global de ETF Capital Markets

HSBC Asset Management continues to reinforce its team with the appointment of Bhaven Patel as Global Head of ETF Capital Markets. Patel, who joined the firm on April 6, will be based in London reporting to Carmen Gonzalez-Calatayud, Head of ETF Capability.

In his new role, he will be responsible for running the firm’s ETF Capital Markets function and driving the liquidity strategy for its ETF platform. The asset manager explained in a press release that Patel will work closely with the ETF sales team to help clients with their ETF trading and execution requirements, and with the ETF operations and product development teams to help design best-in-class primary market infrastructure to support the firm’s existing product range.

Commenting on the appointment, Carmen Gonzalez-Calatayud said that Patel’s experience in designing and launching asset class-specific ETF platforms will enable them to continue expanding their “growing range of ETF products and capabilities”.

Patel highlighted that HSBC Asset Management’s ETF business has seen “momentous growth” over the past year and it is “an exciting time” to join the firm. “I am looking forward to helping the company bring innovative products to the market”, he added.

Patel brings over 16 years’ experience within the ETF industry in managing the primary and secondary ETF markets and also an ETF trader. He joins from DWS Xtrackers where he was Director, ETF Capital Markets for six years. Prior to that, he was part of the iShares ETF Capital Markets team and also worked for the ETF and delta one trading teams at Credit Suisse and Morgan Stanley.

In 2020, HSBC AM set out its strategy to re-position the business as a core solutions and specialist emerging markets, Asia and alternatives focused asset manager, with client centricity, investment excellence and sustainable investing as key enablers. Growing its ETF range, particularly in areas such as ESG, Asia and fixed income, is one of the firms’ strategic growth initiatives. HSBC AM currently manages USD93.9 billion in passive and systematic strategies and USD 15.5 billion in ETF strategies.

Allfunds Launches Allsolutions, its B2B Subadvisory Platform

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Allfunds, the leading independent wealthtech and fund distribution platform, has developed Allsolutions, a new platform that aims to provide fund of fund and discretionary portfolio managers with a different set of building blocks to optimize their portfolios. It will open its operations during the course of May.

The firm revealed in a press release that Allsolutions will give banks and wealth managers “a solution for running their open architecture programs through mandates”.  They also pointed out that, true to their business model, this is a B2B solution not available to a final investor offering.

Allfunds will onboard the first iteration of strategies for its B2B sub-advisory platform following approval from the Luxembourg regulator (CSSF). The offer will initially consist of twelve mandates covering the primary asset classes and managed by some of the largest fund houses. Seven of these strategies will have an ESG focus, which is consistent with the firm’s commitment to sustainability which includes adhering the Principles for Responsibility Investing, a United Nations initiative to foster the development of a more sustainable global financial system.

Following the initial launch, Allfunds will introduce 18 complementary strategies to the platform in the third quarter of 2021. Of these strategies, a further 14 will also focus strongly on sustainability. Their introduction will bring the total number of available strategies to 30.

“We are pleased to extend our services, offering clients access to a selection of exclusive mandates expertly managed by some of the world’s largest fund houses. Through Allsolutions, our aim is to continue to evolve the Allfunds infrastructure allowing for efficient access to open architecture whilst sticking to our B2B business model and never selling to end clients”, Juan Alcaraz, CEO, said.

NN Group Reviews its Strategy to Boost Growth of its Asset Management Business

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Pixabay CC0 Public Domain. NN Group revisa su estrategia en búsqueda de alternativas de crecimiento para su negocio de gestión de activos

As part of its periodic assessments, NN Group has announced this week that it is reviewing strategic options for its asset management business. The firm is evaluating a broad range of options including a merger, joint venture, or (partial) divestment.

The group explained in a press release that the process is part of its “regular and thorough” assessment of its individual businesses, in line with their aim to pursue “long-term value creation that is beneficial to all stakeholders”.

The current review is aimed at assessing the opportunities to create a broader platform that enables NN Investment Partners (NN IP) to accelerate its growth. “In considering different strategic alternatives, particular focus will be given to how NN IP can continue to provide the best investment offering and service to NN’s insurance business and asset management clients in a rapidly evolving industry”, they added.

With around 300 billion euros (362 billion dollars) of assets under management, NN IP is a leader in responsible investing and has strong capabilities in fixed income, private debt, equity and multi asset solutions.

HSBC AM Appoints Paul Griffiths as Global Head of Institutional Business

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HSBC AM nombramiento
Foto cedidaPaul Griffiths, director global de negocio institucional de HSBC AM. . HSBC AM nombra a Paul Griffiths director global de negocio institucional

HSBC Asset Management has announced in a press release the appointment of Paul Griffiths as its new Global Head of Institutional Business. Based in London, Griffiths will start on May 5 and report to Nicolas Moreau, CEO.

With over 30 years’ experience in the industry, he will be responsible for the commercial development of the firm’s Institutional Business and leading its institutional sales and client management teams. He takes over from Brian Heyworth who left the firm last year.

Griffiths joins from First Sentier Investments where he was Chief Investment Officer for Fixed Income & Multi Asset Solutions. Prior to that, he held senior roles with firms including Aberdeen Asset Management, Credit Suisse, Axa and lnvestec. He is also the founder investor of the UK’s first student run investment portfolio based at the University of York.

“Paul’s extensive investment management experience and deep knowledge of the needs of institutional clients will prove invaluable as we continue to develop our proposition and differentiate our offering in the market. I look forward to welcoming him to the team”, Moreau has commented.

Meanwhile, Griffiths has highlighted that HSBC AM has seen significant growth in its institutional business over the past year: “This has been driven by bringing a strong set of innovative products to the market and I am thrilled to be part of its future development.”

In 2020, HSBC Asset Management set out its strategy to re-position the business and focus it on core solutions, emerging markets -specially Asia- and alternatives, with client centricity, investment excellence and sustainable investing as key enablers. The firm restructured its business to establish a more market competitive and client-centric operational model. As part of this, it changed its distribution model to operate with a global approach with the creation of Institutional and Wholesale client businesses.

Santander Becomes a Founding Member of the Net Zero Banking Alliance

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Pixabay CC0 Public Domain. Santander se convierte en miembro fundador de la Net Zero Banking Alliance

Santander has announced in a press release that it has become a founding member of the Net Zero Banking Alliance (NZBA), which has been convened by the United Nations Environment Programme Finance Initiative (UNEPFI).

Its goal is to help mobilise the financial support necessary to build a global zero emissions economy and deliver the goals of the Paris Agreement, besides providing a forum for strategic coordination among financial institutions to accelerate the transition to a net zero economy.

The NZBA brings together an initial cohort of 43 of the world’s leading banks, which also include BBVA, Bank of America, HSBC or BNP Paribas. Santander has highlighted that they focus on delivering the banking sector’s ambition to align its climate commitments with the Paris Agreement goals with collaboration, rigour, and transparency, acknowledging the necessity for governments to follow through on their own commitments. 

The commitments that have been reached by all of them include transitioning all operational and attributable greenhouse gas (GHG) emissions from their lending and investment portfolios to align with pathways to net-zero by mid-century, or sooner. They have also decided to set intermediate targets for 2030, or sooner, for priority GHG-intensive and GHG-emitting sectors; and to facilitate the necessary transition in the real economy through prioritising client engagement and offering products and services to support clients’ transition.

“If we are to green the world’s economy, we need a truly global effort: banks, companies, governments, regulators and civil society working together at pace. At Santander we are proud to be part of the founding members of this new alliance, and to accelerate progress towards net zero”, has commented Ana Botín, executive chairman at Banco Santander.

Santander has pointed out that is already playing a major role in helping to tackle climate change and enable the transition to the green economy. In February 2021 it announced its ambition to achieve net zero carbon emissions by 2050. The bank also published its first decarbonization targets with the ambition that, by 2030, it will have stopped providing financial services to power generation clients with more than 10% of revenues dependent on thermal coal, as well as eliminating all exposure to thermal coal mining worldwide and aligning its power generation portfolio with the Paris Agreement. At the end of 2020, Santander CIB was the world leader in renewable financing, according to Dealogic.

BNP Paribas AM Appoints Alex Bernhardt as Global Head of Sustainability Research

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BNP Nombramiento
Foto cedidaAlex Bernhardt, nuevo director global de análisis sostenible de BNP Paribas AM.. BNP Paribas AM nombra ficha a Alex Bernhardt como director global de análisis sostenible

BNP Paribas Asset Management has announced the appointment of Alex Bernhardt as Global Head of Sustainability Research within its Sustainability Centre. Bernhardt has joined on April 21st and will report to Jane Ambachtsheer, Global Head of Sustainability.

In his new role, he will be responsible for BNP Paribas AM’s Sustainability research agenda and ESG scoring platform. Bernhardt will manage the team of ESG analysts. and will work closely with the Quantitative Research Group, which plays an increasingly important role in developing and delivering the asset manager’s sustainability research agenda.

BNP Paribas AM has highlighted Bernhardt’s acknowledged role within sustainable finance, as he has received multiple awards for his work within insurance and investment across topics including climate risk management, disaster resilience and impact investing.

He joins from Marsh McLennan, where he was Director of Innovations, helping clients to address systemic issues including climate resilience, the catastrophe protection gap, diversity and sustainable infrastructure financing. Previously, he was Principal and US Responsible Investment Leader at Mercer, helping institutional investors to manage sustainability challenges in their portfolios, particularly related to climate change.

Bernhardt also worked at reinsurance broker Guy Carpenter where he devised bespoke risk transfer solutions for insurance brokers. He holds a BA in English and Philosophy from the University of Puget Sound in Tacoma, Washington.

“Alex will play an important role in driving our research agenda, thought leadership and thematic fund development. His extensive experience in sustainable investment and climate risk management will bring new insights to support our investment teams in generating long term sustainable returns for our clients”, has commented Jane Ambachtsheer, Global Head of Sustainability.

UBS Hires a Former Wells Fargo Team with 1.8 Billion Dollars in AUM

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Foto cedidaFoto: Businesswire. Foto cedida

UBS Private Wealth Management announced this week that three experts formerly in Wells Fargo have joined the firm in its South Florida market. The team manages over 1.8 billion dollars in assets.

Based in Miami, it is led by Financial Advisors Doris Neyra and Melissa Van Putten-Henderson, and also includes Relationship Manager Gina Jamurath. They will report to Karl Ruppert, South Florida Complex Director at UBS Private Wealth Management.

“It’s important that our advisors reflect the clients and communities they serve and we’re delighted that Doris, Melissa and Gina are very active in the local community. We know the team will bring to bear the full breadth of UBS’s global offering to clients, understanding their complex needs and helping them to achieve their goals”, said Ruppert.

Neyra has been working with ultra-high-net-worth clients for more than two decades. She holds the Certified Financial Planner® designation and has Series 7, 66, Variable Annuities and Life & Health licenses. Before joining UBS, she was a Managing Director and Wealth Advisor at Wells Fargo Private Bank in Miami for 15 years. Prior to that she worked at Northern Trust and Merrill Lynch.

Van Putten-Henderson has worked in the financial services industry for over 20 years. Before joining UBS, she was a Managing Director and Senior Investment Strategist at Wells Fargo Private Bank in Miami, where she specialized in creating tax efficient custom portfolios to meet clients’ needs and objectives. Prior to that she worked at U.S. Trust as a Senior Portfolio Manager. She holds the Chartered Financial Analyst® and Chartered Alternative Analyst (CAIA ®) designations.

They will both be supported by Jamurath, who was formerly a Wealth Advisor Associate at Wells Fargo Private Bank in Miami.

Technological Advances Will Determine Success of China’s New Five-Year Plan

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China has outlined in its latest five-year plan the three key pillars supporting its drive towards being a world power. These include technological advancement and boosts to both private investment and domestic consumption. But what will this mean for investors? NN Investment Partners answers in its latest analysis.

China’s technological advance will be crucial for growth but while investments in education and R&D have been impressive, the asset manager sees the main risk lying in its relations with other countries, from which it still needs to import knowledge, capital goods and high-end components. The extent to which China’s business climate will be able to generate the required level of private-sector investments is also questionable given the central government’s reluctance to give up enough control for competition in the corporate sector to drive innovation to a higher level.

NN IP believes that of China’s three ambitions, the one most certain of success is likely to be consumption growth. The improvements China has made in social security and public services since the 1990s have laid much of the groundwork for households to save less and spend more, while a more active income policy and the gradual easing of restrictions for internal migration should help expand the middle-income group and drive urbanization.

In the asset manager’s view, investors could benefit from focusing on consumption and services-driven stocks in the “new economy” sectors of consumer staples, consumer discretionary, media and entertainment, and healthcare. Additionally, investors should focus on IT companies, especially those that build digital and telecom infrastructure and those active in the broad shift from offline to online. Sectors to avoid are likely to be energy, materials and industrial stocks.

Many of the new economy companies are listed on the A-Shares market, which is becoming more accessible. In this sense, NN IP highlights that China is opening its equity and bond markets to foreign investors to reduce dependence on domestic bank funding and make capital allocation more efficient, while boosting international use of the renminbi.

“The Chinese leadership’s ambition to double its economy in the coming 15 years should be taken seriously. Experience shows that China tends to meet its growth targets. But whereas China’s rapid development in the past decades was mainly driven by exports, public investments in infrastructure and a sharp increase in leverage, growth in the coming period will have to come primarily from innovation and the private sector“, Maarten-Jan Bakkum, Senior Emerging Markets Strategist, says.

In his opinion, this strategy makes sense, given China’s high debt levels, the more challenging global environment and the less favourable demographics picture. “But if the private sector becomes the decisive force and capital allocation becomes increasingly market-driven, the authorities will not be as firmly in the driving seat as before. This should make China’s future growth trajectory less predictable and more volatile”, he adds.

All in all, NN IP thinks that investors who approach China from a strategic angle would do well to consider allocating explicitly to A-shares. The China weight in EM has risen sharply in the past years to 39% currently, and its dominance has become so large that more investors are likely to start allocating to China and EM ex-China separately.

China is likely to continue growing relative to the rest of the emerging markets. As this is likely to be driven primarily by the higher growth and better accessibility of the A-share market, the asset manager recommends to position for this with a strategic overweight in A-shares alongside a neutral allocation to Chinese equities overall.

Kandor Global Partners with Summit Financial Holdings and Merchant Investment Management

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Kandor Global, an independent registered investment advisor (RIA) serving ultra-high-net-worth clients worldwide, has partnered with Summit Financial Holdings and Merchant Investment Management, through the newly created Summit Growth Partners (SGP).

SGP is an innovative custom capital solution launched by Summit Financial Holdings and Merchant Investment Management in January which combines upfront cash monetization with equity participation as well as exclusive partnership privileges. Based in Miami, SGP has taken a minority, non-controlling stake in Kandor Global, which now represents its 13th investment, and its first investment targeted toward serving international clients.

Meanwhile, with 450 million dollars in assets under management, Kandor Global was seeking an established strategic partner to propel growth initiatives, provide access to premier advisor and client resources, and expand in-house expertise and strategic capital.

“Our mission in establishing Kandor Global is to be a key wealth and investment management resource for the Latin American community at home and here in the U.S. We are seeing more and more highly successful Latin American entrepreneurs and families flock to the U.S. to expand their businesses and their wealth. We have the experience and resources through Summit Growth Partners to serve this specific subset of clients at the highest level and address their unique financial needs”, said his CEO, Guillermo Vernet.

Meanqhile, Stan Gregor, CEO of Summit Financial Holdings, pointed out that, with all the disruption that has taken place in the international wealth management space, they’ve been looking for the right firm to partner with that could deliver a “truly differentiated and customized” suite of services and solutions to advisors who cater to international clients. “We were very impressed with Kandor Global’s leadership team and are excited about our partnership”, he added.