Pixabay CC0 Public Domain. UNCDF and Artesian launch impact partnership to support investments in gender equality
The United Nations Capital Development Fund (UNCDF) and Artesian launched an impact partnership to support gender-lens investing, boost female leaders in the corporate workplace and support women’s economic empowerment in the world’s 47 Least Developed Countries (LDCs).
The Artesian Women’s Economic Empowerment Bond Fund (WE Fund) will invest in public companies with women in management and board positions, fair compensation and work-life balance policies including parental leave and flexible work options, and commitment to gender equality. The fund will donate one-third of the management fee to a nonprofit organization, SheSyndicate, and UNCDF, to support women’s economic empowerment around the world.
“We are proud to work with Artesian and SheSyndicate on an innovative impact partnership. Pension funds and socially-conscious investors globally are seeking ways to use their investment dollars to support the UN Sustainable Development Goals. The WE Fund offers an innovative mechanism to recognize and reward companies with accountable business practices and gender-positive management policies, while also making a donation to support UNCDF’s work in LDCs”, said UNCDF Executive Secretary, Judith Karl.
Through a fixed income strategy using Equileap’s screening and guidance, the WE Fund will seek to produce market rate returns tracking the Bloomberg Barclays Global Aggregate Corporate Index. “With the launch of our Women’s Economic Empowerment Bond Fund, we are making it easier for gender lens investors and stakeholders to support global economic equality,” said John McCartney, Managing Partner at Artesian.
This fee donation will support the UNCDF’s work in LDCs, including helping poor women access savings and credit, lending to small and mid-size businesses run by female entrepreneurs in frontier markets and supporting local governments as they build climate-resilient infrastructure and manage their public finances in transparent and accountable ways.
SheSyndicate will use its donation to fund education and mentoring programs that benefit female entrepreneurs, investors, directors, and future leaders. A portion of the funding will also be used to set up a dedicated foundation to support non-governmental organizations that help the world’s most vulnerable and marginalized women, particularly those affected by COVID-19.
Esther Pan Sloane, Head of Partnerships, Policy and Communications at UNCDF claims that this partnership shows the promise of new ways of doing business: “It’s getting more difficult for investors to differentiate between the many new vehicles aimed at supporting sustainability or achieving impact. Artesian is demonstrating its commitment by putting money on the table to support women around the world. Their donation to UNCDF will help us support a new generation of female entrepreneurs in developing countries”.
UNCDF is a UN agency with specialized expertise in making finance work for the poor in the world’s LDCs. Artesian is a global alternative investment management firm specializing in debt, venture capital and impact investment strategies.
However, Vicky Lay, SheSyndicate Founder and Artesian Head of Impact Investing, states that the global economic gender gap has complex causes and is widening each year. “It will require concerted effort, ingenuity and resources to solve. Innovative public private partnerships like the WE Fund are necessary in order to unlock impact capital at scale and drive real change.”
Although there has been a significant increase in both the supply and demand for ESG related content created by asset managers in the last 12 months, there remains a significant gap between the content that investors are looking for and the content the managers are actually providing, according to new research from Peregrine Communications, ‘Making a Difference, Marketing a Difference´.
Peregrine’s research shows that while there has been a 67% increase globally in ESG related content from asset managers across top tier media in the last 12 months, asset managers routinely provide generic, derivative content to their audiences. The research shows that 34% of the 70 topics assessed in the report are significantly “over-indexed” by the market, with more content provided on these themes than there is organic demand.
In contrast, this latest ESG research also shows where there is unmet investor demand for information – i.e. “White Space”. Issues where there is significantly more demand for content than there is supply include: measurement and materiality, supply chain transparency, active ownership and private equity.
Other key findings include:
The average increase in brand interest for firms with significant ESG exposure is 80% over the last five years – demonstrating a very real ‘brand dividend’ for firms that communicate effectively around ESG.
Output in specialist ESG and sustainability media outlets has increased by 76%
There has been a 63% increase in searches globally for ESG-related content in the last 12 months
There has been a 36% increase in social media engagement globally around ESG issues
Anthony Payne, CEO, Peregrine Communications said:
“In this report we have sought to provide a framework by which asset managers can better contribute to the complex ESG conversation in a more meaningful way, a way that better reflects the interests and needs of investors.
“It has become increasingly clear that most asset managers’ audience are not served well by the ESG content provided them. This is why we have built our White Space framework so that asset managers can have more data about which topics their audiences are actually looking for, and ultimately, so that they can build genuine category authority around these topics.”
Max Hilton, Managing Director, Peregrine Communications said:
“Our latest research confirms what a lot of people will have already suspected, that the majority of ESG content provided by asset managers is generic and hugely mismatched to the information that their increasingly well-versed audiences need.”
Pixabay CC0 Public Domain. El 66% de los gestores europeos de gran capitalización superaron a su índice de referencia
COVID-19 is having a sizeable impact on the business operations of both fund managers and investors, according to Preqin’s latest release, disruption caused by travel restrictions and social distancing will lead to dampened activity through the remainder of 2020, and possibly into 2021. However, they believe that alternatives funds proved to be resilient in previous cycles, and in the longer term, investors seem set to increase their allocations as a result of the pandemic, accelerating future AUM growth.
“A dispassionate analysis based on previous financial crises would suggest that we will see three major outcomes for alternative assets,” said Preqin CEO, Mark O’Hare. “A significant short-term slowdown in activity; a medium-term resumption of the established growth trend; and a long-term outperformance of those funds which were able to capitalize on advantages being presented now. We are already seeing this start to be borne out, with activity in 2020 down from previous years and operators telling us they expect this to characterize the year ahead. Overall, it’s unlikely that COVID-19 will fundamentally alter investors’ attitudes to alternatives, but it may well accelerate some long-term trends and moderate others.”
The alternatives industry is not a single entity, and within each asset class the pandemic is likely to be felt to different degrees and in different ways. Preqin has been surveying and interviewing fund managers and investors across the industry, looking at 2020’s activity so far, and drawing comparisons with previous financial cycles. For this edition, the firm notes:
Private Equity: Accelerating Digital Transformation. Private equity firms have almost $1.5tn in dry powder to deploy into deal opportunities, so they are well-placed to take advantage of opportunities presented by a downturn. However, in the short-term the reality of social distancing will hamper deal closing. Retail, leisure and hospitality assets are set to be hit hard, although supermarket retail specifically will benefit. Digital technologies will benefit, particularly in non-cyclical sectors like healthtech and remote working – accelerating interest in already-growing areas.
Private Debt: The Difficult Second Album. The 2008 Global Financial Crisis was the making of the modern private debt industry, putting the spotlight on distressed debt funds and spawning the direct lending sector. 2020 will see if the asset class can repeat that feat – interest in distressed debt has spiked in Q1, and more than a third of investors are now targeting the strategy. Direct lending, meanwhile, is untested in the face of a crisis, and COVID-19 may put a stumbling block in the path of the sector’s expansion.
Real Estate: Logistical Opportunity. Rental income from businesses and private housing has seen a sharp drop since the start of March, impacting the short-term cash flow of real estate fund managers. Deal activity is likely to be particularly depressed through the rest of 2020, given the practical challenges in evaluating properties. In the longer term, COVID-19 will exacerbate the challenges already faced in the retail sector, and may deflate the market for city-center offices. Demand for logistics assets, though, is likely to spike – last-mile delivery has emerged as a particular opportunity for expansion.
Real Assets: Do Not Pass Go. Toll-based assets and travel-related assets have been hit hard by travel restrictions, with the impact increasing the longer that restrictions are in place. Government-backed bailouts in the travel and shipping sectors are currently aimed at operators rather than asset-owners, so recompense is uncertain. Conversely, social and digital infrastructure have significant growth opportunities as demand for healthcare infrastructure and broadband networks rises. Oil price volatility continues to disrupt the natural resources industry, and more than a quarter of investors are avoiding conventional energy investments in 2020 as a result.
Hedge Funds: Time to Shine. Losses in Q1 2020 wiped out gains made by hedge funds in 2019. But the asset class did act to protect investors from worse downturns in equity markets, showing their value as a defensive strategy. This may reverse recent negative sentiment from investors as the downturn extends. However, it will also likely lead to a flight to safety, benefiting large managers and prompting more consolidation in the sector. New launches will fall as new managers are deterred from raising vehicles to seek investment. Strategy-wise, equities funds are more likely to see outflows, while macro and multi-strategy funds could benefit on the basis of their defensive credentials.
Foto cedidaHoward S Marks, director y co-presidente de Oaktree Capital Management.. Howard S Marks (Oaktree Capital Management): "Estamos ante un mercado respaldado artificialmente por las compras de la Fed”
In order to be a good investor you have to be confident in your views says Howard S Marks from Oaktree Capital Management.
In the 1980s, he became one of the first investors to specialize in beaten-down bonds. He is now trying to raise $15 billion for what would be the biggest-ever fund to invest in distressed debt. He is also raising a separate $3.5 billion fund designated for underwater real estate assets.
During the 73rd annual CFA Institute conference, he also mentioned that in this environment, where returns will be lower for longer, the secret to prevailing is to produce better returns than your peers. “The market is what it is, rates, and the return environment is what it is, so superior investors control their emotions to deviate from the herd and outperform.”
The billionaire contrarian investor reminded the viewers that “in order to combat the virus we put the economy into a deep freeze… Investors are not experts on the virus, we are just taking ideas from experts which you have to pick according to your bias, but all are cautious to varying degrees.”
Although he agrees with Mr Powell in that extreme and unprecedentedactions are called for, he is also aware that stocks and bonds are selling at prices they wouldn’t sell at if the Fed were not the dominant force.
More than once he has quoted that “capitalism without bankruptcy is like Catholicism without hell” and he believes that today’s, is a market which is artificially supported by Fed buying, so he expects plenty of debt defaults and bankruptcies when corporate borrowers start running out of cash in the months ahead.
Marks is not alone, according to Preqin, as of mid-May , distressed real estate funds have already accumulated nearly $10 billion worth of dry powder, waiting to invest once the Fed inevitably steps back.
Nearly 3 million Americans filed first-time unemployment claims last week, bringing the total to 36.5 million since mid-March. That represents 22.4% of the March labor force.
It was the eighth week in a row that the number for initial claims decreased after peaking at 6.9 million in the final week of March. Economists say this is relatively good news because it means things aren’t getting worse, but their expectations for a quick recovery are not optimistic.
Janwillem Acket, Chief Economist, Julius Baer mentions that “April 2020 has become a historical month, revealing the most dramatic monthly erosion of US jobs since the Great Depression of the 1930s. driven in particular by massive job cuts, e.g. from the largely closed-down leisure and hospitality sectors. It comes as no surprise that the brunt of the US jobs erosion is born by the services sectors. The most bizarre figures for April concerns wages, showing very strong, positive (!), average growth rates. Overall, the April data could, in hindsight, stand out as an absolute low in job losses, because small-and-medium-sized businesses are receiving fiscal support with loans that could be partially forgiven if used for employee salaries. The Federal Reserve has also provided businesses credit lifelines. In addition, 30 of 50 US states are reopening their lockdowns, allowing businesses to operate again. Therefore, we can expect a wave of re-employment once the economy recovers in the wake of a further loosening of the lockdowns in the second half of 2020. However, consumption, in particular of services, has suffered a severe blow in the current quarter and therefore an overall contraction of US real GDP, by approximately an annualised 30%, is in the cards. However, looking ahead, it is highly likely that consumer behaviour could become rather cautious, given the lasting insecure backdrop. Many companies will cease to exist or are already bankrupt, and others, which survive the Covid-19 crisis, could wait longer before hiring new people. It will take time to get most of the unemployed back to work, and the US economy will not be able to recover to the GDP levels of the end of 2019 until Q3 2021.“
Ranko Berich, from Monex Europe says that “Today’s jobs figures are catastrophic on a human and economic level, but from a policy or a markets perspective, they simply confirm what both central banks and market participants have been reacting to since at least March.We know the covid-19 shock will be extraordinarily bad, and today’s data confirms it. The finer details of the report are interesting, but largely beside the point when compared to the sheer scale of job losses. After accounting for the vagaries of survey responses, it seems roughly one sixth of the US workforce has been made unemployed in the space of a month... Today’s data is merely confirming what markets, governments, and central banks have been bracing for since at least March: a global recession of unprecedented suddenness and depth.”
James McCann from Aberdeen Standard Investments, adds: “The challenge today is for the Federal Reserve and Congress to get ahead of this crisis as it unfolds. After a strong start, there is a great risk that they will be left behind and the abrupt stop of the economy will turn into a prolonged fall that would be ruinous. Avoiding this scenario will require the Federal Reserve to adopt new tools like helicopter money.”
Dave Lafferty from Natixis warns about the fact that “equities continue to rally on the idea that the economy is slowly re-opening and that the economic damage will be largely transitory. For now, investors are running with every morsel of good news and dismissing the bad news. However, in the coming months, the deeper scars of the recession will reveal themselves. We expect the unemployment rate will top out between 17% – 20% in the coming months. Yes, it will recede quickly, but may remain stubbornly above 8% through 2021. Will equity investors still want to pay over 22x earnings for growth that still looks recessionary by any historical standard?”
Nate Hurst, foto cedida. Nate Hurst se une a Wells Fargo
Nate Hurst will join Wells Fargo on June 1 to oversee a newly combined organization that includes Corporate Responsibility, Philanthropy, Community Relations, and Sustainability. He will also serve as president of the Wells Fargo Foundation.
“Nate brings a wealth of corporate citizenship, charitable giving, public affairs, and sustainability experience in the private, public, and nonprofit sectors to Wells Fargo,” said Bill Daley, vice chairman of Public Affairs at Wells Fargo. “We look forward to having Nate continue to advance Wells Fargo’s commitment to addressing the needs of underserved communities, particularly as we work to ensure housing security, small business stability, and consumer financial health in the wake of the COVID pandemic.”
In his new role at Wells Fargo, Hurst will oversee the alignment of Wells Fargo’s sustainability and corporate responsibility efforts with corporate philanthropy and community relations. The combined organization will drive innovation and maximize the positive societal, environmental, and economic impact that Wells Fargo brings to the communities it serves. Under Hurst’s leadership, the company will further integrate sustainability and corporate responsibility into all aspects of its business and explore how to further utilize business expertise to help solve societal problems.
Hurst joins Wells Fargo from HP Inc., where he was chief Sustainability & Social Impact officer responsible for driving HP’s global giving, environmental stewardship, and social responsibility into its core businesses. Hurst led a global team of experts to innovate sustainable solutions in collaboration with customers, partners, governments, and nonprofits. In 2019, HP climbed to No. 1 on Newsweek’s Most Responsible Companies list.
Previously, Hurst served as the director of Sustainability, Public Affairs & Government Relations for Walmart, where he helped integrate sustainability into the business and align the community giving strategy with core customer needs. As a member of The White House Council on Environmental Quality for former U.S. President Bill Clinton, he helped develop the administration’s environmental policy agenda and executed a stakeholder engagement plan on leading issues such as climate change; and as national spokesperson for The Ocean Conservancy, Hurst spearheaded big ideas to reduce ocean plastic and led communications strategies, international coastal cleanups, and community grassroots campaigns.
A strong advocate for diversity and inclusion, Hurst has a proven track record of being inclusive of diverse perspectives. He was an executive ally for HP’s LGBTQ community and has led efforts to advance gender equality programs and ensure access to learning for women and girls. He served on the United Nations’ Women Global Innovation Coalition for Change, and while at HP he championed technology products and external programs that focus on gender equality, education and achievement, youth entrepreneurship, and socially responsible business.
Wells Fargo recently received an “Outstanding” rating from the Office of the Comptroller of the Currency for its work in addressing underserved communities through the Community Reinvestment Act.
In recent years, Wells Fargo has deepened its commitment to philanthropy in low- to moderate-income communities. In June 2019, the company committed $1 billion in philanthropy alone through 2025 to address the country’s housing affordability crisis. Also in 2019, Wells Fargo invested $455 million through corporate philanthropy and the Wells Fargo Foundation in grants, funding national organizations to deliver programs at scale and nonprofits that specifically address the needs of local markets. In March, the company announced $175 million in aid for COVID-19 relief to help address food, financial health, small business, and housing stability, as well as to provide help to public health organizations.
Pixabay CC0 Public DomainPhoto: Jools-Black . Piqsels CC0
BlackRock has developed an innovative range of products with currency hedging to Mexican pesos.
“A year ago we launched international fixed income products and now we are launching 4 international equity ETFs so that Mexican investors can invest in shares of companies in the United States, Europe and Japan without exchange rate volatility,” explained Giovanni Onate, Director of the Institutional Segment at BlackRock in Mexico.
The 4 ETFs are:
CSPXX – US Equities (S&P 500)
IJPAX – Japanese Equities
CEUX – European Union Equities
IMEAX – Developed Europe Equities
Another advantage that Onate highlights is that the products have the UCITS structure, so the cost to the Mexican investor is attractive.
“We are expanding the universe of options so that the Mexican investor has access to instruments through which they can materialize their investment perspective, including the exchange rate variable. As trustees to our clients, it is part of our obligation to help our clients navigate stormy waters, not just calm ones, “he added.
According to Onate, the current scenario presents important challenges for large institutional investors.
Volatility has increased dramatically, with the VIX index rising to levels close to 12% in February, above 80% in March, and currently at 35%. This volatility has been even greater in emerging countries, where currencies have depreciated significantly against the dollar, as is the case in Mexico, where the peso has depreciated more than 30% in less than a month.
“In Mexico, for example, Afores have 80% of their assets concentrated in Mexico, which limits the possibility of accessing the benefits of a more resilient portfolio with greater international diversification. Furthermore, one of the key factors in the Investment in international assets is the level of the exchange rate and exchange rate volatility. An investment in an international asset that has performed well in a given year, but that currency of that asset has depreciated through the Mexican peso, will affect our performance in Mexican pesos,” concludes the manager, who considers that “in times of volatility, there are things that we can control.”
Americans are renouncing their citizenship at the highest levels on record, according to research by Bambridge Accountants New York.
During the first 3 months of 2020, the IRS reported that 2,909 Americans renounced their citizenship, far more than the total of the four quarters for 2019 (when 2,072 Americans renounced), and a 1,104% increase on the prior 3 months to December 2019 where only 261 cases were recorded.
Alistair Bambridge, partner at Bambridge Accountants New York, explains “The surge in U.S. expats renouncing from our experience is that the current pandemic has allowed individuals to get their affairs in order and deal with an issue they may have been putting off for a while.”
“For U.S. citizens living abroad, they are still required to file U.S. tax returns, potentially pay U.S. tax and report all their foreign bank accounts, investments and pensions held outside the U.S. For many Americans this intrusion is too much and they make the serious step of renouncing their citizenship as they do not plan to return to live in the U.S.”
“There has been a silver lining for U.S. expats that they have been able to claim the Economic Impact Payment of $1,200, but for some this is too little, too late.”
Americans must pay a $2,350 government fee to renounce their citizenship, and those based overseas must do so in person at the U.S. Embassy in their country.
However, as Bambridge tells Funds Society, “you do still need to pay an exit tax if your net worth is $2m or more when you renounce.” If you are at the $2m threshold or over, the IRS will calculate a deemed sale of all your assets and will charge you on the capital gains that would be realized.
“Speaking to our clients, a lot of them feel nervous and worried about U.S. taxes and the current situation has added to that anxiety. So I think for many, by renouncing it is a way to reduce that worry and take back some control in their life.” He concludes.
Raphael Thuin, courtesy photo. Tikehau Capital nombra a Raphael Thuin responsable de su división Capital Markets Strategies
Tikehau Capital, an alternative asset management and investment group, appointed Raphael Thuin as Head of its Capital Markets Strategies offering, as of 11 May 2020.
Thomas Friedberger, CEO and Co-Chief Investment Officer of Tikehau Investment Management, said: “We are delighted to welcome Raphael Thuin to our team. His experience and deep understanding of equity and fixed income markets perfectly complement our long-term fundamental management approach. We look forward to him making a significant contribution to further development of our Capital Markets Strategies business”.
Raphael will oversee the management of Tikehau Capital’s bond, equity and flexible investment strategies. This range of funds provides access to long-term conviction-based management of investment grade and high-yield corporate bonds, financial bonds and equities of all capitalisations with investment capacity across Asia, Europe and North America. Assets under management of Tikehau Capital’s Capital Markets Strategies activity amounted to EUR 3.8 billion at 31 December 2019.
A graduate of the HEC School of Management, Raphael Thuin began his career in 2005 as a portfolio manager for Topaz Fund in New York. In 2008, he joined the capital markets business of Société Générale, also in New York. Since 2014, he was Head of Fixed Income Management at TOBAM in Paris.
Pixabay CC0 Public Domain. AXA IM y XP Investimentos se asocian para llevar economía digital y estrategias de automatización al mercado brasileño
In an environment characterized by heightened market volatility and a sharp rise in employees working from home, AXA Investment Managers (“AXA IM”), a leader in active, long-term investing and XP Investments (“XP”), a top-tier financial services platform, announce they are partnering to offer Brazilian-based investors access to innovative, global equity and fixed income strategies via new local products focused on the digital economy, automation and the US high yield markets.
XP recently launched three local feeder funds for qualified individual and institutional investors, which invest directly into three AXA IM strategies: AXA IM US High Yield Bonds, AXA IM Framlington Digital Economy, and AXA IM Framlington Robotech.
The partnership comes during an era of significant market disruption caused by the COVID-19 pandemic and the ensuing accelerated evolution of technology and digitalization. This is characterized by a growing number of global companies with employees working from home, the prevalence of e-commerce and companies that continue to generate revenues from their customers in lockdown via social media, video-streaming and video-gaming. To help meet these challenges, XP and AXA IM are providing investment opportunities that were historically difficult to access for Brazilian-based investors seeking exposure to these types of companies that are typically based outside of Brazil. Launching these strategies in the local market will make them readily available in Brazilians Reais, eliminating concerns about any potential fluctuations with the U.S. dollar.
“The pandemic has had a profound impact on the digital economy, with so many employees working from home. The digital economy, a fast-growing trend last year, has now become a reality and is here to stay. Our partnership with XP comes at the right moment to provide Brazilian investors with greater opportunities to diversify their portfolios abroad and have access to companies whose businesses are not in lockdown but are in fact growing,” said Rafael Tovar, Director, US Offshore Distribution, AXA Investment Managers.
In an effort to provide its clients attractive investment options and diversification, XP is seeking partnerships with the best global asset managers, spanning numerous products and asset classes. As a result, XP chose AXA IM due to its successful and long-term expertise in high yield strategies, in addition to its leadership in investing in several overarching themes where technology and the evolving consumer are reshaping industries and sectors such as automation/robotics and e-commerce.
“There are many attractive opportunities in the international markets and Brazilian investors deserve better access to top-tier global managers as well as strategies that can help them improve the risk/return ratios in their portfolios,” explains Fabiano Cintra, Funds Specialist at XP Investments. “We are very pleased to partner on this client-focused initiative with AXA IM, one of the leading managers in the world with recognized expertise in active investment management.”
The strength of XP as a fast-growing financial powerhouse, combined with the innovative, global investment management capabilities and expertise of AXA IM, provides Brazilian investors global access to some of these dynamic and growing sectors, which are of particular relevance during the current market environment. Technology has facilitated a world in lockdown to continue to operate thanks to connectivity tools for home office and tele-medicine, as well as the capabilities of e-commerce, social media, digital advertising and video streaming to allow people to continue consuming content. The behind-the-scenes technological infrastructure to support these solutions has become critical. This includes the cloud, network broadband capacity, cybersecurity, payment technologies and the physical infrastructure to support the delivery of products and services, such as warehouse automation, semiconductors and robotics. As a result, equity strategies focused on technology disruption will be able to capture these long-term themes.
