Foto cedidaGonzalo Binello. Schroders nombra a Gonzalo Binello director para Latinoamérica
Schroders is announcing today that Gonzalo Binello has been appointed Head of Latin America. His appointment will bring a dedicated, regional-specific emphasis on our development in Latin America, a key strategic growth area for the firm. Gonzalo will also retain his role and responsibilities as Head of Offshore Intermediary Sales.
Gonzalo joined Schroders in 2003 and was most recently the Head of Intermediary Offshore Sales, based in Miami. He has extensive experience and knowledge of the Latin American market, having been Head of Distribution for Latin America and Central America at Schroders from 2009 to 2013.
Gonzalo will report in to John Troiano, Global Head of Distribution at Schroders.
As part of these changes and our focus on Latin America, Pablo Albina will also become Head of Investments for Latin America and continue with his role as Country Head of Argentina. Pablo will work in partnership with Gonzalo to develop and implement our strategy for the region, focusing on building our local investment teams and enhancing our product suite. In this role, he will report to Karl Dasher, Co-Head of Fixed Income and CEO North America.
The new appointment of Gonzalo, together with Pablo, will secure the ongoing prosperity and growth in the Latin America region.
John Troiano, Global Head of Distribution, Schroders commented:
“Schroders has established itself as a growing force in the Latin American market. Furthermore, the region has become a key strategic growth area for the firm and we are experiencing significant client demand for our investment expertise across the continent. We are confident that Gonzalo’s appointment will support the continued growth of our business across Latin America.”
Gonzalo Binello, Head of Latin America, Schroders, said:
“Schroders’ profile in Latin America among investors continues to grow. I am excited to bring my regional experience of the market to this new role and help build on the substantial foundations that Schroders already has in place.
“The investment needs of investors across the continent are diverse. I am determined to ensure that Schroders’ business continues to evolve to meet the complex challenges that both existing and prospective clients face.”
After years of growing older, the ranks of advisers and RIA firm leaders are getting younger. New FA Insight benchmarking research from TD Ameritrade Institutional finds the leadership of registered investment advisor firms is passing the torch from the Baby Boomer to Gen X and investing to sustain their firms’ strong performance well into the future.
The report found that the advisory community as a whole is getting younger, reversing a graying trend that had many advisors worried about the sustainability of the industry. With a median age of 49 years – three years younger than in 2015 — six out of 10 firms have at least one owner who expects to stay at the helm for at least another 12 years, according to The 2019 FA Insight Study of Advisory Firms: People and Pay.
The median age of firm associates, overall, dropped to 42 from 44 in 2015, while the median age of lead advisors is now 46 years, down from 50. The study also found that the number of owners who are 40 years of age or younger equals the number of firm owners who are over 60.
“As the next generation of RIA leaders comes to the forefront, they’re investing in their firms with a long time horizon,” said Vanessa Oligino, Director of Business Performance Solutions at TD Ameritrade Institutional. “We expect to see different approaches to industry challenges – whether they be staffing and compensation, growth and organizational design, or technology and innovation.”
Firm owners remain characteristically confident about continuing growth in 2019. They’re investing in senior-level experience, with lead advisor compensation up by 12 percent over the last two years, in an effort to secure seasoned talent that can help supercharge growth and navigate tomorrow’s challenges.
The report found that, although 2018 ended with the major stock indexes posting their worst yearly performances since the 2008 global financial crisis, choppy markets did not quell firm owners’ optimism, even as growth in assets under management (AUM) slowed.
The median revenue growth rate for firms was 14 percent in 2018, up slightly from 2017, while the median client growth rate of 7.4 percent was little changed. The rate of growth for AUM dropped to 5.9 percent.
Today’s Advisory Firms: Growing and Profitable
Firms continued on their growth trajectory in 2018, thanks to efficient operations management and the increase in productivity from associates in revenue-generating roles.
At 21 percent, a typical firm’s operating profit margin last year rose by more than a percentage point from 2017, and overhead expenses as a share of revenue fell slightly in 2018. This translated to rising income for firm owners, whose median total income rose 3.6 percent in 2018 to $633,000, the highest since 2014, or 55 cents for every dollar or firm revenue.
Despite market declines at the end of 2018, firm financial performance was also strong compared to the average of the previous five years. The rate of revenue growth increased to 14 percent, versus 12 percent, while operating profit margin increased from 20 percent to 21 percent. Revenues generated by revenue-generating roles were up 14 percent to $547,000 in 2018, while annual revenues per full-time equivalent (FTE) were up 13 percent over a two-year period.
Wanted: Seasoned Help
Advisory firms anticipate doubling their hiring rate in 2019 compared to 2018, with 61 percent making at least one hire last year. The largest firms plan to increase headcount by 10 to 12 percent, bringing on board seven FTEs.
Senior revenue generators and advisory firm staff, who have a proven ability to navigate market volatility and ease client concerns, have seen compensation rise over the last two years, whereas compensation for less experienced revenue generators has fallen. The compensation of associate advisors, who are now generally younger and have less experience than in prior years, has gone down by 8.5 percent and operations manager compensation rose during this period by 8 percent during this period.
The quest for experience may also help explain why firms continue to recruit lateral hires from inside the industry. RIAs tend to hire predominately from other independent RIAs for revenue roles, though they may also consider recruiting from other financial services firms and wirehouses.
Only 4 percent of firms are hiring recent college graduates for revenue-generating roles. A slightly higher amount, 6 percent, are hiring professionals from outside of the financial services industry.
People costs represent 77 percent of a typical firms expenses and 59 percent of total revenues. For every dollar spent on cash compensation, firms spend an additional 14 cents, on average, on retirement programs, medical benefits, training and payroll taxes.
“Independent advisory firms are laser-focused on growth and profitability, keeping expenses in line, while generating healthy returns across market cycles,” said Oligino. “Entrepreneurial and optimistic, successful owners are making investments they believe will benefit their firm in the long-run.”
Click here to read the executive summary of The 2019 FA Insight Study of Advisory Firms: People and Pay.
Wikimedia CommonsIan Sims, President and CIO . Colchester Global Investors: "In the Medium Term, We Seek to Establish a Diversified Footprint in Spain and Other Spanish-Speaking Countries"
A new management company has landed in Spain: it is the independent firm and fixed income specialist Colchester Global Investors, which invests exclusively in public debt with the objective of “preserving the diversifying integrity of government bonds” and which seeks to offer investors between 150 and 200 basis points of alpha above the benchmarks, and de-related risk assets. It only uses derivatives in currency futures contracts, whose exposure manages separately from that of bonds. Constance de Wavrin, Client Relationship Manager at the firm talks with funds society about their expansion plans.
Why have you decided to make the jump to the Spanish market?
We have recently made our investment strategies available in daily dealing, Irish-domiciled, UCITS Fund form. This prompts us to make headways in more intermediary- and retail distribution-focused jurisdictions than we have in the past, such as the Spanish market. While Colchester’s current assets under management are globally well-diversified, our presence in Continental Europe has historically been more heavily weighted in the more institutional space owing to managing portfolios in global sovereign bonds. We believe however that our trademark real yield investing process can bear significant decorrelation, diversification and liquidity advantages to Spanish investors in the intermediary and retail space. Colchester is committed to the Spanish market and this move is the first step in deepening our relationship with and presence in the market.
Do you think it has potential for growth and there is room for new managers?
The Spanish fund market, like many other continental European markets, is dominated by sizeable, established global asset managers. Especially in recent years, the rate of penetration by large, global managers has increased exponentially. We believe that the appeal of smaller, less well-known, asset managers can contribute to helping investors diversify their cross-asset exposure. In addition, by virtue of being of a more modest size, our fund strategies can help them gain exposure to less likely sovereign debt issuers which display strong balance sheets, are on a solid debt path and whose bond issuance is highly liquid.
What are the keys to your DNA and your offer in sovereign debt and currencies?
Colchester’s business is focused solely on bond and currency management.
As a result of this narrow focus, we believe our firm possesses six key advantages:
Independence of ownership and the resulting alignment of our interests with those of our clients;
Concentrated focus on global sovereign debt and higher quality smaller markets;
Sovereign-only focus delivering the diversification benefit of being invested in bonds;
Size (as measured in assets under management), which enables us to take meaningful positions in markets within the opportunity set;
Consistent and disciplined application of time-proven value-oriented techniques; and
Stability of investment team and other key professionals. Only one investment professional has left Colchester since inception.
We believe Colchester’s use of the smaller higher-quality sovereign bond markets is unique in the global bond investment management universe.
Colchester’s active use of this diversity allows it to circumvent the use of credit products in its portfolios and provides clients with attractive diversification at the aggregate portfolio level.
How do you want to conquer the Spanish market and what kind of product?
The Colchester Multi-Strategy Bond Fund (“MSGBF”) ICVC has recently been registered for fund unit sales in Spain and has appointed Allfunds Bank as a transfer agent and distributor.
We are in the process of initiating relationships with a number of prestigious local banks. In addition, we are listed on a number of European platforms including Allfunds, MFEX and UBS Fondcenter. We also have strong, long-standing relationships with leading global consultants and are working closely with their respective local offices in Spain. Colchester is committed to the Spanish market and this move is the first step in deepening our relationship with and presence in the market.
We strongly believe that our singular focus on sovereign bonds will help Spanish institutional clients’ preserve the integrity of their fixed income allocations. We also expect our offering to complement existing fixed income products currently carried by fund buy lists at intermediaries in Spain, including retail distribution platforms, discretionary portfolio managers at private banks, open-architecture multi-managers and fund-of-funds.
We count four flagship strategies. Our core strategy is a Global Sovereign Bond program, which we have been running since September 2000. Colchester introduced the Global Inflation–Linked Bond program in 2006, the Local Currency Emerging Markets Debt program at the end of 2008 and the Alpha Program in 2005.
In the current environment of very low profitability in public debt… What is your bet to win profitability?
In order to respond to this question, I would like to share with you some insight into our investment style and process which aim to deliver value in real terms throughout the cycle to our investors.
Colchester is a value-oriented manager. At the heart of Colchester’s philosophy is the belief that investments should be valued in terms of the income they will generate in real terms. The investment approach is therefore based on the analysis of inflation, real interest rates and real exchange rates, supplemented by an assessment of sovereign financial balances – fiscal, external and monetary. Portfolios are constructed to benefit from those opportunities with the greatest relative investment potential for a given level of risk. Sovereign bonds form the majority of Colchester’s portfolios.
Colchester eschews corporate credit, believing instead that its broader sovereign opportunity set provides attractive diversity and return potential.
Colchester’s use of sovereign-only portfolios ensures that the diversifying integrity of bonds is not compromised. Our Global Bond program mainly invests in developed markets, however Colchester’s unique use of the smaller bond markets in its portfolios differentiates us from most other fixed income managers. The fact that we are willing to make meaningful allocations to the likes of Australia and New Zealand among the developed bond markets and to Mexico and Poland among the Emerging Markets sets us apart from peers.
Colchester applies a qualitative screen to all high-quality investment grade countries to decide upon their inclusion, or otherwise, in the opportunity set. Size of market, liquidity, institutional structure, regulatory environment, capital regulations, political environment, stability issues, etc., are all considered by Colchester in its determination of the suitability of a country to be included in the opportunity set. Not all investment grade countries are included as barriers to foreign entry, political uncertainty and other factors have resulted in some countries being ‘screened out’. We constantly monitor the suitability of all existing and potential countries for inclusion in their investment opportunity set.
Colchester’s investment process focuses on identifying “Investment Value” at each important level: country, currency, sector and duration/maturity.
“Investment Value” is the synthesis of what we term “Real Value” and “Financial Stability” and its determination provides the basis on which Colchester takes investment decisions. “Real Value” is composed primarily of traditional real yield and real exchange rate measures, supplemented with an analysis of the term structure of interest rates. The determination of real yields and rates requires forecasts of future inflation, for which we employ robust, time-proven quantitatively oriented methodologies. We complement this analysis with quantitative assessments of sovereign financial strength backed up by country visits. “Financial Stability” has as its key determinants economic deficits and surpluses, monetary conditions and policy objectives.
Bond management is treated independently from currency management when deriving optimal bond and currency portfolios and we aim to generate half to two thirds of the relative return from bond selection and one third to a half from currency management. However, cross correlation risk between bond and currency exposures are analysed as a part of the assessment of the overall composition of risks in the final portfolio. Colchester believes significant duration variation is a low information ratio strategy. Accordingly, duration management is constrained to approximately +/-25% of benchmark duration.
Colchester’s approach to currency management is underpinned by an assessment of a country’s real exchange rate. This real valuation framework complements the real yield driven approach used on the bond side. A currency’s deviation from fair value has repeatedly been a strong indicator of a currency’s future movement. The further and longer a currency moves away from fair value the greater the likelihood—and the faster the speed—of an adjustment back towards fair value. Accordingly, we believe that higher returns are achievable over the medium term by being exposed to those currencies that are the most undervalued according to their real exchange rate.
In practical terms, this means that little or no currency risk is taken when a country’s real exchange rate is around fair value, but currency exposure is taken as currencies begin to meaningfully diverge from fair value. Estimates of the real exchange rate therefore provide the cornerstone of our currency valuation. We supplement these estimates with an assessment of a country’s financial balance factors and real interest rate differentials to generate Colchester’s estimate of each currency’s value. These currency values are then input into our optimisation framework to determine final currency allocations. Final portfolio exposures reflect both this underlying real valuation philosophy and clients’ risk preferences. Approximately 60% of Colchester’s currency valuation is determined by our estimate of the deviation of the real exchange rate from fair value, 20% by our assessment of the state of a country’s financial balances and 20% by the differential in short term real interest rates.
Are the Funds registered in Spain?
Yes, our funds are registered for sale in Spain. Our transfer agent is Allfunds Bank. Allfunds are also our distributing platform. We are aiming to add to this soon for greater accessibility.
Please see below our flagship funds. Each strategy exists in Irish-domiciled UCITS commingled fund form offering daily dealing, with different currency share classes, available hedged and unhedged:
Colchester Global Bond Fund (sovereign bonds only) – USD 1.3 billion with a since inception annualised alpha of 0.9% (7yr track record)
Colchester Local Markets Bond Fund (EM local debt only) – USD 2.4 billion with a since inception annualised alpha of 1.6% (6yr track record)
Colchester Global Real Return Bond Fund (inflation-linked bonds) – USD 490 million with a since inception annualised alpha of 0.9% (10yr track record)
Colchester Global Low Duration Bond Fund (sovereign bonds only) – USD 97 million with a since inception annualised alpha of 1.1% (4yr track record)
Colchester Local Markets Real Return Bond Fund – seeded with our own money so only 2m USD in size with a since inception annualised alpha of 0.8% (7 year track record)
What kind of funds (of your offer) are generating more interest in the Spanish investor? And why?
To date, we have found that our EMD Local Currency fund is of particular interest to our prospects in the Spanish market. While demand in the EMD sector has recently shown signs of weakening and fund buy lists appear to be well-stocked, it appears that the compelling differentiating characteristics of our investment approach (as described below) are worthwhile considering by domestic fund selectors. Diversification in the form of uncompromised interest rate duration, daily liquidity and decorrelation from risk assets, including credit and other equity-linked securities, are appealing to today’s fixed income investors.
The analysis of your sovereign debt funds is different from the rest… how do you tell from the competition?
What sets us apart from other Global Fixed Income asset managers is that we are a value-oriented manager. At the heart of Colchester’s philosophy is the belief that investments should be valued in terms of the income they will generate in real terms. The investment approach is therefore based on the analysis of inflation, real interest rates and real exchange rates, supplemented by an assessment of sovereign financial balances—fiscal, external, monetary and Environmental, Social and Governance (ESG) factors. Portfolios are constructed to benefit from those opportunities with the greatest relative investment potential for a given level of risk.
Contrary to most managers of Global Bond and Emerging Market Debt funds, sovereign bonds form the majority of Colchester’s portfolios. Colchester eschews corporate credit, believing instead that its broader sovereign opportunity set provides attractive diversity and return potential. Colchester’s use of sovereign-only portfolios ensures that the diversifying integrity of bonds is not compromised. Our Global Bond program mainly invests in developed markets, however Colchester’s unique use of the smaller bond markets in its portfolios differentiates us from most other fixed income managers. The fact that we are willing to make meaningful allocations to the likes of Australia and New Zealand among the developed bond markets and to Mexico and Poland among the Emerging Markets sets us apart from peers.
This greater independence in the opportunity set improves the potential information ratio. This compounded with the highly liquid nature of our investment universe and the powerful decorrelation effect of the allocation make for a compelling investment proposition as part of a broader mix of assets.
Colchester give great importance to the ESG factors in the management. How we incorporate in the management of funds?
Colchester is a PRI signatory and we integrate ESG analysis into the financial balance sheet work within our investment process. All members of the Investment Team are involved in implementing our ESG Policy as part of their day-to-day involvement in research and portfolio management activities. Claudia Gollmeier, Senior Investment Officer, is responsible for PRI reporting and initiatives which are approved by Compliance and the Chief Investment Officer. Claudia is also a member of the PRI Fixed Income Advisory Committee (https://collaborate.unpri.org/news/eleven-new-signatories-added-to-pri-fixed-income-advisory-committee) and chairs the Sovereign Working Group. Please find on page 78 of the “PRI – Shifting Perceptions” a new paper from Claudia, which can be found here: https://www.unpri.org/credit-ratings/credit-risk-case-study-colchester-global-investors-/4028.article.
What customer profile do you direct?
We strongly believe that our singular focus on sovereign bonds can help Spanish institutional and intermediary clients’ preserve the integrity of their fixed income allocations. We also expect our offering to complement existing fixed income products currently carried by fund buy lists at intermediaries in Spain, including retail distribution platforms, discretionary portfolio managers at private banks, open-architecture multi-managers and fund-of-funds.
What growth objectives do you set in Spain for the next few years?
Colchester’s focus on generating solid risk-adjusted performance for our investors has been the main driver of the firm’s growth over the past 20 years. With this in mind, we are hoping to continue deliver for our clients and simultaneously gain traction with as many institutions, private banks and multi-managers as possible in the Spanish market. We are looking to establish mutually beneficial partnerships with key fund distributors. In the medium term, we are looking to establish a diversified footprint in Spain and other Spanish-speaking countries. As mentioned before, Colchester is committed to the Spanish market and this move is the first step in deepening our relationship with and presence in the market.
About the history and team…
Colchester was founded by Ian G. Sims in 1999 and commenced managing client portfolios in February 2000. Ian Sims, Chairman and Chief Investment Officer, was one of the premier global bond managers of the 1990s prior to founding Colchester. Our business is focused solely on interest rate, bond and currency markets managed by an investment team with combined experience of over 100 years. Colchester manages only fixed income, and as of end of May 2019 had US$ 46 billion under management.
Colchester is headquartered in London, and this is where the majority of the investment activities and operations take place. Colchester also has offices in New York and Singapore and Compliance and Marketing and Client Service representatives are based in all three office locations. Colchester Singapore was incorporated in February 2012 and is a wholly owned subsidiary of Colchester London and provides discretionary investment management, research and advisory services, marketing, client services and trade execution services to Colchester London and to external clients in Asia Pacific.
Foto cedidaFrom left to right: Rafael Mendoza, CFA; Pablo Jaque, CFA; Magdalena Bernat; Luis Fernando Pérez y Diego Chomali, CFA. Oaktree Acquires Strategic Stake in Chilean-based Singular
Oaktree Capital Management announced on July 29th that it has agreed to acquire a 20% strategic stake in Chilean-based asset management firm and placement agent Singular. This is Oaktree’s first corporate acquisition in Latin America.
Howard Marks, Co-Chairman of Oaktree, stated, “We have worked with the people of Singular for seven years. We respect them; their work in the region has been excellent; and most importantly they embody Oaktree’s culture. We are very glad to take this next step in extending our relationship and deepening our commitment to Latin America.”
“I am pleased to continue our work with the Singular team,” said Daniel Saieh, a Managing Director at Oaktree specializing in distribution of funds in Latin America. “They have been great partners for Oaktree and our clients and I look forward to expanding this important relationship throughout the region.”
Singular will continue to operate independently. Oaktree will have the right to appoint one representative to Singular’s board of directors.
Singular Chairman Pablo Jaque said, “We are thrilled to partner ever more closely with Oaktree. We welcome the expertise and best practices Oaktree has to offer to our platform as well as their additional support as we continue developing our asset management business across Latin America.”
Oaktree is a leader among global investment managers specializing in alternative investments, with 119 billion dollars in assets under management as of March 31, 2019. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The firm has over 950 employees and offices in 18 cities worldwide.
Singular is an asset management company based in Chile bringing a long track-record in managing institutional money to the Latin American market and extensive experience as Oaktree strategies’ institutional distributor in the region.
At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.
According to a press release, “the Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term”.
However, on his opening statement, Draghi made it clear that loose policy is here to stay: “An ample degree of monetary accommodation is still necessary”.
The Governing Council also underlined “the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim. It therefore stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner”.
In this context, the Governing Council has tasked the relevant Eurosystem Committees with examining options, including ways to reinforce its forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases.
Aneeka Gupta, from WisdomTree said: “The ECB remains stubbornly stoic, falling short of market expectations. It has decided to leave the deposit rate unchanged at -0.40% but sets up the stage for a rate cut ahead at its meeting in September… European financials reacted positively to the possibility of tiering by the ECB. The markets were expecting to receive more stimulus at this meeting after the release of the weaker manufacturing PMI and IFO data from Europe and Germany respectively at the start of the week. The German bund yield fell to a record low of -41bps as the ECB opens up the option of further QE.”
Also today, the Governing Council of the ECB adopted an opinion on the recommendation from the Council of the European Union on the appointment of the future ECB President. It read: “The Governing Council has no objection to the proposed candidate, Christine Lagarde, who is a person of recognised standing and professional experience in monetary or banking matters.”
Wikimedia CommonsCourtesy photo. Michael Blank Joins a Canadian MFO, to Lead its US Expansion
Holdun Family Office, a 5th generation Canadian family with offices in Montreal, Bahamas and The Cayman Islands, has opened its first US Office. Located at 555 Washington Ave., in Miami Beach, and lead by industry veteran and former Managing Director of Andbank, Michael Blank, the new office is considered by the firm, “as a major expansion into the United States.”
Joining Holdun Family Office in Miami will be a team of professionals with over 100 years of banking experience. It includes: Giuseppe Mazzeo as Chief Investment Officer, Marc Bonorino as Head of Global Compliance, as well as Ileana Torruella and Adilia Lugo, as Senior Relationship Managers.
Global CEO Brendan Holt Dunn of Holdun Family Office commented: “Our extensive family history has served us well in managing our client relationships worldwide. We are looking forward to working in partnership with our new U.S. families and bringing our expertise to the domestic U.S. market.”
Stuart Dunn, Chairman of Holdun Family Office added: “The guiding principles of our family which comprise of honesty, integrity and accountability are never compromised. We pride ourselves on our ethics which is reflected in client loyalty.”
The Holdun vision and services includes: Family Office Services , Wealth Management, Trust and Corporate Services, Financial Services, Concierge Services and a full digital financial platform and ecosystem operating under the Holt brand.
Mariela Arana joins Insigneo as Head of Operations and Technology while the company embarks on a growth strategy with a laser-focused plan on digitalizing operations to provide an enhanced client experience.
Arana brings over a decade of experience in the financial industry along with a solutions-oriented mentality that will propel the successful implementation of key initiatives to automate workflows. She will be overseeing both the United States and Uruguay’s operations as well as the firm’s IT department.
With the client experience at the core, Insigneo has embarked on a journey of growth and expansion as it seeks to scale and automate their operations by leveraging state-of-the-art technology to be more efficient and continue to meet their clients’ needs in an increasingly digital landscape. These initiatives will streamline workflows, including the implementation of cutting-edge programs which will be spearheaded by Arana.
“We are excited to welcome Mariela to the Insigneo family and we are confident that with her experience and talent, coupled with her solutions-oriented mentality, she is the perfect addition to our team,” said Javier Rivero, Chief Operating Officer of Insigneo. “We are counting on her to bring a fresh perspective and the expertise to better our processes and enhance our client’s experience.”
An industry veteran, Arana brings extensive experience in project and time management with a profound focus on risk and compliance and third-party vendor management. Most recently, Arana served as Head of CPII Operations at Citi International Personal Bank and previously as an Investment Associate at Citi Private Bank. Arana started in the financial industry in 2005 when she joined Merrill Lynch.
“I am extremely excited to join such a passionate and energetic team,” Arana shared. “I believe in the power of communicating your purpose with passion and energy, keeping the team motivated and engaged to achieve a common goal. This is what I plan on bringing to my new Insigneo family.”
She graduated from Florida International University with a Bachelor of Business Administration and Finance, has completed Certified Financial Planning courses at the University of Miami and holds Series 7, 66, 9 and 10 in addition to a Life, Health & Variable Annuities License (215).
During the celebration of the Fidelity International’s annual Media Forum in London, Anne Richards, CEO of the firm, shared her view on the challenges that the asset management industry will have to face in the next decade.
According to Richards, global regulations on pension funds and other long-term saving vehicles are directing the mass affluent investors to own public listed securities. Meanwhile, the amount of capital that has been allocated to private markets has increased and the returns in the private markets have been persistently higher than in the public listed markets.
“The number of public listed companies is falling around the world. Companies are increasingly looking to private markets to raise capital. Last year in the US, more money was raised in the private markets than it did in public listed markets. When I was the rookie on the desk, one of my tasks was to manually check the price of each holding that we owned across the business. The total number of listed companies that I had to check was 967 stocks. Today, the equivalent number is more than a third lower. On one hand, the regulators are pushing the mass affluent investors into funds that are typically concentrated in daily listed stocks, which is a market that is currently narrowing, and on the other hand, the asset management industry knows that the returns are higher in the private market. I think this is a deeply uncomfortable juxtaposition to have,” explained Richards.
“The main benefit of democratization of capital was to allow people without a lot of money to get some access to capital markets. The shift that the asset management industry is seeing now will exclude a lot of investors from obtaining attractive capital returns. The returns in private markets are being only directed to those who have the capacity to get exposure to that type of capital, categorized as professional investors. This may cause eventually an inequality issue, which is the heart of much of the unrest and political divergences that the world is facing right now. We have to come together as industry and think about ways of making sure that we can continue to offer a whole range of investment opportunities, regardless of the investment amount”, she added.
A shift towards more returns for society
Speaking about the responsibility that the asset management industry has over society, Richards mentioned the need to take into consideration not only the financial returns, but the long-term impact that every business has in the society.
“When you look after other people’s money, like the asset management industry does, you end up with an above average share of voice by collecting a lot of individual voices. Our business could make a meaningful difference on encouraging companies not take advantage of the work force or the environment, and to do things that are good for the broader society. Financials returns are important, but not enough. We need to think about the long-term impact of investments. This is important to us because our clients and employees are also asking for a responsible way of investment,” she said.
A family business
The fact that Fidelity Investments and Fidelity International are a family started business -the Johnson family owns a large part of the business, although there are other many shareholders and employees that are owners as well- makes the dynamic of the business very different.
“This characteristic gives Fidelity International a long multi-generational view. The mindset is not about maximizing the value of what we are doing today. Instead, the mindset is how you can build something better to handle it to the next generation, and that’s very special. It is a very refreshing mindset. In a listed company business, the decisions of the management are sometimes affected by the demands that the market imposes on the business and the volatility that can come from the pressure on quarterly earnings.
This is not to say that it does not matter to us running an efficient organization and taking care of the business that we inherited from the previous generation. But we do have an ability to take a through-cycle view of what we want to do and how we want to invest,” she stated. Fidelity International has two distinctively separated business. Firstly, the investment management part of the business, where the firm engages directly with institutional clients, wholesale clients, private banks or larger financial institutions. And secondly, the platform business that can be used to help advisers to manage their part of the business.
“The dynamics of these two areas of the business are quite different. This gives us a good window on the landscape in the outside world and on what is wanting from us. This full capacity is very powerful and few of our competitors have it”, she mentioned.
Geographical spread
China is a massive market and opportunity. Population in China is aging and has more disposable income than the previous generations. Regulators and policy makers are starting to build the infrastructure to provide to each individual person the ability to have some sort of control over their financial future, as it has already happened in other countries around the world. China is about to build the first pillar to their pension system, but they still not have a third pillar of voluntary savings.
“As for now, we have been in investing in China over 20 years and we have been competing in the ground field around 14 years. In order to build up our capabilities in China, we have been a lot more patient than our competitors. Partly, because we have always felt we needed to be in control of culture, and partly because of the investment environment that our teams are operating in. In 2017, we had the opportunity to obtain a wholly owned investment license in China, which only allows to do business with high net worth individuals, not with the mass affluent market,” she explained.
Other strategic areas
Historically, Fidelity International tended to be known for its expertise and capabilities in both equities and fixed income. However, since the number of public listed companies is falling in many developed markets, Fidelity International considers very important to start building a broadest range of capabilities in the less liquid space of the investment universe. In that regard, the firm recently hired Andrew McCaffery, who will fill the newly created position of Chief Investment Officer for alternative assets.
“We want to build out our capabilities across the alternative investment space so that we can continue to offer innovative themes to our customer base as it evolves. So, it does not mean in anyway, that we are trenching our former heritage or our market expertise, particularly in the equity market and increasingly in the fixed income market, but that we need to enhance the offer the whole spectrum of capabilities”, she concluded.
Pixabay CC0 Public Domain. Aberdeen Standard Investments: “Some Of The Political Risks Which Plagued The Markets In 2018 Appear To Have Softened, At Least In The Short Term”
Current global economic growth prospects remain subdued. However, according to Aberdeen Standard Investments (ASI), some of the political risks that plagued the economies and markets in 2018 seem to have eased, at least in the short term. This has been accompanied by the ‘dovish’ tone of the Fed, which has generated some relief for the markets and has been reflected in the asset prices’ moves.
Speaking to Funds Society, ASI claimed that its medium-term outlook for traditional asset classes (developed government bonds, corporate bonds and equities) remains intact: “We believe that they are facing a challenging return environment given current valuations.” Therefore, they feel “comfortable” with their relatively moderate exposure to equities and see attractive opportunities elsewhere.
Within traditional credit markets, however, they are somewhat concerned about the fact that the level of credit spreads on offer is not commensurate with the risk at this point in the cycle. They therefore have a negligible direct exposure to corporate credit and assure that they will “patiently” wait for a more attractive point to reinvest.
Likewise, they continue to see ABS as a good instrument for an “attractive risk-return trade off.”
The management company believes that local currency emerging market bonds are “the most attractive of the larger liquid asset classes” mainly due to the nominal and real yield they offer as compared to that of developed markets. This is supported by inexpensive currency valuations and “decent” underlying fundamentals.
Finally, they also see attractions across a broad range of niche alternative asset classes, such as litigation finances, healthcare royalties and aircraft leasing.
“Economics and politics are interconnected; they always have been and always will be,” claims ASI, before pointing out that, nevertheless, the nature of that connection “changes over time.” In that regard, the management company predicts that geopolitical uncertainty will continue to drive markets.
In particular, it sees a confrontation between Italy and the EU, a hard Brexit, and an escalation of the US-Iran conflict as increasingly likely.
The management company points out that future outlook analysis is a key part of its risk management approach, since it ensures that they look beyond simple quantitative measures of investment risk. In that regard, some scenarios that have been assessed include a trade war, the rapid increase in interest rates and a liquidity crisis.
According to ASI, their scenario analysis reinforces their focus on diversification through its multi-asset strategy – which includes products such as the Aberdeen Standard SICAV I – Diversified Income Fund – and, in addition, provides a useful basis for “challenging base case assumptions with respect to asset class correlations and individual market liquidity.”
The objective of this analysis is to consider how their funds could respond to different extreme scenarios, which include geopolitical (e.g. war in the Middle East), economic (e.g. China’s hard landing), political (e.g. protectionist policies), market (e.g. major US treasury sell-off) and environmental (e.g. cyberterrorism).
“Although a scenario analysis is a highly subjective exercise and there are no right answers, we believe that by taking the time to think through these scenarios we have a better sense of how our portfolios may perform in a range of market conditions and some of the key sensitivities around this,” says ASI.
Wikimedia CommonsPhoto: PxHere CC0. CFP Professionals Have Another Nine Months to Comply with New Code of Ethics and Standards of Conduct
The Board of Directors of the Certified Financial Planner Board of Standards announced on Tuesday that it has set a date of June 30, 2020 when CFP professionals’ compliance with the new Code of Ethics and Standards of Conduct will be enforced.
The previously announced effective date of October 1, 2019 remains the same for the over 85,000 CFP professionals to understand and comply with the new rules. In setting a targeted enforcement date, the Board of Directors is providing CFP professionals additional time before compliance is enforced with the new Code and Standards.
“In order to best benefit the public, the Board wants CFP professionals to have time to adjust to the new Code and Standards. By setting this enforcement date, we are ensuring they have ample time to modify their policies, adapt systems and be in alignment with the new rules,” said Board Chair Susan John, CFP. “With these new standards, CFP professionals will be required to provide clients with fiduciary financial advice at all times.”
John specifically noted that none of the Code and Standards themselves had changed. This includes, what she called, the “iron clad” commitment of CFP Board to require CFP professionals – no matter their compensation method – to adhere to a fiduciary duty whenever delivering financial advice.
“Since the beginning of the nearly four-year process to review our standards, we said that CFP Board would not be led by what actions regulators take. But we won’t ignore them either,” John said.
“The Board, however, does believe that the alignment of the SEC’s enforcement date of Regulation Best Interest (Reg BI) is helpful to our CFP professionals in that there is significant overlap in the two sets of standards – with a notable exception that CFP professionals are required to act as a fiduciary whenever they are providing financial advice to clients.”
For conduct that occurs between October 1, 2019 and June 29, 2020, CFP Board will continue to enforce violations of the existing Standards of Professional Conduct. Starting June 30, 2020 and onward, CFP professionals will then be subject to potential disciplinary action for any violations of the new Code and Standards. Additionally, the exam starting with November 2019 exam will include material from the new Code and Standards.
“We appreciate the valuable input of CFP professionals, their firms, trade associations and membership organizations representing CFP® professionals in helping the Board come to this decision,” John said. “It is now time for all of us to pull together and comply with the new standards so that we can provide the public with the highest level of financial advice.”
