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Managing the Exit: How to Position Portfolios for the Withdrawal of Monetary Stimulus?

Gestionando la salida: ¿Cómo posicionar las carteras ante la retirada de los estímulos monetarios? — Foto cedidaPhoto: Mark Nash, Head of Global Bonds for Old Mutual Global Investors and Lead Manager of the Old Mutual Strategic Absolute Return Bond Fund. Managing the Exit: How to Position Portfolios for the Withdrawal of Monetary Stimulus?

During the fourth annual conference of the OMGI Global Markets Forum 2017, Mark Nash, Head of Global Bonds for Old Mutual Global Investors and Lead Manager of the Old Mutual Strategic Absolute Return Bond Fund, explained the implications and risks to financial markets from the gradual withdrawal of monetary stimulus by central banks. Furthermore, he disclosed the bets they are implementing in the portfolio in order to manage the exit of excess liquidity in the markets.

Following the financial crisis, the US Federal Reserve was the first central bank to react by cutting interest rates. The situation was so dramatic that when the traditional instruments failed to take effect, the Fed had to inject liquidity into the economy through several rounds of quantitative easing to get consumers to revive spending.

Almost a decade later, what is the nature of economic recovery? According to Mark Nash, recovery has been slow and somewhat disappointing, with the gradual increase in consumer spending being the main driver. With the recovery, consumers in developed markets, especially the United States, were able to get out of debt.

Fiscal spending soared. Deficits in developed countries skyrocketed as governments were forced to replace consumer demand, with the implementation of austerity measures being particularly counterproductive. Companies have not been especially collaborative, not being especially comfortable with the global scenario; they stopped investing and began to increase recruitment. 2017 has been the year in which investment spending has finally started, the economic cycle is perceived to be long-term sustainable, not overheated, with some improvement in terms of productivity.

But there are two fundamental issues that threaten the cycle: wages and inflation. Globalization and the automation of production processes keep wages down, while the global production gap is widening, technology business models and weak commodity prices helped to depress inflation.

“As regards inflation, what we think is happening is a kind of struggle between the elements that play in favor and those structural elements that play against, such as globalization and the increase of new technological business models, for example, Amazon, Airbnb and Uber, which not only offer new uses of the internet to lower costs, and therefore lower prices, but also attract new supply to the market, helping to keep inflation levels low. In terms of wages, these are down since companies can outsource their employees easily or send their factories to countries where labor is cheaper. Also, the advance of the technology affects wage prices, since many of those jobs will be automated in the future. Unemployment levels have also declined and more people have rejoined the workforce,” Nash said.

What will happen to asset prices once liquidity is withdrawn?

With the injection of liquidity in the markets, financial asset prices have not stopped rising. Bonds boosted their prices as interest rates fell, and shares rose as the only alternative to negative or incredibly low interest rates.

But what will happen to the price once the stimulus is withdrawn? A strong impact is expected, there are clear pressure points: wages and inflation will begin to grow with the withdrawal QE and the increase in interest rates. Furthermore, the current financial conditions are too relaxed, corporate debt continues to grow: “If you lend money to activities that are not being productive, there is a risk that that debt will not be returned to the lender in the end. There is no reason to keep interest rates at the current minimum levels.”

Also, asset prices are high, running the risk of being surprised by a sharp drop when market conditions tighten. Another variable that must be taken into account are the technical factors, the European Central Bank is running out of bonds to buy.

Market consequences and risks

The Bank of England points out that a reduction of stimulus begins to be necessary, the Bank of Canada that the interest rate reduction has already served its purpose, Mario Draghi that the threat of deflation has already been eliminated, and Janet Yellen maintains the rate hike cycle and announced the beginning of the Fed’s balance-sheet reduction.

“Central banks are beginning to undo their positions, bond yields will obviously rise, liquidity in markets will disappear, and markets will start to do their jobs, which is precisely to assign the correct price to assets. Volatility will reappear and passive investment, especially ETFs, which have enjoyed exceptional years due to ‘anything goes’, will fail to yield higher returns than active management. The stock markets and the real estate market will be affected. In addition, assets with lower liquidity such as emerging markets, high yield debt, and REITS will be affected, and may suffer a correction.”

The market may react in a disorderly way, if this happens; adverse conditions that could affect the economic cycle could appear in the market, with economies with the highest debt-to-GDP ratio being the most vulnerable. There is an additional risk in economies such as Australia, Canada, and Singapore, which did not get to deleverage, and whose real estate market may be directly damaged. It is also possible that those mutual funds that have grown disproportionately in recent years may be in a liquidity problem when they are forced to sell and there is not enough liquidity in the market. Finally, the sustainability of the Italian debt may be questioned, raising the risks of the Euro zone.

Looking to the future, as the baby boomer generation and China’s new middle class retires, labor supply will decline, something that should lead to a rise in wages and a decline in global savings. The automation of jobs will help raise productivity above growth levels, supporting the economy. As a result, higher rates are expected, which will be bad for bonds, average for equities and good for inflation and wages. It is expected to be an economic cycle similar to that of the 60s, 70s and 80s.

How to position the portfolio

Finally, Mark Nash explained how to position the portfolio to benefit from the outflow of liquidity in the markets. He recommended a commitment to Long-Short funds and tofavor active management versus passive, to be in the short part of the curve in developed markets, to be short in Italian debt, and to take into account that yield curves will steepen. “Curves have flattened because terms have been eliminated; investors in Japan and Europe buy the long part of the US yield curve, with the withdrawal of liquidity it should steepen.”

Also, he expects an adjustment in the credit markets, which is why he recommends a short position in this asset class because the market ignores the individual credit situation, causing the spreads to be compressed. Regarding currencies, Nash believes the dollar should remain at current levels, but the Euro and other European currencies like Swedish kronor will appreciate. While he recommends avoiding the Swiss franc, which is perceived as an active safe-haven.

Likewise, he recommends buying volatility and protection against inflation, as both should reach the markets naturally once the structural factors are overcome. Investment in emerging markets, as well as high-yield debt, can turn out to be a good bet, both assets have become the means by which to obtain superior returns. When the Fed raises rates again, US bond yields will rise, there will be outflows in these two types of assets, so it would be advisable to exit these asset classes now, and wait for a correction before returning.

How to Invest in Funds Affiliated with Not One But Two Nobel Prize in Economics Winners

| For Gabriela Huerta | 0 Comentarios

Richard H. Thaler received the 2017 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Back in 2002 the recipient was Dr. Daniel Kahneman. They both are associated with Fuller & Thaler Asset Management. Founded in 1993, the company has pioneered the application of behavioral finance in investment management taking advantage of over or under reactions in the stock market.

Primarily focused on U.S. small-cap equities, they offer tailored strategies which include two mutual funds as well as separately managed accounts. As Benjamin Johnson, Associate Director at the firm, told Funds Society, they would be open to potential new opportunities with Latin American family offices.

They currently also have two mutual funds that invest in small caps and one would be considered a US Small-cap blend strategy –the Fuller & Thaler Behavioral Small-Cap Equity Fund (FTHSX), as well as a sub-adviser for a US Small-cap Value focused mutual fund offered by JPMorgan Distribution Services, the Undiscovered Managers Behavioral Value Fund (UBVLX).

According to the Royal Swedish Academy of Sciences, “Thaler’s contributions have built a bridge between the economic and psychological analyses of individual decision-making. His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioural economics, which has had a profound impact on many areas of economic research and policy.”

Thaler has written six books and several articles. He also performed a Cameo in the 2015 movie The Big Short, were he explains the psychological fallacy of a hot hand to help reveal how a key part of the financial crisis came about.

OMGI Global Markets Forum Brought Together over 50 Latam and US Offshore Business Professionals at its Annual Boston Conference

| For Fórmate a Fondo | 0 Comentarios

Old Mutual Global Investors held its conference’s fourth edition in Boston on September 20^th and 21^st. This event was attended by more than 50 industry professionals from the main US Offshore business centers in the United States – Miami, New York, San Francisco, Houston, San Antonio – and major markets in Latin America – Santiago, Montevideo, Lima, and Bogota.

After a brief presentation of the agenda by Chris Stapleton, Head of Americas Distribution, Allan Macleod, Head of International Distribution, welcomed the attendees and presented the latest corporate level changes experienced by Old Mutual Global Investors (OMGI). Its parent company Old Mutual plc, is going through a process of splitting the business into four new independent units. This ‘managed separation’ which began in March 2016 is expected to be completed by the end of March 2018. Following this, Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank, and OMAM, will operate separately.

Furthermore, he mentioned that OMGI’s single strategy business, will start operating as a separate entity from its multi-asset strategy business, which is distributed through Old Mutual Wealth, and which is mainly carried out in the United Kingdom. The details of the organizational structure of the new entity are still pending.

In terms of business volume, the project which began in 2012 with US$ 17.9 billion and 162 employees, and a clear inclination for the UK business – which at that time represented 95% of its client base, and with only 2 people engaged in the international distribution business, is now a reality with US$ 47.4 billion dollars in assets under management (figures at the end of Q2 2017) and 292 employees, including 22 members of the international team, with presence in London, Edinburgh, Zurich, Milan, Singapore and Hong Kong, along with Boston, Miami and Montevideo, through entities affiliated with Old Mutual.

“For the third consecutive year, our net business in terms of international clients is higher than the UK business. And, this does not mean that we are having a bad year in the UK, where we are third in the market. We are having a fantastic year, but the international side is even stronger,” he pointed out.

Among the features that distinguish Old Mutual from the competition, Macleod pointed out that OMGI is an investment-led business in which there is no chief investment officer, since each of the strategies has its own investment process, its own philosophy, and its own profit and loss account. Which is something that provides a series of benefits, the most obvious being the fact that it allows business diversification. “We have some portfolio managers who operate based on the fundamentals, others who follow a systematic approach, while certain managers base their operations only on macro factors and others only focus on stock selection. But they all have active management with a high alpha in common.”

With respect to the firm’s culture, OMGI identifies itself as a small-sized asset manager, and has the intention of remaining so, displaying an extremely flat structure, something that is reflected in the fact that both the portfolio managers and the sales representatives have remained in the firm, which is especially significant in London which has a high turnover ratio in the sector. Another key factor has been the incorporation of talent from other large firms such as Schroders, BlackRock, Invesco, with Nick Payne, Head of Emerging Global Equities, and his team being the latest recruits.
As for the Americas team, the unit went from consisting solely of Allan Macleod and Chris Stapleton, to include five other people: Andrés Munho, Head of Sales LatAm, Santiago Sacias, Regional Manager for the Southern Cone, Francisco Rubio, Sales Specialist for Americas Offshore, and Valentina Rullo and Collen Rennie, as part of the sales support team.

The Event’s Agenda

Following the introduction came the turn of the investment specialists; Mark Nash, Head of Global Bonds shared his vision on how the withdrawal of monetary stimuli by central banks will affect the global fixed-income market.

Then, Josh Crabb, Head of Asian Equities, pointed out that despite the latest rally in Asian markets, valuations remain reasonable and the probability of making money in the next 12 months is very high. In turn, Old Mutual Gold & Silver FundManager, Ned Naylor-Leyland, spoke of the return of gold to its traditional role as means of facilitating trade, particularly in the East.

Before lunch, Ian Heslop, Head of Global Equities and Justin Wells, Global Equity Investments’ Director, commented on the difficulty of predicting macroeconomic events and their effect on markets, as well as the importance of active investment in the current market.

Following the break, Paul Shanta, Manager of the Old Mutual Absolute Return Government Bond Fund, explained the opportunities created in the interest rate market and inflation after the growth spurt in Europe. In emerging markets, Nick Payne, Manager of the Old Mutual Global Emerging Markets Fund, noted that the gradual withdrawal of monetary stimulus by the Fed should not divert the course of these markets. Meanwhile, Ian Ormiston, Manager of the Old Mutual European (ex UK) Smaller Companies Fund, commented on the importance of investing in companies rather than countries in order to find opportunities in the European region.

The day was brought to a close by David Sandham, an investment writer who moderated the discussion between Ian Heslop, Mark Nash, and Ian Ormiston, where it became clear that each strategy is free to choose its own investment process and philosophy, giving differing degrees of importance to economic factors, markets or companies.

Investing with a micro or macro approach, which side wins the debate?

During his speech in the discussion panel, Mark Nash advocated the importance of macroeconomic factors for recognizing the moment for exiting the market, something that in his opinion is decisive in generating an excess return.”Macro investment will return with the withdrawal of monetary policy stimulus, as markets resume their ability to price assets, and more importantly, when divergence between different economies begins to emerge. Volatility will then return to the macro and opportunities in operations with currency and interest rates will appear. How will these movements affect the price of assets? It’s something directly related to the level of current interest rates and where they are headed. We believe asset prices will not rise, especially as long as the central banks maintain a gradual withdrawal.”

He also pointed out the importance of geopolitical events as a factor that will shape fundamentals in bond markets: “The Brexit referendum, Trump, the forthcoming elections in Italy, introduce some de-correlation in the markets, creating opportunities in macroeconomic level opportunities, at least in fixed income markets”.

However, while Ian Heslop acknowledges the importance of macroeconomic factors in the determination of asset prices, he points out that the problem lies in the lack of capacity to predict interest rate behavior and then trying to construct a portfolio based on the shape taken by the yield curve. “Our team made a conscious decision not to take that road, given the difficulty of getting it right. While we do not make explicit predictions, if we are capturing our predictions in the portfolio, we obviously do so implicitly.”

Meanwhile, Ian Ormiston commented that it is generally believed that asset prices depend on fundamentals, when in fact they depend on investment flows. In turn, the latter depend on the various bets that investors are making in the market. “There is always the possibility of market distortion at any moment, pushing prices away from fundamentals, and that is when the opportunities appear.”

Regarding whether the asset management team should have a committed relationship with the company’s management team, Ormiston again stressed the importance of knowing the corporate governance apparatus, since many opportunities for investment can be derived from this. “If we talk about the cultural differences in Europe, the culture of each company is linked to sociological factors, which although important are difficult to quantify. At OMGI, we have the opportunity to manage our portfolios as if the business was our own; we have their confidence because we have the right motivations. It is extremely important to know a CEO’s motivation. In Europe, it is quite common to find businesses managed by families, so we have to be careful when it comes to how the management is aligned with our interests. We are investors, we need to be sure that these managers will deliver credibility and sustainability, although to be fair, we must admit that the first filter is quantitative, if the characteristics of the balance are not good, the stock is not considered.”

With an opposing approach, Ian Helsop acknowledged that while the quality of the management team is an important issue to be understood, since Reg FD (Fair Disclosure) was issued by the SEC, the management team cannot provide more information than what can be extracted from the balance sheet and from the income statement. In particular, he recalls an occasion when, after having spent a lot of time and effort in preparing the questions, before he actually finished asking each question, the firm’s investor relations representative began to answer, because he already had a predetermined answer for it. However, Heslop did acknowledge that when you move down the market cap scale, a relationship with company management does become more important.

Finally, Helsop also added that his fund’s investment philosophy can be summed up as “today’s search for stocks which investors will want to buy tomorrow” and disclosed its investment methodology: “In order to invest efficiently, we have to have a good knowledge of fundamentals and information at the company level, plus a good understanding of how the macro part will affect the company. But I think there are better ways to understand a company than to perform a traditional bottom-up and top-down analysis, such as trying to understand where investors are positioned in the markets, something that later translates into the styles and themes that are used in the portfolio. This bias derives from the market, rather than having a country or sector bias drawn from macroeconomic factors.”

BlackRock: “We Think The Chinese Economy Is Doing Well and Do Not See Any Worrying ‘Bubbles’ Forming Up At This Stage”

| For Alicia Miguel | 0 Comentarios

BlackRock: "Por el momento, la economía china funciona bien y no creemos que se estén formando burbujas preocupantes" — Foto cedidaJean-Marc Routier, courtesy photo. BlackRock: "We Think The Chinese Economy Is Doing Well and Do Not See Any Worrying ‘Bubbles’ Forming Up At This Stage"

Jean-Marc Routier, Director, and Product Strategist for the Asian Equities team in the Fundamental Equity division of BlackRock‘s Active Equity Group is convinced that there are many fundamental reasons for investing in Asian equities, an asset still not well favored by investors: not only its growth surpasses the rest of the world, but the reforms are improving its quality and there are solid advances in urbanization, consumption and the services sector that can not be overlooked. Besides China, which dominates the investment universe, in this interview with Funds Society, he speaks of the attractiveness of markets such as India and Indonesia,

Are investors coming back round to Asian equities as an alternative to the high prices of the US stock market? Is Asia just an alternative or are there fundamental reasons to invest in their equity markets?

Investors are still relatively underweight Asian Equities (source EPFR). Whilst Asia would indeed be a nice alternative to other markets and a good source of diversification, investors remain cautious to allocate as they are still unsure about China and don’t yet believe in the earnings recovery story that we have been observing now for the last 18 months. We believe that Asia benefits from attractive valuations, low ownership and good fundamentals. The fundamentals reasons to invest in Asia are that growth is outpacing the rest of the world, reforms are improving the quality of growth and we are seeing strong urbanization, consumption and services sector developments.

Growth could be one of the reasons for the return to the Asian equity markets, but this growth will slow down due to China’s effect. Do you think that less growth in the future will impair returns? Or do you consider a more balanced growth as positive for the region?

We think growth in China has now normalised – in fact China has doubled its GDP growth in nominal terms from Q1 2016 to Q1 2017. We expect growth to be lower than a decade ago but we also expect the growth to be better quality (less reliant on capital investments) which we think is positive for company returns and therefore markets. Yes definitely more balanced growth is a positive for the region

Regarding China… Do you see opportunities in the framework of the country’s new growth? In what sectors? Do you opt for the old or the new economy in the BGF Asian Dragon fund?

Contribution from consumption to GDP growth has gained importance over the year and now contributing to around 2/3 of China’s GDP growth. The importance of investment component will be reduced over time. The economy transition from an investment-driven model to a consumer-led model is a multi-year process, but well-supported by urbanization, job creation (mainly driven by private sector employment due to privatization progress), strong labor market (very low unemployment rate), and wage growth. We have recently seen very strong growth in the e-commerce and internet part of the market – China has one of the world best penetration of e-commerce (15% of retail sales) and most of its population online.

How will the recently announced inclusion of China’s A-shares in the MSCI emerging markets index affect the Chinese and Asian markets?

MSCI’s A-share inclusion decision represents a significant step in opening China’s equity markets to foreign investment and to aligning the weight of China in global indices with the country’s emerging status as an economic superpower (China’s weight in MSCI ACWI is only 3% but China accounts for around 17% of world GDP in 2015 per IMF).

While A-share inclusion may lift sentiment temporarily, we believe the impact in the China onshore market will be minimal at the initial stages of inclusion. Firstly, the actual inclusion implementation will not happen until mid-2018. Secondly, incremental inflows to A-share market will be modest initially. Incremental active inflows at initial inclusion stages shall actually be minimal since active investors who took a view on A-share would have already increased exposure given the multiple market access channels already in place (including QFII and Stock Connect).

However, the long-term investor implications are likely to be far-reaching. At full inclusion, China weight (offshore and A-share equity together) can exceed 40% in MSCI EM index. Therefore as MSCI moves towards full inclusion of China A-share, China allocation will be strategically important for international investors. The entry of more institutional investors would also help drive the healthy development of China’s onshore equity markets.

To what extent could economic slowdown in China and its debt and financial issues impact the rest of Asia? Will there be firewalls or is there a real danger of these problems spreading?

While we recognize that China’s debt makes up 250% of its economy and is increasing at a rapid pace, we think concerns are overblown. The likelihood of a debt contagion is minimal as China is a close-ended economy and debt is concentrated in state-owned companies whilst consumers, private corporate and government debt is very low. But more importantly, we believe we have seen the peak in the non-performing loan cycle as reform progress in the past few years is starting to come through and many of the structural problems such as overcapacity and credit growth are starting to be addressed. Furthermore, good cyclical momentum within China as well as a pickup in global demand in developed markets may also help lift the economy.

On account of China, is there a risk that the volatility in the Asian stock markets could surge once again, as they did in 2015 or is this risk more controlled than in the past? And why?

There are always risks that situations that move on non-fundamental drivers come back to normalised levels. At the moment we think the Chinese economy is doing well and do not see any worrying ‘bubbles’ forming up at this stage.

Is the Asian equity market just China? What other regions offer decent opportunities to be taken into account? Do you like the Indian market? And other more modest markets, such as Indonesia, Philippines..?

China now makes up 35% of the Asian index (MSCI AC Asia ex Japan) and is the biggest constituent. But indeed, we see a lot of value in more peripheral markets. Specifically, we have good exposures to Indonesia at the moment as we see the economy normalising after a period of sub trend growth. We like India and have good exposure there too specifically to cyclicals and financials. We are currently cautious on the Philippines where the twin deficit is increasing

Following the strong rally which Asian equities experienced in 2016, is it still the right time to enter?

Asian equities are trading below the 40years long term average so valuations are not yet on mid-cycle levels yet. Investor ownership is low. Earnings drivers should remain positive as long as the main world economies continue to see normalising growth and we can maintain the domestic reform agenda in the region.

When investing in Asia, what is the most important thing to bear in mind, the macroeconomic aspects or the companies’ fundamentals and why? What are the characteristics that you look for in the companies which you invest in?

The Asian Equity team believes that stock prices are driven by fundamentals, liquidity and perceptions of risk. Markets frequently exhibit sharp swings of sentiment and misprice a company’s true worth. By combining fundamental research with local market knowledge and quantitative and qualitative screening and valuation techniques, we can exploit market inefficiencies. By investing over the medium to long term, we aim to invest in companies that are both relatively cheap to reasonably priced (valuation conscious), which can meet or beat market expectations.

Investing in Asia, is it better to cover currency risk or take it on? What are the current risks for Asian currencies against the dollar?

We invest with currency un-hedged as we take a view when we pick a stock that we make a deliberate call on the company, where it is listed, the sector it is in and the currency it is traded under. We do recommend investors to hedge to their local currency to avoid surprises unless they have very strong and informed views otherwise.

Yves Perrier and Amundi, Considered the Best in Europe

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Yves Perrier y Amundi, los ganadores en los Premios Financial News — Foto cedidaPhoto: Financial News. Yves Perrier and Amundi, Considered the Best in Europe

Amundi was the standout winner at Financial News’s 16th Asset Management Awards last night, fending off fierce competition from a strong line-up of contenders to claim three of the top awards on offer.

Europe’s largest fund house was the only asset manager to take home more than one award — no mean feat in a year where several top prize winners only just pipped their closest contenders to claim victory.

Amundi was crowned Asset Manager of the Year after a distinguished panel of industry judges deemed its €3.5bn acquisition of Pioneer Investments last year worthy of the top award.

Amundi also beat Lyxor Asset Management and AQR Capital Management, Ossiam and Tobam to take home the award for Smart Beta Manager of the Year.

Yves Perrier picked up Amundi’s third award, for Chief Executive of the Year, after judges felt much of the firm’s success in the past 12 months was driven by its senior leadership team.

The other industry personality to receive recognition was Dominic Rossi. He picked up the Chief Investment Officer of the Year award as a result of his work to bolster Fidelity International’s stance on corporate governance.

Among exchange traded fund providers, Lyxor stormed to success after beating BlackRock’s iShares division — the world’s largest ETF firm.

Emerging markets proved to be the most competitive categories this year, with Ashmore only just beating Hermes Investments to claim success.

It was also a closely fought battle for Environmental, Social and Governance Manager of the Year, with Hermes emerging the victor after managing to outshine rivals Legal & General Investment Management and Nordea.

An enviable track record for Terry Smith, who holds a concentrated portfolio of 20-30 stocks in global equities, was enough for the judges to hand Fundsmith the award for Boutique Manager of the Year.

Others continued their winning streak from last year. Insight Investment once again picked up the Liability-Driven Investment Manager of the Year award — the eighth year the asset manager has claimed victory in this category.

Edinburgh-based Baillie Gifford was the runaway winner in the Equities Manager of the Year category, with its performance alone enough to impress the judges it should be awards the top prize.

Redington held onto its prize for Investment Consultancy of the Year, demonstrating again it has the ability to fend off larger rivals Mercer, Hymans Robertson and Aon Hewitt for the top award.

Anglo-Dutch outfit Cardano continued to steamroll competition and claim top prize in the fiduciary management category — the ninth consecutive year it has won the award.

Winners of the Asset Management Awards Europe 2017:

Chief Executive Officer of the Year — Yves Perrier, Amundi
Asset Manager of the Year — Amundi
Chief Investment Officer of the Year — Dominic Rossi, Fidelity International
Investment Consultant of the Year — Redington
Index Funds/ETF Provider of the Year — Lyxor Asset Management
Fiduciary Manager of the Year — Cardano
Boutique Manager of the Year — Fundsmith
ESG Strategy of the Year — Hermes Investment Management
Equity Manager of the Year — Baillie Gifford
Fixed Income Manager of the Year — M&G Investments
Multi-Asset Manager of the Year — Nordea Asset Management
Smart Beta Manager of the Year — Amundi
LDI Manager of the Year — Insight Investment
Emerging Markets Manager of the Year — Ashmore

Aegon Launches an Asset Management Company in Mexico

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Aegon lanza una gestora en México — Foto cedida Fernando Quiroz, courtesy photo. Aegon Launches an Asset Management Company in Mexico

Aegon NV and its subsidiary Transamerica have joined forces with Administradora Akaan to create an asset management company named Akaan Transamerica. Akaan Transamerica has recently received formal approval from the Mexican Banking and Securities Commission (CNBV) to initiate operations and go to market.

Akaan Transamerica will offer a wide variety of Mexican and International mutual funds as well as diversified global investment solutions. Akaan Transamerica has implemented Aladdin, BlackRock‘s trading and risk management system which combines leading-edge risk analytics with comprehensive portfolio management, trading and operations on a single platform.

Akaan Transamerica will leverage the extensive investment knowledge and experience from a highly skilled team of investment management professionals. Its product offering includes alternative investments, actively- and passively-managed funds, and bespoke investment strategies. In addition to the wide variety of investment products, Akaan Transamerica will offer integrated investment solutions for individuals and companies based on their financial needs. Akaan’s Chairman and Founder, Fernando Quiroz, was formerly CEO and Vice Chairman of Citigroup’s ICG Mexico and Latin America as well as Vice Chairman of the Board of Directors for Banco De Chile. Mr. Quiroz was also a Board member of Banamex, Grupo Financiero Banamex, Aeromexico and the Mexican Stock Exchange (BMV).

Mark Mullin, President and CEO of Transamerica, commented, “We are thrilled to form this partnership with the highly respected firm of Akaan and to benefit from the tremendous expertise of Fernando Quiroz. We are determined to help individuals and corporations in Mexico pursue wealth accumulation and growth as they work toward securing a sound financial future.”

Fernando Quiroz, commented, “We are delighted to have formed a JV and a strategic alliance with Aegon and Transamerica. Our teams worked extremely hard to set up a new asset management company, with a state-of-the-art technological platform and the most innovative financial solutions for our clients.”

Kent Callahan, President and CEO of Transamerica Latin America, added, “This unique combination of experienced professionals and cutting edge technology sets a new bar for customer service excellence in the asset management business in Mexico.”

Loomis Sayles & Company, JP Morgan Asset Management, and Alliance Bernstein Get 700 Million Dollars From Afore XXI Banorte’s Mandate

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Afore XXI Banorte fondea 700 millones de dólares en renta variable estadounidense — Pixabay CC0 Public DomainPhoto: freephotos. Loomis Sayles & Company, JP Morgan Asset Management, and Alliance Bernstein Get 700 Million Dollars From Afore XXI Banorte's Mandate

Afore XXI Banorte, the largest pension fund in Mexico, successfully completed the funding of its third investment mandate. On this occasion it granted $700 million to three managers to actively invest in US equities. Alliance Bernstein received $250 million, JP Morgan Asset Management $150 million and Loomis Sayles & Company (owned by Natixis Global Asset Management) received $300 million.

To date, the pension fund administrator of Grupo Financiero Banorte and the Mexican Social Security Institute (IMSS), has funded three investment mandates; the first in European stock markets for approximately $1.1 billion, the second in the Asian market for approximately $1 billion and the latter with exposure to the United States for $700 million.

Mauricio Giordano, CEO of Natixis Global Asset Management Mexico, told Funds Society that “US equities are not normally considered to be alpha-generating, since the average manager does not beat the market, and what I tell the players is why to see the average if there are managers like Loomis who consistently present an overperformance.” The director added that the funding of this mandate came in only two months which is proof that “when you have well-structured teams with a very clear plan things can be done very fast.” Loomis will actively manage 3 segregated US Equity portfolios for Afore XXI Banorte. The Large Cap Growth accounts will be managed by seasoned US growth manager Aziz Hamzaogullari and his dedicated research team, using their proprietary bottom up research structured around quality, growth and valuation.

Aziz Hamzaogullari, VP and Portfolio Manager Loomis Sayles Growth Equity Strategies team, commented: “We are delighted that Afore XXI Banorte has chosen Loomis Sayles as a strategic partner. We believe in taking a long-term, private equity like approach to investing. Through fundamental research, we look to invest in those few high-quality businesses that we believe have sustainable competitive advantages and secular growth when they trade at a significant discount to intrinsic value”.

This transaction gives Afore XXI Banorte the opportunity to take advantage of the conditions of the United States stock markets and actively manage the portfolio for the benefit of its clients. “With the funding of this mandate, Afore XXI Banorte confirms its commitment to affiliates, offering the best investment product for their retirement in Mexico under the management of specialized firms with extensive international experience. In addition to this, we used the services of a temporary administrator known as “transition manager” and a proven international custody model, all in order to enhance the performance of our portfolio for the benefit of our affiliates in the long term”, said Juan Manuel Valle, Chief Executive Officer at Afore XXI Banorte.

Sergio Méndez, Chief Investment Officer at the pension fund, commented: “With the funding of this mandate with exposure to the North American region we finalized the first phase of our plan on the outsourcing of investment services, maximizing the use of our investment regime, which places Afore XXI Banorte at the forefront in the local market.”

Old Mutual Latam Launches Their Wealth Management Segment in Mexico

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Old Mutual has decided to enter into the Wealth Management segment in Mexico. This new division is being led by Rodrigo Iñiguez, a professional with over 11 years in the group.

Mexico is the second largest market in the Latin American region, after Brazil, so Old Mutual expects that in the next 5 years this line of business will generate a high percentage of its sales for Mexico and complement that of Latin America. According to McKinsey Global Wealth Management, Mexicans have over 800 billion dollars in different financial institutions.

Agustín Queirolo, who is in charge of the Wealth Management segment for Latin America, said: “We will face this new challenge by leveraging our experience and the great acceptance we already have in countries such as Chile, Peru, Switzerland and the United States…We are sure that this new and innovative Mexican solution will help us in advising our clients in an integral way with a local and international vision. Our solution allows Mexican clients and residents in Mexico the possibility of guarding their investments both locally and abroad.”

Julio Méndez, Group CEO in Mexico, said: “The company has achieved significant growth in its different segments in recent years. We maintain a leading position in the Institutional business through the administration of Private Pension Plans and have managed to expand our distribution through more than 3,000 investment advisors across the country. The DNA of our Group is constantly pushing the creation of new investment solutions with a constant innovation in the creation of products and today we visualize great opportunities to enter the Wealth segment.”

Thinking of complementing Private Banks, Family Offices and Wealth Managers that advise affluent and high net worth Mexican families, they will be using a life insurance solution, with an investment component, as an asset planning tool, as well as other innovative instruments that fit the segment and its clients.

Jupiter Asset Management Teams up with Unicorn to Target Latin America

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Jupiter Asset Management se alía con Unicorn para entrar en el mercado latinoamericano — Pixabay CC0 Public DomainMatteo Dante Perruccio, courtesy photo. Jupiter Asset Management Teams up with Unicorn to Target Latin America

Jupiter Asset Management (Jupiter AM) reached an agreement with global distribution platform Unicorn Strategic Partners, a global third-party distribution platform which services clients through offices in Santiago de Chile, Montevideo, Buenos Aires, Miami and New York, to service key Latin American markets as well as US offshore hubs of New York and Miami.

The agreement will allow Jupiter AM to continue its international growth strategy based on a selective business expansion in the regions where the Company has identified potential client demand and provides Jupiter AM with access to potential clients in the region. According to Matteo Dante Perruccio, Head of Global Key Clients: “Our alliance with Unicorn offers us the opportunity to enter the region partnering with an exceptionally talented and experienced team of distribution professionals with an in-depth knowledge of the unique characteristics and requirements of the Latin American market.”

According to the latest figures, private wealth in Latin America will reach an estimated $7.5.9 trillion by the end of 2021, making it a significant and rapidly growing market. Chile, Uruguay and Argentina are strategic markets in the region.

With this alliance, Jupiter AM consolidates its global presence, with representation in UK, Spain, Germany, Switzerland, Austria, France, Hong Kong, Italy, Luxembourg, Portugal, Sweden and Singapore.

Active management and high conviction investment:

Jupiter AM is a UK asset manager founded in 1985 that believes in high quality, high conviction active management and in the independence of its managers as a key requirement to be able to add value. As such, there is no in-house macro-economic view or investment committee that produces lists of recommended stocks. Managers instead have the freedom to make investment decisions, albeit always working within strict risk parameters.

Jupiter AM is an established UK-listed asset management business. In recent years the company has expanded its footprint across Europe and Asia. It currently has more than $ 61.1 billion under management globally (as at June 30, 2017).

Joel Peña Joins DoubleLine to Lead Expansion in Latin America, Caribbean

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El mexicano Joel Peña liderará las relaciones con clientes institucionales de América Latina y el Caribe en DoubleLine — Joel Peña, Photo Linkedin. Joel Peña Joins DoubleLine to Lead Expansion in Latin America, Caribbean

Joel Peña has joined DoubleLine Capital LP as head of the firm’s institutional and intermediary investor relations in Latin America and the Caribbean. Peña comes to DoubleLine from international asset manager Robeco where he served as managing director for Latin America and U.S. Offshore.

In addition to heading DoubleLine’s institutional and private client relations in Latin America and the Caribbean, Peña will manage relations with overseas clients, advisors and distributors engaging the firm via its U.S. offshore platforms.

“Thanks to economic growth, a broadening middle class and rising standards of living, countries in Central and South America have seen growth in assets entrusted to pension funds, insurers and other fiduciaries. These institutional investors are looking beyond their local markets for investment opportunities and expertise,” said Ron Redell, executive vice president of DoubleLine. “My colleagues and I are delighted to welcome Joel into the DoubleLine team to sharpen our focus on the needs and objectives of institutional and private investors in Latin American and the Caribbean.”

“Navigating markets in today’s complex environment is far from easy. Very few firms have been as successful at it as DoubleLine,” Peña said. “I look forward to leading the expansion in Latin America within this organization, a company which is fully committed to always putting its clients’ needs first.”

Peña has 16 years of experience in asset management. Prior to Robeco, he served nearly six years as head of institutional clients in Latin America for fixed income manager PIMCO. He began his career in asset management at BBVA Bancomer in Houston and Miami before joining Bank Hapoalim as senior private banker. He holds an undergraduate degree in economics from Instituto Tecnológico y de Estudios Superiores de Monterrey , Tecnológico de Monterrey, Mexico, and an MBA from the Stern School of Business, New York University. He is a CFA and CAIA charter-holder.