Prudential’s Asian investment branch, Eastspring Investments, has promoted Phil Stockwell to Chief Executive Officer of its Singapore business effective as of September 1st. Stockwell had been the Chief Operating Officer of Eastspring Investments, company he joined in September 2014.
He will report to Guy Strapp, Eastspring Investments chief executive, and will be responsible for the operations of the largest of Eastspring’s 10 Asia offices. He is also responsible for the environment around their portfolio managers in Singapore so they can focus on alpha generating activities.
Prior to joining Eastspring Investments, Phil was COO of BT Investment Management in Australia, a publically listed fund manager and part of Westpac Banking Corporation. In his role, Phil was responsible for the leadership of product development, product management, client services, dealing, investment operations, IT, risk and compliance, and company secretarial and legal. Phil has also been a strategy consultant with McKinsey & Company, and with KPMG Consulting. Phil has over 13 years of investment industry experience.
Phil holds an MBA from Australian Graduate School of Management (AGSM), UNSW, Sydney and a Bachelor of Economics and a Bachelor of Commerce from University of Queensland, Brisbane. He is a Fellow of the Institute of Chartered Accountants in Australia.
CC-BY-SA-2.0, FlickrPhoto: hjjanisch
. Kingdon Capital Management Launches a UCITS Fund Using Lyxor AM's Platform
Kingdon Capital Management has launched a UCITS version of its long/short equity fund. According to HFMWeek it has done so using Lyxor AM’s Platform.
The Lyxor/Kingdon Global Long-Short Equity Fund was registered in Ireland on July 22. It is an open-end fund incorporated in Ireland that invests in publicly-traded equity securities and equity derivatives in global Markets. Its objective is to achieve attractive returns, over market cycles with a strong focus on capital preservation through diversification, risk management and stock selection.
Lyxor AM, a subsidiary of Société Générale, has been looking to grow its alternative UCITS offering as Philippe Ferreira told Funds Society (in Spanish piece) some months ago, these type of funds, ” have proved that they are able to offer similar returns as equities with a third of their volatility which explains why investors such as pension funds have grown their interest in them.”
Kingdon Capital Management, founded by Mark Kingdon in 1983, is an employee owned hedge fund sponsor. It invests in the public equity and fixed income markets using long/short strategies to make its investments. It employs fundamental analysis along with combination of bottom-up and top-down approach to create its portfolio and is based in New York, New York.
UCITS compliant absolute return funds have outperformed hedge funds over the past five years, according to a study conducted by independent asset manager Lupus Alpha.
The research, conducted among a universe of 564 alternative absolute return funds, revealed that over a five-year time period, UCITS regulated absolute return funds offered an average return of 2.72% per year, whereas hedge funds lost an average of -0.46% per year.
Over a one-year time scale, the picture was even gloomier with less than 30% of funds offering positive returns, ironically due to the high level of volatility at the beginning of the year. Added to that was a relatively high level of European equity exposure among most funds, which further dragged down performance throughout 2016.
Overall, absolute return funds offered an average return of -3.55% over the past five years, with unregulated hedge fund vehicles at the bottom-end of the scale, offering -5.63%. However, they still outperformed the European equity universe, with the Euro Stoxx 50 index falling by -13.89% throughout the same period.
Independent of average returns, the survey concluded that profitability varied greatly depending on the provider, with some asset managers offering returns of 20.56% over the past years, while others reported losses of -23.63%.
Ralf Lochmüller, founding partner and spokesperson for Lupus Alpha comments: “The performance of individual absolute return funds can vary greatly, we have noticed clear difference in terms of quality. Our research highlight that manager selection should remain a key priority for investors in order to achieve stable returns independent of the market phase.”
CC-BY-SA-2.0, FlickrFoto: charlemange / Pixabay. Algunas fundaciones y fondos están reevaluando el uso de los hedge funds
NEPC, one of the industry’s largest independent, full-service investment consulting firms to endowments and foundations, recently published the results of its Q2 2016 NEPC Endowment and Foundation Poll, a measure of endowment and foundation confidence and sentiment related to the economy, investing and market performance. The Q2 Poll included a special focus on how endowments and foundations view hedge funds. Respondents cited strong concerns about high fees, underperformance and transparency.
“While hedge funds play an important role in many institutional portfolios, the last several years have been difficult for the industry and investors are starting to look very closely at how hedge funds can work for them,” said Cathy Konicki, Partner and Head of NEPC’s Endowment & Foundation Practice Group. “These survey results are by no means indicating a mass exodus from hedge funds, but they do point to greater pressure being felt by the industry as a whole.”
According to the survey, twenty-four percent of respondents cited having zero exposure to hedge funds, which is a significant increase from the Q2 2014 NEPC Endowment and Foundation Poll, when only two percent of respondents reported having no exposure. And while 39% of respondents in the Q2 2014 Poll had 11-20% of their portfolio allocated towards hedge funds, in the Q2 2016 survey only 23% had the same allocation.
Another concern cited by endowments and foundations was hedge fund fees. A quarter of survey respondents have asked for reduced fees or been offered reduced fees by their hedge fund managers within the past six months. When asked about the biggest challenges they face with their hedge fund investments right now, High Fees was the second highest response (54%), topped only by Low/Disappointing Returns (80%). Rounding out the top concerns was Transparency (37%).
Despite these concerns, the survey did highlight some positive findings for the hedge fund community. While 28% of endowments and foundations said they’ve either reduced or were considering reducing their allocation to hedge funds, 55% are not actively discussing this with their investment committee, and nearly a fifth of respondents (17%) have either increased or were considering increasing their allocation to hedge funds.
As for which hedge fund strategies respondents are most bullish on, 36% think Multi-Strategy hedge funds will generate the highest returns over the next three to five years. Other top results to this question include Long/Short Equity (33%), Global Macro (25%) and Credit (22%).
“This survey tells us that endowments and foundations are frustrated with hedge funds but they’re not giving up on them, and with several global concerns on the horizon, many investors may be looking towards hedge funds to protect their portfolios,” said Konicki.
Other top findings include:
50% say the US economy is in a worse place now than it was this time last year
52% say a Slowdown in Global Growth poses the greatest near term threat to their portfolios
Rising Interest Rates were the second most cited concern (16%)
Potential for overseas conflict was third (13%)
Presidential Conundrum: 70% of respondents think Hillary Clinton will win the upcoming Presidential Election, but are split on who would have a more positive impact on US markets and their portfolio.
CC-BY-SA-2.0, FlickrPhoto: Ferruccio Zanone
. Strategic Acquirers Drive More Than One-Third of M&A Activity in 2016
Fidelity Clearing & Custody Solutions, the division of Fidelity Investments that provides clearing and custody to registered investment advisors (RIAs), retirement recordkeepers, broker-dealer firms, banks and insurance companies, recently released the Fidelity 1H 2016 Wealth Management M&A Transaction Report, which highlights the RIA mergers and acquisitions through the first half of 2016. The report focuses on Strategic Acquirers, firms that take a financial interest in an advisory firm to help them grow and perform more effectively through strategic guidance and operating support. Those firms have driven 39 percent of all M&A activity in 2016, and, based on extensive interviews with executives at major strategic acquirers, the report outlines different models of Strategic Acquirers as well as their approaches to acquisition. The findings also highlight how a need for scale, in order to help improve firm profitability, has driven this continued industry consolidation.
“Our goal with this report is to help advisors who are considering strategies to take their businesses to the next level to better understand their options and learn more about how to navigate the M&A space,” said David Canter, executive vice president, practice management and consulting, Fidelity Clearing & Custody Solutions. “One thing they should know as they prepare for the negotiation process is that they will have to redefine their role as an entrepreneur. While that may mean giving up some control in order to continue to grow their business, a strategic acquirer may also help to drive scale and growth through capital and expertise.”
In addition to providing a detailed list of transactions for 1H 2016 and highlighting Strategic Acquirer models, this new report outlines questions that RIAs should ask themselves before beginning to engage with strategic acquirers:
What does being an entrepreneur mean to you as an advisor, and how would you like that to change to achieve your business objectives? Why do you need capital, what for, and how would you balance that need with the desire for independence/autonomy? What outcome do you seek? What do you need from a strategic acquirer: Capital? Access to talent? Management skills? An investment platform? Operating scale and leverage? What kind of a partner do you want?
“The biggest takeaway here for RIAs is that M&A strategies are becoming an increasingly important consideration for the future of their businesses,” continued Canter. “In order to realize their full potential value, advisors need to think about the firm they want to partner with and whether their businesses are in a good position for a successful acquisition.”
You can read the full report on the following link.
Pershing, a BNY Mellon company, has announced the launch of new mutual fund and exchange-traded fund solutions, offered by its affiliate, Lockwood Advisors. These will meet the needs of investors starting to build wealth and help registered reps navigate the Department of Labor’s (DOL) fiduciary rule requirements.
Pershing’s new Lockwood WealthStart Portfolios mutual fund and ETF offering, along with new solutions provided by third-party providers, both feature a diverse range of asset allocation strategies and a minimum balance of $10,000.
These portfolios include a number of asset allocation strategies targeted at investors with varying risk profiles. The strategies can be accessed through diversified risk-based model portfolios from some of the industry’s leading firms, including Pershing affiliate Lockwood.
“These flexible mutual fund and ETF solutions demonstrate our ongoing commitment to providing financial professionals with the tools they need to navigate the evolving regulatory landscape and grow their business,” said Joel Hempel, chief operating officer of Lockwood. “They may also assist registered reps who are considering a transition from a commission-based brokerage model to fee-based advisory relationships.”
The new offering is fully integrated into Pershing’s flagship NetX360 professional platform, and advisors can access them through Lockwood’s turnkey managed account solution, Managed360 or by using Pershing’s managed investments platform.
“Emerging and mass-affluent investors can now have greater access to professionally managed investment solutions,” said Hempel. “These investors represent a large, often underserved market. By offering a suite of diversified risk-based portfolios to this segment, advisors and registered reps can serve new clients and take advantage of cross-generational opportunities.”
Looking ahead, Lockwood will continue to evaluate managers to participate in its third-party offerings to provide more opportunity for financial professionals to grow their business and for investors to accumulate wealth.
CC-BY-SA-2.0, FlickrPhoto: Elanaspantry, Flickr, Creative Commons. Morgan Stanley IM Launches Global Balanced and Global Balanced Defensive Funds
Morgan Stanley Investment Management has announced the launch of two new multi-asset funds, the Morgan Stanley Investment Funds (MS INVF) Global Balanced Fund and the MS INVF Global Balanced Defensive Fund.
The underlying investment process for the two funds mirrors that of the existing Global Balanced Risk Control (GBaR) strategy, which is designed to maintain a stable risk profile. The funds are the first in the GBaR suite to incorporate environmental, social and governance (ESG) factors into the process.
The chief difference between the funds is their targeted volatility. The Global Balanced Fund targets a volatility range of 4 to 10%. The Global Balanced Defensive Fund has a lower target volatility range of 2 to 6%.
Both funds will be managed by Andrew Harmstone and Manfred Hui in London. “The new funds will be based on our established GBaR process, which in our view is the most effective way for investors to participate in rising markets whilst providing strong downside protection,” said Mr. Harmstone, managing director and lead portfolio manager. “We expect the integration of ESG considerations into the process to further improve potential returns and enhance risk management.”
“Morgan Stanley Investment Management’s extensive multi-asset capabilities are reinforced by the addition of these two new funds,” said Paul Price, global head of Client Coverage, Morgan Stanley Investment Management. “Clients now have greater choice in the implementation of GBaR’s risk-controlled approach and their preferred level of volatility.”
The MS INVF Global Balanced Fund and the MS INVF Global Balanced Defensive Fund, registered in Luxembourg, are not yet widely available for sale and are awaiting registration in various markets. They are intended for sophisticated and diversified investors or those who take investment advice.
CC-BY-SA-2.0, FlickrPhoto: peasap
. Samuel Nunez joins Bolton´s San Diego Office
Bolton Global Capital announced this week that Samuel Nunezhas joined the firm. Nunez has spent the last 23 years as a financial advisor with Merrill Lynch, compiling a client book of $125 million with annual revenues of $1 million. His clients are primarily located in Mexico and the US.
Nunez will be joining Bolton’s San Diego office, which was opened recently under the name TransAtlantic Investment Partners. James Jiao, a former Merrill Lynch complex manager and FA who left the firm last year after working 18 years, established this office. Jiao began his career in 1990 with Deutsche Bank in Germany as a portfolio manager and then transferred to Deutsche Morgan Grenfell in New York as a Private Bank Manager in 1994.
Over the last year, Bolton has recruited 8 teams from Merrill Lynch with client assets totaling approximately $1.5 billion. Typically, advisors who join Bolton operate under their own brand name using Bolton to provide compliance, back office, trading and technology support with client assets held by BNY Mellon-Pershing and other custodians.
CC-BY-SA-2.0, FlickrPhoto: Lain. China: How Serious is the Debt Issue?
Emerging Markets (EMs) continue to drive global growth, with China still accounting for the lion’s share. However, China’s increasing debt remains a significant concern for global investors. Pioneer Investments’ Economist Qinwei Wang, takes a closer look at China’s debt situation.
After reviewing the recent developments around the debt issue, Pioneer has not changed their view that China can still avoid a systematic crisis in the near term, “as the issue remains largely a domestic problem and in the state sector.”
“Looking into the composition, China’s debt issues are largely within the country, unlike typical cases in EMs. Its external balance sheet still looks relatively resilient as China continues to run current account surpluses. China has also been building up net foreign assets over the last decade, and is one of the largest net lenders in the world and domestic savings remains high enough to fund investments.”
In addition, looking at domestic markets, Pioneer believes the situation still looks manageable. In fact, the borrowers have been largely in the state sector, directly or indirectly, through various government entities or SOEs. The lenders are also mainly state-linked, with banks (state dominant) making loans, holding bonds or channelling a big part of shadow activities.
The People’s Bank of China has prepared plenty of tools to avoid a liquidity squeeze, with capital controls still relatively effective, at least with respect to short-term flows. Ultimately, the government has enough resources to bail out the banking sector or major SOEs if necessary to prevent systemic risks.
The private sector does not appear to present big concerns, at least for now. In particular, on the property side, following the major correction since 2013, the health of the sector looks to be improving, although there is still a long way to go in smaller cities. Households have been leveraging up, but their debt levels are still relatively low with saving rates remaining high.
“We are not too concerned about existing troubled debt, as there are possible solutions to clean it up while avoiding a systemic crisis, and the implementation process has already started. The more challenging issue is how to prevent the generation of new bad debt.” Says Wang.
He believes that a first step in this direction is to improve the efficiency of resource allocation. Ongoing financial reforms, including the liberalization of interest rates, bond markets, IPOs, private banking, a more flexible FX regime as well as the opening of onshore interbank markets over the last couple of years are positive attempts in his view.
Continued efforts to shift towards a more market-driven monetary policy transmission mechanism is also helping. In addition, the anti-corruption campaign has also effectively added relatively better supervision of the state sector. That said, SOE reforms have been relatively slow, with mixed signals, although we see certain positive developments, such as individual defaults allowed and a pledge to remove their public functions.
Preventing new problematic debt levels from rising again in the future will also require strengthened financial regulations. We think a large part of the new forms of finance, or so-called shadow banking activities, are the result of financial liberalization. The current segmented regulation system is unlikely to keep pace with the rapid financial innovation across sectors and products. This will be an issue to monitor going forward.
“From an investment perspective we keep our preference for China’s “new economy” sectors, which could benefit from the move towards a more service-driven economy.” Wang concludes.
CC-BY-SA-2.0, FlickrFoto: fancycrave1 / Pixabay. La clase media-alta de Reino Unido se decanta por la banca online
Research by financial services research and insight firm Verdict Financial has found that the UK’s mass affluents, compared to non-mass affluents, are heavier users of online and mobile banking, are more likely to favor these channels for routine activities, and are more satisfied with the performance of digital banking channels.
The company’s latest report finds that among those who use online banking, 89% of mass affluents accessed this channel at least once a week, compared to 83% of non-mass affluents. For mobile banking, the equivalent weekly usage figures were 83% and 79%, respectively.
Furthermore, mass affluents are slightly more inclined to use digital channels to carry out activities such as checking their balance, paying bills, and managing their direct debits.
Daoud Fakhri, Principal Analyst for Retail Banking at Verdict Financial, states: “Mass affluents are more confident about financial management than other consumers, finding it easier, for example, to keep track of their day-to-day spending. As such, they are more at home using digital self-service channels and less reliant on speaking to bank staff, whether in-branch or in a call center.”
Verdict Financial’s report also found that mass affluents were more satisfied than other consumers with the functionality, usability, and security of digital channels, especially mobile. For example, while only 36% of non-mass affluents were very satisfied with mobile banking security, this rose to 45% of mass affluents.
Fakhri continues: “The high level of enthusiasm for digital banking among mass affluents is good news for the banking industry. Banks are trying hard to migrate their customers to their online and mobile banking platforms, which incur far lower operational costs than branch networks and call centers, and it appears that mass affluents are happier than non-mass affluents to go along with this.
“Given that mass affluents are a highly attractive demographic in terms of their revenue-generating potential, there is clearly a strong incentive for banks to continue developing their digital channels by adding new functionality and improving ease of use.”
