CC-BY-SA-2.0, FlickrFoto: Unsplash / Pixabay. John DeVoy regresa a Loomis, Sayles & Company
Loomis, Sayles & Company announced that John DeVoy, CFA, returned to the company as a dedicated credit strategist for the flagship full discretion team. Simultaneously, Brian Kennedy and Todd Vandam, CFA, assume full-time portfolio management roles on the full discretion team and will transition their credit strategist responsibilities (investment grade and high yield respectively) to John. Todd, Brian and John will report to Elaine Stokes and Matt Eagan, co-heads of the full discretion team.
“The complexity of global fixed income markets continues to expand as does investor demand across the full discretion product suite. We are pleased that John is back on board to dedicate his full efforts to providing insight on credit trends,” said Elaine Stokes. “Additionally, John’s role allows Brian and Todd the time to focus exclusively on portfolio management. Their promotions are reflective of the excellent work they have done managing various full discretion strategies to date.”
As a dedicated resource for the full discretion team, John’s responsibilities will include:
Providing insight into cyclical and secular credit trends affecting the investment environment for the full discretion portfolio management team
Partnering with the firm’s various credit analysts and sector teams to form opinions of investment opportunities
Providing team portfolio managers with specific investment and trade recommendations in the corporate sector across the full discretion product line
As co-portfolio manager on the Loomis Sayles full discretion team, Brian joins veteran fixed income managers Dan Fuss, Elaine Stokes and Matt Eagan on the full suite of Loomis Sayles multisector funds and strategies, which includes the Loomis Sayles Bond Fund and Loomis Sayles Strategic Income Fund. In February 2013, Brian was named co-portfolio manager of the Loomis Sayles Investment Grade Bond and Loomis Sayles Investment Grade Fixed Income funds.
Todd is one of the founding co-portfolio managers of the Loomis Sayles strategic alpha strategy that launched in 2010, which currently has $4.4 billion in assets under management. Additionally, Todd is a co-portfolio manager of the Loomis Sayles US high yield strategy (currently $3.5 billion) and Loomis Sayles global high yield strategy ($290 million).
Nick Langley - Foto cedida
. RARE Infrastructure (filial de Legg Mason): ¿Por qué son interesantes las inversiones en infraestructuras?
One of the first things that you realise when you start looking into the infrastructure asset class is that everyone’s definition of what ‘infrastructure’ is varies. Our view of infrastructure is as follows; we are looking for hard assets that provide an essential service to an economy, and which have a degree of price certainty built in so that we know the asset provider is going to get paid for providing the service. It is this approach that forms the basis of our thinking, says Nick Langley, co-CEO & co-CIO, RARE Infrastructure, when asked about investment types in listed infrastructure investing.
The infrastructure universe can be broadly separated into four main asset types: community and social assets, regulated assets, user pay assets, and competitive assets. You can split the universe in this manner because of the different types of assets that fall within each group, and their different characteristics as investments. It is important to do so because you’re going to get very different types of risk and return profiles based on the type of infrastructure assets that you hold, he adds.
The first group, community and social assets, is those assets that many people will mention when you ask them to name infrastructure; schools, hospitals, and prisons are some of the main examples. These are assets which have traditionally been funded with public sector involvement, and which have a clearly visible beneficial impact on society, although for investors may offer low returns with limited growth potential.
The second group is regulated assets. These are assets that operate in a regulated environment; their operations, and therefore return profiles, are impacted by the regulator of their particular industry. The key examples here are energy companies (e.g. gas and electricity utilities which manage the gas and electricity networks) and water utilities. These companies are regulated because they typically operate in markets that tend to be natural monopolies. For example, the UK, like most countries, only has one national electrical transmission network which is managed and operated by National Grid.
The third group, user pay assets, are assets that are involved with moving people or goods around an economy. For example, companies that operate road and rail networks, airports, and ports. These companies are not regulated, however they often operate with concession-based contracts; for example, a company may hold the lease to operate a particular toll road for a certain amount of time. User pay assets are more exposed to growth than regulated assets, as their revenues are typically linked to economic or population growth.
The final group consists of assets that operate in competitive markets, with exposure to wholesale prices, and typically without the security of regulation or concession contracts. An example here is energy generation and retail companies – rather than managing the energy networks, these are companies that create energy and sell energy to the end user. They are therefore subject to supply and demand risk, and potentially commodity price risk.
Which are the most interesting investments?
We focus on investing in the regulated assets and user pay assets. We do so due to the fact that these companies operate either within a defined regulatory framework or with long-term contracts in place, which underpins the return profiles of these companies. The cash flows of these companies typically stretch out decades into the future (i.e. they have a long duration), and the frameworks that they operate in means that with the appropriate expertise it is possible to estimate these cash flows, and therefore the intrinsic value of the companies, with some degree of accuracy.
This means that the main types of assets we invest in include the regulated gas, water, and electricity companies in the regulated assets space, and then toll road, rail, port, and airport companies in the user pay space.
Why are investments in infrastructure interesting?
Infrastructure has a number of characteristics that are often attractive to investors, including a strong and stable risk/return profile, inflation protection, income, lower correlation to traditional asset classes, and defensive qualities such as generally lower drawdown in falling equity markets.
Stable risk return profile and inflation protection – as infrastructure companies are typically involved in the provision of an essential service (often over a long time period), backed by hard assets, whilst having a degree of price certainty (e.g. a regulatory framework or long-term contract), we see the risk/return profiles on offer in the sector being stable over time. Whilst any return will involve some degree of risk, the nature of the asset class means that skilled investors can achieve a return that more than compensates for the risk incurred. In addition, given underlying infrastructure assets typically have some degree of inflation-linkage built in through these regulatory frameworks or long-term contracts, infrastructure provides good protection against changes in inflation. We estimate that 70% of the cashflows of companies invested in within our flagship Value strategy are either directly or indirectly linked to inflation.
Income – As discussed in more detail below, infrastructure typically provide an attractive income over time, given the recurring and growing dividends paid by many companies within the opportunity set.
Lower correlation to traditional asset classes – infrastructure can act as a good diversifier in a portfolio, given its lower correlation to asset classes such as equities and bonds. This is a result of the underlying return streams of infrastructure companies being strongly linked to the regulatory or contractual frameworks in place, rather than typical drivers of equity and bond returns. Even more importantly, we frequently see this diversification benefit increase in times of market stress, meaning that infrastructure can provide protection through diversification exactly when it is needed the most.
What yields could you expect from these investments?
The type of listed infrastructure companies we invest in provide an attractive (typically high single digit) return, whilst achieving this in a relatively low risk manner. We also see listed infrastructure providing favourable up- and down-market performance characteristics, participating in returns in up markets, but providing protection in down markets. This is a result of the defensively natured (and often income paying) regulated assets providing protection in times of market stress.
The yield on the assets we invest in varies – in the user pay assets we typically see a lower yield, however in the regulated assets we see significant and growing dividend yields over time, with figures in the 5% – 10% p.a. range not uncommon. Bringing these two asset types together, we would expect to see a yield of say 3.5% to 5.5% in a portfolio which maintained a 50:50 weighting between user pay assets and regulated assets.
Foto: Rich Brooks. Bill Gross recomienda a los banqueros centrales recordar los principios del Monopoly
In his July’s letter to investors, Bill Gross states that if “Fed Governors and Presidents understood a little bit more about Monopoly, and a tad less about outdated historical models such as the Taylor Rule and the Phillips Curve, then our economy and its future prospects might be a little better off.”
Without forgetting of other effects such as Brexit, the growing Populist movement and the possibility of what he calls de-globalization (less trade, immigration and economic growth), he highlights the $200 you get when passing go, mentioning it is like new credit, “responsible for the ongoing health of our finance-based economy. Without new credit, economic growth moves in reverse and individual player “bankruptcies” become more probable.”
He also explains how at the beginning of the game when “the bank”- which he compares to private banking, gives out the initial $1,500 growth is strong but eventually it starts to decelerate.
After explaining that money supply or “credit” growth is not the only determinant of GDP but the velocity of that money or credit is important too and that today’s “contribution of velocity to GDP growth is coming to an end and may even be creating negative growth,” he goes on to warn about that this means that “at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year’s end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return “of” your money, not the return “on” it. Our Monopoly-based economy requires credit creation and if it stays low, the future losers will grow in number.” He concludes.
You can read the full letter in the following link.
Over 2000 people gathered in Atibaia during the 24th, 25th, and 26th of June to attend XP Investimentos’sixth national convention, one of the largest events held in Latin America for investment professionals. The Expert 2016 event was attended by such international fund management companies with a local presence as Franklin Templeton, BlackRock, JP Morgan AM, BNP Paribas AM, Deutsche Bank, BNY Mellon, and Mirae Assets; local fund managers with a prominent role in Brazilian and Latin American markets such as the Group’s own fund manager, XP Gestão de Recursos, thefund management companies within the Azimut Group, Questy AZ and AZ Legan, BTG Pactual, Bozano Investimentos, Votorantim Asset, and Valora Gestão de Investimentos, amongst others. In addition, banks and insurance companies such as Porto Seguro, Prudential, Sulamérica Investimentos, and Icatú Seguros, as well as the fund distributor and custodian platform, Allfunds Bank, also participated.
During this financial industry trade fair, there was also time for conferences, training sessions and presentation of awards. The event kicked off with a welcome to all attendees by Guilherme Benchimol, XP Investimentos President and Founding Partner of XP Group. Benchimol recalled the company’s beginnings, reviewing its development from the outset. Gabriel Leal, a partner at XP Group and the company’s Retail Business Director, spoke about the current situation in the markets and the future of XP Group.
Next, Abilio Diniz, current President of the Board of Directors at Península Participaçoes, spoke about the challenges currently faced by Brazil. Diniz recommended trying to understand the country’s current crisis by using the example of the ideograms that make up the word “crisis” in Mandarin Chinese: “danger” and “opportunity”. Thus, he informed of the need for: survival spirit, monitoring costs closely, assessing the crisis as a whole, avoiding to blame the crisis, looking in the mirror rather than out of the window, and anticipating, all in order to exit the crisis stronger. Abilio Diniz, who along with his father Valentim, was responsible for developing one of the country’s largest retail distribution networks, Grupo Pão de Açúcar, is also Chairman of the Board at BRF, and member of the board of directors for the Carrefour Group in Brazil.
Later, Martin Escobari, entrepreneurial and private equity investor partner in charge of General Atlantic’s operations in Latin America, shared his three rules for investing even in times of low visibility. For Escobari, the first rule is to look to the future, something relatively easy to do in markets such as Brazil which, to a certain extent, lag behind more developed markets. As an example, he mentioned the mutual funds retail distribution market in the US during the seventies, in which 80% of the funds were distributed through banks and 20% by independent firms, and its evolution to the present, in which 98% of investment funds are distributed by independent entities; while the Brazilian funds’ distribution market is almost entirely in the hands of banks, which portends a trend in the migration of savings towards independent channels. As a second rule, he recommended reacting quickly to market conditions, and finally, as a third rule, looking for resistance by investing in companies that do not depend on the country’s situation.
During his presentation, José Gallo, Director and President at Lojas Renner, spoke of the need to ‘enchant’ the client, the importance of developing an emotional attachment to the construction of a brand, and simplifying the management process as much as possible.
Finally, one of the most exciting moments of the day was when the audience stood to welcome the ‘Eternal President’, Fernando Henrique Cardoso, President of Brazil for two consecutive terms, from 1995 to 2003. Cardoso gave an overview of the extremism currently present in global politics, with the very recent Brexit results and the US presidential elections before the end of the year. With regard to the economic crisis currently faced by Latin America’s largest economy, Cardoso referred to the years of the global financial crisis and the performance of the financial team under Lula’s government, during which there was an increase in public spending, credit, and consumption, without an increase in investment, which in his opinion is a “Recipe for Disaster.” The former president also spoke of the need to reform the Brazilian political system, in which the more than 30 parties participating in Congress prevent setting a course for implementing the political agenda, he therefore commented on the need to return from cohabitation presidentialism to coalition presidentialism. As for the future of Brazil, Cardoso believes that the country reached a turning point where the Lava-Jato operation was a necessary and positive step for advancement. His only fear is the possible emergence of “backward” political demagogues who do not culturally perceive the need for what needs to be done. At the economic level, he trusts the dynamism of Brazilian industry and agriculture as a force to recover the path to growth. When asked if he would be willing to return to the forefront of politics, the former president’s felt honored by the request, but declined politely, joking that at 85 years of age, a return to politics would shorten his life significantly.
PIMCO, a leading global investment management firm, has hired Gene Frieda as Executive Vice President and Global Strategist for the firm’s emerging markets and global strategies and Yacov Arnopolin as Executive Vice President and Emerging Markets Portfolio Manager. They will both be based in PIMCO’s London office.
Frieda, who will work primarily with the emerging markets team but will also contribute to other global, country and sector strategies, will report to Andrew Balls, Managing Director and Chief Investment Officer – Global Fixed Income. Arnopolin, who will focus primarily on emerging markets external debt strategies, will report to Michael Gomez, Managing Director and Head of the Emerging Markets Portfolio Management team.
“Gene and Yacov are two tremendous additions to our global macroeconomic and emerging markets portfolio management expertise, as their deep experience will bolster PIMCO’s investment process and tap the investment opportunities we see for clients in emerging markets,” said Dan Ivascyn, Managing Director and PIMCO’s Group Chief Investment Officer. He added: “PIMCO will continue to use its considerable resources to hire the best industry talent globally. Already this year, we have hired more than 130 new employees, including 14 portfolio managers and 20 more investment professionals across many areas including alternatives, client analytics, mortgages, real estate and macroeconomics.”
Frieda joins PIMCO from Moore Capital Management where he was a Partner and Senior Global Strategist. Prior to that, he was the Global Head of Emerging Markets Research and Strategy at the Royal Bank of Scotland. Prior to joining PIMCO, Arnopolin was a Managing Director and Portfolio Manager at Goldman Sachs Asset Management in New York where he helped oversee emerging market portfolios for institutional clients such as pension funds, insurance companies and sovereign wealth funds.
“Gene and Yacov bring nearly 40 years of combined investment experience and complement other specialized resources we have added in recent years, including in emerging markets corporates and local markets,” said Gomez.
“As the adverse global backdrop of lower commodity prices and a stronger dollar give way to a more constructive picture for emerging markets, now is an exciting time to be adding two such talented investment professionals as Gene and Yacov to the PIMCO team,” said Balls.
According to new research from Cerulli Associates, digital advice could offer a solution for U.S. consumers with portfolios too small to attract the attention of financial advisors.
“The mass market and the lower end of the middle market are underserved by financial advisors,” states Tom O’Shea, associate director at Cerulli. “A vast majority of consumers do not possess the assets necessary to merit attention from financial advisors.”
“Digital advice innovation presents an opportunity to enhance the efficiency of advisors servicing small accounts,” O’Shea adds. “Combining human and digital advice can strengthen the fiduciary foundation of the client recommendations. This combination also allows an advisor to scale their practice in such a way that he or she can profitably manage the smaller accounts of mass-market consumers.”
“Almost 90 million U.S. households have investable assets of less than $100,000,” O’Shea explains. “Yet, only 8% of financial advisors treat this segment as their core market. The overwhelming majority of advisors target clients with higher levels of investable assets.”
“It is not that advisors are unwilling to help small investors,” O’Shea continues. “Rather, they cannot figure out how to make money when working with them, leaving investors to go it alone or rely on guidance provided by direct-to-consumer firms.”
Zurich headquartered GAM, the industry’s third-biggest provider of liquid alternative UCITS funds, announced the acquisition of Cantab Capital Partners, an industry-leading, multi-strategy systematic manager based in Cambridge, UK. Cantab manages USD 4.0 billion in assets for institutional clients worldwide.
At the same time, GAM launches GAM Systematic, a new investment platform dedicated to systematic products and solutions across liquid alternatives and long-only traditional asset classes including equities, debt and multi asset. Cantab will form the cornerstone of GAM Systematic.
By moving into the growing segment of scalable systematic investing, GAM takes an important step to deliver on its long-term objective to expand and diversify its active asset management business. Leading systematic strategies are attracting substantial allocations from investors globally due to their compelling returns and their rigorous, disciplined investment processes.
According to a press release, “GAM Systematic will complement GAM’s successful active discretionary investment offering. It will also serve as the Group’s innovation hub for the development of new technologies, investment ideas and approaches for systematic strategies and products.”
Alexander S. Friedman, Group Chief Executive Officer of GAM, said: “We have been evaluating how best to enter the systematic space for the past 18 months because we believe it represents an important capability for an active investment firm in the current environment and in the decades to come. GAM Systematic will offer our clients a compelling range of unique products complementary to our strong discretionary product range at a time when the investment industry is challenged to provide cost-efficient, liquid and diversified sources of returns.”
“The market turmoil following the UK referendum last week has only reinforced our determination to pursue, and deliver on, our strategy of diversification and long-term growth. In Cantab we are acquiring industry-leading intellectual capital, a highly distinguished decade-long investment performance track record, and a profitable and scalable business. In combination with GAM’s global distribution reach, I am convinced that this business is well positioned for significant growth.” He concluded.
Foto: Global Panorama
. BNP Paribas crea un holding para agrupar sus filiales en Estados Unidos
BNP Paribas has announced the creation of an Intermediate Holding Company (IHC), BNP Paribas USA, Inc., effective 1 July 2016. This decision signals the bank’s commitment to the US market, its largest market-by commitments as of 12/31/15- outside Europe and a region that is central to its businesses and development plans.
As a large Foreign Banking Organization, the bank is required by new regulation to place all its controlled US subsidiaries under a US holding company. BNP Paribas USA will hold the retail subsidiary ‘BancWest’ and the Corporate and Institutional Banking’s (CIB) and asset management subsidiaries in the United States.
The wholesale and retail businesses in the United States have seen significant growth over the past couple of years: in 2015 CIB and Retail Banking & Servicesincreased their revenues in North America by, respectively, 15% and 5% (in USD) vs 2014. Today the Group employs over 16,000 people in the country.
Michael Shepherd becomes Chairman of the new holding and retains his chairmanship of BancWest. And Jean-Yves Fillion, Head of CIB Americas becomes its CEO.
Foto: James Cridland
. Norteamérica lidera la captación de fondos para private equity en el segundo trimestre de 2016
The private equity fundraising market accelerated in Q2, as 180 funds closed securing a combined $101bn. Given that these numbers are expected to rise 10-15% as more information becomes available, the aggregate capital secured by funds closed in the quarter looks set to approach the record $112bn seen in Q4 2013. However, while the number of funds closed almost matches the 186 funds closed in the previous quarter, it falls some way short of the 261 funds that closed in the same period last year.
The majority (54%) of private equity funds closed in H1 2016 have closed above their target size, a record high. Just 21% of funds have closed below their target size, down from 28% of funds that did so in 2015.
The level of uncalled capital available to fund managers of core private equity strategies hit new record highs, rising from $745bn at the end of 2015 to $818bn as of the end of June 2016.
As of the start of July, there are 1,720 private equity funds in market worldwide, targeting an aggregate $447bn, compared to 1,630 funds that were seeking $488bn at the start of the year. This is the first reduction in aggregate target capital since the start of 2014.
North America-focused funds were the key driver of growth in the quarter; 96 funds focused on the region raised $60bn, accounting for 59% of the aggregate capital raised globally. By contrast, Europe saw 44 private equity funds raise just $33bn in Q2, of which the Ardian Secondary Fund VII accounts for $10.8bn. Only 11 buyout funds focused on the region closed, securing an aggregate $13bn. Elsewhere, 33 Asia-focused funds raised $6bn through the quarter, while seven funds focused on Rest of World raised $1.3bn.
“The second quarter of the year has seen robust fundraising activity, with over $100bn raised globally, despite the relatively low number of funds closed. This highlights the continuing trend seen of increased amounts of capital being allocated to a smaller number of experienced fund managers.
Global uncertainties surrounding the US presidential election and the British EU referendum have continued to cast a shadow over the industry, and while North America- focused fundraising has been robust, Europe seems to be experiencing a more cautious environment. With volatility persisting in the wake of Britain’s EU referendum result, we can expect further uncertainty to affect the European fundraising market.”Said Christopher Elvin, Head of Private Equity Products.
Generali Investments has been included in the ‘High-impact Socially Responsible Investments’ category in the 2015 report of the responsible investments in France compiled by Novethic, the Paris-based SRI certification agency, auditor and research center and the creator of the first European SRI certification. For the first time ever, Novethic has split the group of assessed companies into three categories, on the basis of how impactful their SRI approach is on the investment choices. Generali Investments has been nominated in the category with the strongest impact.
“The Novethic recognition is testament to Generali Investments’ continuous effort on SRI”, has commented Franca Perin, Head of SRI of Generali Investments. “Being included among the 29 most committed SRI asset managers certifies that Generali Investments is at the forefront of responsible investing thanks to a stringent, proprietary and innovative methodology and top- notch ESG analysis capabilities”.
Novethic has assessed 55 asset management companies operating in France and integrating Environmental, Social and Governance (ESG) criteria in their investment choices (barring mere exclusion principles). In the ‘High-impact SRI’ category, Novethic has included those managers applying either a best-in-class approach (i.e. excluding more than half of the investment universe, such as Generali Investments) or a best-in-universe approach (i.e. more than 25%) or offering thematic investments. The ‘High-impact SRI’ category accounted for €54 billion of assets in 2015, out of €746 billion of total responsible investments in France (+29% vs. 2014).
Headed by Franca Perin and composed of five analysts based in Paris, Generali Investments’ SRI team screens approximately 520 European listed companies in 26 different sectors on the basis of 34 ESG criteria. The criteria are applied in a way that rewards those companies making the ‘best efforts’ to reach the ‘best practice’. The initial universe is therefore halved, and the selected companies are included in the proprietary database S.A.R.A. (Sustainability Analysis of Responsible Asset Management). Generali Investments applies its SRI methodology to a portfolio of €30 billion in total. Generali Investments is also the appointed investment manager of two SRI funds – GIS SRI European Equity and GIS SRI Ageing Population.
