Foto: B Rosen
. La desaceleración de los EM y los resultados corporativos encabezan la lista de preocupaciones de los advisors
A slowdown in emerging markets, U.S. corporate earnings and U.S. economic slowing ranked as the top three concerns among investment managers polled in Northern Trust´s fourth-quarter 2015 survey. Fewer managers than in the past expect U.S. economic activity and corporate earnings to accelerate, a developing trend Christopher Vella, CIO, and Mark Meisel, SVP, Northern Trust Multi-Manager Investments, noted last quarter that continued this quarter. A large percentage of managers expect U.S. economic activity to remain stable, yet a small but increasing segment of managers expect a period of deceleration.
The study shows that only 21% of managers view U.S. equities as undervalued, down from 34% last quarter and the lowest percentage since the survey began in the third quarter 2008. Investment managers view the valuation of European equities in the best light, with approximately 85% rating them as either undervalued (54%) or appropriately valued (32%). Investment managers are most bullish on non-U.S. developed equities. Emerging market equities ranked second. Within economic sectors, information technology and financials ranked first and second in bullishness.
The results also show that two-thirds of managers expect little to no impact on global equity markets from the Fed’s interest-rate increase; If the price of oil remains low for another year, only 25% of managers believe it will be negative for the U.S equity market; 84% of managers believe the probability of a global recession due to a slowdown in emerging markets is 25% or lower; Only 23% of managers expect corporate earnings to increase, the lowest reading in this survey since the first quarter 2009; A large percentage of managers, 64%, expect U.S. GDP growth to remain the same, but only 23% versus 48% last year expect GDP to accelerate; 41% of investment managers view U.S. equities as overvalued, the largest percentage of managers since the survey began in the third quarter 2008.
Northstar Financial Services Limited, a Bermuda based financial solutions firm announced that Mark Rogers is due to play a more prominent role going forwards and that the firm is to begin operations in the Middle East and Africa.
Mark joined Northstar as a Director in July 2015 but, in his new position as Vice Chairman, he will be more actively involved in the global activities of the company and will spearhead the Middle East and Africa initiative. Northstar is in the final stages of establishing its office for the Middle East and Africa in the DIFC and is set to make an announcement regarding the Key Representative to be based in the region imminently.
Northstar’s Head of Distribution, Alejandro Moreno commented: “Having enjoyed such a successful relationship as colleagues at our previous firm, I am thrilled to be working so closely alongside Mark again. His vast experience and global network of relationships should prove to be invaluable as we continue to enhance our product range and expand into new territories. The Middle East and Africa in particular represent a significant opportunity for Northstar and I look forward to working with Mark in those regions.”
Mark Rogers commented: “I couldn’t resist the opportunity to play a more central role at Northstar. With a robust operating history stretching back 17 years, a compelling range of products and a highly experienced team, Northstar is perfectly positioned to support the growing demand for international investment products.”
Ariel Bezalel, fund manager of Jupiter Dynamic Bond Fund, explains in this interview with Funds Society the opportunities he sees in the Fixed Income space.
In the current low yield scenario and bearing in mind the US rates hikes we are starting to see, do you believe fixed income still offers value?
We do not believe that the US Federal Reserve will hike rates aggressively this year. Nevertheless, our portfolio is defensively positioned and our allocation to high yield is the lowest it has been in a while. We see pockets of value in fixed income.
Are there more risks than opportunities in the bonds markets?
Policy mistakes by the US Fed, a China hard-landing and the broader emerging markets’ crisis are some of the risks in the bond markets at the moment. Opportunities persist and one of our top picks at the moment is local currency Indian sovereign bonds.
Is it harder than ever to be a fixed income manager?
We may be in a more challenging environment for bonds but the advantage of a strategic bond fund like ours is that we can move in and out of different fixed-income asset classes, helping us to steer clear of riskier areas.
Some managers in charge of mixed funds used to see the fixed income as a source of protection and returns. Do you believe that this asset plays now a much more limited role?
Fixed income can still provide protection for investors – default rates are far from recent highs.
Where can you find investment opportunities in fixed income right now (high yield, investment grade, public, private, senior loans…)? Any particular market or sector?
We are running a bar-bell strategy in the funds – in which we have a large allocation to low risk, highly rated government bonds and a balancing exposure to select higher-yielding opportunities. We like legacy bank capital and pub securitizations within the UK. Within EM, we like local currency Indian sovereign bonds, Russian hard currency corporate debt and Cypriot government bonds.
What is going to be the effect of the US interest rates hike we saw last week? Which will be the next steps of the Fed in 2016? Will we see a decoupling between the US and the European yields?
It will be several months before we can assess the impact of the Fed’s move on the US economy. However, a number of leading indicators suggest to us that the US economic recovery is less secure than is commonly believed. The Evercore ISI Company Surveys, a weekly sentiment gauge of American companies, has weakened this year and is currently hovering around 45, suggesting steady but not spectacular levels of output. The Atlanta Fed’s ‘nowcast’ model indicates underlying economic growth of 1.9% on an annualised basis in the fourth quarter, a level consistent with what many believe is a ‘new normal’ rate of US growth of between 1.5% and 2%.
More worryingly, the slowdown in global trade now appears to be affecting US manufacturing. The global economy is suffering from acute oversupply, not just in commodities but across a range of sectors, and industrial output in the US is now starting to roll over. In this climate, there is a genuine risk that the Fed will end up doing ‘one and done’. In some ways, it seems that the Fed is looking to atone for its failure to begin normalizing monetary policy earlier in the cycle, before the imbalances in the global financial system became so pronounced.
Longer term, the ability of central bankers to normalise policy is constrained by powerful deflationary forces, including aging demographics, high debt levels and the impact of disruptive technology and robotics, a reason why we are comfortable maintaining an above- consensus duration of over 5 years.
What are the forecasts for the emerging debt in 2016? Do you see a positive outlook for the bonds of any emerging country?
We have adopted a cautious stance towards emerging markets (EMs) recently at a time when many developing countries have been experiencing economic and financial headwinds. Currencies and bond markets in countries such as Brazil, Turkey and South Africa have been uncomfortable places for investors to be over the past 12 months as the strengthening US dollar, lower commodities prices and high dollar debt burdens have proved to be a toxic combination.
We have benefited though from situations where indiscriminate selling has left opportunities, and we have found a couple of stories that we really like.
In Russia, we have been investing selectively in short-dated names in the energy and resource sectors including Gazprom and Lukoil. Russian credit sold off last year as the conflict in Ukraine, the country’s involvement in Syria and the oil price sell-off caused the rouble to depreciate. Investor aversion towards Russia has meant we have been able to find companies with what we believe are double A and single A rated balance sheets whose bonds trade on a yield typically more appropriate for double B or single B credits.
India is another emerging market story we like. Monetary policy has become more prudent and consistent. Inflation has fallen from a peak of 11.2% in November 2013, aided by lower oil prices which has supported the rupee against major currencies. Our approach has therefore been to seek longer-duration local currency bonds. We rely on rigorous credit analysis to select what we believe are the right names, particularly as the quality of corporate governance remains low in India.
Will emerging currencies keep depreciating vs the US dollar?
With the US Fed raising rates in December and economic weakness persisting in emerging markets, we believe the trend will be for gradual depreciation of emerging currencies.
Which are the main risks for the fixed income market these days?
US Fed policy mistake, China hard-landing, emerging markets crisis.
We have seen a notorious crisis in the high yield market in the last weeks. What is exactly happening? Does the lack of liquidity concerns you?
Much was written at the end of last year concerning certain US funds that have frozen redemptions. In addition to this we have seen material outflows from US high yield mutual funds. We have been concerned about US high yield for some time, and have limited exposure to this market. Furthermore, the other concern we have had for a while is some sort of contagion to European credit as credit in emerging markets and US credit have continued to come under pressure. For this reason we have been reducing our European high yield exposure and within our high yield bucket we have been improving the quality and also preferring shorter dated paper.
Yes, liquidity has been the other big risk for the credit market. Due to regulatory reasons investment banks simply cannot support the markets as well as they did in the past. At this late stage of the credit cycle, and with the Fed tightening policy even further (the combination of a strong dollar and quantitative easing coming to an end in the US is a tightening of economic conditions in our opinion) caution is warranted.
What are the prospects for inflation in Europe? Do you see value in the inflation-linked bonds?
We think inflation will remain low in Europe driven by stagnating economic growth and lower oil prices. One of the key measures of inflation expectations, the 5y5y forward swap, demonstrates that investors do not expect inflation to increase materially.
Foto: aehdeschaine. Legg Mason sigue creciendo: adquiere Clarion Partners, una minoría en Precidian Investments y combinará Permal con EnTrust Capital
As we published earlier this month, Legg Mason has announced that it has agreed to acquire a majority equity interest in Clarion Partners, a leading diversified real estate investment firm based in New York that manages approximately $40 billion across the real estate risk/return spectrum. Clarion Partners will operate as the primary independent real estate investment affiliate for Legg Mason and Steve Furnary, Chairman and CEO of the firm, will continue in his current role.
Under the terms of the transaction, Legg Mason will acquire an 83% ownership stake in Clarion Partners for $585 million.In addition, Legg Mason will pay for its portion of certain co-investments on a dollar for dollar basis, estimated at $16 million as of December 31, 2015. The management team will retain 17% of the outstanding equity in Clarion Partners. Legg Mason’s ownership percentage and the purchase price may be adjusted lower if the management team elects before the closing to retain more than 17% (not exceeding 20%). The firm’s previous majority partner, Lightyear Capital, will sell its entire ownership stake in the transaction. The deal is expected to close in the second calendar quarter of 2016.
The company also announced it has entered into a definitive agreement to combinePermal, Legg Mason’s existing hedge fund platform, with EnTrust Capital. EnTrust is an independent hedge fund investor and alternative asset manager headquartered in New York with approximately $12 billion in total assets and complementary investment strategies, investor base and business mix to Permal. The business combination will create a global alternatives firm with over $26 billion in pro-forma AUM and total assets of $29 billion. As a result of the combination, Legg Mason will own 65% of the new entity, branded EnTrustPermal, with 35% being owned by Gregg S. Hymowitz, EnTrust’s Co-founder and Managing Partner. The new company will be led by Mr. Hymowitz, who will become its Chairman and Chief Executive Officer. Key investment and business professionals from both firms will continue to serve the investors of the new organization.
And, last, the same day Legg Mason also announced that it has acquired a minority equity position in Precidian Investments, a firm specializing in creating products and solutions related to market structure issues, particularly with regard to the ETF marketplace. Precidian powers its own ETF products subadvised by unaffiliated managers and works with financial services firms to jointly develop solutions, structures and products to meet investor needs. Under the terms of the transaction, Legg Mason purchased a new class of preferred equity, entitling it to the rights of a holder of 19.9% of common equity, with the option to acquire a majority interest in the common equity. Other terms of the transactions were not disclosed.
CC-BY-SA-2.0, Flickr. Guillermo Ossés joins Man GLG as Head of Emerging Market Debt Strategies
Man GLG, the discretionary investment management business of Man Group plc, announced on Monday that Guillermo Ossés joined the firm as Head of Emerging Market Debt Strategies, based in New York.
Guillermo, who brings 24 years of experience in emerging markets fixed income investing to Man GLG, joins the firm from HSBC Asset Management. Guillermo joined HSBC in 2011 and led the firm’s emerging markets fixed income capabilities, managing in excess of $20 billion. Prior to this, Guillermo was an emerging markets fixed income portfolio manager at PIMCO and held emerging markets positions at Barclays Capital and Deutsche Bank. He holds a BA in Business from Universidad Católica de Córdoba in Argentina and an MBA from the Massachusetts Institute of Technology Sloan School of Management.
The recruitment of Guillermo follows the acquisition of Silvermine and the recent hire of Himanshu Gulati last year, demonstrating Man GLG’s commitment to expanding its presence in the US, and further strengthening the firm’s capabilities.
Guillermo Ossés will report to Man GLG’s co-CEO Teun Johnston. According to whom, “it is with great pleasure that we welcome Guillermo to Man GLG. He has extensive experience in investment management and a distinctive investment process, alongside a proven track record of investing and managing investment teams in the emerging markets fixed income space. As Head of Emerging Market Debt Strategies, Guillermo will be instrumental in broadening our capabilities in the fixed income space and enhancing our client offering.”
Guillermo Ossés said: “Man GLG is a performance-focused business and its institutional framework, combined with an entrepreneurial environment and collaborative culture, make this a very compelling opportunity. I am very excited to be joining the firm, and working alongside Teun and his team as we strive to build a world class emerging markets fixed income investment management business.”
Barings Investments, a firm specialized in providing financial services for agribusiness, M&A and Wealth Management in Latin America, has just launched its new office in Asuncion, due to the high demand which exists in Paraguay for specialized financial services.
Emerson Pieri, head of Latin America for Barings Investments, hired Carlos Avila, who will be heading the new office and developing the business in Paraguay. Carlos Avila previously worked for Credit Andorra Group’s Valores Casa de Bolsa, as private banking financial advisor dedicated to buying and selling stocks and bonds on Paraguay’s stock exchange.
Barings Investments is diversifying participation in various business areas, looking for new opportunities outside the agribusiness and WM sectors. The company’s first venture is to try to attract a group of financial institutions to Paraguay to invest in the infra-structure sector. The first meetings, which aim to capture about half a billion dollars to build toll roads and airports with public and private funding, took place during the second week of January. For the first time, local companies like BYB Construcciones, Ferrere Abogados and private investors will have the support of an international firm such as Barings Investments to bid for a PPP project.
Paraguay, with a population of 7 million people, is a country with a vast wealth of natural resources. The country is crossed by several rivers which make up the Rio de la Plata Basin, which provides hydroelectric power to the Itaipu and Yacyreta power plants which are shared with Brazil. Other key activities in the country include highly automated agriculture and livestock production.
The latest data published on activity in Paraguay could not be more favorable for promoting investment and business in the country. According to the World Bank, Paraguay rates higher than Brazil on the scale of ease of doing business. According to a study by Brazil’s National Confederation of Industry, labor is 21% cheaper in Paraguay than in Brazil and electricity is 64% cheaper. Foreign direct investment to Paraguay grew by 230% between 2013 and 2014, compared with a 2% drop in Brazil. Indeed, Paraguay stands out in a region where overall FDI fell 16% in 2014 and which is expected to fall by as much as 10% this year. The International Monetary Fund expects Paraguay to expand by 3.8% next year, while a growth of only 0.8% is expected in the rest of the region.
In 1997, Paraguay reviewed their industry views by offering incentives to foreign companies willing to assemble low-end factory goods for the world market. Given the country’s inclination to political turmoil, (the overthrow in 2012 of President Fernando Lugo didn’t help) investors were opposed at first, but the situation has changed with the recent political changes.
Since Horacio Cartes, a tobacco magnate, was elected president in 2013, promising to turn Paraguay into a stable democracy with an improved economy, the government’s fiscal responsibility is improving and the country’s debt remains stable. Prior to his election as president, Horacio Cartes endorsed a bill passing an income tax (until then Paraguay lacked this type of revenue collection) to pay for public services and control the underground economy.
The Fourth Industrial Revolution, which includes developments in previously disjointed fields such as artificial intelligence and machine-learning, robotics, nanotechnology, 3-D printing, and genetics and biotechnology, will cause widespread disruptionnot only to business models but also to labour markets over the next five years, with enormous change predicted in the skill sets needed to thrive in the new landscape. This is the finding of a new report, The Future of Jobs, published last Moday by the World Economic Forum.
The report is based on a survey of chief human resources officers and top strategy executives from companies across nine broad industry categories and covering 15 of the world’s largest economies. These are; Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, South Africa, Turkey, the United Kingdom and the United States, plus the ASEAN and GCC groups. Together, these economies account for 65% of the global workforce.
In terms of overall impact, the report indicates that the nature of change over the next five years is such that as many as 7.1 million jobs could be lost through redundancy, automation or disintermediation, with the greatest losses in white-collar office and administrative roles. This loss is predicted to be partially offset by the creation of 2.1 million new jobs, mainly in more specialized “job families”, such as Computer and Mathematical or Architecture and Engineering.
These predictions are likely to be relatively conservative and leave no room for complacency. Yet the impact of disruption will vary considerably across industry and gender as well as job type. For example, Healthcare is expected to experience the greatest negative impact in terms of jobs in the next five years, followed jointly by Energy and Financial Services and Investors. The industry that stands to create the most jobs, perhaps less surprisingly, is Information and Communication Technology, followed by Professional Services and Media, Entertainment and Information professionals.
When it comes to respondents’ outlook on how best to deal with these sweeping changes, the news is more encouraging. The most popular workforce strategy across every industry is investing in reskilling current employees. Other practices, such as supporting mobility and job rotation, attracting female and foreign talent and offering apprenticeships, also scored high.
Drivers of change
Drivers of change will also have a very disparate impact within specific industries. For example, processing power and big data will have an especially strong impact on Information and Communication Technology, Financial Services and Professional Services. The rising middle class in emerging markets will have the largest effect on Consumer, Financial Services and Mobility. Consumer ethics and privacy issues will have a significant impact on the Consumer, Financial Services and Information and Communication Technology sectors.
The business model changes created by these drivers will, in turn, have specific and different consequences for employment and skills needs in each industry. While there is a modestly positive outlook for employment across most sectors over the 2015-2020 period, underneath this aggregate outlook there is significant relative growth in some job families and significant relative decline in others. Skills instability is expected to impact all industries but is particularly pronounced in Financial Services where 43% of the top skills needed in all job families across the industry are expected to change by 2020.
You may find the complete report following this link.
Standard Life Investments, a global investment manager, suggests that structural reforms in China will play an important role in determining the trends of global financial markets in 2016. In the January edition of Global Outlook, the manager also shines a spotlight on emerging markets, examines the global economy into 2016, the outlook for US bond markets and sterling, and drivers of global equities.
Alex Wolf, Emerging Markets Economist, Standard Life Investments said: “In China, we expect policymakers to continue walking a tightrope – balancing enough fiscal and monetary stimulus to prevent a sharper growth collapse, while slowly proceeding with supply side reforms to remove excess capacity. Slowing Chinese demand, which we believe was worse than official data reflected, was one of the largest causes of the emerging market trade and output contraction experienced last year. As such we see some room for cyclical upside, as policy measures take effect.
However, our longer-term outlook on China has become increasingly negative. Our own view is that GDP growth is closer to 5% than the 6.9% reported by the Chinese authorities. Although we believe policy makers will avoid a hard landing, it is becoming more likely that Chinese leaders will not enact necessary reforms quickly, especially of state owned enterprises (SOE). SOEs are at the heart of China’s problems, and reforms here would deliver the biggest dividends from a growth and rebalancing perspective, but Beijing has been dragging its feet.”
According to Standard Life Investment, SOE reform plans delivered over recent months were received with optimism, but they believe they failed to address corporate governance issues or the reduction of excess capacity through corporate restructuring and closures.
“Consolidation has been the preferred path, and the government seemed unwilling to sell or reduce state assets in a meaningful way. The plan will lack effectiveness if the focus on addressing loss-making companies and overcapacity is limited to a small number of centrally-owned SOEs, and not the mass of locally-owned SOEs, where most of the overcapacity and inefficiencies lie.
If China growth does disappoint this could drive continued volatility in global markets. Sluggish growth is priced into markets but a hard landing which impacts on currency, capital flows, commodities and social stability is not. This could result in more aggressive domestic monetary easing, forcing the renminbi lower against the dollar, with adverse implications for global inflation and a blow to emerging markets dependent on robust Chinese demand for manufactured goods and commodities.”
Foto: Dani Vázquez
. Hermes IM nombra presidente a David Stewart
Hermes Investment Management has announced the appointment of David Stewart as the new Chairman of the Board effective 1 April 2016. He assumes the position from Paul Spencer, CBE, who has been Chairman since 2011.
David Stewart is currently a Non-Executive Director of Hermes Investment Management since joining the Board in April 2015. He previously spent nine years at Odey Asset Management, initially as Chief Executive and latterly as a Non-Executive Director. He is Chairman of IMM Associates, a Non-Executive Director of the Caledonia Investment Trust, and sits on the Investment Committee of MacMillan Cancer Care.
Saker Nusseibeh, Chief Executive, Hermes Investment Management, says:“Since joining the Board as Chair of the Risk and Compliance Committee, David has quickly established himself as an insightful and trusted advisor. His advice and counsel will be greatly beneficial as we take Hermes through the next stage of its growth.”
David Stewart, Chairman elect,Hermes Investment Management, says:“I look forward to taking up my new role, and working with Saker, the leadership team at Hermes and my fellow Board members to build on the successes Hermes has already achieved. I see Hermes as an asset manager which is fully embedding responsible capitalism at the very heart of its business. This gives the firm a unique advantage, for which it is increasingly being recognized. ”
BBVA Compass and FutureAdvisor are forging an alliance to bring investment management services to a greater slice of the bank’s clients through digital means, making the Sunbelt-based financial institution the first major bank to sign on with FutureAdvisor after the San Francisco firm’s milestone year in which it combined forces with leading asset-management firm BlackRock.
BBVA Compass clients will be able to use the award-winning firm’s automated investment services later in 2016. The bank sees the alliance as a way to make sophisticated tools and guidance available to its digital-savvy clients who aren’t currently taking advantage of its investment services. The alliance demonstrates BBVA Compass’ willingness to align with innovators regarded by some as industry disruptors.
“FutureAdvisor gives us a way to connect more of our clients with convenient, affordable and trusted advice,” said BBVA Compass Chairman and CEO Manolo Sánchez. “The ultimate goal here is to help our clients take greater control of their finances so they can build bright futures.”
The alliance follows a headline-generating year for FutureAdvisor, which was acquired in September by BlackRock Inc., the world’s largest asset manager. FutureAdvisor has managed more than US$ 700 million in client investments since it launched its managed service in 2013.
Its innovative, always-on technology is guided by a proprietary algorithm, and its investment decisions are backed by theory developed by Nobel Prize-winning economists and continuously refined by a council of notable scholars and finance experts.
“We are very pleased to be deepening BlackRock’s longstanding relationship with BBVA through FutureAdvisor’s partnership with BBVA Compass,” said Laurence D. Fink, Chairman and CEO of BlackRock, whose firm has long helped BBVA serve clients in the U.S., Latin America, Spain and Portugal. “The role of technology in our industry continues to evolve as consumers increasingly look to engage with digital-advice platforms. FutureAdvisor powers an entirely new digital client experience for investors, which includes a diverse set of investment products, proprietary retirement technologies and risk analytics.”
BBVA Compass clients will be able to link external investment accounts with FutureAdvisor and receive a customized plan for their portfolios. FutureAdvisor’s investment management service will also be available for clients who want direct management of a portfolio, with the assets being held through the bank’s broker-dealer affiliate BBVA Compass Investment Solutions, a division of BBVA Securities Inc., member FINRA and SIPC. The service will include auto-rebalancing based on market movement and tax loss harvesting to help improve after-tax, risk-adjusted rates of returns.
FutureAdvisor is the latest innovator to join forces with BBVA Compass in the bank’s pursuit to lead the technology-driven transformation of the financial services industry. In 2014, its parent company, BBVA, acquired Simple, a Portland, Oregon-based company that has created a new standard in digital banking, through BBVA Compass. And through its alliance with the all-digital payments network Dwolla, the bank is helping account holders bypass conventional networks to send and receive funds instantly. It also is the latest in a series of BBVA Compass offerings designed to give clients greater control of their finances. In November, via the second release of BBVA Wallet, BBVA Compass became the first major U.S. bank to offer its credit card clients real-time redemption of rewards earned on qualified purchases made at any retailer. And in September, the bank introduced its ClearSpend prepaid card with a mobile budgeting app, a nod to the increasing use of prepaid debit cards across all ages and income levels.
FutureAdvisor was awarded the World Economic Forum’s Technology Pioneer award in 2015, and American Wealth Management Innovator award in 2014.
