In order to gain from a major technological and social shift that is still under-exploited by investors despite its strong value creation credentials, Edmond de Rothschild Asset Management, a pioneer in investment themes like healthcare – EdR Fund Global Healthcare has just celebrated its 30th birthday- is launching Edmond de Rothschild Fund Global Data.
The fund takes a stock-picking approach across all capitalization sizes and geographical zones, investing in growth stocks which have only limited exposure to global economic conditions.
Jacques-Aurélien Marcireau, the fund manager, has isolated several different but complementary stock profiles. Some companies (infrastructure) collect data and sell them to clients; others (analytics) develop software which analyses data while the third category concerns data users, or non-tech companies which have already integrated big data into their main business so as to achieve competitive edge.
The fund is a balanced blend of core holdings (51% minimum) in established big data players and companies which are capable of using big data to transform their business model. To mark the launch of EdR Fund Global Data, the international equity team has just been reinforced with the arrival of Nan Zhang, a junior fund manager and analyst.
A New Value-Creating Investment Opportunity
The arrival of big data is ushering in major social changes and forcing companies to adapt their strategy. The concept emerged at the beginning of the decade and covers two key areas: technological innovation to facilitate data storage but also, and perhaps more importantly, new developments tied to the rapid increase in connected objects which are bringing billions of people together.Huge sections of the economy are concerned by a development which seeks to turn data into a key decision-making tool, thereby creating value for companies.
Harnessing exponential flows of data (Volume) from different sources (Variety) which are most often cross-referenced in real time (Velocity) allows companies to better understand their markets, boost organisational efficiency and generate robust revenues. The financial gains from such large-scale analysis based on the 3V concept could run into billions of US dollars in coming years.Economic players will benefit from as yet largely untapped growth from digital data reckoned to hit 35,000 exabytes in 2020, or twenty times more than in 2010. According to the International Data Corporation (IDC), only 0.5 % of global data is currently being analysed.
Giants like IBM, Cisco and Microsoft as well as start-ups have big ambitions in data analysis which they see as a value-creating tool.A good number of sectors like insurance or autos are making huge efforts to collect as much data on customer behaviour as possible to optimise risk analysis and identify new markets. Growing use of big data should also radically transform the healthcare sector with the emergence of personalised medicine. Companies, governments and entire cities will see real benefits from this development. Estimates suggest that the smart city market, for example, will be worth USD 100 bn by 2030.
CC-BY-SA-2.0, FlickrPhoto: 一元 马 . Aberdeen Granted WFOE Licence, Signals Long-Term Ambition in China
China has granted Aberdeen Asset Management, the UK-based asset manager, a Wholly Foreign-Owned Enterprise (WFOE) business licence.
The announcement comes as UK Chancellor of the Exchequer, George Osborne, leads a trade delegation to China.
The licence, issued to a newly-created Aberdeen subsidiary by the Shanghai Administration for Industry & Commerce, Pilot Free Trade Zone Branch, will enable the company to set up an office there under the pilot Free Trade Zone.
Aberdeen has long wanted to expand its activities in China. The chief constraints have been access, control and manpower. The company has taken a gradual approach, having opened a representative office in 2007. That office has mainly performed liaison work.
Under the new venture, the plan is to add analysts to research local equities and business development staff. At present, Aberdeen does such research mainly from Hong Kong, preferring to do this in-house, and this will continue.
In the first stage asset-raising will focus on local institutions. The WFOE is based in the Free Trade Zone which brings further advantages.
Aberdeen stresses the importance of patience, however. It is not seeking quick returns but looking to build its presence step by step, mindful that, while liberalisation is good for the industry, opportunities are evolving fast.
That view is informed by the raft of new investment initiatives, which have included the likes of ‘Stock Connect’, the Hong Kong-China mutual recognition scheme for funds as well as the WFOE regime itself.
Catalonia is voting to renew its parliament this Sunday. Contrary to other regions, attention was not focused on emerging parties like Podemos and Ciudadanos but completely monopolized by the independence question. Debates have mostly opposed the pro-independence list “Together for Yes”, led by current President Artur Mas, to the rest of parties that defend the unity of Spain. “We expect the current uncertainty to ease in the medium term, in particular after the general elections of December, since the next central government should take note of the Catalan elections and start negotiations for additional political and fiscal autonomy”, explains Jean-Alexandre Vaglio, member of the Research team at AXA IM.
The Catalan political landscape is facing an almost unprecedented situation. The ruling Convergence and Union (CiU), that federated the Democratic Convergence of Catalonia (CDC) and the Democratic Union of Catalonia (UDC) since the first post-Franco elections, was dissolved due to diverging opinions regarding the Catalan independence process. Artur Mas, President of Catalonia and leader of the CDC, is now running the pro-independence joint list “Junts pel Si” (JS, Together for Yes) that gathers the centrist CDC and the Republican Left of Catalonia (ERC). In addition to this move, Mas directly called for a plebiscitary vote to turn this regional election into the referendum he wanted last year and that he had rebranded in a “participation process”, to abide by the Spanish Constitution.
As yet, polls suggest that JS will not be able to get the absolute majority, even though it is leading polls and that the Catalan system favours more than proportionally the party that ends up with the most votes. The Popular Unity Candidacy (CUP), an emerging extreme-left party, chose not to ally with JS but might support it just for the sake of the unilateral independence declaration, such that latest polls found JS-CUP might get a short absolute majority (set at 68 seats). Parties opposed to independence, Popular’s Party (PP), Spanish Socialist Workers’ Party (PSOE) and Ciudadanos gather roughly the same votes than three years ago, though the breakdown is different, to the advantage of Ciudadanos and mostly at the expense of PSOE. Lastly, Podemos joined ecologists to form Catalunya Si que es Pot (“Catalonia Yes we can”), with a moderate stance as regards independence, not supporting it but letting voters decide through a referendum. However, to the contrary of what happened in Barcelona, Podemos does not seem to get much traction, since this joint list currently polls at 13-14%, while its allies already got 10% in the 2012 elections.
“Overall, such reshuffle of parties casts some shadow on the final output of these elections which look like a very close call, in a very fragmented context.
As for last year’s “participation process”, debates have experienced a significant escalation, with strong stances adopted by opposing parties in the run-up to elections. Hence, if the situation is to remain volatile in the short term, it may ease and stabilize in the medium term once negotiations are engaged with the central government, probably about additional political and fiscal autonomy. The stability of the forthcoming government will also be questioned as electoral themes outside independence were neglected while they can differ very significantly between the parties that have similar positions on independence, in particular for JS and CUP, which would find very difficult to coordinate and rule Catalonia together”.
Old Mutual Global Investors announced that the Old Mutual Absolute Return Government Bond Fund, which is a UCITs fund, and the Old Mutual Liquid Macro Fund, which is a Qualifying Investor Alternative Investment Fund (QIAIF), will be launched on 7 October 2015, with US$ 150 million of seed capital from Old Mutual plc.
The funds will be managed by Russ Oxley and his team, who joined Old Mutual Global Investors from Ignis Asset Management earlier this year. Russ Oxley, the lead manager, and co-managers Adam Purzitsky and Paul Shanta, will be supported in their portfolio management and trading by Huw Davies and Jin Wong, and in systems development by Josh Heming.
“This is a very exciting development for our company as a lot of work has been undertaken to prepare for the launch of this range. We have had a lot of interest from investors as Russ and his team are highly respected, having one of the best track records of managing absolute return government bond funds in our industry. We are therefore confident that demand will be strong from our global client base”, said Warren Tonkinson, managing director of Old Mutual Global Inverstors.
The objective of the funds is to seek to deliver positive total returns on a rolling 12-month basis with stable levels of volatility uncorrelated to bond and equity market conditions. The Old Mutual Absolute Return Government Bond Fund will be managed to a volatility target of 4%-6%, with expected annualized returns of cash plus 5%. The Old Mutual Liquid Macro Fund, which will also offer investors daily liquidity, will be managed to a volatility target of 7%-9%, with expected annualized returns of cash plus 8%. The funds aim to be diversified from global fixed income markets by employing a highly distinctive investment strategy focused on expressing views on macro themes through exposure to forward interest rates, inflation expectations and foreign exchange.
The low correlation with global bond markets is likely to be appealing at a time when the traditional safe-haven role of government bond markets is increasingly questionable. Due to the distinctive process and avoidance of credit and credit-like assets, and of emerging market debt the Fund is also expected to exhibit low correlation with other absolute return investment strategies (including global macro hedge funds, fixed income, equity and multi-asset based strategies), making it a potentially attractive addition to a portfolio. The portfolio managers will place a strong emphasis on investing in highly liquid assets, in which the market has historically remained liquid, even in the most extreme periods, including for example the global financial crisis.
“We are delighted that Old Mutual will be supporting the strategy with US$ 150 million of seed capital at launch. This demonstrates the belief we have in the strategy and our commitment, to both these Funds, and to the development of the Alternatives business within Old Mutual Global Investors. We have successfully delivered uncorrelated returns in our highly liquid Global Equity Market Neutral strategy, which now has over US$ 4.5 billion in client assets under management, and we hope for similar investor support for this highly liquid, uncorrelated, strategy”, commented Donald Pepper, managing director of Alternatives.
“Our investment philosophy hinges on the belief that, through a detailed understanding of forward interest rates, it is possible to express views on global macro trends in a very precise way. Through our approach to investing, we are able to target specific risks and opportunities, without “inadvertently” taking economic exposures to those risks we would rather avoid. At the core of our approach is the understanding that forward rates are influenced by very different factors depending on their location on the curve. We believe we have the potential to deliver positive returns for investors within clearly defined volatility parameters irrespective of the direction of interest rates. Our investment track record of successfully managing these strategies is clear evidence that our process if very effective”, commented Adam Purzitsky, co-manager of the fund.
Paul Shanta, co-manager of the fund, also added: “We have developed a unique investment strategy over a period of many years and a product that we think plays a valuable role in our clients’ wider portfolio. Joining Old Mutual Global Investors has given us the opportunity to further enhance our processes and technology and to prepare a bespoke platform for the launch of our new funds. We are excited about being part of an organization that shares our ambition and now look forward to working with investors.”
Photo: adjusted Fotorus / Flickr Creative Commons image
. Rafael Tovar Joins Axa IM as US Offshore Distribution Director
Rafael Tovar has joined Axa Investment Management in order to develop the offshore business for the Americas, and will be working in James Wallace’s team.
Rafael will be based at the AXA Investment Management US headquarters, located in Greenwich, Connecticut.
Until a month ago, Tovar worked at Nikko AM, the Japanese management company, where he worked within the Sales and Marketing team based in New York, serving institutional clients and family offices throughout the Americas region.
Prior to that, he formed part of the team at Compass Group, where he was responsible for business development for institutional clients in Brazil, Miami, and New York, providing coverage to private banks, family offices, wholesalers, broker dealers, and pension funds. He had previously worked for renowned firms such as Goldman Sachs and Accenture.
He holds a Bachelor of Engineering Degree from the Simon Bolivar University in Venezuela, has an MBA in Finance, and an MA in International Studies from the University of Pennsylvania – The Wharton School.
As part of the process of internationalization of their asset management company, AXA Investment Managers, recently appointed Leticia Aymerich as Head of Customer Service for the region of the Americas, serving markets in the United States, Canada, and Latin America. Leticia has joined the management company’s headquarters in the United States from Spain, where she worked for Axa IM since 2006.
JP Morgan Asset Management has appointed Alex Stanic as a Portfolio Manager. Alex is based in London and joins the Global Equities Team, led by Howard Williams.
Alex has 20 years experience in the asset management industry, specialising in global equities. He spent over a decade at Newton, leading the global team, and the last six years at River & Mercantile as Head of Global Equities. Alex’s experience and track record in managing global portfolios will further strengthen an already strong team. He will work closely alongside the team managing JP Morgan Asset Management’s range of Growth equity strategies.
Commenting on the appointment, Alex Stanic said “I am thrilled to be joining JP Morgan Asset Management and to be working alongside a well-established, experienced team of portfolio managers as we look to expand the suite of global equity strategies.”
Photo: Arek Olek. Navigating The Storm: In Risk Budgeting and Alpha We Trust
The Lyxor Hedge Fund Index was down -2.7% in August. 1 out of 12 Lyxor Indices ended the month in positive territory. The Lyxor Convertible Arbitrage Index (+3.3%), the Lyxor L/S Equity Variable Bias Index (-0.7%), and the Lyxor L/S Equity Market Neutral Index (-1.1%) were the best performers.
The deflation and growth scares, which built up over the summer, accelerated following the CNY devaluation. They morphed into a vicious cycle in the last week of August. With volatility reaching 55 and equities plunging by the hour, Monday 24 will from now on count among the major stress episodes used as reference. The bulk of the Lyxor Hedge Fund index was endured during that week. Event Driven funds were the main losers. Return dispersion was elevated. Losses in some heavy-weight funds hid decent performances among macro traders (CTAs and Global Macro). A milder pressure on credit and govies supported credit and fixed income arbitrage strategies. The L/S Equity space proved resilient apart from Asian and US long bias managers.
“Beyond a possible near-term rally, we expect moderate and riskier returns from traditional assets. Thus, we continue to strengthen our focus on hedge funds’ relative value approaches.” says Jean-Marc Stenger, Chief Investment Officer for Alternative Investments at Lyxor AM.
To the notable exception of Asian and US long bias funds, the L/S Equity strategy was remarkably resilient. Most funds had steadily reduced their net exposures over the summer, cautiously positioned ahead of the sudden end-of-August debacle. In Europe, Variable bias managers implemented efficient hedging strategies, with an increased number of single shorts. European managers, which generally missed the reflation trade early this year, regained all the lost ground over the summer. They even outperformed market neutral strategies. In contrast, Lyxor Asian managers suffered in August, down -2% in aggregate. Their dramatic cut in net exposure since June (-10%) limited the damages. US Long Bias also took a major hit, losing most of their beta.
Event Driven funds were the main losers, with a severe plunge across the board. The aggregate Event Driven performance was close to flat before the last week of the month. Until then, some losses were recorded in China and Resources related exposures. They were offset by positive earnings releases in few large corporate situations and by the favorable closing of several M&A deals. The last week of August unsettled both merger spreads and the pricing of corporate situations, including activist positions. Special Situation underperformed Merger Arbitrage funds, even adjusted from their market beta. The sudden widening of deal spreads and the depressed valuation levels of corporate situations will probably open a phase of recovery going forward.
The Lyxor L/S Credit Arbitrage index was only down -1.5%. The market turmoil infected credit markets but less than equities. Spreads had already meaningfully widened over the recent months. This kept managers on a very cautious footing, positioned on high quality and high grade issues, with increased diversification. As dispersion returned in the space, short opportunities also emerged – and not only in the energy segment. In particular weakening cross credit correlations provided fixed income arbitrage funds with greater relative value opportunities. The alpha produced by Credit strategies alleviated the adverse beta contribution.
High dispersion among CTAs in August. CTAs were up nearly +1% before the last week of August. With their long bond and USD positions along with their short commodities exposures, they were well hedged against the various risks being priced in. In particular: a slower global growth, a slower Fed normalization and the Chinese ripple effects on EM countries and resources. During the last week, a majority of funds remained reasonably resilient. However some heavy weight funds were substantially hurt on their remaining long equity holdings and on some of their long USD crosses. ST models outperformed thanks to a faster portfolio repositioning. We observe that, in aggregate, LT models cut their about 30% net equity exposure down to less than 10% over that week.
Heterogeneous returns among Global Macro, with losses in heavy weights. Until the last week of August the strategy remained resilient, with a slightly positive MTD return. While cautiously exposed to risky assets, their hedges had little efficiency in the sell- off. They were essentially hit in their equity and long USD positions, with limited cushion from bonds or safe havens. However, losses in large macro funds actually hide a more heterogeneous and favorable picture. After the sell-off, Lyxor Global Macro funds were on average 10% net long on equities (from 15% early August), with more than half of their equity positions in Europe. They continue to play commodities mostly in relative value. Overall they remain long USD, especially against EUR and GBP.
CC-BY-SA-2.0, FlickrPhoto: Heribert pohl. Misperceptions of Thailand
Nikko Asset Management has launched a Luxemburg domiciled Asia ex-Japan Equity UCITS fund. The fund is managed by Nikko Asset Management’s experienced Asia ex-Japan equities team headed by Peter Sartori and Eng Teck Tan as lead portfolio managers. Its active Asia ex-Japan equity strategy has been managed by the team since 2006.
The Asia ex-Japan strategy aims to achieve long-term capital growth by investing in a portfolio of 40- 60 mid- to large-cap stocks issued by companies in the Asia ex-Japan region. The team takes an active investment approach based on thorough fundamental research, taking advantage of mispricings in Asian equities.
The fund provides access to Nikko Asset Management’s proven Asia ex-Japan team and market leading resources in Asian fund management. The company has approximately 200 investment professionals operating in 11 countries, nine of which are based in Asia.
This latest fund launch builds on the success of Nikko Asset Management’s launch of the Global Equity and Global Multi Asset UCITS earlier this year. The firm continues to expand its range of UCITS funds for sophisticated global investors, providing access to a broad range of exposures across developed and emerging markets.
“We have launched the fund in response to investor demand for specialist expertise in actively managed investments in Asia ex-Japan,” Sartori commented. “The need for a highly skilled active fund management team with on-the-ground resources, and experience in different market conditions is increasing.”
“Our experienced Asia ex-Japan team has worked closely together since 1999, and they have a proven track record of long term outperformance through the different market cycles across Asia. This expertise is invaluable in delivering alpha in the fast evolving Asian markets.”
Nikko Asset Management will launch further UCITS funds later in 2015 to meet investors’ demands for access to specialist investment strategies.
Courtesy photo.. Hartwig Kos Joins SYZ Asset Management as Co-Head of the Multi-Asset Team
SYZ Asset Management, the institutional asset management division of the SYZ Group, has announced the appointment of Hartwig Kos as Co-Head of the Multi-Asset team. Hartwig Kos will co-manage the team with Fabrizio Quirighetti and also serve as Vice-CIO of SYZ Asset Management. He will take up his position on 15 October 2015.
Based in London, Hartwig Kos will contribute with his specific skills and experience in active allocation strategies to the team of 7 people in place and will take over the management of the OYSTER Multi-Asset Diversified fund as lead manager. For their part, Fabrizio Quirighetti and his team in Geneva will manage the OYSTER Multi-Asset Absolute Return EUR and OYSTER Absolute Return GBP and Fixed Income strategies.
Before joining SYZ Asset Management, Hartwig was a Director in the Global Multi Asset Group at Baring Asset Management, where he was responsible for managing the Baring Euro Dynamic Asset Allocation Fund. He was also the Co-Manager of the Baring Dynamic Emerging Market Fund. Moreover, Hartwig was a member of the Strategic Policy Group at Barings, the firm’s asset allocation committee. Hartwig holds a Ph.D. in Finance from Cass Business School in London and a degree in Economics and Business Administration from the University of Basel, Switzerland. Hartwig is also a CFA® charterholder.
The London office is one of SYZ Asset Management’s clusters of excellence and notably houses the European equities fund management and research team. An office was opened in Edinburgh in November 2014 to include additional European fund management and research capabilities and an expanded sales team.
Commenting on the appointment, Katia Coudray, CEO of SYZ Asset Management, said: “I am pleased to have hired Hartwig Kos. He is an investment professional who is highly respected by his peers and his renowned experience in active allocation management adds value to our fund management team.”
Hartwig Kos added: “SYZ Asset Management has an excellent reputation and a convincing track record in the competitive field of multi-asset management. I am delighted to be a part of this team and join a Group with a strong investment culture and a human dimension.”
OppenheimerFunds announced a strategic partnership in which Apollo Credit Management, which is an affiliate of Apollo Global Management, LLC, will serve as sub-sub-advisor to the Oppenheimer Global Strategic Income Fund (GSIF).
“As a progressive money manager, OppenheimerFunds consistently strives to add value for our clients. Apollo Credit Management offers a wide range of alternative investment credit strategies that complement our strong in-house fixed income capabilities, which will help us continue to deliver a very compelling offering,” said Art Steinmetz, Chairman, CEO and President of OppenheimerFunds.
“Continuing the fund’s history of innovation, we wanted a quality partner in terms of performance, investment team and most importantly, one that shares our cultural viewpoint on serving investors first. We are launching our relationship via our marquee fixed income product, and will explore other potential initiatives over time.”
“We are delighted to partner with OppenheimerFunds on this innovative approach to provide their investors with access to Apollo’s flagship liquid alternative credit solution. These credit exposures, which have historically only been available to Apollo’s institutional investors, offer significant yield advantages and diversification to the individual investor,” said Marc Rowan, co-founder and senior managing director of Apollo.
“Similar to Apollo, OppenheimerFunds is focused on delivering investment excellence to its clients, and we look forward to a long and prosperous partnership with such a high-caliber institution.”
Global Strategic Income Fundis dedicated to providing current income from diversified sources of fixed income investments while maintaining low overall volatility relative to the multi-sector fixed income category. GSIF utilizes the complete set of OppenheimerFunds’ taxable fixed income capabilities, and the new partnership will help the Fund access non-traditional fixed income market opportunities – including structured credit, middle-market loans, direct real estate investments and insurance-linked securities – to improve yield and overall risk-adjusted performance, diversify the fund to minimize volatility, and advance the firm’s history of innovation.
“Our partnership with Apollo Credit Management is very exciting as it gives us access to different areas of the credit markets that can provide low-correlated, diversified sources of high income for our fund shareholders,” said Michael Mata, portfolio manager of GSIF at OppenheimerFunds. “Our shareholders will receive the benefits of our scale and service without paying extra to reach these non-traditional asset classes.”
