Lori Monaco, CFA, SVP Financial Advisor at Morgan Stanley. Following the Closure of RBC WM, Lori Monaco Continues with her Renowned Track Record at Morgan Stanley
Lori Monaco, a reputed wealth management industry professional in Miami, has been developing her professional career at Morgan Stanley since January this year, following over 10 years at RBC Wealth Management. According to industry sources, who have confirmed the appointment, Morgan Stanley has acquired about 80% of the assets of RBC Wealth Management’s Miami office, which has been closed, along with the international private banking offices of the Canadian bank in USA.
Lori Monaco, Senior VP Financial Advisor at Morgan Stanley, attends to both domestic and offshore clients, and holds a CFA degree, as well as being fluent in English and three other languages: Spanish, Portuguese, and French.
Monaco has worked at RBC Wealth Management from 2004 to January 2015. In fact, she was hired to establish the Broker Dealer business in Miami and was branch manager in this city from 2004 to 2006. She has always worked as Financial Advisor, advising on investment solutions for wealth management clients.
According to her LinkedIn profile, she previously held the post of CIO at Coutts USA International for a period of four years, and was responsible for the Advisory and Execution team in Miami, focusing mainly on non-resident HNW and UHNW clients.
Previously, from 1995 to 2000, she worked as Head of Research at Vestrust in Miami, covering Latin American Corporate Debt, specializing in the Media and Telecommunications sector. She had previously spent four years in New York as an analyst in the technology sector. Therefore, Lori Monaco has over 25 years experience in the investment and wealth management industry.
The European Fund and Asset Management Association (EFAMA) has published its Eighth Annual Review of the Asset Management industry in Europe. The report focuses on the value of assets professionally managed in Europe, with a distinction between investment funds and discretionary mandate assets, across both the retail and institutional landscape. The report is primarily based on questionnaire responses by EFAMA member associations covering data at end 2013.
The review also reports on the industry’s key characteristics and functions in the context of the wider financial system. In particular, it outlines the vital role theasset management industry plays in channelling savings toward investment in the general financing of the economy – and therefore its core contribution to an efficient and well-functioning Capital Markets Union (CMU).
This year’s review highlights include:
Total Assets under Management (AuM) in Europe increased by approximately 15% in 2014 to EUR 19 trillion, from EUR 16.5 trillion at end 2013. In relation to GDP, the value of AuM is estimated to reach 124% at end 2014, up from 114% in 2013.
Europe ranks as the second largest market in the global asset management industry, managing one-third of the EUR 50 trillion global asset management industry at end 2013.
In Europe, discretionary mandates represented EUR 8,572 billion or 52% of total AuM at end 2013, while the share of investment fund assets in total AuM stood at 48% and amounted to EUR 7,884 billion at year end. Both investment fund and discretionary mandate assets stood at record high levels at end 2013.
Bond assets dominate asset managers’ asset allocation choice, with a share of 43% of all assets at end 2013. Equity assets accounted for 33% of assets, whilst money market and cash equivalents represented 8% of assets.
More than 3,300 asset management companies are registered in Europe employing 500,000 people. About 90,000 people are directly employed, with a further 410,000 full-time equivalents indirectly employed in functions servicing the asset management industry.
Institutional investors, acting on behalf of millions of households, represent the largest client category of the European asset management industry, accounting for 74% of total AuM in Europe. Insurance companies and pension funds accounted for 39% and 33% of total AuM for institutional clients at end 2013, respectively.
European asset managers held 23% of the debt securities issued by euro area sectors at end 2013, and 42% of the value of the free float of euro area listed firms. These figures highlight the role played by asset managers in the financing of Europe’s economy.
Peter De Proft, Director General of EFAMA, comments: “EFAMA’s Eighth Annual Review of Asset Management in Europe highlights the continuing growth of the industry and the increasingly important contribution it makes to the European economy. This makes our industry a key player in the wider financial system and one that has a prime position to support the EU in creating a Capital Markets Union (CMU).”
Photo: Official White House Photo by Pete Souza. Investors Less Attracted to Mutual Funds Managed by People with Foreign-Sounding Names
Investors in the U.S. are less likely to invest in mutual funds that have managers with foreign-sounding names, according to a new study from the University of Miami School of Business Administration.
The study, forthcoming in The Review of Financial Studies, found that annual fund flows were 10% lower for funds managed by someone with a foreign sounding name compared to funds managed by someone with a more familiar American name, an annual loss of approximately $133,000 per $195 million under management.
The study also found:
These effects are stronger for funds that have more conservative investor clienteles or are located in regions where racial/ethnic stereotypes are more pronounced. The impact occurs even though managers with foreign-sounding names do not follow unique investment styles or have inferior investment skills. On the contrary, individuals who live in regions with a greater proportion of foreign-born individuals invest more in funds run with foreign sounding names.
Funds with foreign-named managers receive lower inflows after good performance and they experience relatively more outflows after bad performance. In other words, managers with foreign sounding names are rewarded less for good performance and “punished” more for bad performance.
Among the best performing funds in the 80th percentile of the performance missed out on $318,432 in advisory fees. For extreme out-performers, the loss of compensation can get even worse, climbing to almost $700,000 in lost fees.
After the Boston Marathon Bombings and 9/11 terrorist attacks, trust in foreign names saw a significant drop.
“We know that people consciously or sub-consciously assign attributes to a person when they hear their name – President Obama said it well when he joked that he got his middle name, Hussein, from someone who clearly didn’t know he’d ever run for president,” said Alok Kumar, Gabelli Asset Management Professor of Finance at the University School of Business Administration and the leader researcher.
“Our study suggests that if Barack Obama was a fund manager his name could cost his fund more than $100,000 this year,” added Kumar, whose research partners included Alexandra Niessen-Ruenzi of the University of Mannheim and Oliver Spalt of Tilburg University.
Photo: Neil Kremer. UBS Investor Watch Report Examines What Drives Millionaires
UBS Wealth Management Americas (WMA) today released its quarterly UBS Investor Watch report, “When is enough…enough?” revealing the anxieties that underlie the successes millionaires have achieved. The survey of 2,215 U.S. investors with more than $1 million in net worth revealed that while millionaires recognize their good fortune, they feel compelled to strive for more, spurred on by their own ambition, their desire to protect their families’ lifestyle, and an ever-present fear of losing it all. As a result, many feel stuck on a treadmill, without a real sense of how much wealth would make them satisfied enough to get off.
Climbing the Socioeconomic Ladder
Investor Watch found that more than three-quarters of millionaires (77%) grew up middle class or below. Working their way up the socioeconomic ranks was a conscious aim, as 61% aspired to become millionaires and 65% felt it was an important milestone to reach the $1 million mark.
Nearly three-quarters of millionaires (74%) surveyed feel like they have “made it” and the vast majority (85%) attribute their success to hard work. Forty-four percent said hard work was the single most important factor in becoming a millionaire.
Overall satisfaction with life rises considerably and consistently as net worth increases. The survey revealed that 73% of those with $1 – 2 million reported being “highly satisfied” with their life compared to 78% of those with $2 – 5 million and 85% of those with $5+ million. Millionaires recognize that their wealth buys them more than what their family needs: 37% of those with $1 – 5 million responded that their wealth allows them to live a fairly luxurious lifestyle, compared to 62% of those with $5+ million.
The Treadmill
However, with increased wealth come increased expectations. Investor Watch found that the wealthier people become, the more likely they are to have increased expectations for their standard of living. Fifty-eight percent of millionaires report feeling increased expectations for their standard of living over the last 10 years. As a result, millionaires keep striving for more.
Higher expectations cause stress for millionaires about their ability to maintain the life they’ve built. Among working millionaires with children at home, 52% feel like they are stuck on a treadmill, unable to get off without sacrificing their family’s lifestyle.
“The majority of millionaires say they have worked hard to earn their wealth and appreciate the lifestyle it affords them and their families. But enough never seems to be enough—even the wealthiest continue on the treadmill to achieve a better life,” said Paula Polito, Client Strategy Officer, UBS Wealth Management Americas.
Investor Watch revealed that no matter how much wealth is accumulated, millionaires still fear they could lose it all with one wrong move. Half (50%) of those with $1 – 5 million are afraid that one major setback (e.g., job loss, market crash) would have a significant impact on their lifestyle, vs. 34% of those with $5+ million. For millionaire parents working full-time, the anxiety is even greater–63% feel that one major setback would have a significant impact on their lifestyle.
Success Comes at a Price
Reaching the millionaire milestone does come at a cost, as 64% of millionaires report that they have had to give up precious family time to achieve their dreams. Most millionaires (68%) admit to having regrets, most commonly around making mistakes in a relationship with their spouse or family and not spending more time with family.
Millionaire parents with children at home struggle to provide the best for their children without spoiling them. They worry that their children will grow up without the right values–two in three (67%) already feel that their children take things for granted and more than half (53%) are at least somewhat worried that their children act entitled. Millionaire parents expressed concern that their children do not understand the value of money (65%), lack motivation (54%), harbor unrealistic expectations (54%) and fear that they will embark on an unstable career path (50%).
CC-BY-SA-2.0, FlickrPhoto: Philip Taylor. Three ‘Uncorrelated’ Trade Ideas for Multi-Asset Portfolios
Michael Spinks, portfolio manager of the Investec Diversified Growth Fund, discusses three multi-asset portfolio ideas that the team classes as ‘uncorrelated’ – these trades have a variable relationship with economic growth dynamics and overall risk appetite, with performance that is generally unrelated to real economic and corporate earnings growth
“As we enter the seventh year of this equity bull market and near the end of the 30+ year bond bull market, some investors are prophesising the end of the investment return-making world as we know it. While it seems hard to disagree that the days of low-hanging investment fruit are behind us, we believe that if investors rummage deep enough and look around in different places, opportunities still exist“, point out Spinks.
‘Uncorrelated’ return sources are one area of particular focus for Investec. These are investment opportunities that have a variable relationship with economic growth dynamics and overall risk appetite, so that performance is generally unrelated to real economic and corporate earnings growth. Not reliant on a strong market direction to be successful, they generate a different type of return stream compared to long-only holdings in equities and government bonds, providing possible diversification benefits to a portfolio. Relative value positions play a role here, constructed across equities, government bonds and currencies.
Whilst not easy to find, a broad opportunity set helps, as does a repeatable and structured idea generation process. Below we outline three ‘uncorrelated’ portfolio ideas to illustrate this view.
1) Taiwanese vs Singaporean equities
Our internal analysis ranked the Taiwanese stock market highly, but was much less positive about Singapore. “Taiwan, we concluded, offered quality growth potential at a reasonable valuation with supportive investor positioning and earnings revisions. Singapore, on the other hand, had poor fundamentals and a lack of earnings revisions, which outweighed the attractive valuations on offer”, said Investec manager.
Additionally, the respective sector composition was attractive as the Taiwan overweight to technology provided exposure to a US recovery and was less exposed to potentially higher US interest rates than other emerging markets. Singapore was characterised by a heavy bias towards banks with relatively high exposure to Chinese loans and a weakening domestic property sector. Therefore, in aggregate, this position offered exposure to the US and European growth cycles while hedging against further China weakness.
2) Hungarian forint vs Polish zloty
Although Investec was positive about the prospects of the Polish economy over the medium term, it had shorter-term concerns due to falling levels of inflation and the prospect of interest rate cuts in reaction to weaker industrial activity. Exposure to Russia and Ukraine also put pressure on growth. Hungary, on the other hand, offered strong economic growth, inflation that was picking up from a low base, and a stable interest rate environment. This position was a way to take advantage of diverging monetary policy and growth outlooks between the two countries, with the added advantage of the Hungarian forint being relatively cheaper than the Polish zloty.
3) Long Australia 10 year government bonds vs US 10 year government bonds
This idea was based on the view that divergent monetary policy and economic fundamental data would drive interest rates in Australia and the US in opposing directions. This trend had already been occurring for some time but, in our view, would continue to become more apparent in the period ahead as the US starts to gradually remove policy accommodation and Australia looks to provide more easing as it adjusts downwards to a once in a life-time terms-of-trade boom.
French asset manager Carmignac has announced the opening of its Zurich subsidiary headed by Marco Fiorini.
While the group has been distributing its funds in Switzerland for 12 years, it has now appointed six-person strong team headed by Fiorini in order to strengthen relationships with Swiss retail and wholesale clients.
Fiorini has been country head for Switzerland at Carmignac for the past four years.
Edouard Carmignac, chairman of Carmignac Gestion, said: “We are ready and able to help Swiss investors tackle their main challenges, namely helping them achieve financial security in retirement by preserving wealth and drawing an income from savings. ”
Headquartered in Paris, Carmignac now operates in Luxembourg, Frankfurt, Milan, Madrid, London and Zurich.
Kirk Pressley, director financiero de BBVA Compass. Kirk Pressley nuevo director financiero de BBVA Compass
BBVA Compass has appointed Kirk Pressley new chief financial officer after Angel Reglero leaves the post to help lead a newly created Spain unit of parent company BBVA.
Pressley currently serves as corporate controller for BBVA Compass, a role he’s held since 2003. He leads the bank’s accounting unit, its U.S. Securities and Exchange Commission reporting, other regulatory filings and Sarbanes-Oxley Act compliance.
“Kirk has been a key part of our success, but more importantly he will be a key part of our future,” said BBVA Compass Chairman and CEO Manolo Sanchez. “He’s stepping up amid our digital push to create a true 21st century bank. We’re in great hands with him as our new CFO.”
Pressley joined BBVA Compass in 1999, spending three years as its director of accounting policy before being promoted to corporate controller, where he successfully led the bank’s financial risk management activitiesand its compliance with acceptable accounting principles, among other responsibilities.
The announcement comes as BBVA closes on its purchase of CatalunyaCaixa, marking a new era for the bank’s growth in Spain. The Spain unit will comprise BBVA and CatalunyaCaixa, which will operate as a separate brand.
Josh Crabb. Old Mutual GI's Asian Equities Team Receives Regulatory Approval to Operate from Hong Kong Office
Old Mutual Global Investors is pleased to announce that the Asian Equities Team has received regulatory approval to operate from their Hong Kong office. This is the first time the business will have on the ground fund management capabilities in Asia.
Old Mutual Global Investors’ award-winning Asian Equities Team was hired in autumn 2014 and consists of four members, Josh Crabb, Diamond Lee, Kris Whitlock and Dmitry Lapidus.
The Team runs three funds, the Old Mutual Asian Equity Fund and the Old Mutual Pacific Equity Fund which are managed by Josh Crabb, who joined in October 2014 and the Old Mutual Greater China Equity Fund, managed by Diamond Lee, who joined the business in November 2014. The team now manages US $500 million in the region.
Old Mutual Global Investors, and its predecessors, have had a presence in Hong Kong for over 10 years. The business has expanded its Asian operations significantly in the last eighteen months, including the appointment of Carol Wong as Head of Distribution Asia in November 2013 and Simon MacKinnon as Asia Strategy Adviser, in February 2015. Old Mutual Global Investors also has a strong relationship with Capital Gateway, its Master Agent in Taiwan.
Julian Ide, CEO, Old Mutual Global Investors comments: “This is a significant development for Old Mutual Global Investors. Now we offer local products to the local market in Asia, we can connect with clients in in a way we have not been able to before. This is an award winning team with an enviable track record, which I believe offer a compelling choice for investors.
“Asia is a very important market for us and we are committed to building our business in the region. Asian industry is leading the field of endeavour in many sectors and we are keen to learn what makes the market so special. We will use this knowledge to ensure we deliver upon our ambitious plans for the region“, said Ide.
Josh Crabb comments: “We are really pleased to now be officially based in Hong Kong. The Asian equities market is hugely diverse and offers a great deal of potential for clients. The local market is incredibly important to us and we are keen to build partnerships in the region, as well as develop our funds.”
Photo: Dennis Jarvis. Emerging Markets: Stay in the Car
Devan Kaloo, Head of Global Emerging Markets, Equities, at Aberdeen took on the role of a conjuror performing a magic trick with a couple of props, in a striking presentation to the investment conference. He gave a lesson to long- term investors in the importance of choosing the right time frame, with a pair of graphs that abruptly vaulted his audience from a pessimistic to an optimistic perspective on emerging market performance.
Mr. Kaloo used the first graph to acknowledge frankly that “over the past five years emerging markets have significantly underperformed developed markets – by something like 60%”.
However, as the next graph suddenly showed, “if you’ve been stuck in emerging markets for ten years, you’ve seen outperformance of about 40%”. Looking at markets on a long-term basis, he suggested that this decade-long period might be “the right time frame”.
He also pointed out that emerging markets underperformed developed markets by 8% in 2014 with a negative absolute return of 2% in U.S. dollars. But this still made emerging markets the second best performing asset class, doing better than Japan, Europe or the UK. While if you calculated returns in Euros, Yen or Sterling you made a positive absolute return.
In short perspective is important
Mr. Kaloo used his presentation to outline the potentially brighter future for emerging markets, with improvements in macroeconomic and corporate conditions likely to pay off in better stock market returns.
Core to his argument for a long-term assessment was the notion that temporary travails in emerging equities did not reflect fundamentals. “People quite often take the view that stock market performance in the short term reflects underlying issues in that market”, he said. However, “in emerging markets that clearly is not the case”.
This disconnect existed, Mr. Kaloo said, because emerging stock markets are often led by foreign investors. “Domestic institutional and retail investors are not consistent players in the market, so the guys who drive emerging markets are typically foreigners”, he explained. “This is important, because foreigners sometimes get concerned about different things from what’s actually occurring on the ground.”
For example, “what’s happening with quantitative easing, and the impact of the European Central Bank (ECB) and Bank of Japan, can have a large impact on liquidity flows into emerging markets, and a disproportionate impact on the performance of these markets”.
Moreover, because emerging stock markets are, in most cases, less liquid, it did not take much to send them up or down. “To put it in some sort of context, over the past three out of four years they’ve seen negative outflows”, he noted. “So there’s been a lot of money going out of emerging markets.” Or has there? Adding some clarity, Mr. Kaloo stated “Actually it’s not a lot of money. For 2014 we’re talking about $25bn. That’s a rounding error on the Federal Reserve’s balance sheet.”
“Although $25bn is not a huge amount of money in global macroeconomic terms, the illiquidity of emerging markets – largely because so much of the market capitalization is made up of shares that were not free-floating – meant that “it doesn’t take an awful lot of money to swing these markets around”, concluded Kaloo.
Chris Hart, CFA, manages a global equity strategy following the “Three Circles” investment philosophy for Robeco Boston Partners, . Hart manages the portfolio searching for opportunity from an unconstrained perspective, looking to take advantage of valuation anomalies in a global environment. “When we apply the investment philosophy of the three circles, to a universe of 10,000 securities, opportunities multiply making it a very powerful tool” he says.
This strategy is characterized by a high consistency in its performance, standing at the top of its category. The trick, as noted by Hart, is to be rigorous with the analysis and diversification of the ideas obtained when combining three concepts which contribute a little of each investment style, “the circle that refers to valuation is more value, that of the sound fundamentals may be described as core, while the momentum serves factors closer to growth”.
To capitalize on opportunities or anomalies in the market, Hart says it is necessary to invest by country, sector, currency, market capitalization, etc. without restrictions, taking note only in selecting good companies.
“One example is our overweight position in the French market,” Hart says. “We have a number of French small and midcap companies in the portfolio, they are all very well managed, able to make money in any market environment, and they also present attractive valuations. It doesn’t worry us if the French GDP does not grow.” At the other extreme is the negligible exposure to European banks which the strategy has held during the last seven years. “Overall, it is an undercapitalized sector operating in an environment of low growth in lending activity. In addition, valuations in terms of P/BV are misleading because if we incorporate actual capital needs of European banks, we see that they are not cheap. “
This strategy, which incorporates emerging markets in its universe though “its weight is very low because well-managed companies tend to be expensive”, now has 33% of the portfolio in Europe (including UK) and around 50 % in USA “The weight in Europe has increased by around 10 percentage points from the third quarter of 2014, to the detriment of exposure to the US, which we’ve cut on valuation grounds.” Japan, “a market in which we have always been invested, mainly through small and midcaps,” also currently weighs a bit more in the strategy’s portfolio.
This is Part 3 of a Three part interview to Robeco Boston Partners US and Global Equity Team, published in Spanish in Funds Societyprint magazine (April 2015)
