Cerulli Associates’report entitled European Fund Selector 2015: Securing a Place on the Buy List has found that buyers value transparency of process above all else-including performance.
Fund selectors told Cerulli that since the financial crisis good communication has become even more important, not just for continuous updates, but also to provide granular information. New research showed that fund buyers ranked investment process as the top factor in selection, followed by access to a portfolio manager. And they ranked performance third on the list.
“A well-run investment house should be transparent and accountable, therefore it should have no qualms about giving access to fund managers, to allow selectors to question their decisions or to clarify market events,” said Barbara Wall, Europe research director at Cerulli and one of the report authors.
But fund managers seem not to have grasped this concern yet and, as they did last year, rated performance as the top prerequisite to win business. They also rated poor fund performance as the primary sacking offence.
And despite access to portfolio managers having gained so much importance for selectors in the past year, this criterion ranks only eighth out of the 11 selection-winning factors that fund managers were asked to rate.
The dissonance between what selectors want and what fund managers think selectors want raises questions: Are fund managers not listening to their clients? Or are selectors not clear enough? Whatever the reason for this divergence in outlook, fund managers must find the best way to bridge the difference.
“Investment management is changing from a box-ticking exercise into a service, making fund managers partners, not just executors of a strategy,” said Angelos Gousios, an associate director at Cerulli and one of the report’s authors. “This change implies more work and the allocation of more resources to client meetings, but it is also a positive development that will lead to higher standards in the market,” he added.
Photo: Hernán Piñera. Itaú Unibanco To Approve the Merger With Corpbanca in Extraordinary General Meeting
Itaú Unibanco last Friday announced that the merger between Banco Itaú Chile and CorpBanca, pursuant to the Transaction Agreement which was disclosed to the market through a notice of material fact dated January 29, 2014, was approved by the shareholders of CorpBanca in the Extraordinary General Meeting held that day.
Therefore, as controlling shareholder of BIC, Itaú Unibanco will approve the Merger in BIC’s Extraordinary General Meeting to be held tomorrow, June 30, 2015.
As previously disclosed, the Merger shall be implemented as a merger of BIC with and into CorpBanca, resulting in an ownership by Itaú Unibanco of 33.58% of the shares of the merged bank.
Considering the approval of the Merger by the shareholders of CorpBanca and BIC, the transaction shall now be analyzed by the competent regulatory authority in Chile, the Superintendencia de Bancos e Instituciones Financieras (“SBIF”). The approval by SBIF shall be in addition to the other necessary regulatory approvals already obtained from the competent regulatory authorities in Brazil, Colombia and Panama, being the involved parties’ intention to conclude the Merger by early January 2016.
The conclusion of the Merger shall benefit the shareholders of BIC and CorpBanca since it means the creation of one of the strongestfinancial institutions of Latin America, with approximately US$ 48 billion in assets, a total credit portfolio of approximately US$ 33 billion and approximately US$ 28 billion in deposits; It will bring together a larger customer service network, with 226 branches in Chile and 172 branches in Colombia; There will be an improvement in funding costs and leverage capacity of Level 1 capital; and there are annual synergies estimated in US$ 100 million before taxes after the conclusion of the integration of the banks.
The Merger is aligned with Itaú Unibanco’s commitments with long-term creation of value and sustainable performance and with its Latin America expansion strategy, consolidating its leadership position in such market, especially by establishing a stronger presence in Colombia’s banking sector.
. T. Rowe Price Expands Relationship Management Team for Spain and Portugal
T. Rowe Price, the $772.7bn global independent asset manager, has appointed Pedro Masoliver to its client management team in Spain. He will report to Alfonso del Moral the Headof Relationship Management for Spain and Portugal in support of the firm’s drive to increase its share of the intermediary markets in Europe.
Mr. Masoliver joins T. Rowe Price from GBS Finanzas, a multi-family office where he was an Analyst. Prior to that, he was a Senior Fund Analyst at Allfunds Bank, investing consultant department between 2007 and 2012. This new role will see him focus on relationship management for clients in Spain and Portugal as well as supporting the sales drive in both countries.
Alfonso Del Moral, Head of Relationship Management for Spain and Portugal said “Pedro Masoliver is a great addition to the team we are building to support our growth. The experience he brings from the sell-side and as an Analyst will add to our ability to anticipated and service the needs of our clients. I look forward to working closely with him as we develop our business in Spain and Portugal.”
KKR Credit recently announced the launch of a pan-European platform that aims to support banks in managing their exposures to non-core and under-performing assets by improving the performance and value of the businesses which underpin the exposure.
The platform is intended to provide long-term capital and operational expertise to businesses to help them stabilize and grow, creating value for all stakeholders. The platform will be structured so that the participating banks share in the upside of the recovery in performance of the businesses and the value of the related assets on the banks’ balance sheet.
There are €1.9 trillion of non-performing and non-core assets, including €1.2 trillion of non-performing loans, sitting on the balance sheets of European banks. These assets are capital intensive and are ultimately restraining the growth of the banks, companies and economies in which they both operate. KKR Credit’s solution is directed toward helping to unlock bank lending and rebuild companies, supporting local and national economies in turn.
The launch of this platform is a continuation of KKR’s commitment to investing in industry across Europe and will be funded by commitments from certain funds managed or advised by KKR or its affiliates. Since 1996, KKR has invested in more than 100 major companies across industrial sectors in Europe, representing approximately $25 billion in invested long-term capital.
Johannes P. Huth, Head of KKR Europe, Africa and Middle East, said: “This is about supporting banks in managing specific exposures, including non-core and underperforming corporate loans, real estate and shipping. It will allow banks to share in the upside of the recovery in performance and value of those assets over time. It is the combination of our operational expertise and our ability to provide fresh long-term capital to the underlying businesses that allows us to offer this innovative solution to banks. The evolution of bank strategies in response to changing regulation has created a real opportunity for such an approach.”
Mubashir Mukadam, KKR’s European Head of Special Situations, said: “In our Special Situations business, we have substantial experience investing in debt and equity positions and working with companies in need of financial and operational restructuring. With this platform, we plan to continue that successful line of investment. The platform has already commenced work in Italy, working with UniCredit and Intesa Sanpaolo. The banks’ exposures to a selected portfolio of assets selected by the banks and KKR Credit – initially worth up to 1 billion Euros – will be transferred to a vehicle managed by the platform. The Italian platform is built in open architecture allowing other banks to join and include their own exposures. Besides Italy, we are evaluating opportunities in a number of other selected European countries in the near-term.”
Photo: Julien Sanine. And What If Volatility Came Back to Town?
In the first half of 2015, investors faced a favourable environment, with crude oil prices far below the USD 110 a barrel level to many of us had become accustomed, a euro/US dollar exchange rate of USD 1.05 to USD 1.15 and – last but certainly not least – the announcement in January by the ECB of a full-blown programme of asset purchases (‘quantitative easing’). Reflecting the significance of this macroeconomic news (and the long-awaited signs of an economic recovery), valuations in many asset markets rose to historic highs – if they didn’t exceed them!
Is time for volatility to return?, asked Andrea Mossetto, senior investment specialist, Paris at THEAM, BNP Paribas IP.
After years of relatively calm and clear trends, mainly determined by the decisions of G3 central banks, 2015 might see volatility come back to town. On 3 June, after an abrupt rise in bond yields, ECB President Mario Draghi advised investors to “get used to periods of increased volatility.“
“Financial markets fluctuate in response to many factors including the economic outlook, geopolitical tensions and the policy decisions of central banks. Thus, worse-than-expected economic data and a resurgence of geopolitical concerns can quickly generate tensions and boost volatility. For this reason, monitoring the level of volatility in financial markets is of paramount importance to us”, point out Mossetto.
Isovol: An approach to mastering volatility
This is precisely what THEAM’s Isovol strategy enables BNP Paribas IP to do. By putting volatility back at the heart of portfolio management and defining the volatility of each asset in the portfolio as a fundamental criterion for asset allocating, this strategy is focused on mastering volatility and improving the participation in market trends, explained Mossetto. It bases investment management not solely on a manager’s judgments, but on a relatively simple signal: the volatility of the markets in which they invest.
Volatility-driven exposure can produce attractive results
“In terms of behaviour, in an Isovol strategy, rising markets are naturally being bought and volatile markets are underweighted. The result is a reduction in maximum losses in times of market turbulence. This explains the attractive performance of the strategy in recent years, but also an improved participation in the various uptrends. In recent years, THEAM’s Isovol management strategy has been effective in improving risk-adjusted returns”, said BNP Paribas IP´expert.
Investing in a flexible way, in a multi-asset class universe of international assets, broadly diversified via futures and index trackers, helps give investors a clear view of their exposure.
Thus, the Isovol strategy can be particularly suitable for investors seeking a straightforward and intuitive strategy targeting a stable level of volatility, without sacrificing performance.
OppenheimerFunds recently announced it has fully staffed its team covering Registered Investment Advisors (RIAs), as the firm focuses on further deepening and strengthening its relationships in this critical market.
“RIAs represent a growing and extremely important client segment for OppenheimerFunds,” said Matt Straut, the firm’s Head of the RIA Channel. “We’ve assembled a talented team that has the deep industry experience and client-centric approach to provide RIAs with investment and thought leadership content. This allows OppenheimerFunds to assist RIAs in growing or running a more efficient practice.”
Kyle Najarian and Keith Watts have joined OppenheimerFunds as Senior Advisor Consultants for the West and Southeast regions, respectively. Most recently, Kyle was at Wells Fargo Asset Management, where he was responsible for working with RIAs in their West territory. Keith was at Hatteras Funds, where he worked with advisors across the Southern United States.
Dan Jarema has been promoted to Senior Advisor Consultant from Regional Advisor Consultant, and will be responsible for working with RIAs in the Midwest territory. In addition, Rico Castelda has moved from the firm’s National Division to become a Regional Advisor Consultant on the RIA team, supporting coverage in the Midwest and Southeast regions.
“Matt and his team have the extensive knowledge of the business that enables them to deliver the full range of our resources and capabilities to the RIA community,” said John McDonough, Head of Distribution at OppenheimerFunds.
With the new additions and changes, the RIA team is as follows:
Director of Custodial Platforms Mike Sussman
Senior Advisor Consultants: James Concepcion, Mid-Atlantic; Mike Dennehy, Northeast; Dan Jarema, Midwest; Brian McGinty, Mountain West; Kyle Najerian, West; and Keith Watts, Southeast
Regional Advisor Consultants: Rico Castelda, Southeast and Midwest; Seth Guenther, West and Mountain West; and Matt Trimble, Northeast and Mid-Atlantic
Client Service Manager Izaak Mendelson
OppenheimerFunds, a leader in global asset management, is dedicated to providing solutions for its partners and end investors. OppenheimerFunds, including its subsidiaries, manages more than $240 billion in assets for over 13 million shareholder accounts, including sub-accounts, as of May 31, 2015.
CC-BY-SA-2.0, FlickrPhoto: Kevin Jaako. Robeco Introduces Multi-Factor Credit Fund
Robeco announces the launch of a multi-factor credit fund. With Robeco Global Multi-Factor Credits, factor investing is brought to credit markets, allowing investors to benefit from similar factors to those that have proven successful in equity markets including low-risk, value and momentum.
Robeco Global Multi-Factor Credits, avalaible in Latam & US- offshore, offers a diversified and balanced exposure to investment grade corporate bonds that score well on these factors, and will have 150-200 names in the portfolio. The fund aims to generate higher returns with a market-like risk profile. Although the fund mainly invests in investment grade credits, it can hold a maximum of 10 percent in BB to benefit from the attractive characteristics of fallen angels and rising stars. Robeco Global Multi-Factor Credits is targeted at experienced investors looking for style- diversification in a balanced portfolio.
Fund Management
The fund will be managed by Robeco’s Credit Team. The fund’s portfolio manager is Patrick Houweling, who joined Robeco in 2003. Houweling has also been managing Robeco’s conservative credits strategy since 2012, which exploits the low-risk anomaly in credit markets. In an academic study published last year, Houweling and his colleague Jeroen van Zundert illustrated that factor strategies can also be attractive in credit markets. Next to the three factors low-risk, value and momentum applied in Robeco’s equity factor strategies, the credit strategy also includes a size factor. Amongst others, size captures a liquidity effect that is more present and important in less liquid asset classes like corporate bonds.
Patrick Houweling: “At Robeco, we have been closely studying the possibilities of bringing our factor investing offering beyond the traditional equity markets. I am delighted that we have put theory into practice by introducing this factor investing fund to credit investors. This fund is driven by our proprietary quantitative multi-factor model, which offers balanced exposure to the low-risk, value and momentum factors.”
CC-BY-SA-2.0, FlickrPhoto: Mike Mozart. Santander Holdings USA Strengthens Board With New Independent Directors
Santander Holdings USA, Inc. (SHUSA) announced a broad reorganization of its Board of Directors, including the appointment of four new independent SHUSA directors and the creation of the position of Lead Independent Director.
The new independent SHUSA directors will be Alan Fishman, Chairman of Ladder Capital; Thomas S. Johnson, former Chairman and CEO of GreenPoint Capital; Catherine Keating, CEO of Commonfund; and Richard Spillenkothen, former head of banking supervision at the Federal Reserve Board and former director of Deloitte & Touche LLP.
SHUSA said Thomas S. Johnson would become the Company’s first Lead Independent Director, a newly created position. The Lead Independent Director will chair board meetings in the absence of the Chairman, convene meetings of the independent directors and carry out the annual performance review of the Chairman.
SHUSA is the U.S. holding company of the Santander Group and parent company of fully-owned Santander Bank, N.A. and 59.03%-owned Santander Consumer USA Holdings Inc. (SCUSA).
T. Timothy Ryan, Jr., non-executive Chairman of SHUSA, said: “These changes are among the many steps we are taking to reinforce best practices and meet our standards of excellence. Our new independent directors bring to Santander deep expertise in regulatory matters and experience in large U.S. financial institutions. All have managed banking or consumer finance businesses. Their appointments and the naming of Tom Johnson as the lead independent director will further strengthen governance and oversight of our businesses.”
He added: “On behalf of the Board, I would like to thank Gonzalo de las Heras, John P. Hamill, Marian Heard, Manuel Soto, and Alberto Sanchez for the service they have given to Santander through their board service in recent years.”
Javier Maldonado, Senior Executive Vice President and head of coordination and control of regulatory projects of Banco Santander, S.A. of Spain, also joined the Board of SHUSA.
Following these appointments, the SHUSA Board will have 14 members, seven of whom are independent, with two vacancies. The new SHUSA directors were also appointed to the Board of Directors of Santander Bank, N.A.
Also joining the Board of Santander Bank are Steve Pateman, head of UK banking at Santander UK; Henri-Paul Rousseau, Vice-Chairman, Power Corporation of Canada; Victor Matarranz, Senior Executive Vice President and Head of Group Strategy, Banco Santander S.A.; and Juan Olaizola, Chief Operating Officer, Santander UK. Mr. Rousseau is an independent director.
Alan Fishman will be Lead Independent Director of Santander Bank.
CC-BY-SA-2.0, FlickrPhoto: Chris Potter. Variations on the Scarcity Theme
UBS Global Asset Management and BB Gestão de Recursos DTVM S.A (“BB DTVM”), the asset management arm of Banco do Brasil (“BB”), today announced a joint collaboration to provide Brazilian institutional investors the opportunity to invest in global sustainable equities.
“We believe that UBS’s Global Sustainable Equity strategy is an interesting offering to meet this growing demand.”
Global investing is increasingly capturing the attention of institutional investors in Brazil. The local pension fund system, with close to R$ 674 billion in total assets, is currently allocated almost entirely to domestic investments but beginning to invest internationally. In addition, sustainable investing is becoming a key focus for investors, with 17 leading Brazilian pension funds now signatories to the United Nations’ Principles for Responsible Investment.
To meet this growing demand, BB DTVM will launch a registered feeder fund (in compliance with CMN Resolution 3,792) giving investors access to the UBS Global Sustainable Equity portfolio. GSE seeks to maximize total return with a sustainable investment approach, using a unique positive screening process that combines material sustainability factors and fundamental valuation analysis. Managed by UBS Global AM’s Sustainable Equities team, GSE has a track record that dates back to 1997 and ranks2 in the top quartile of Global All Cap Core Equity managers (eVestment Alliance) over 1, 3 and 5 years.
UBS Global AM has committed USD 20 million (approximately R$62 million) to launch the local fund.
Photo: Ines Hegedus-Garcia. How Big is the US Offshore Market?
Latin America has more than a trillion dollars in offshore money, these figures were published recently in “Global Wealth 2015: Winning the Game Growth”, the Boston Consulting Group’s latest global wealth report, according to which Switzerland is no longer the main destination for this money, having been displaced by the US and the Panama-Caribbean region, each holding 29% of the offshore money with Latin American origin. Switzerland, which until last year was the main destination of this wealth, currently receives 27% of the money leaving Latin America.
In total, the United States holds almost 300 billion dollars of wealth from residents in Latin America, a figure that is growing compared to previous years. In fact, in 2014 the offshore wealth originating in Latin America has been one of the main sources of growth in the world, generating 100 billion dollars of new money which has left their home countries, mainly looking for stability in their destination offshore centers, due to the political instability in some of the countries in which that money originated.
In correspondence, Latin America is the number one source of all the offshore money which reaches the United States, representing 41% of the total. United States holds more than 700 billion dollars of offshore money, so that 41% brings us back to approximately that round figure of 300 billion dollars.
Miami, New York, Houston, and San Diego are, in this order, the four major US offshore centers which serve the owners of this Latin American wealth.
Other good news is that Boston Consulting Group expects this growth to continue. For the next five years, United States is, after Singapore and Hong Kong, the offshore wealth destination with higher growth prospects globally.
