BNY Mellon announced that Alan Flanagan has been appointed to the new role of Global Head of Private Equity and Real Estate (PE&RE) Fund Services. Flanagan will continue to be based in Dublin and report to Frank La Salla, CEO of BNY Mellon’s Alternative Investment Services (AIS) business, in New York.
As a new unit within AIS, PE&RE Fund Services will comprise more than $100 billion in assets under administration and over 150 employees worldwide. Flanagan will be responsible for overseeing global business and driving growth in an area that has seen large recent deals. In February, BNY Mellon and Deutsche Asset & Wealth Management (AWM) announced an agreement where Deutsche will outsource its real estate and infrastructure fund accounting and parts of its reporting functions to BNY Mellon covering more than $45 billion in AUA.
Most recently, Flanagan was global head of product management for Alternative Investment Services. He will be succeeded in that role by Robert Chambers, who joins BNY Mellon from Balestra Capital, where he was managing director, portfolio manager, and member of the operating committee.
“We’re seeing vibrant growth opportunities in this space as investors pursue new strategies and increase allocations to private equity and real estate,” said La Salla. “Alan was instrumental in orchestrating our signature agreement with Deutsche AWM. During his tenure as head of product he led many projects to better serve our hedge fund and PE clients, and I have every confidence he’ll do an outstanding job in this new role.
“Rob Chambers brings a multi-faceted skillset in finance, investment strategy and the alternatives market. I look forward to working closely with him in building out the global capabilities for our alternative manager client base,” La Salla added.
Flanagan serves on a number of executive committees at BNY Mellon, including its European operating committee, Asset Servicing global business risk committee, and is a director of BNY Mellon Trust Company (Ireland). He joined BNY Mellon in 2007 from UBS Fund Services (Cayman) Ltd., where he was head of business development-Americas. Flanagan is a Fellow of the Institute of Chartered Accountants in Ireland.
Swiss Life AM has named Mathieu Caillier as head of International Business Development, a division that has been recently created.
Caillier joined Swiss Life AM as a senior relationship manager in 2007. He was hitherto working as head of Wholesale distribution and Swiss Life France network.
Formerly, he worked at HSBC GAM where he has been responsible for the development of wholesale and institutional distribution for France and Switzerland.
Caillier started his career as a broker at Tullett & Tokyo (Futures & traded Options) in Paris.
Swiss Life AM has CHF160bn (€152bn) of assets under management as at the end of 2014.
Photo: Hartwig HKD
. ¿Por qué son soleadas las perspectivas para España?
Spain is in recovery mode, but has not been rewarded for this by equity investors so far in 2015. “The Spanish economy is doing fine and there is a strong cyclical recovery underway.” That is how Robeco’s Chief Economist Léon Cornelissen sums up the current state of the fourth-largest economy in the Eurozone. The country is emerging from a difficult period as a result of the global financial crisis. Economic growth was 1.4% in 2014, but this year it is expected to be more than 3%.
Despite the positive growth figure for 2015, the Spanish stock market is lagging: The IBEX 35 Index has risen 7% this year, while the Euro Stoxx 50 Index is up 11% (as of 5 June 2015). “Economic difficulties in Latin America are a problem for Spanish equities,” explains Cornelissen. “And investors, who already expected a strong economic recovery last year, have now become more cautious.”
Opportunities in equities Despite the investor pessimism, Cornelissen sees opportunities in Spanish equities. “I am moderately optimistic about the rest of the year for two reasons. First, the worst is over for the economies in Latin America. Interest rates in Brazil will fall in 2016, which will stimulate the economy.” Latin America is an important destination for exports and many Spanish companies are active in this region.
“Second, the outlook for corporate earnings will strengthen as the economy improves further,” he continues. “Financials, which represent the biggest component in the IBEX 35 Index, are geared to see an earnings improvement. And the banks have successfully recapitalized by issuing new shares. Moreover, Spanish house prices have risen again, which is very important for mortgage loans.”
Debt levels improve The recovery will lead to improved public finance figures, says Cornelissen. “The figures are not great; a 4.5% government deficit is still too high, as is the current debt-to-GDP ratio of just under 100%. But the direction is positive and the government expects these figures to come down. I agree with the government, given the strong economic recovery. The deficit is expected to go down to the 3% threshold set by the Stability and Growth Pact of the EU.”
Another important factor behind this Spanish renaissance is the country’s increased competitiveness, says Cornelissen. “Spanish exports are doing well. Unit labor costs have come down, which enables companies to lower their costs. This has been helped by labor market reforms, especially a decentralization of wage negotiations. Currently Spain has the strongest growth within the Eurozone.”
Outlook on bonds more subdued He is less optimistic about bonds, because a lot of the good news has already been priced into the market. Government bond yields have gone down over the last two years and are now around 2.2%. “The ECB’s bond buying is set to support Spanish government bonds,” says Cornelissen.
“And ECB President Mario Draghi will continue the program until September 2016, which will keep the lid on any strong rise in interest rates. In addition, Spanish credit worthiness will improve as a result of economic growth. That said, I expect the impact on credit spreads versus German government bonds to be small. These spreads are already low and I do not expect them to tighten much further.”
Elections not a concern Another major theme for the financial markets in 2015 is the national elections. These have to be held before 20 December and are expected to take place at the end of October or in November. Regional elections were held in May and saw the rise of two new political parties: Podemos and Ciudadanos. Podemos (which means ‘We can’) is often compared with Syriza in Greece, while Ciudadanos (which means ‘Citizens’) is liberal and moderate.
Another looming question is Catalan demands for independence. Because of the size of its economy, this region is vital for Spain. Therefore, any talk of secession is a risk to the financial markets. However, Cornelissen is not really worried, and even sees bright spots ahead, once the traditional two-party system has come to an end. “In theory, a Podemos victory is a risk to Spain’s membership of the Eurozone, and any steps towards a Catalan secession could also spook the markets. But it is not going to happen soon. Podemos has peaked in the opinion polls, so I do not fear a situation similar to that of Greece occurring in Spain.”
“The rise of Ciudadanos can be seen as a boon to investors because the party opposes Catalan independence – it forms a useful counterweight to regional nationalism,“ he adds. “All in all, investors should not be too worried by the occasional political storm, but should focus on the country’s sunny fundamentals. Spain can do it,” concludes Cornelissen.
Net assets in Irish domiciled funds increased by €317 billion during 2014, it was announced yesterday. Speaking at Irish Funds’ Annual Global Conference in Dublin, Pat Lardner, Chief Executive of Irish Funds, told representatives of the global funds industry that Ireland’s assets of domiciled funds rose by almost 25% during 2014. Mr. Lardner also confirmed that in the first three months of 2015, assets have further grown by €234 billion, representing a rise of 14%. Net assets domiciled in Ireland now stand at nearly €2 trillion.
This year’s Conference was opened by recently appointed Chairman of the Association, Mr. Tadhg Young. Over thirty speakers and panelists addressed topics ranging from the EU’s plans for Capital Markets Union to Ireland’s vision for its International Financial Services Sector and our role in respect of Asia.
Speaking at the Conference, Pat Lardner, Irish Funds Chief Executive said:“These latest figures reflect a record period of growth and represent a significant milestone for the Irish Funds industry. By working closely with the Irish government, the Central Bank of Ireland and the wider funds community, we are together continuing to build one of the most competitive locations for the regulated funds industry in Europe and the world. We will continue to work on behalf of our members and advocate effectively in order to make our infrastructure as attractive as possible and increase the breadth of services and fund structures Ireland can offer the international funds industry. Ireland is well on course to be considered the number one choice for funds globally.”
Also speaking at the Conference, Minister of State at the Department of Finance, Simon Harris TD, added:“The considered and comprehensive programme of this year’s Conference is a credit to Pat and his team. The depth of expert speakers and range of topics is perfectly in keeping with the latest developments in the Funds’ Industry and wider global trends. Funds are and will continue to be a keystone of Ireland’s International Financial Services’ Sector. As Minister with responsibility for this area I will continue to engage with Industry to advance the objectives of the Irish Government’s IFS2020 Strategy.
A robust and resilient Funds’ industry is essential to hi-skill and hi-value employment growth. Government must be attuned and responsive to opportunities that ensure Ireland continues to be a leading international funds’ domicile. I welcome informed proposals that share this goal and look forward to working with Irish Funds and others on a range of projects to do just that.” Regarding Asia, Minister Harris continued, “My message to this conference is clear. We want Ireland to be Asia’s and of course China’s gateway to Europe for financial services investment.”
The year to date has seen a continued rise in assets in Ireland, including a 15% rise in UCITS and 12% rise in QIAIF funds. This brings total domiciled funds to a figure of €1.9 trillion, of which UCITS account for €1.5 trillion and QIAIFs €355 billion.
This follows on from a very strong 2014 during which all domiciled assets grew 24% over the course of 12 months, and a year in which Irish domiciled ETFs accounted for 50% for all European domiciled ETFs and 16% of all UCITS funds. The strength of Ireland in Europe has continued into 2015, as of the end of Q1 there has already been 64 new sub funds launched and €46 billion of inflows to funds.
Key statistics
Ireland hosts the largest hedge fund administration centre in the world, representing over 40% of all global hedge fund assets, and is the European domicile of choice for cross border fund distribution with over 30% of the European cross border market.
As at the end of March 2015:
Value of investment funds domiciled or administered in Ireland: €3.8 trillion
Value of investment funds domiciled in Ireland: €1.9 trillion
Value of UCITS Funds domiciled in Ireland: €1.5 trillion
Over 900 Fund Managers from 50 different countries use Ireland (440 managers have funds domiciled in Ireland)
Total Funds Industry employment 13,000+
Irish Funds has over 100 member companies
80+ Industry companies employ people across 12 counties
Highest automation rates of any international funds centre in Europe
Schroders has announced the launch of its Emerging Multi-Asset Income fund, which is designed to primarily invest in emerging markets.
The launch comes in response to client demand, the manager said, particularly for those seeking to diversify and manage risk.
The portfolio will be managed by the same team running the Schroder ISF Global Multi-Asset Income fund, which has some €5.8bn of assets under management.
Aymeric Forest and Iain Cunningham head the team of some 100. They will target an annual distribution of 5%-6%, using dynamic asset allocation and risk management. Currently the Multi-Asset team manages some €106.8bn for clients globally.
Carlo Trabattoni, head of Pan-European Intermediary Business at Schroders, said: “The launch of the new fund will offer clients multi-asset diversification benefits within emerging markets. Although emerging markets have experienced recent headwinds, it allows investors with a medium to long term outlook to seek opportunities in some of the fastest growing economies in the world.”
Aymeric Forest, head of Multi-Asset Europe and fund manager, said: “We’re very pleased to announce the launch of the new fund. Investors need to be more selective in the current environment among countries and assets. Exchange rates need to be actively managed, as a local bond or equity market may appreciate in price whilst the local currency can depreciate. A multi-asset approach can use the dispersion in asset prices created by diverging monetary and economic cycles among emerging market countries and offer potentially lower drawdown risks compared to single asset classes”
EFG International has recruited Philippe Bruyère to be Head of Private Banking Geneva. He will report to Adrian Kyriazi, CEO, Continental Europe and Head of Private Banking, Switzerland.
Philippe Bruyère will replace Jean-Louis Platteau, who will focus on the development of his own portfolio of clients as well as overseeing the Independent Asset Managers segment.
Philippe Bruyère was formerly at Credit Suisse, where since 2010 he was Market Group Head – Russia, Central Asia, Eastern Europe, Israel and Greece, based in Geneva. An experienced senior executive, he has held finance and business management roles across a number of service sectors, including travel as well as financial services.
EFG International is a global private banking group offering private banking and asset management services, headquartered in Zurich. EFG International’s group of private banking businesses operates in around 30 locations worldwide, with circa 2,000 employees.
Hubert de Marliave has joined The L.T. Funds as Senior Analyst. He is a financial analyst with 30 years’ experience, he began his career as auditor at Ernst & Young, moving to Barclays (Paris and London) as credit analyst.
Hubert then joined Paribas, the French investment bank, where for 10 years he was Mid & Small Caps analyst on the French equity market. After the merger with BNP, he sought to broaden his experience with coverage of the pan-European Mid & Small Caps market, first with WestLB, and then a London investment management company.
For the past 4 years, Hubert has been a fund manager at a European equities growth fund. Wishing to refocus his career on Long-Term fundamental analysis, Hubert will review and perform in-depth analysis of the portfolio’s stocks. He will concentrate particularly on the very diverse support services sector, traditionally the largest in The L.T. Funds´ portfolios.
After a fairly dire 2014, it appears that the arrival of spring has brought new shoots of growth for the Eurozone. Macroeconomic data this year has been improving and, to an extent, investor concerns over a deflationary spiral have largely been alleviated. Although the ECB’s quantitative easing programme has undoubtedly boosted optimism, the Comprehensive Assessment of the European banking system has also played a pivotal role. With the ECB taking responsibility for the region’s banks, the improved regulatory environment should ensure they are more resilient. Loans to both corporates and consumers have already shown signs of improvement and the new banking union will hopefully encourage cross-border lending.
On a three-year view, European banks offer strong absolute return potential. This is driven by operating leverage from a very depressed profitability base, and by reduced cost of equity as the beta of the sector comes down gradually over time. Currently, European banks trade cheaply on price to book, a function of low profitability and sentiment that is still badly damaged by the recent years of financial market stress, as well as by regulatory and oversight issues. However, the Eurozone growth backdrop appears set to improve; recent data releases, in particular bank lending surveys and money supply, confirm this positive upswing. The combination of the collapse in the oil price, a fall in the euro versus the US dollar and quantitative easing, acts as a powerful stimulant, and the banking sector is one of the most advantaged by a recovering economy.
This is initially likely to be reflected in falling provisions for non-performing loans and some write-backs, which will lead to earnings upgrades. There are obvious similarities with the US experience, albeit that the Eurozone is several years behind in forcing banks to raise capital and recognise non-performing loans. As growth improves and provisioning falls, banks will generate improved returns on equity (RoE), which for the best-capitalised will lead to significant dividend increases. Regulatory headwinds remain a challenge for the sector and a key focus for investors but, in the context of attractive valuations and a recovering economic backdrop, need not prevent the sector from outperforming. In the medium term, regulatory pressures will fade as banks comply with changing requirements, enabling higher dividend payout ratios, following the US example.
Banks are typically a higher beta play on equity outperformance, as the economy and regulatory environment continue to gradually improve we expect a higher RoE from smaller bad loan provisions and new loan growth. Despite this, we are cognisant of headwinds such as a weaker euro, the oil price and low government bond yields.
The majority of advisors intend to continue recommending alternative investments over the next year, yet believe the asset class has underperformed since the economic crisis, according to a new survey from Pershing LLC, a BNY Mellon company. The study,Help or Hype: Advisor Perceptions of Alternative Investments, which was released at Pershing’s INSITE™ 2015 conference, is based on a recent survey of 1,200 advisors conducted by Pershing in conjunction with Beacon Strategies LLC, along with interviews with advisors, broker-dealer firms, registered investment advisors (RIAs) and alternative investment managers.
“Alternative investments continue to interest all investors, from ultra-high-net-worth and high-net-worth investors to the mass affluent,” said Justin Fay, vice president of investment solutions at Pershing. “Though some lingering skepticism exists about alternatives, largely due to recent lukewarm performance, we are seeing strong flows into this asset category. The findings of our study suggest that most advisors are optimistic about the ability of alternatives to deliver diversification benefits over time.”
According to the survey, most advisors’ primary goal in using alternative investments is to reduce volatility and diversify their client portfolios. Advisors who were surveyed indicated that 73 percent of their clients have at least one type of alternative investment in their portfolios.
The survey also found that:
70 percent of advisors plan to maintain their current alternative investment allocation recommendation for clients over the next twelve months
However, almost half of advisors surveyed feel that alternative investments have underperformed since 2008
More than half of advisors (55 percent) surveyed believe that clients should allocate 6 to 15 percent of their portfolios to alternative investments
56 percent of respondents see value in allocating illiquid alternatives to investor portfolios
The principal drivers of product selection are the experience of the alternative investment manager and diversification options
The majority of advisors who do not currently recommend alternative investments to clients cited product expense, along with disagreement over the viability and basic premise of alternative investments
Broker-dealers and large RIAswho took part in the survey identified operational issues as an area of concern with regard to alternative investments–specifically with regard to processing, pricing/time to settlement, tax reporting and regulation.
“The findings of the study indicate that communication, product understanding and improvements to operational processes will be critical to mitigating these challenges,” said Fay.
Fitch Ratings has published a special report titled ‘Mexican Corporates Rating Outlook Update’. The report explores the change in bias of the Rating Outlook to Negative from Positive for Mexican Companies, gives and overview of first quarter results and highlights things to watch in the future that can affect credit quality.
“The Rating Outlook continues to be Stable for Fitch’s portfolio of international and national scale publicly rated Mexican corporates, but the bias since September has turned to negative from positive,” said Sergio Rodriguez, Senior Director and Co-head of Fitch’s Mexican corporate group.
As of May 15, 2015, 86% of issuers have Stable Outlooks, 5% Positive and 9% Negative. Increased M&A activity has pressured ratings, as the vast majority of acquisitions have been funded with debt.
First quarter operating trends were favourable, although free cash flow was relatively unchanged. Leverage increased during the quarter but remains at manageable levels when compared to other Latin American countries and liquidity remains sound. Good performance by exporters along with a better environment for consumption than the previous year balance against lower oil prices and sluggish economic growth.
