Photo: Kuhnmi. Threadneedle Appoints Head of European Insurance Sales
Threadneedle Investments has appointed Patrick Steiner as Head of European Insurance Sales. Patrick, who is based in Zurich, joined Threadneedle on 6 January and will report to Andrew Nicoll, Threadneedle’s Global Head of Insurance. In his role, Patrick will work closely with Threadneedle’s institutional sales teams across Europe with the objective of broadening and deepening Threadneedle’s relations with European insurance clients.
Patrick Steiner has 20 years’ experience in asset management and joins Threadneedle from Conning Asset Management where he had been a Business Development Director with a focus on European insurance clients since 2012. Before that, Patrick was a Business Development Director at Wellington Management International and prior to that, Head of European Distribution at Deutsche Asset Management in Switzerland.
Patrick started his career in the Credit Suisse Group in the mid-1990s and has an Executive MBA in international management from the University of Applied Sciences, St. Gallen, Switzerland.
He graduated with a Bachelor’s degree in Economics from Kaderschule Zurich. “Patrick’s appointment reflects our intention to leverage our significant insurance capabilities and credentials and extend these more fully across the European market,” said Andrew Nicoll. “His insurance experience and local knowledge will enable us to build new relationships and to provide a better level of service to our existing clients across the continent.”
Threadneedle currently has over € 55 billion under management from insurance clients across Europe covering a range of investment strategies.
Prudential market experts expect moderate growth in 2015 – led by the United States – as global economies continue to recover. Outlining their views at Prudential Financial, Inc.’s 2015 Global Economic and Retirement Outlook discussion, they said any growth is likely to be uneven across the globe and in the face of increased and prolonged volatility.
Ed Keon, managing director of QMA, said the current environment will lead to continued low yields for bonds and yet another strong year for the stock market.
“Bond yields have stayed low after the end of quantitative easing for a simple reason: bond demand is very strong, and bond supply is modest. Strong demand and modest supply means high prices in any market, and leads to low yields for bonds,” Keon said. “In the short run, stocks can continue to perform well as low interest rates support higher than normal valuations, but higher valuations carry a long-term cost. Eventually expected returns of stock and bond portfolios might be lower than historical norms, creating challenges for many investors.”
Mike Lillard, chief investment officer of Prudential Fixed Income, agrees that the outlook for stocks is more attractive than for bonds. Lillard also believes interest rates will remain low with the health of the economy weighing heavily on any Federal Reserve decisions.
“June would be my liftoff date for a rate hike from the Fed, but they will do it very slowly and patiently. If the economy begins to soften, however, they will stop to avoid sending us into another recession,” said Lillard. “They are going to be highly data dependent, and at the end of the day, our expectation is that they won’t be able to get short term rates very high.”
Quincy Krosby, a Prudential market strategist, warned that the recent slide in oil may not be as beneficial as Fed members make it out to be. She also questions whether a rate hike by the Fed could ultimately harm the economy.
“While consumer spending may have increased in the United States, the Fed needs to worry more about what lower energy prices mean globally. It could be signaling a decrease in demand in places like China, Europe, and Japan, which could lead to decreased production and job cuts in the energy sector,” said Krosby. “Taking that into account, the Fed also has to keep in mind that when rates rise, something always breaks. There’s no telling what asset class may start the ball rolling, but it can’t come as a surprise. That said, it has been the velocity of the oil price plunge that caught markets off guard. Consumers, however, are net beneficiaries of lower prices.”
John Praveen, chief investment strategist for Prudential International Investments, cautioned that divergent monetary policies from central banks are likely to lead to volatility in the coming year and that current and future geopolitical risk cannot be dismissed.
“The start of quantitative easing in Europe and possibly Japan will allow for greater expansion in those markets compared to the United States, yet any unforeseen risks could derail that proposition,” Praveen said. “Europe was supposed to be on an upswing in 2014, but Putin’s actions held any potential rally in check. With such interconnected global economies, any geopolitical or major risk can hold everything back.”
Sri Reddy, head of full service investments with Prudential Retirement, recognizes that this low growth environment described by Prudential’s market experts will challenge investors to think creatively when it comes to retirement income and will cause a shift in how retirement products are structured.
“This prolonged low interest rate and low growth economy has investors looking for new options to generate retirement income,” Reddy said. “Things like automatic enrollment plans, auto escalation options, and enhanced defined contribution plans need to become more of an industry norm to secure retirement income for today’s workers. With people living longer than ever before, the industry needs to continue to adjust.”
Foto: woodleywonderworks. Blackstone y TSSP compran Acenden Mortgage a los administradores de Lehman Brothers
Funds managed by Blackstone Tactical Opportunities and TPG Special Situations Partners have agreed to acquire Acenden Mortgage Servicing Solutions from the administrators of Lehman Brothers.
Acenden is a mortgage servicing solutions provider. The Company provides primary servicing, special servicing, analytics and securitisation services. It has more than 64,000 loans under management, with a value of about £5.4bn (at December 2013). Acenden employs almost 400 staff located in central London, High Wycombe and Dublin.
Amany Attia, Chief Executive Officer of Acenden, said: “We are excited to work with Blackstone and TSSP and believe that Acenden is well placed to benefit in the long term from the collaboration with our new shareholders.”
The transaction is expected to close in early 2015, subject to customary regulatory and antitrust approvals.
Photo: Dennis Jarvis. “Make in India”: A Push for Manufacturing
India’s challenges in the manufacturing sector illustrate the complexities of implementation in real (versus theoretical) political and economic systems. Ownership barriers, rigid labor laws, complex land acquisition rules and weak infrastructure have conspired to stunt manufacturing growth. But whenever these barriers have been lifted, explains Sharat Shroff, portfolio manager at Matthews Asia, the response from the entrepreneurial community has been encouraging. The automobile industry, liberalized in 1991, was among the first segments of manufacturing to open up to private sector participation. Since then, output has grown 15-fold and, India is increasingly considered a destination for manufacturing and an export base for auto parts and automotive vehicles.
India’s newly elected Prime Minister Narendra Modi has made manufacturing a key agenda point, thinks Shroff. Specifically, his administration plans on building a globally competitive industrial sector that can steadily increase market share in exports. To support this, authorities have progressively lowered ownership barriers to foreign firms within manufacturing. Most recently, in the defense and railways sectors, it has increased the level of ownership permitted by foreigners to 49% and 100%, respectively.
Labor laws in India are more vexing because they are legislated concurrently by both the central and state governments. The Northwestern state of Rajasthan has taken the lead in labor deregulation by reducing government-approval restrictions on hiring/firing workers. Other proposed measures aim to provide greater flexibility in running factories, and in complying with existing labor laws. If the efforts in Rajasthan lead to greater job creation, it will be difficult for other states not to follow suit.
Formal job creation is surely a goal of Mr. Modi’s and the kinds of changes sought by the state of Rajasthan are certain to challenge some vested interests. But the recent elections have given a broad mandate of growth and governance over welfare entitlements to the incoming government, concludes the Matthews Asia expert.
Ethenea Independent Investors S.A. expands its Portfolio Management Team by a new colleague. Peter Steffen strengthens the team around Luca Pesarini, Arnoldo Valsangiacomo, Guido Barthels and Daniel Stefanetti as of January 2015. “We are happy to have experienced Portfolio Manager Peter Steffen aboard. The equities expert completes our team and will support us in the investment decisions of our funds”, says Chairman of the Board of Directors and Portfolio Manager Luca Pesarini.
Peter Steffen holds a Master’s Degree in Finance and Asset Management and is CFA Charterholder. He worked for different banks and gained relevant experience in the areas of Credit Research, Equity Research, Corporate Banking and Alternative Asset Management. In 2007 he joined Deutsche Asset & Wealth Management Investment GmbH in Frankfurt and New York. For three years he worked as analyst for US bank and insurance stocks. Since 2010, he occupied the position of Portfolio Manager and successfully managed the funds DWS Global Value and DWS Top Dividende.
Capital Strategies is Ethenea distributor in Spain and Portugal.
Asset managers globally recognize the importance of building brand awareness and have been increasing resources to support marketing and sales activities in this area, according to the latest issue of The Cerulli Edge – Global Edition.
A recent Cerulli Associates survey of European asset managers revealed that 77% expected to allocate more to marketing in 2014. And significantly, no manager intended to reduce their marketing budget.
“We believe this strong trend will continue into 2015,” noted Barbara Wall, Europe research director at Cerulli. “The recovering market and increased competition between managers merit allocating more to marketing and sales strategies. And overwhelmingly, managers globally share this view.”
In Cerulli’s U.S. proprietary survey of marketers, 78% of small and mid-size managers expected to increase their marketing budgets compared to 38% of large managers. The smaller managers need to spend more on marketing and building brand because they have significantly smaller salesforces and wholesaling operations.
A similar picture emerged in Asia where 63% of marketers anticipated an increase in their marketing budget. In total 29% expected the budget to increase by more than 10%, 11.5% forecast an increase between 6% and 10%, while 23% said the budget would increase by a modest 1% to 6%.
“Opportunity to grow local market presence throughout Asia and Europe is certainly on the cards,” said Angelos Gousios, a Cerulli senior analyst. “With increased competition in all regions, brand awareness is the key to gaining an edge in this game. But cultural and local nuances, especially in Asia, mean a one-size-fits-all marketing strategy is unlikely to succeed no matter how much money is thrown at it.”
The UBS Global Asset Management US Pension Fund Fitness Tracker saw the funding ratio of the typical corporate US pension plan drop by approximately two percentage points to 87% in the fourth quarter of 2014.
“Overall, 2014 was a negative year for US corporate pension plans, as we estimate that the average funding ratio declined by about 8 percentage points. After a 17% funding ratio improvement in 2013, the 8% decline in 2014 highlights the importance of plan sponsors adhering to their de-risking program and thereby minimizing the volatility of their funded status ge points. After a 17% funding ratio improvement in 2013, the 8% decline in 2014 highlights the importance of plan sponsors adhering to their de-risking program and thereby minimizing the volatility of their funded status”, says UBS Global AM.
Investment returns of 2.5% could not keep pace with the 5% increase in liability values over the quarter, causing funding ratios to decrease. In 2014, funding ratios decreased approximately eight percentage points. These estimates are based on the average corporate plan’s reported asset allocation weightings from the UBS Global Asset Management Pension 500 Database and publicly available benchmark information.
The sharp decline in oil prices dominated the last quarter of 2014. This is seen as a net positive by the chair of the US Federal Reserve (Fed) Janet Yellen; however, it also has damaging economic consequences for oil exporting countries. Russia in particular has been hit by the combination of falling oil prices, economic sanctions and the fall of its currency. OPEC decided not to cut production at this stage, despite oil prices reaching a 5-year low.
In the U.S., the Fed updated its commitment to keeping rates low from “considerable time” to “patient in beginning to normalize the stance of monetary policy”, as expected by market participants. The fall in oil prices contributed to the decrease in inflation expectations.
The economic slowdown continued in China while snap elections were called in Japan and Greece. The political uncertainty in Greece remained cause for concerns in Europe, which translated into increased volatility of the European market indices at the end of the year.
Further to a correction in the first half of October, the S&P 500 Index went on to end the quarter up with a total return of 4.93%. In US dollar (USD) terms, the Euro Stoxx Total Return Index was down 4.54% over the quarter. The MSCI Emerging Markets Total Return Index ended the quarter down 4.44% in USD terms.
The yield on 10-year US Treasury Notes ended the quarter down 32 basis points (bps) at 2.17%. The yield on 30-year US Treasury Notes decreased 45 bps, ending at 2.75%. High-quality corporate bond credit spreads, as measured by the Barclays Long Credit A+ option-adjusted spread, ended the quarter 16 bps wider. As a result, pension discount rates (which are based on the yield of high-quality investment grade corporate bonds) decreased over the quarter. The passage of time caused liabilities for a typical pension plan to increase by about one percentage point over the quarter. Together, these effects caused liabilities to increase 5.0% for the quarter.
Funding ratios decreased approximately eight percentage points in 2014. US Pension Fund Fitness Tracker of the typical US corporate plan’s funding ratio. Source: UBS Global Asset Management, Barclays, Markit.
Photo: Eneas de Troya. Assessing the U.S. Economy in the New Era of Innovation
There are driving changes in the U.S. economy, affecting employment, productivity and profitability dynamics: the automation of knowledge work, advanced robotics and the energy revolution. These trends are just the tip of the iceberg, says Pioneer Investments. “Over the coming decade, radical changes in healthcare, education, communication, transportation and alternative energy – to name just a few – will transform the economy and the investment landscape. We believe that new modes of research and analysis will be necessary in order to interpret the impact of these changes on both the macro and micro levels of the economy”.
Selection in the Era of Innovation
In this era of accelerating innovation, Pioneer´s analysts believe that a fundamentally different analytical perspective on long-term factors shaping the economic landscape is required. “This framework, together with the more traditional sector/business financial analysis, will potentially enable us to identify unique return opportunities and uncover hidden risks in each market”. Key factors for the firm are:
New technologies’ impacts on sector trends
New business emergence
Rapidly evolving disruptive competitors
Business model flexibility; the ability to leverage a platform, respond to competitive threats, reshape product and service offerings
Demonstrable innovation track record (ability to enter new markets/launch new products)
The ability to attract/retain innovation talent, shed costs, rapidly increase productivity
Accelerating Innovation: Far-reaching, Positive Consequences on the Economy
The U.S. economy is in transition, moving rapidly towards a knowledge-based economy that will rely increasingly less on human labor to manufacture goods and provide many services. “We believe the trends we have discussed will rapidly reshape the economic landscape. With any dramatic change comes uncertainty and some fear. Many pundits have highlighted the possible downside of these changes. While we are sympathetic to these concerns, we believe that accelerating innovation will ultimately create more jobs than it destroys, produce dramatic wealth and have far-reaching positive consequences to areas of the economy that have historically been less productive (education and healthcare are good examples)”, explains Michael Temple, director of Credit Research at Pioneer Investments and portfolio manager for Pioneer Dynamic Credit Fund.
Every economic transition generates dislocations. Society ultimately adapts but the transition will be difficult to navigate for those unable to keep up. This has significant ramifications for the investment landscape, opines Temple. “Investors that use traditional frameworks to analyze the market, picking winners and losers based on outdated valuation relationships or assessing macro-economic policy based on irrelevant historical paradigms, run the risk of focusing on the wrong things”.
Investec appointed Florian von Hartig Head of Debt Capital Markets in its Specialist Bank. He joins from Standard Bank, where he was global head of debt primary markets, Investec said in a statement as mentioned by Reuters. Based in London, he reports to Chris Meyer, head of corporate and institutional banking.
Von Hartig joined Standard Bank on December 2005, leaving last October. Ian Dixon, a member of Investec’s debt capital markets, had been an interim responsible for the division since October 2013. Dixon will remain at the bank within the high-yield segment.
Pioneer Investments has announced two new senior hires to lead U.S. Intermediary Distribution and U.S. Marketing and Product Development.
Mark Spina has been named Executive Vice President and Head of U.S. Intermediary Distribution, effective January 5, 2015. He will lead internal and external wholesaling, business development, and relationship management teams focused on building relationships with leading financial intermediaries. He will be responsible for distributing Pioneer’s investment solutions, including mutual funds, sub-advisor services and closed-end funds. He is a member of the firm’s U.S. Management Committee and reports to Lisa Jones, President and CEO of Pioneer Investment Management USA Inc.
“Mark has extensive experience across all channels and a demonstrated track record of enhancing partnerships with clients,” said Jones. “I am confident that with Mark’s leadership, Pioneer will work closely with our clients to enhance our partnerships across these channels. I am excited to have Mark as a member of our leadership team,” she added.
Spina joins Pioneer from Voya Investment Management, where he served as Head of Intermediary Distribution since 2008. Prior to that role, Spina was Head of Strategic Marketing and Head of Business Development at Voya (formerly ING US Investment Management), where he worked since 2001.
Erik Gosule has been named Senior Vice President and Head of Marketing and Product Development for the U.S. Division, effective December 15, 2014. He is responsible for developing an integrated marketing platform for Pioneer’s investment solutions across all channels, including intermediary and institutional. He will also lead the U.S. Division’s product development efforts. Erik is a member of the firm’s U.S. Management Committee and reports to Lisa Jones.
“Erik’s breadth of investment experience, ranging from product development and management to marketing and consultant relations, makes him well suited to expand our suite of investment solutions and to better communicate the merits of Pioneer’s capabilities to the marketplace, ” she added. “Pioneer has a broad and compelling global investment platform. While many of our clients are well aware of our capabilities in both traditional and alternative strategies, we are seeking to enhance investors’ awareness of our robust equity, fixed income and multi-asset investment solutions,” said Jones. “Erik will be instrumental in developing a fully integrated marketing and product development platform aligning our investment capabilities with client expectations and needs,” Jones added.
Before joining Pioneer Investments, Gosule was Head of Client and Product Solutions at PanAgora Asset Management, where he was responsible for overseeing strategic and tactical marketing initiatives including product development, and for communicating PanAgora’s investment capabilities through a variety and distribution channels around the world.
