Foto: Nguyen@NYCity, Flickr, Creative Commons. La Française compra el 49,9% de la gestora Alger, especialista de renta variable con sesgo growth
La Française, an international multi-class asset manager, announces the signing of a strategic partnership (pending regulatory approval) with Alger Management, Ltd. La Française will take a 49.9% interest in Alger, an affiliate of Fred Alger Management, Inc., a U.S. asset management firm. Two executives of La Française will sit on the newly appointed five member Board of Alger.
This alliance offers a unique opportunity to create synergies in distribution, market development, and product diversification, says the firm. La Française, through its European network and with the support of its majority shareholder, Credit Mutuel Nord Europe, will provide distribution capabilities and acceleration capital, and Fred Alger Management, Inc. will contribute its recognized expertise in growth equities.
For more than 50 years Fred Alger Management, Inc. has been considered a globally recognized pioneer of growth style investment management, focusing primarily on U.S. equities with additional capabilities in international and alternative equities. It has a long-standing track record and has been recognized numerous times in Europe as a Lipper Funds Awards winner.
Fred Alger Management, Inc. manages approximately $22.4 billion (31/12/2014). Its investment philosophy, in place since its founding in 1964, seeks to identify the best investment opportunities for clients by focusing on companies undergoing “Positive Dynamic Change.” This philosophy, and its analyst-driven investment process, is built on original, fundamental, bottom-up research provided by a more than 40 person investment team.
Patrick Rivière, Managing Director of La Française says, “We pride ourselves in bringing institutional quality investment solutions within everyone’s reach. Together, with Alger, we’ll be developing new markets and building on its well-merited reputation among American retail and institutional investors as a high-standing and innovative asset manager. These past three years of intensive international development have led to this ultimate partnership, completing our now established equities expertise.”
“Establishing this relationship with La Française is another step we are taking to build our presence outside the U.S.,” said Dan Chung, CEO and Chief Investment Officer of Fred Alger Management. “La Française is one of the leading asset managers in Europe, and I am quite pleased that Alger will be working together with La Française to provide expertise in U.S. equities as we build this partnership.”
The United States held steady in its ranking among the top 20 countries in the world for retirement security, according to the 2015 Natixis Global Retirement Index, published this week by Natixis Global Asset Management. For the third consecutive year, the U.S. placed 19th among 150 nations, as benefits of the U.S. economic recovery offset growing demand on government finances.
“As our analysis shows, the security of retirees’ savings is influenced by a range of factors largely out of their control,” said John Hailer, president and chief executive officer for Natixis Global Asset Management in the Americas and Asia. “We’re seeing that individuals will have to shoulder more of the financial burden by saving and investing more effectively to ensure financial security in retirement.”
Now in its third year, the Natixis Global Retirement Index is based on an analysis of 20 key trends across four broad categories: health, material well-being, finances and quality of life. Together, these trends provide a measure of the life conditions and well-being expected by retirees and near-retirees.
While the U.S. got strong grades for its finances, largely due to low inflation and interest rates, and enjoyed higher Gross Domestic Product growth, its position in the rankings may be fragile. The U.S. benefits from high per-capita income and spends more per capita on healthcare than any other nation. However, those resources don’t reach all Americans. The U.S. has a relatively large gap in income equality, and Americans have access to fewer doctors and hospital beds than citizens in other developed nations.
Further, the U.S. population is aging and living longer. The proportion of the U.S. population over the age of 65 is expected to rise from 13% in 2010 to 21% in 2050. As a result, there will be fewer workers to pay for programs, such as Medicare and Social Security, that serve older Americans.
Europe leads in quality of retirement
Top-ranked countries in 2015 benefited from well-developed and growing industrialized economies with strong financial systems and regulations, broad access to healthcare, and substantial public investment in infrastructure and technology. Despite relatively heavy tax burdens, these countries rank high in per-capita income levels and low in income inequality.
“These countries currently lead the way, but could face headwinds as the citizens live longer in retirement and the cost of funding various programs continues to increase,” said Hailer.
The index showed:
Stability at the top: Switzerland retained its No. 1 ranking because of its high per-capita income, strong financial institutions and environment. Switzerland has a mandatory occupational pension system and a well-funded universal health system. Norway held the second spot on the strength of its widely shared wealth.
Big leaps: Iceland jumped seven slots, to No. 4, because of structural changes in the nation’s financial system after its banking crisis. The Netherlands rose to No. 5 from No. 13 on strengthened finances, while Japan’s fiscal reforms and healthcare improvements helped it vault to No. 17 from No. 27.
Down under policies working: Australia (No. 3) and New Zealand (No. 10) are two non-European countries in the top 10 due in large part to mandatory retirement savings programs.
“Bold public policies and a commitment to innovation are making the greatest contribution to the security of retirees in the top-ranked countries,” Hailer said. “They offer valuable lessons for countries trying to improve their retirement systems and prepare citizens for financial security in retirement. In the U.S., we need to open access to work-based retirement programs so more Americans can put money away for their future needs.”
Some progress is being made at the federal level, and the states are beginning to take action as well. Illinois, for example, recently introduced an automatic retirement savings program for workers in the state that don’t already have a retirement plan at work, a first for the nation.
Photo: New logo of NNIP. ING IM Changes Its Name to NN Investment Partners
As part of the EC Restructuring agreement, ING Group agreed to divest its Insurance and Investment Management activities.
From April 2015 we’ll be known as NN Investment Partners, a stand-alone business of NN Group. As part of NN Group N.V. since last July 2nd 2014, a publicly traded corporation, the new name, with a new logo, is the final step in the journey that NN Group and NN Investment Partners are making to an independent future.
Jaime Rodríguez Pato, Managing Director ING Investment Management Iberia & Latam: “We may be changing our name. We won’t be changing who we’ve always been. Our customer commitment remains the same. Proprietary research and analysis, global resources and risk management are still fundamental in a wide variety of strategies, investment vehicles and advisory services that we offer in all major asset classes and investment style.”
History and background
NN Investment Partners is the asset manager of NN Group N.V., a publicly traded corporation. Our investment management products and services are offered globally through regional centres in several countries across Europe, the United States, the Middle East and Asia, with the Netherlands as its main investment hub. We manage in aggregate approximately EUR 180 bln (USD 227 bln) in assets for institutions and individual investors worldwide. We employ over 1,100 staff and are active in 18 countries across Europe, Middle East, Asia and U.S.
The successful history of client-focused asset management extends back to 1845 and reflects our roots as a Dutch insurer and bank. Clients draw upon our more than 40 years’ experience in managing pension fund assets in the Netherlands, one of the world’s most sophisticated pension markets. This rich heritage enables us to deliver exceptional long-term, risk-adjusted performance across asset classes, complemented by best-in-class service.
Photo: robinhood.org. BlackRock Appoints Deborah Winshel to Lead Impact Investing Platform
BlackRock announces the appointment of Deborah Winshel as a Managing Director and global head of impact investing. In her role, Ms. Winshel will help BlackRock unify its approach to impact investing through the launch of BlackRock Impact, a dedicated platform catering to investors with social or environmental objectives worldwide. Ms. Winshel will also be responsible for overseeing BlackRock’s Global Corporate Philanthropy program.
BlackRock Impact will work closely with the firm’s global investment teams and leverage its data and analytic capabilities to develop scalable, innovative investment solutions that also meet clients’ desired societal outcomes. BlackRock currently manages over $225 billion in strategies designed to align clients’ portfolios with their objectives and values, which will now be integrated under BlackRock Impact. Ms. Winshel joins the firm with a distinguished career in non-profit management and venture philanthropy, during which she took an active role in shaping charitable giving programs while defining and measuring successes based on the programs’ lasting effects.
“Today, many clients are looking for investment opportunities that advance social and financial goals at the same time. While the roots of this movement can be traced back many years, the frequency and complexity of these mandates are increasing. More and more, clients are looking to measure the returns on their investments both by the societal and financial outcomes they can help to create. With her experience at Robin Hood, and its focus on programs with measurable impacts, Deborah is the ideal choice to help BlackRock develop scalable impact investing offerings through both public and private markets,” said Laurence D. Fink, Chairman and CEO of BlackRock.
Currently BlackRock offers a number of investment strategies which incorporate environmental or social considerations, including:
Values Based –Utilizes screens to exclude securities, aligning investors’ portfolios with their values. BlackRock currently manages more than $214 billion in Values Based mandates.
ESG Consideration – Focuses on investing in companies that display strong track records in the governance, social or environmental areas. The firm recently launched the iShares MSCI ACWI Low Carbon Target ETF.
Impact Investing – Pursues measurable societal or environmental outcomes alongside financial goals. To date we have participated in over $1 billion in client mandates for investing in Green Bonds. With over $1.5 billion of commitments and AUM, BlackRock’s renewable power investment platform is one of the largest in the world, offering clients compelling opportunities to meet their investment needs.
Lyxor Asset Management announces a new partnership with Quantmetrics Capital Management to join Lyxor’s AIFM managed account platform. With this partnership, Lyxor will launch its first AIFMD-compliant strategy on the platform.
In a context where the environment for CTAs has significantly improved in 2014, this strategy could appear as a strong diversifier to deliver positive and uncorrelated returns to investors.
James Fowler, Founder of Quantmetrics, commented: “With the current environment, institutional investors have difficulties to source opportunities that can offer sustainable performance. Our strategies have been developed to generate returns across different market environments. This is especially true during volatility peaks, where we believe our niche strategies can exploit short term opportunities in highly liquid futures. We are pleased that Lyxor has chosen to partner with Quantmetrics, and we expect institutional investors’ portfolios to benefit from our strategy.”
With over 80 managers running a diverse range of alternative strategies, Lyxor’s Managed Account Platform gives access to a broad universe of best-in-class talent. Superior capabilities in hedge fund selection, portfolio construction and risk management, combined with a high level of customization in terms of transparency or liquidity provide value to investors and address their key decision criteria.
Brazil has submitted new plans to restore investor confidence and strengthen growth. In this regard, Marie-Thérèse Barton, Senior Manager of Emerging Market Debt at Pictet, who has been visiting the country, believes that despite the pessimism held by many managers regarding the country, change is in the air, and authorities strive to open up for business. So it could positively surprise.
“I landed in Rio de Janeiro for a full day of meetings, with the growing pessimism of foreign investors, and then the local optimism that Rousseff and her team can support this, the largest economy in Latin America, hit me. Besides, the economic and political elites try to be friendly to entrepreneurs. In fact, we were greeted warmly in Congress by a senior coalition party official, even though it was one of their busiest days. Everyone is interested in stressing that Brazil is open for business and I cannot remember how many times I heard the words “tax adjustment”. The message is clear: change is in the air. Foreign investors are almost universally pessimistic and may be pleasantly surprised,” she says.
Even so, there are still some misgivings, and this expert does not deny that the situation is serious. “This economy flirts with recession, and inflation has reached the end of its tolerance levels, yet prices of raw materials like iron, soybeans, and other key exports continue to fall.” In addition, at least one credit rating agency has suggested a drop in rating, while a billionaire scandal which threatens to further undermine confidence, affects Petrobras, the state oil giant.
The administration, however, seeks to restore investor confidence, says the expert. “To shore up state finances, it has already announced cuts to subsidies to state-owned banks, higher interest rates in the development bank BNDES, and limits to pensions and unemployment benefits. But, more importantly, the Government has taken a big step in the right direction with the appointment of Joaquim Levy as finance minister. Mr. Levy is a banker educated in Chicago, an orthodox economist who has worked at the IMF and ECB and is known for having cut spending for the period 2003-2006. Indeed, all officials and bankers whom I have met are almost unanimous about the fact that curbing public spending is the most important task during the next four years, and that Levy is the right person for the job”.
According to one public official, says Barton, “he promises little and obtains much”, which is what it takes to make difficult cuts and increase taxes. “Many investors doubt that he will to be able to exercise any autonomy because Rousseff is interventionist, (apparently, given her promises to union leaders,she has recommended the new planning minister, Nelson Barbosa, to change his position on adjusting the minimum wage). Many people, however, consider that Rousseff has no choice. Levy’s promise, which seems ambitious, is to improve the fiscal balance by 1.5%, but Brazil’s central bank has reaffirmed its commitment to have reached its inflation target within the next two or three years, and it seems that investors are willing to give Levy the benefit of the doubt, at least for the next few months. “
Deceleration: the Risk
Economic slowdown is the inevitable collateral damage of these measures is the economic slowdown, the emerging market debt team at Pictet AM thinks that Brazil, after growing about 0.1% in 2014,will hardly see any growth this year, and an increase in unemployment is likely. On the other hand, the market lists an expectation of rising interest rates by at least 75 basis points. To keep inflation below 6.5%, reference rates have already been raised to four year maximums, at 12.25%, and, given the adverse impact on the economy, it is possible that the central bank does not tighten as much. In any event, officials and executives believe that interest rates will rise this year, but differ as to the rate, with some expecting it to reach as high as 13%. “The central bank, however, may wish to focus by the end of the year, in supporting growth by cutting interest rates, which can generate an interesting investment opportunity in Brazilian bonds,” she says. This scenario can be partly discounted, since the yield curve on maturities from two to six years on the state debt is reversed, but there is room for the gap to widen if Levy and his team positively surprise.”
“However, the Real may fall further against the dollar this year, in line with what is indicated by the currency market’s interest rates’ differential on forward contracts. We must bear in mind that in 2014 the Real was one of the emerging market currencies with higher falls against the dollar, following the Russian Ruble at over 11%. In our fair value models, however, it’s still overvalued by 10.5% in nominal terms.”
Laurent Crosnier, CIO at Amundi London, recently visited Madrid. Attracted by Mexico and Brazil, Amundi’s Laurent Crosnier Begins to See Value in Emerging Market Debt
Towards late 2014, around 80% of the global bond market offered returns below 2%, and half, less than 1%. Under such circumstances, where is it possible to obtain returns in fixed income? Amundi’s Global Aggregate bond strategy seeks to achieve that through a strategy based on expanding the investment universe and in a flexible style, in order to invest wherever there is value, depending on the stage of the cycle (with dynamic asset allocation and by combining long-term macro visions with short-term tactical management).
Laurent Crosnier, CIO of Amundi London, who was recently in Madrid, says the key is to identify the best asset class and learn to adequately combine it so that, for example, currencies do not undermine the gains. For 2015, he is cautious in duration (the fund may vary from 0-8) and in US Public Debt, although he is more positive regarding European Public Debt (where he prefers peripheral debt to German debt, due to its greater potential to benefit from ECB QE).
Laurent Crosnier shall share his market vision with attendees at the first Funds Society Fund Selector Summit organized in association with Open Door Media, to be held on the 7th and 8th of May at the Ritz-Carlton Key Biscayne in Miami. You may view the program and additional event information by clicking on this link.
As explained in a presentation to reporters, he is very positive towards investment grade credit, which will also benefit from the QE in Europe, although at this time he sees more value in the United States because of the valuations. By sector, he prefers the financial to the industrial, and also begins to be positive towards emerging debt, in which he sees attractive valuations in Mexico and Brazil (where “there is no growth but prices are very attractive in light of the devaluation of the Real, and therefore provides a good risk-return ratio”), he also favors the debt of countries benefiting from the fall in oil prices, such as India or Turkey. However, in order to be covered in the event of a hard landing in China, he takes short positions in debt and currencies of commodity-exporting countries such as Canada, Australia and New Zealand.
In currencies, he’s banking on the Dollar (supported by US growth) against the Yen and the Euro, and asked about a possible currency war, he warns of the contradictory effects that may result from the decisions of some central banks to avoid deflation. He considers that all that the Swiss Central Bank’s decision will achieve is to import that deflation.
Regarding China, he affirms that it will need a weaker currency in order to gain competitiveness in Asia against Japan, but it will have to achieve a balanced compromise between the need for a weaker currency and its desire to internationalize the Renminbi. “You cannot ask investors to invest in a currency that is going to depreciate by 20%,” he says, indicating China’s need to find equilibrium between both plans.
Multi-Asset Management
Dan Levy, Head of Multi-Asset Flexible Management Specialists of Amundi, spoke of Amundi Patrimoine and was positive towards many assets (such as equities, fixed income and duration in the US, he’s not expecting an imminent rate hike there, and Europe) but he believes there will be pressures which can add volatility (rate hikes by the Fed, the situation of the emerging world, international political risks, or deflationary pressure in Europe).
In the absence of haven securities, he advises as to the importance of risk management and of decreasing it whenever necessary. In that regard, the fund is flexible to protect the portfolio by cutting risk and adding diversification when needed. Currently, the fund’s exposure to equities is around 45%. “We expect a correction, although it will not be big,” he says.
Investment manager Neuberger Berman has announced the launch of its Neuberger Berman Global Real Estate Securities Fund a sub-fund of its Irish-Domiciled UCITS fund umbrella, Neuberger Berman Investment Funds plc.
The Fund invests in a portfolio of global real estate securities with the aim of outperforming the FTSE EPRA/NAREIT Developed Index. The portfolio will typically hold 50-70 securities, diversified by geographic region, countries and property sectors.
It is managed by the Neuberger Berman Global Real Estate Securities Group led by Steve Shigekawa. The team has on-the-ground regional resources, with portfolio managers Steve Shigekawa and Brian Jones based in the US, Gillian Tiltman in Europe and Anton Kwang in Asia Pacific. The Group manages approximately $2.7bn (€2.3) in AUM.
Steve Shigekawa, head of the Global Real Estate Securities Group, commented: “This new fund is a natural extension of our existing US strategy and has been launched in response to increasing interest from clients for global strategies. We have the right people in the right locations to build a focused and differentiated global real estate portfolio.”
Jean Jacques Durand, Senior Manager for EdRAM’s Emerging Fixed Income strategy / Courtesy Photo. Venezuela, Amongst the Main Options in EdRAM’s Emerging Debt Strategy
Jean-Jacques Durand, Senior Manager of the Emerging Fixed Income strategy at Edmond de Rothschild Asset Management (EdRAM), is firmly committed to Venezuelan fixed income assets as he considers that the default risk is below 50% and that it has great upside. A few months ago, Venezuela, which currently represents the largest position in their portfolio, had unfavorable technical factors which, during the summer, prompted partial profit taking for an asset in which the portfolio manager had already invested previously, and to which he returned in early 2014. After the fall of oil prices during the month of December, Durand has decided to strengthen his commitment to this country once again.
“Oil risk is high but Venezuela’s upside potential is huge,” says Durand, who explains that, “six months ago I would have thought that the worst scenario for Venezuela’s sovereign debt would be a sharp drop in oil prices, if this was produced by a fall in demand. The highest risk was a brutal fall of the development of Chinese economy, but the decline in prices has been due to supply and the OPEC’s decision not to intervene.”
The manager is confident that Venezuela will not need a restructuring of its debt or reach a default situation, which 85% of the market expects. While considering that the country has been very poorly managed, he thinks it has a good chance of readjustment, which would enable it to continue repaying its debt. “The default risk is below 50%. Even though currently the situation is difficult because social spending is very high, there are elections later this year, and the price of oil is very low, if a default were to occur it would be a political decision. The country has already overcome similar situations experienced in previous crises. It has never defaulted. “With a ratio of external debt to GDP below 20%, and most of its debt held by local investors, Venezuela has a relatively strong position to negotiate with its creditors.
Durand, who has spent the last four years in EdRAM after a long career as an emerging market’s fixed income trader in investment banks in New York and London, confesses that flexibility is required in order to choose the adequate risk and to invest the portfolio in the appropriate assets. “During those periods when the conviction is not as attractive, you have to be able to lower the portfolio’s overall exposure,” he says. When he took over management of the fund in 2012, he had to decide whether he wished to adopt either a more cautious, or a more risky approach as his overall investment philosophy. In his strategy’s investment decisions, the macro situation weighs as much as technical factors (flows, valuation, momentum), which may lead to take positions in assets that are unattractive if we just look at macro data such as the ratio of debt to GDP of the issuing country, but have very favorable fund flows or very attractive valuations. Thus, this strategy’s portfolio has a very distinct composition compared to its peers.
Such is the case of Russia, a market with very negative macro fundamentals. The political crisis and international sanctions imposed on the country have impacted the economy and the Russian Debt market, causing the consensus recommendation to drop from overweight to outright underweight. The price of bonds reflects a situation that is four or five levels below its credit rating, due to lack of investor confidence. According to Durand, “despite the crisis, its level of public debt to GDP is below 15%, external debt is virtually nonexistent, only 3% of GDP, and its ability to repay is very strong”. Currently, despite its fundamentals, which in the past prompted the manager to stay out of this country, the strategy holds a strong position in Russia.
Egypt, where Durand began building a position during the crisis “because when everyone sells there are opportunities”, is yet another example to illustrate that many times the portfolio composition is different from most of the other strategies within its category. In Mexico’s case, however, the momentum and valuation have caused the strategy to exclude it since 2012, when he disposed of an important position with significant gains, even though it shows a positive macro fundamental analysis.
Market flows greatly condition performance. Argentina, with a significant technical specific risk in 2013, was at that particular time the biggest position within the strategy. “There was a consensus recommendation to clearly underweight Argentinian sovereign debt, and us a result that the marginal seller had already exited. The only possibility remaining was for it to climb, and it did. The debt stock changed hands, leaving that of investors who cannot tolerate risk to local or medium long term investors,” added Durand.
Their positions in Belize are another sign of the management style of this strategy, in which the size of the country or its weight in the index are irrelevant. In 2012-13, elections were held in the country, debt was restructured, bonds fell dramatically, and there was very little liquidity, but there was value. “The macro analysis showed that debt was below 90% of GDP, the last government had not performed badly. It was a question of predicting, before the elections, what was the likelihood that the candidate who wanted to restructure debt would win the elections, and upon election, how would it handle restructuring (fast or slow, friendly or not). Seeing the price at which it was trading, profits were assured, regardless of who won power. In order to build the position, we began taking positions in 2012, further increasing them in 2013.”
This strategy, which may invest either in sovereign and quasi sovereign debt, as well as in corporate bonds, also takes advantage of opportunities in hard currency and in local currency debt. The strategy currently does nor hold local currency bonds because Durand expected some adjustment after the commodity boom. “We have something on the radar, but we have not entered as yet. We currently offer a strategy which is more focused on hard currency debt than in local currency debt”, he concludes.
Photo: SEC. SEC Names David Grim as Acting Director of the Investment Management Division
The Securities and Exchange Commission announced that David Grim has been named as Acting Director of the Division of Investment Management. He replaces Norm Champ, the division’s former director, who left the SEC at the end of January.
“Dave has served with distinction for nearly 20 years in the Division of Investment Management,” said SEC Chair Mary Jo White. “The Commission and investors will benefit tremendously from his extensive legal knowledge, deep roots in the work of the division, and his managerial expertise.”
Mr. Grim has been the division’s Deputy Director for the past two years where he has been responsible for overseeing all aspects of the division’s disclosure review, rulemaking, guidance, and risk monitoring functions.
“As a part of the Division of Investment Management for my entire career, I have witnessed first hand the exceptional talent and dedication of my colleagues. It is a privilege to work with Chair White, the other Commissioners, and the staff as we continue to carry out our important mission,” said Mr. Grim.
Mr. Grim joined the SEC in September 1995 as a Staff Attorney in the division’s Office of Investment Company Regulation. In January 1998, he moved to the division’s Office of Chief Counsel and was named Assistant Chief Counsel in September 2007.
Mr. Grim graduated cum laude with a degree in Political Science from Duke University and received his law degree from George Washington University, where he was Managing Editor of the George Washington Journal of International Law and Economics.
The SEC’s Division of Investment Management works to protect investors, promote informed investment decisions, and facilitate innovation in investment products and services through oversight and regulation of the nation’s multi-trillion dollar asset management industry.
