7 Prices for 7 Commodities by Loomis, Sayles & Company

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7 precios para 7 materias primas en 2015
Photo: Nestor Galina. 7 Prices for 7 Commodities by Loomis, Sayles & Company

The commodity complex has seen a rapid fall since the middle of the 2014 due to global growth concerns, the US dollar rally and continuing overall growth in supply. “I believe prices may be close to bottoming and we could see a cyclical upturn in the first half of 2015”, says Saurabh Lele, Commodities Analyst for the macro strategies group at Loomis, Sayles & Company.

Crude oil

Lele expects crude oil prices to correct in 2015, bringing the Brent Crude Index to $85-95/barrel and the West Texas Intermediate (WTI) to $75-85/barrel by year end. “My opinion is that the current move in crude oil prices is unwarranted. I believe the market is mispricing geopolitical risk, a US supply response and the upcoming global refinery turnaround schedule (periods of refinery closure for maintenance and renewal services)”.

The situation in Libya is still volatile and recent disruptions to oil production are yet to have any impact on prices. Refinery demand in the second half of 2014 was the weakest in five years, not only due to global growth but also due to temporary factors such as closures and maintenance related shutdowns, explains. “The first half of 2015 will see very little maintenance related shutdowns as well as several new refineries initiating operations. Finally, US domestic production will adjust lower as energy and petroleum companies will have less cash to spend in 2015”.

Natural gas

In this case, the analyst expects prices to continue to trade in the $3.75 to $4.25 per mmbtu range (this is the price required for electric consumption to balance the market)

Natural gas seems to have found a comfortable trading range between $3.75 and $4.25 per mmbtu as electric utilities switch between natural gas and coal. Inventories, which were down significantly after the severe winter in early 2014, have built up steadily over the course of a cooler-than-usual summer. “In 2015 we are likely to see higher demand for natural gas due to higher industrial consumption, exports to Mexico and the start of LNG exports from the new Sabine Pass terminal in Texas”, argues.

Copper

Loomis, Sayles & Company expects copper to stay in a slight surplus after which supply growth is expected to slow and fall behind demand.

Inventories at the exchange and bonded warehouses are low and a slight pickup in demand could result in prices moving higher. “Over the next two quarters, we could see demand improve from higher grid spending in China, which has lagged its budgeted number year-to-date”, says Lele.

Iron ore

“Prices could correct and move up to the $80-90 per metric tonne range by the second half of 2015. Longer-term I believe iron ore prices to remain in $80-$90 range”, affirms Lele.

“The fall in prices exceeds what fundamentals would dictate – I believe the decline is being driven by de-stocking/restocking cycles. Demand should improve after the APEC (Asia-Pacific Economic Cooperation) summit in November as steel makers restart mills near Beijing”. Ore inventories at ports have fallen between 7-10% since their June highs, indicating low but stable demand. Iron ore inventories at steel mills are also close to their 2012 lows.

Thermal coal

He expects global thermal coal prices to stay in the $70-75 per metric tonne range over the next year due to weak demand is likely to persist with the only bright spot being medium-term Indian coal. “I see strong supply growth from Indonesia and Australia in the near-term; the impact of the thermal coal import tax is expected to be minimal as Indonesia and Australia are exempt due to their respective free-trade agreements with China”.

Gold

The firm expects gold prices to fall to $1,000/oz over the next two years. “Resilient mine supply and lower demand from China and India should push prices lower. I expect the Indian gold export tax to continue until the end of 2015 as well as Chinese demand for jewelry to remain subdued as anti-corruption sentiment reduces the demand for luxury goods. ETF selling is expected to continue as real rates move higher and inflation/deflation present no major concerns at this time”, enunciates.

Morabanc to Launch in Spain, Acquire Tressis

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MoraBanc entra en España con la compra de Tressis
CC-BY-SA-2.0, FlickrJosé Miguel Maté is Tressis' CEO. Morabanc to Launch in Spain, Acquire Tressis

Andorra’s Morabanc is said to be launching in the Spanish market through the acquisition of fund platform Tressis, according to Expansión. It could pay 50 millions euros for the 85% of the business, according to its sources.

The details of the acquisition are not known yet, but the operation seems to be close to reach a final point.

Morabanc would be the fourth Andorran bank to launch in Spain. Banca Privada d’Andorra entered the market through Banco Madrid; Crèdit Andorrà launched through Banco Alcalá; while Andbank was the only Andorran bank to enter the Spanish market with his own brand and by recently acquiring Inversis Banco.

Voya Hires Corporate Communications and Chief Communications Officer

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Voya Financial announced that Paul J. Gennaro has joined the company as senior vice president, Corporate Communications, and chief communications officer. In this role, he will oversee all internal and external communications for Voya Financial, serving as a strategic advisor to senior management, setting the overall communications strategy, and both further defining and protecting the company’s reputation with key stakeholders. He will report to Chairman and CEO Rodney O. Martin, Jr.

“Paul is a recognized thought leader and has demonstrated experience working with several well-known global brands to help them strategically and effectively communicate with multiple stakeholders,” said Martin. “He has an impressive record, a diverse background of communications leadership roles, and significant experience overseeing programs to support a number of initiatives, including a successful initial public offering and a global rebranding effort. He will be a great asset as we continue to further define and protect our reputation in the industry and our brand in the marketplace. I’m pleased to have him on our team and I am looking forward to working closely with him as we continue to work toward achieving our vision to be America’s Retirement Company.”

Gennaro comes to Voya Financial with more than 25 years of experience and, during his career, has managed various facets of corporate and marketing communications, investor relations, public relations and government affairs. Most recently, Gennaro was senior vice president, Corporate Communications, and chief communications officer of AECOM, a $20 billion, fully integrated infrastructure and support services firm. At AECOM, Gennaro led all aspects of the firm’s global corporate communications, brand optimization and reputation management strategies. During his tenure at AECOM, which Gennaro joined in March 2006, he developed and executed communications strategies in support of more than 40 acquisitions, the company’s initial public offering and its global rebrand.

“I’m excited to join the Voya team and to be part of a company with a great vision and a commitment to helping Americans with their retirement readiness needs,” Gennaro said. “I look forward to helping build the Voya brand – and to helping Americans build a secure financial future.”

Prior to joining AECOM, Gennaro managed all global corporate and marketing communications for Johns Manville, a subsidiary of Berkshire Hathaway, Inc. He has also held communications leadership roles for global brands such as Ingersoll-Rand, Dell, and American Express. Gennaro began his career as a print/broadcast journalist and public affairs officer for the U.S. Navy.

Gennaro received a Bachelor of Science degree in aeronautics from Embry-Riddle Aeronautical University. He is a board member of Ethisphere LLC, serves on the board of advisors for the Emory University Center for Ethics, and also is on the board of directors for the DINFOS Foundation, which supports the U.S. Department of Defense Information School.

Gennaro is the recipient of several professional awards, including being named PR Week magazine’s PR Professional of the Year in 2013. He also received the 2013 John W. Hill Award from the New York Chapter of the Public Relations Society of America and, in 2010, the International Business Award for Communications Executive of the Year.

Franklin Square Hires Chief Marketing Officer to Strengthen Leadership in Alternative Investments

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Franklin Square today has hired Berta Aldrich to serve as the firm’s Chief Marketing Officer. Ms. Aldrich joins the firm after spending the last 10 years with Vanguard, where she held executive positions in marketing strategy and planning, loyalty operations and investment education.

“Berta is a highly respected marketer and educator in our industry and we are delighted she has joined Franklin Square,” said Michael C. Forman, Chairman and CEO, Franklin Square. “Berta will help us further strengthen our position as a leader in alternative investments and our support for client and investor education programs.”

In her most recent position as Head of Marketing Strategy for Vanguard, Ms. Aldrich led the channel marketing efforts for the growth and expansion of its $1 trillion dollar Financial Advisory Services division. She previously served as Department Head of Vanguard’s Acquisition and Loyalty Marketing Operations, Marketing Executive to the Institutional Full-Service Retirement division and Head of Investor Education and Program Development. Before joining Vanguard, Ms. Aldrich had a 13-year career at the Principal Financial Group.

Franklin Square is a leader in providing individual investors access to alternative investments historically reserved for large institutions,” commented Ms. Aldrich. “I am excited to join such an innovative, dynamic firm and a team that places such great emphasis on investor protection, client care and civic engagement.”

In 2013, Ms. Aldrich was named among Gramercy Institute’s 20 Rising Stars in Financial Marketing. She holds an MBA with honors from St. Joseph’s University and a BA in Finance from Iowa State University. Ms. Aldrich is a member of the board of directors for Camphill Special School and is a previous board member of the Mutual Fund Education Association.

Threadneedle Rebrands its Business as Columbia Threadneedle Investments to Strengthen Global Growth

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Columbia Management announced today that it will rebrand its business as Columbia Threadneedle Investments in the first half of 2015. The new global brand will represent the combined capabilities, resources and reach of Columbia and UK-based Threadneedle Investments, offering clients access to the best of both firms and positioning the asset management group for a greater share of global growth.

Threadneedle has assets under management (AUM) of $150 billion (as of September 30, 2014) and is the fifth largest retail asset manager in the UK (IMA as of October 31, 2014). Together, Columbia and Threadneedle have $505 billion in AUM across developed and emerging market equities, fixed income, multi-asset solutions and alternatives. Both firms are owned by Ameriprise Financial.

The new brand – Columbia Threadneedle Investments – will reinforce the strength of both firms in established markets of the U.S., UK, and Europe and enable the group to grow its presence in key markets, including Asia Pacific, Latin America and the Middle East, stated the firm.

The established investment teams, strategies, processes and legal entities at both firms will not change as a result of the new global brand. Similarly, existing funds will not change, nor will existing client portfolios and mandates.

“This is an important and exciting new phase for us. We are bringing together a combined offering under the Columbia Threadneedle Investments global brand for the benefit of our clients and our business,” said Ted Truscott, CEO – Global Asset Management, Ameriprise Financial. “Columbia and Threadneedle have been working together for more than two years to increase the breadth and depth of our offering to clients. Presenting the combined capabilities of both firms under a single brand is the natural next step.”

“We are introducing the Columbia Threadneedle Investments brand to reflect the significant resources and expertise available to our teams around the globe. By working together we add depth to our offerings, enabling us to make better investment decisions and ultimately generate better performance for our clients, and the new global brand reflects this. Clients around the world benefit from our combined research ideas and insights, trading techniques and portfolio strategies,” Truscott said.

“Columbia and Threadneedle share many philosophies and values, including a commitment to delivering the investment outcomes our clients expect,” said Colin Moore, Global Chief Investment Officer. “In a world where financial markets and economies are increasingly interconnected, being part of a strong global partnership with our colleagues at Threadneedle is a considerable advantage. Over recent years we have deliberately fostered an environment of information sharing and debate between Columbia and Threadneedle, and I believe the aggregate resource is world class. While our investment teams remain true to their respective styles and processes, the sharing of research globally allows us to make full use of our collective intellectual capital and better inform our decisions to the benefit of our clients.”

“Columbia and Threadneedle have a shared vision, business strategy and values, albeit with distinct investment capabilities, local distribution and unique product offerings,” said Campbell Fleming, CEO of Threadneedle. “Under the new brand we become a global group, presenting our combined resources, investment perspectives and expertise to better serve our clients, both individuals and institutions, around the world.”

Q3 Sees Worldwide Net Cash Inflows Jump to US$340 Billion

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The European Fund and Asset Management Association (EFAMA), has released its latest international statistical release containing the worldwide investment fund industry results for the third quarter of 2014. 

Investment fund assets worldwide increased 6.2 percent during the third quarter to stand at EUR 27.24 trillion at end September 2014. In U.S. dollar terms, worldwide investment fund assets decreased 2.2percent to US$ 34.28 trillion on account of U.S. dollar appreciation during the quarter.

Worldwide net cash inflows amounted to EUR 290 billion, up from EUR 252 billion in the previous quarter.  A turnaround in net flows into money market funds was the main driver behind this result.

Long-term funds (all funds excluding money market funds) continued to register net inflows amounting to EUR 223 billion during the third quarter, albeit down from EUR 301 billion registered in the previous quarter. 

Worldwide equity funds recorded reduced net inflows of EUR 24 billion, down from EUR 48 billion in the previous quarter. Worldwide bond funds registered net inflows of EUR 79 billion, compared to EUR 112 billion in the previous quarter. Balanced funds recorded reduced net inflows of EUR 72 billion, down from EUR 81 billion in the second quarter.

Money market funds recorded a turnaround in net flows during the third quarter as net inflows amounted to EUR 67 billion, compared to net outflows of EUR 49 billion in the previous quarter.  The United States registered net inflows of EUR 33 billion during the quarter, with Europe attracting EUR 13 billion in net new money.

At the end of the third quarter, assets of equity funds represented 40 percent and bond funds represented 22 percent of all investment fund assets worldwide. The asset share of money market funds was 13 percent and the asset share of balanced/mixed funds was 12 percent

The market share of the ten largest countries/regions in the world market were the United States (50.3%), Europe (28.7%), Australia (4.9%), Brazil (4.7%), Canada (3.7%), Japan (3.2%), China (1.8%), Rep. of Korea (1.0%), South Africa (0.5%) and India (0.4%).  Taking into account non-UCITS assets, the market share of Europe reached 36.3 percent at end September 2014.

Azimut Acquires 50% of LFI Investimentos

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A corto plazo las valoraciones en Brasil ya no resultan tan atractivas
CC-BY-SA-2.0, FlickrFoto: Eduardo Mar. A corto plazo las valoraciones en Brasil ya no resultan tan atractivas

Italy’s independent asset manager Azimut has signed a deal to acquire 50% of Brazil’s LFI Investimentos through AZ FuturaInvest, one of its Brazilian joint ventures, said italian media.

LFI is an independent wealth management company based in Sao Paulo, founded in 2009 with a proven track record on developing customized investment solutions for Brazilian HNWI.

The Brazilian company counts seven experienced professionals, with an average tenure of more than 25 years in the industry and approximately R$500m (US$190m) AUM.

AZ FuturaInvest is Azimut financial advisory arm for the Brazilian market providing professional advisory services on asset allocation, funds selection and financial education.

“With LFI, AZ FuturaInvest will be able to offer new and efficient wealth management solutions to families and HNWI clients leveraging on LFI experience to structure customized portfolios. The team of LFI will add up to the FuturaInvest advisory team which currently counts more than 40 professionals,” the company said.

The transaction, which is not subject to the approval by the competent authorities, involves a purchase price of around R$ 8.5m (around US$ 3.2m) to be paid to LFI founders in four tranches during the next five years depending on the attainment of specific targets.

Marcelo Vieira Elaiuy and Fabio Frugis Cruz, founders of LFI commented: “Joining Azimut project is a fundamental step to improve our business. We will be able to leverage on the entire Azimut structure maintaining our independent governance and focus on clients’ interests. We are confident that the quality of the new structure will result in huge benefits for our customers.”

Pietro Giuliani, Chairman and CEO of Azimut Holding, added: “Despite a tough 2014 for the Brazilian investment fund industry, our local operations registered an encouraging growth, confirming the value of our business model and the quality of our partners. The complementary nature of LFI and AZ FuturaInvest gives new strength to our project, which rests on providing asset allocation and financial advisory services to our clients. We continue to scout all the international markets in which Azimut operates in order to attract more talents, and the JV with LFI reinforces our focus on Brazil as one of the key markets for Azimut international expansion.”

Capital Strategies Partners, a third party mutual fund distribution firm, holds the distribution of AZ Fund Management products in Latin America

Robeco Appoints Maureen Schlejen as Head of Sales Benelux and Nordics

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Robeco has appointed Maureen Schlejen as head of institutional sales and account management in charge of the Benelux and Nordic countries.

Based in Rotterdam, Schlejen will lead a team of account managers and be responsible for building Robeco’s institutional client base in the Netherlands, Belgium, Luxembourg and the Nordics.

Schlejen has been with Robeco since 1995, most recently as senior account manager institutional clients. She replaces Eric van der Maarel, who left the firm to join Aegon.

Threadneedle Appoints Head of European Insurance Sales

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Threadneedle nombra nuevo director de ventas para instituciones aseguradoras en Europa
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 Experts: Investors Should Prepare for a Lower Return Environment Relative to Historic Returns

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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.”