Photo: Ian Ormiston, portfolio manager of the Old Mutual Europe (excluding the UK) Smaller Companies fund. Old Mutual Global Investors Launches European Small Cap Fund
Old Mutual Global Investors has announced the launch of the Old Mutual Europe (excluding the UK) Smaller Companies Fund, a sub fund of the Old Mutual Global Investors Series Plc, a Dublin domiciled umbrella fund.
The fund, which is managed by Ian Ormiston who joined Old Mutual Global Investors in October 2014, aims to achieve long-term capital growth through investing in smaller companies in Europe (excluding the UK). The portfolio will hold between 40 and 55 stocks, each with an equal weighting in the portfolio.
The fund will focus on finding companies with less than €1bn market cap, with the team researching the most inefficient part of the market in order to find cheap growth opportunities.
By investing in businesses achieving high and consistent profitability whilst avoiding illiquid stocks and turn-around companies, the fund aims to reduce inherent risks that are sometimes associated with the small cap market.
The European small cap sector offers a breath of opportunities for investors, benefiting from economic clustering and diversity that offers attractive investments in most market conditions.
Ian Ormiston commented: “The European small cap market is a diverse universe offering great opportunities for investors. As an under-researched sector, it is naturally inefficient and so by focusing on high quality, true small cap companies, with a good level of liquidity we aim to create a portfolio that can add real value to investors.”
Foto: Jose Javier Martin, Flickr, Creative Commons. KKR se refuerza en España con el fichaje de Alejo Vidal-Quadras
KKR has announced the appointment of Alejo Vidal-Quadras as Director, based in KKR’s Madrid office.
In this role, Mr Vidal-Quadras will be responsible for developing and supporting KKR’s investment platforms in Spain. Alejo will be part of KKR’s Private Equity team and reinforce coverage of the Spanish market for the other investments platforms such as Credit, Infrastructure and Real Estate.
Alejo Vidal-Quadras is joining KKR from 3i where he was Head of 3i Spain, responsible for investments in Spain and Portugal. During the 9 years with 3i, Alejo worked on 11 Private Equity investments across several sectors, including buyouts and minority investments, and participated in 6 Boards of Directors.
Prior to joining 3i, Alejo worked at Rothschild in Madrid, providing M&A advisory services. Alejo holds a combined programme of Bachelor’s degree in Business Administration and MBA at ESADE in Barcelona, completed with a Master in Management CEMS at London School of Economics and HEC Paris.
Jesus Olmos, Member, Head of European Infrastructure and Head of KKR’s operations in Spain, said: “I am thrilled to announce Alejo’s joining as we continue to build our Spanish presence. We have been investing in Spain since 2010, and we are expanding our team to offer our partnership, long-term capital and global industrial expertise to Spanish companies. I am sure that Alejo’s knowledge and network will be of great value to us.”
Johannes Huth, Head of KKR Europe, Africa and Middle East, said: “As we continue to build our team, I am delighted that Alejo is joining us in Madrid. We believe that Spain will present many attractive investment opportunities and Alejo’s involvement will enable us to identify and pursue even more opportunities on behalf of our investors.”
Alejo Vidal-Quadras commented: “I am excited to join an investment firm with such an outstanding reputation and track record. I am particularly attracted to KKR’s flexible, multiproduct and entrepreneurial approach to investment, which is key in the local Spanish market.”
Over the last years, KKR has invested over US$2.4 billion in Spain. These investments include Inaer, Uralita, ACCIONA Renovables Internacional, Telepizza, Grupo Alfonso Gallardo, TSolar, Saba, PortAventura and two real estate investments in retail and leisure parks.
Of KKR’s more than 80 private equity portfolio companies, 18 have operations in Spain, employing over 7,000 people.
Jose Luis Llamas, Verax Wealth Management CEO/Courtesy photo. The Birth of Verax, a Multi-Family Office Created by José Luis Llamas
José Luis Llamas is yet another example of those professionals who opt for leaving large companies to launch independent projects. After 25 years of private banking experience and 13 years at Deutsche Bank, this Mexican professional has created Verax Wealth Management, a Multi-Family Office oriented to UHNW clients in Latin America, which aims to become the largest Family Office in the country. “We are not the largest in Mexico, but we are close. We hope to be so in the short term, as we have started with already a significant amount of assets.”
To this end, he has left New York to return to his roots in Mexico City, where the company will have its headquarters. “Although our headquarters will be in Mexico, our goal is to open another office in the US, probably in Miami or Houston.”
With this new project, Llamas aims to offer his services to a small number of high income households (over $25 million), with a focus on “pure family office”, covering their financial and non-financial needs, estate planning, and tax advice. “The idea of a family office is to cover all the needs of the family. I do not believe in the model which focuses exclusively on the financial side, ignoring family planning and the fiscal situation. Our big advantage is to be able to purely represent the client’s interests and to avoid conflicts of interest. We don’t need to make a decision because we represent a certain institution. This allows us to offer many more options to our customers, in a market that is becoming increasingly complex.”
As regards portfolio management, they will use an open architecture approach that aligns with the interests of the families they represent. “We will provide tailor-made solutions for each of our customers,” said the expert. “The fact of starting from scratch with a large volume of assets allows me to have a greatly talented team of investment professionals. We are about to close the recruitment of Chief Investment Officer and two other portfolio managers. “The objective of the company is to initially have a team consisting of eight or nine people, three of which will be bankers.
In late November, Verax will launch its first open fund, with medium risk, which will invest in liquid share certificates, fixed income and commodities. “With this fund we want to give access to smaller customers who have requested our services.”
On the other hand, the expert says that they are investing in less traditional assets, both in private equity and real estate, “Smaller products that are difficult to access and in which we are having the good fortune of participating.”
“We will have many short term corporate surprises, both by the corporate deals in which we are involved, and for the important recruitments we are making,” he concludes.
Photo: Ruocaled. Allianz GI Shares its Wish List for Santa
Having just celebrated Thanksgiving, says Kristina Hooper, the US investment strategist and head of US Capital Markets Research & Strategy for Allianz Global Investors, we have so much to be thankful for as Americans—and as investors:
The employment situation has improved substantially in the past year – Unemployment has dropped to 5.8% in October 2014 from 7.2% in October 2013. Even U-6, the broadest measure of unemployment, has fallen to 11.5% from 13.7%.
Lower oil prices have put money back in consumers’ pockets – On June 6, oil closed at $102.66 per barrel. Last Friday, it closed at $76.1 per barrel. A roughly 25% drop in a few short months, helps compensate, at least indirectly, for the lack of wage growth many Americans continue to experience.
Global monetary policy remains very accommodative – Last week, the Bank of China lowered interest rates and the ECB president Mario Draghi suggested the probability of sovereign QE is rising. Even the Fed is looking at a broader set of economic data in assessing when to begin tightening. Policy makers want to ensure the economy is on solid footing before it acts. Even after the Fed’s initial move, the environment will remain relatively accommodative, especially given that the Fed expects to maintain its balance sheet at its existing size through re-investment of its maturing assets.
Most importantly, our veterans, who have made great sacrifices for our freedom – Thanks to our men and women in uniform, we live in a free society and enjoy all the rights and privileges that come with it, including a capitalist system.
But there are some items on our wish list for Santa:
Higher-quality jobs and higher wages – There has been very little wage growth in the past few years, a result of the substantial slack in the labor market. In general, many Americans have lower-quality jobs— ones they’re overqualified for, ones that don’t pay as much, ones that don’t include benefits—that are far worse than the ones they had before the global financial crisis. We are hopeful that will change as labor-market slack diminishes, although we expect it will vary by region and industry in the US.
Less conflict in the world – Some of our greatest risks right now are geopolitical ones. Let’s hope many of the troubling flare-ups we’ve seen recently begin to moderate. “The euro zone and Japan are concerned primarily about deflation while China is concerned with decelerating growth.”
Stronger economic growth and a healthy level of inflation globally – It’s clear based on recent monetary policy that Japan, China and the euro zone are worried about their economies. The euro zone and Japan are concerned primarily about deflation while China is concerned with decelerating growth. The International Monetary Fund downgraded global growth expectations for 2015 to 3.8% from 4% earlier this year. And while the United States is enjoying improving economic growth, it’s not immune to what’s happening on other shores. In fact, the October FOMC minutes show that the Fed is concerned about a global deceleration and the impact it would have on the United States. Let’s hope that greater deceleration can be halted, and that economies can actually see stronger growth in the coming year.
Investors who put emotions aside and invest with a plan – Investors, particularly younger ones, are far too risk averse right now. That’s cause for concern especially since we expect more volatility going forward. A recent Bankrate survey showed that 39% of millennials—those ages 18 to 29 years old—felt that the best place to invest money they “didn’t need for 10 years or more” was cash. While that’s largely due to the kind of investing environment they lived through as young adults, it doesn’t bode well for their financial security. Looking ahead, the investing environment will be more challenging with a lot of twists and turns. Still, investors should stick to a long-term financial plan and broadly diversify their portfolios, including an adequate allocation to stocks. It’s risky not to be in risk assets.
Foto: Coleccionista de Instantes, Flickr, Creative Commons. Los activos en fondos UCITS y no UCITS en Europa sobrepasan los 11 billones de euros por primera vez en la historia
The European Fund and Asset Management Association (EFAMA) has published its latest quarterly statistical release which describes the trends in the European investment fund industry during the third quarter of 2014.
The combined assets of UCITS and non-UCITS surpassed the EUR 11 trillion mark for the first time ever to end the quarter at EUR 11,057 billion.
UCITS recorded increased net inflows of EUR 130 billion in the third quarter of 2014, up from EUR 126 billion in the second quarter of the year. This marked the third successive quarter of UCITS net sales surpassing the EUR 100 billion mark.
So far in 2014, UCITS attracted EUR 405 billion in net inflows, more than double the EUR 178 billion attracted over the same period in 2013.
Long-term UCITS, i.e. UCITS excluding money market funds, continued to register strong net inflows of EUR 117 billion, albeit down compared to EUR 148 billion in the second quarter.
Demand for bond funds remained high in the third quarter (EUR 47 billion compared to EUR 56 billion in the second quarter). Net sales of balanced funds also posted strong net inflows during the quarter (EUR 52 billion compared to EUR 56 billion in the second quarter). On the other hand, equity fund net sales fell to EUR 14 billion, from EUR 24 billion in the second quarter, owing to rising geopolitical and economic uncertainties during the quarter.
Money market funds posted net inflows of EUR 13 billion in the third quarter, against net outflows of EUR 22 billion recorded in the second quarter.
Total net assets of UCITS increased by 4.3 percent during the third quarter to stand at EUR 7,807 billion at end September 2013. Net assets of balanced funds increased 5.9 percent during the quarter, followed by bond funds with growth of 4.7 percent. Net assets of equity funds registered growth in assets of 3.3 percent. Money market funds also registered a rise in assets of 4.1 percent during the quarter.
Total net assets of non-UCITS increased by 3.1 percent in the third quarter to stand at EUR 3,250 billion at end September 2013. Assets of special funds reserved to institutional investors grew by 3.3 percent during the quarter.
S&P Dow Jones Indices announced the launch of the S&P Brazil Sector Gross Domestic Product (GDP) Weighted Index. The Index is designed to measure the largest and most liquid stocks listed on the BM&F Bovespa weighted proportionately to the published Brazilian sector GDP figures.
“Brazil’s equity market is highly concentrated in financial services and natural resource companies, thus traditional market capitalization weighted equity indices are not representative of the Brazilian economy,” says Michael Orzano, Director of Global Equity Indices at S&P Dow Jones Indices.
“By weighting the constituents according to their GDP sector weights, the S&P Brazil Sector GDP Weighted Index provides investors with a transparent benchmark that reflects the growing, dynamic industries underrepresented in market cap weighted indices.”
The underlying universe for the S&P Brazil Sector GDP Weighted Index is all stocks from the S&P Brazil Broad Market Index (BMI). The Global Industry Classification Standard (GICS®) sector for each of the 100 unique companies is mapped to the following Brazilian GDP sectors: Agriculture, Industrials, Financial Services and Non-Financial Services. The sectors are then weighted according to their annual GDP figures.
Wikimedia CommonsFoto: Giordano Lombardo, new CEO Pioneer. Leadership Change at Pioneer Investments
UniCredit and Pioneer Investments today announced that Sandro Pierri will be stepping down from his post as CEO of Pioneer Investments effective January 31, 2015. Giordano Lombardo will ensure continuity of leadership for Pioneer’s business during this phase. Mr. Lombardo has been with Pioneer for over 17 years, during which time he has been responsible for developing and leading Pioneer’s global investment management platform, currently serving as Deputy CEO and Group Chief Investment Officer.
Federico Ghizzoni, CEO of UniCredit, said, “I would like to thank Sandro for his many contributions to Pioneer over the last eleven years, and especially during his two and a half years as CEO. Pioneer produced excellent investment results and robust net inflows owing to Sandro’s strategic focus and disciplined execution. The past two years have seen Pioneer’s standing as a leading global asset manager reaffirmed, supported by outstanding investment performance and approximately €24 billion of cumulative net inflows. I wish him the very best in his future endeavors, and am confident that he leaves Pioneer extremely well positioned.”
Mr. Ghizzoni continued, “I am fully confident that Giordano and the rest of Pioneer’s management team will continue to effectively manage the business and support Pioneer’s clients and associates around the world. They have my full support.”
Sandro Pierri commented: “I want to thank Federico and UniCredit, as well as the Board of Pioneer Global Asset Management, for giving me the opportunity to lead Pioneer for the past two and a half years. We have, thanks to a fantastic team effort, outperformed our initial goals and helped Pioneer to produce strong investment performance and record levels of net inflows, and Pioneer is now in an incredibly strong position. I will always think very fondly of my time at Pioneer and wish nothing but the best for Pioneer and its people going forward.”
Banco Santander said on September that it was in talks to potentially combine its asset management arm in a joint venture with Pioneer Global Asset Management. The deal, if consumated, would create an asset manager with 347 billion euros, or about $568.2 billion, in assets under management and operations in the Americas, Europe and Asia. The leadership change announced today by Pioneer Investments could well be related with these conversations.
In 2013 Santander entered into an alliance that gave the private equity firms Warburg Pincus and General Atlantic a 50 percent stake in its asset management operations.
. Juan Fierro Has Been Appointed as New Sales Manager for Henderson in Madrid
Juan Fierro has been appointed as the new Sales Manager with Henderson Global Investors for the Iberian market. He will be working in Madrid, Spain from January 2015.
Henderson Global Investors’ has a strong commitment to the Iberian market. Spain in particular, has been one of the biggest contributors to the growth of Henderson’s European business.
Juan will report to Ignacio de la Maza, Director of Sales Iberia & Latin America, and he will be responsible for the wholesale market in the Iberian Peninsula.
Juan makes a welcome new addition to the team in Iberia, whose members already include both Rafael Bonmati and Paul Southgate.
Most recently, Juan was a Risk Analyst with the Investment Risk Team also at Henderson Global Investors, where he has been for more than six years. Before joining Henderson in 2009, he worked for New Star, and Banco Santander.
Commenting on the appointment, Ignacio de la Maza, said, “Juan has in depth experience of both the asset management sector and Henderson’s product offering.
His investment risk experience adds great value to the existing presence that Henderson has in Spain. This is another step forward in structuring a solid team to serve our clients in the region.”
Harald Preissler, CIO, Chief Economist and Head of Asset Management at the Swiss Management company, Bantleon
. "With The Economic Downturn in Europe, in 2015 We Could See Debt Yields Even Lower Than The Current Ones"
Interest rates and bond yields are both at historic lows, to the point that one may think that there is no scope for further reductions. But Harald Preissler, Chief Investment Officer, Chief Economist, and Head of Asset Management at the Swiss management company, Bantleon, does not think so: he believes that low asset yields will remain for a while, “they will remain low over the next five years, and will not rise too high,” he explained during this interview with Funds Society, and he argues that there may still be scope for further reductions in the coming months.
“With the economic downturn in Europe, in 2015 we could see yields even lower than the current ones,” he says; although he acknowledges that the margin is not large. Preissler explains that bonds need not again have high returns, or undergo high volatility, in order to generate returns in the portfolios, but they are able to generate alpha if yields move in around 1% -2%.
Their management is based primarily on analyzing the economic cycle: whereas, in periods of greater strength, they opt for high yield, credit, emerging market debt, or convertibles, if the situation worsens, as has happened this year, they go back to gaining exposure to public debt, which currently represents most of the portfolios of the Bantleon Opportunities funds. It’s currently overweight in German government bonds while recognizing that if the situation improves in 2015, as expected, they will opt more heavily towards credit and high yield debt. These strategies, which can invest in European bonds, currently avoid peripheral debt because they want highly liquid assets, although it does have this asset in other portfolios.
They have two sources for profitability: duration management and the incorporation, or not, of equity. As for duration, it now stands at about four years (Opportunities funds’ conservative strategy can range from 0 to 7 and the aggressive ones between 0 and 9). “If the situation becomes complicated, we are long in duration, in order to benefit from the transfer of capital from risky assets to safer assets”; and if the situation changes, they do the opposite.
The weak economic environment not only explains their opting for German government bonds, but also their current lack of exposure to equities in flexible strategies which allow it. “The economic data is weak and the technical data indicates caution, so we prefer to be out of the stock market,” he explains, although if the situation stabilizes they will invest once more. The funds include this asset in a binary way through DAX futures (i.e. they are either invested, or not invested): for the conservative strategy they have either 0% or 20%, and for the aggressive one, either nothing or 40%.
This combination can be explained by the desire to have, at least, one source of alpha in the portfolio. “When the situation improves and fixed income yields go up, should there be exposure only to bonds, there would be no source of alpha, unless they opt for negative duration, which is somewhat more complicated from the technical point of view than exposure to the stock market. In that case, the stock market provides a source of alpha.”
QE towards late 2015?
Preissler envisions a difficult economic outlook for Europe, with growth declining but without recession, although he believes that, with the help of a weaker euro, the situation will improve next year. Should the economy fail to recover, however, he believes that the ECB could act with a real QE. For now, it would suffice with a QE in the private market, and Germany would stop at that, but should the situation worsen, purchases of public debt will come at the end of next year or in early 2016. “In the end, Draghi has no other means of improving things than to buy government debt, there is not much else he can do if another period of economic weakness comes along,” he says.
European banks will not help the recovery because, in his opinion, there is no demand for credit and companies have cash to undertake investments outside Europe; therefore approved stress tests do not involve a change in the situation.
Across the Atlantic, the Fed could start raising rates in the second quarter of next year and the management company is positioned for that movement, although they rule out sharp rises which may endanger a recovery which is still weak, and taking into account the real estate industry’s sensitivity to those increases. “US cannot afford it,” he says.
Opportunities in emerging markets
For the Bantleon Opportunities strategy, the manager believes that there is value in other fixed income assets in addition to European public debt. In their multi-asset strategy, Bantleon Family and Friends, they have, also with a duration of four years in debt assets, positions in credit, although he has cut down somewhat in high yield. As well as in European government debt, although peripheral this time, including Spanish debt, these positions were built in early 2012 and are still overweight.
15% is in equities, some US but especially in emerging countries, in which it’s overweight, as he considers that the weakness of last year, which resulted from the end of QE in the US, has faded and the situation will improve. It also has 7% in gold as a hedge against potential crises.
Bantleon manages over 10 billion Euros. Capital Strategies Partners, specializing in mutual funds brokerage, represents Bantleon in Latin America and Spain.
Wikimedia CommonsPhoto: Mys 721tx. SEC Charges HSBC’s Swiss Private Banking Unit With Providing Unregistered Services to U.S. Clients
The Securities and Exchange Commission today charged HSBC’s Swiss-based private banking arm with violating federal securities laws by failing to register with the SEC before providing cross-border brokerage and investment advisory services to U.S. clients. HSBC Private Bank (Suisse) agreed to admit wrongdoing and pay $12.5 million to settle the SEC’s charges.
“HSBC’s Swiss private banking unit illegally conducted advisory or brokerage business with U.S. customers,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “HSBC Private Bank’s efforts to prevent registration violations ultimately failed because their compliance initiatives were not effectively implemented or monitored.”
According to the SEC’s order instituting settled administrative proceedings, HSBC Private Bank and its predecessors began providing cross-border advisory and brokerage services in the U.S. more than 10 years ago, amassing as many as 368 U.S. client accounts and collecting fees totaling approximately $5.7 million. Personnel traveled to the U.S. on at least 40 occasions to solicit clients, provide investment advice, and induce securities transactions. These relationship managers were not registered to provide such services nor were they affiliated with a registered investment adviser or broker-dealer. The relationship managers also communicated directly with clients in the U.S. through overseas mail and e-mails. In 2010, HSBC Private Bank decided to exit the U.S. cross-border business, and nearly all of its U.S. client accounts were closed or transferred by the end of 2011.
According to the SEC’s order, HSBC Private Bank understood there was a risk of violating the federal securities laws by providing unregistered broker-dealer and investment advisory services to U.S. clients, and the firm undertook certain compliance initiatives in an effort to manage and mitigate the risk. The firm created a dedicated North American desk to consolidate U.S. client accounts among a smaller number of relationship managers and service them in a compliant manner that would not violate U.S. registration requirements. However, relationship managers were reluctant to lose clients by transferring them to the North American desk. HSBC Private Bank’s internal reviews revealed multiple occasions when U.S. accounts that were expected to be closed under certain compliance initiatives remained open.
The SEC’s order finds that HSBC Private Bank willfully violated Section 15(a) of the Securities Exchange Act of 1934 and Section 203(a) of the Investment Advisers Act of 1940. HSBC Private Bank agreed to admit the facts in the SEC’s order, acknowledge that its conduct violated the federal securities laws, and accept a censure and a cease-and-desist order. The firm agreed to pay $5,723,193 in disgorgement, $4,215,543 in prejudgment interest, and a $2.6 million penalty.
The SEC’s investigation was conducted by Matthew R. Estabrook and David S. Karp, and the case was supervised by Laura B. Josephs. The SEC appreciates the assistance of the Swiss Financial Market Supervisory Authority.
