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Allianz GI Shares its Wish List for Santa

Cuatro motivos para estar agradecido y una lista para Papá Noel — 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.

UCITS and non-UCITS Assets Surpass the EUR 11 Trillion Mark for The First Time Ever

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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 Brazil Sector GDP Weighted Index Launched by S&P Dow Jones Indices

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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.

Leadership Change at Pioneer Investments

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Pierri deja el liderazgo de Pioneer Investments a Giordano Lombardo — 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

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Henderson nombra a Juan Fierro nuevo ventas en Madrid — . 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.”

“With The Economic Downturn in Europe, in 2015 We Could See Debt Yields Even Lower Than The Current Ones”

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“Con la contracción económica en Europa, podríamos ver en 2015 rentabilidades en la deuda aún por debajo de las actuales” — 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.

SEC Charges HSBC’s Swiss Private Banking Unit With Providing Unregistered Services to U.S. Clients

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HSBC Private Bank Suiza pagará una multa para resolver las acusaciones de EE.UU. — 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.

Investec: “The General Growth Backdrop Will be Supportive for Equity Markets”

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Investec: “Las perspectivas son constructivas para la renta variable" — CC-BY-SA-2.0, FlickrFoto: Jônatas Cunha. La renta variable de los mercados emergentes ya acusa la salida de capitales

Looking into 2015, it’s a good moment to review both the most important issues of 2014 and the challenges we face for next year. Philip Saunders, Co-Head of Multi-Asset at Investec Asset Management highlights the outlook for 2015, which will come marked by a deflationist environment and the strength of equity markets.

What has surprised you the most in 2014?

I think what has surprised me the most was the market’s resilience to macro negatives throughout most of 2014 until October. We saw a long period when we did not see any meaningful correction despite some fairly serious threats in the form of ISIS and energy, lacklustre European growth and the weakness of the Chinese economy. In the autumn we saw a more conventional correction and that, I think, is generally healthy for the markets.

What is your outlook for global growth for 2015?

Our outlook for global growth in 2015 is relatively constructive. We think some of the concerns about economic weakness in the short term are overdone. Although we are not expecting a blisteringly strong global economy in 2015 it should continue to register positive growth in the vicinity of just over 3% internationally, which is very similar to the experience we have had over a number of years. The composition of that growth has shifted. It has moved away from emerging economies, where we have seen weaker growth, towards a stronger US economy, which seems to be firing on a lot of domestic cylinders, including energy. Weakness in China will probably continue, but it is a growth recession and we think that expectations for Europe are excessively negative. We think the general growth backdrop will be supportive for equity markets. The global economy is not going to race away and we think that interest rates are likely to remain low. Inflation prints around the world are likely come in at pretty low levels allowing central banks to pursue easy monetary policies, which should support growth.

What type of growth are we currently seeing and how does this affect market cycles?

The kind of growth we are currently seeing is pretty anaemic and unbalanced. Many economies are at different points in cycles, which we call asynchronous growth, i.e. it is not synchronised and therefore it is still positive, but it is not as dynamic as we have seen in periods in the past when all economies have tended to strengthen on a coordinated basis. That is quite good for investors because overly strong growth tends to result in inflation, which tends to encourage central banks to tighten policy. We are not seeing that and we do not think that we will see that for some time. Low inflation, low interest rates and a long economic cycle are constructive for equity markets in particular and also means that real long-term interest rates do not have to rise as much as would otherwise have to be the case.

What are the biggest risks to these views?

We think that the biggest risk is on the deflationary side rather than the inflationary side. We think that inflation is unlikely to be a problem because we are in a fundamentally disinflationary environment. Global growth is unbalanced at the moment because it is overly dependent on the performance of the US economy. We think the US economy is going to perform just fine and that will help to underpin growth internationally at a time when other economies are having to adapt. However, if the US economy were to weaken significantly that would compromise our global growth outlook, which will raise risks and affect corporate earnings. Our equity view depends on constructive corporate earnings. In practice, the corporate sector is performing better than national economies and we expect that to continue.

How are you positioning your portfolios?

Our portfolios currently reflect a strategic bias towards equities. We think that equity markets are fairly valued at current levels and we think that they are supported generally by an improving earnings dynamic. We also prefer equities within the growth space to other growth assets, such as high yield bonds or emerging market debt. The skew towards equities is less than in the post summer of 2012 period, but is still positive. That is balanced by defensive assets. We continue to be happy to hold bonds, even though yields are relatively low at the moment, simply because we see the principal risk to our primary scenario as being a deflationary one. This would result in undermining the prospects of earnings and it would mean that yields would fall even lower than they are at currently.

Ana Botín Appoints José Antonio Álvarez as CEO of Banco Santander, Replacing Javier Marín

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Ana Patricia Botín destituye a Javier Marín como consejero delegado de Santander — Ana Botín, Group Executive Chairman, with the new CEO, José Antonio Álvarez. Ana Botín Appoints José Antonio Álvarez as CEO of Banco Santander, Replacing Javier Marín

The Board of Banco Santander today announced the appointment of José Antonio Álvarez as Chief Executive Officer replacing Javier Marín.

It also announced the appointments of:

Bruce Carnegie-Brown, as first Vice Chairman and lead independent director of the Board;
Sol Daurella and Carlos Fernández as independent Board directors;
Rodrigo Echenique, a current non executive Board Member, as Vice Chairman.  The three new independent directors will fill the vacancies left by the death of Emilio Botín and the resignation of Fernando de Asúa and Abel Matutes.

José Antonio Álvarez, prior to his appointment as CEO, served 10 highly successful years as Chief Financial Officer at Banco Santander. His tenure has received wide external recognition for best industry practices specifically in the areas of Investor Relations and transparency. As a result of Mr. Álvarez’ move, several other senior management changes have been made, each by promotion of internal executives.

José García Cantera will assume the responsibilities of Banco Santander CFO. Mr. García Cantera was a top-ranked bank analyst at Citi before serving as CEO of Banesto, a leading bank in efficiency, balance sheet strength and customer satisfaction that was integrated with Santander Spain in 2013. Replacing Mr. Cantera as the global head of Santander Global Banking and Markets (SGBM) will be Jacques Ripoll, previously the head of SGBM in Santander UK.

These appointments will take effect from 1 January 2015 and are subject to regulatory approvals.

Ana Botín, Group Executive Chairman, said: “On behalf of the Board, I would like to express our gratitude to Javier Marín, for his great work for Banco Santander for 23 years and especially for his service as CEO. During his two years in this role, he has led the commercial transformation of our bank, bringing innovative management to lead our customer segmentation and service improvement initiatives, while also improving our profitability and efficiency”. “We would also like to acknowledge the contributions to our Board of Fernando de Asúa and Abel Matutes, whose work has been crucial to our success”.

“The financial services industry today faces many important challenges. But Banco Santander is uniquely well-positioned to succeed, thanks to our strong local retail and comercialbanking presence in 10 European and American markets. Our leadership team’s vision is to create a bank that is “Simple, Personal and Fair” for our teams, our customers, our shareholders and communities”, Ana Botin said.

The Banco Santander Board will now have 15 members, of which nine are independent, with highly relevant and current management experience in diverse business sectors with strong customer-focused expertise. Five members — 33 percent — are women, and represent a wide diversity of international perspectives, including the US, the UK, Mexico and Spain.

Credit Suisse Publishes a Study on Wealth Creation and Wealth Management among US’s Wealthiest African-Americans

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Credit Suisse, in collaboration with Brandeis University’s Institute on Assets and Social Policy (IASP), has published “Wealth patterns among the top 5% of African-Americans,” a study on wealth creation and wealth management among the nation’s wealthiest African-Americans as measured by net worth.

The study shows that the top 5% of African-Americans invest a greater proportion of their wealth in lower-volatility assets relative to a white comparison group, including insurance, savings bonds and CDs. It also shows proportionally higher investments in real estate, and proportionally lower investments in business assets.

The research was sponsored by Credit Suisse’s New Markets business, which seeks to advance financial opportunity among women, African-Americans and the LGBT community.

“This study identifies distinctive investing behaviors within the African-American community and a number of potential drivers of these behaviors,” said Pamela Thomas-Graham, Credit Suisse’s Chief Marketing and Talent Officer and Head of New Markets. “The findings may also reflect what we know from adjacent data, which is that African-Americans are generally under-served by banking institutions. The Commerce Department, for example, has published data showing that minority business owners receive loans less frequently, at significantly smaller sizes, and at worse rates than non-minority business owners.”

Highlights of the report include:

The top 5% of African-Americans take a relatively conservative approach to decision-making on matters of wealth creation and wealth management. For example:
- The investment portfolios of the top 5% of African-Americans are three times more heavily weighted towards CDs, savings bonds and insurance than the investment portfolios of the study’s white comparison group, and are nearly one-half less weighted towards stocks, bonds and mutual funds.
- The top 5% of African-Americans invest 9% of their non-financial assets in business assets, defined as the total value of business(es) in which a household has either an active or non-active interest. The study’s white comparison group invests 37% of their non-financial assets in business assets.
- The top 5% of African-Americans invest 41% of non-financial assets in real estate outside their primary home, relative to 22% for the study’s white comparison group.
“Wealth mobility” – the degree to which a population maintains wealth over time or moves into wealth over time – is relatively low among African-Americans and may be a driver of more conservative financial decision-making. IASP’s research shows that around 57% of high-income African-American families in 1984 were still in the top segment of income in 2009, but 8% had fallen into the low-income segment. For high-income white American families, 73% remained in the high income segment and only 1% fell into the low income segment. This analysis is a new analysis of the 1984-2009 data.
Education is a key driver of wealth among the top 5% of African-Americans. Almost 69% of African-Americans at the 95th percentile of net worth have a college degree, compared with 64% for the study’s white comparison group.

“The numbers in our report provide rich and detailed insights,” said Stefano Natella, Global Head of Equity Research and one of the study’s authors. “Wealth at the top of the African-American community, what drives it and how it compares to specific control groups has not been studied with this comprehensiveness in some time.”