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Commissioner Thomas B. Leonardi Joins Evercore as Senior Advisor

Evercore has announced that Connecticut Insurance Commissioner Thomas B. Leonardi has agreed to join the firm as a senior advisor with a focus on the insurance industry sector. Mr. Leonardi has nearly 40 years of experience as an investment banker, venture capitalist, attorney, and insurance company president, and is widely regarded as a leading expert on systemic risk, group supervision, and international regulatory issues.

Roger Altman, Evercore’s Executive Chairman, said, “At a time of intense regulatory changes in the insurance industry, both here and abroad, Tom’s professionalism, knowledge and experience, coupled with his personal character and integrity, will prove invaluable to a wide range of Evercore clients.”

Ralph Schlosstein, Evercore’s Chief Executive Officer, said, “We are delighted to welcome Tom to Evercore. His deep knowledge of the sector, broad experience and relationships across the industry will further enhance Evercore’s leading global insurance advisory franchise. Tom will work closely with our teams in New York and London and joins an insurance practice that has an excellent track record of success and has built an outstanding reputation for high quality, specialist advice and creativity. We look forward to continuing to build on this success with Tom’s technical expertise, strong understanding of the regulatory environment and global perspective on the industry.”

Thomas Leonardi said, “The insurance industry continues to go through a period of extraordinary challenges in regulation, global competition, systemic risk designations, storms of increasing frequency and severity, and a prolonged low-interest-rate environment. Evercore has a world-class platform, a team of professionals that are among the most talented and experienced in the business, and a commitment to delivering extraordinary service. Perhaps most important to me, Evercore places the interests of the client above all else and they do all of this while adhering to the highest ethical standards. I look forward to contributing to Evercore’s continued growth and broadening and deepening its client relationships.”

Mr. Leonardi is head of the Connecticut Insurance Department, a regulatory agency with jurisdiction over one of the largest insurance industries in the United States. He has been a member of the executive committee of both the National Association of Insurance Commissioners (NAIC) and the International Association of Insurance Supervisors. He was a member of the U.S. Treasury’s inaugural Federal Advisory Committee on Insurance and was selected to serve on the World Economic Forum’s Global Council on Insurance and Asset Management.

For 22 years prior to his appointment as Commissioner, Mr. Leonardi was Chairman and CEO of Northington Partners Inc., a Connecticut-based venture capital, private equity and investment banking boutique that specialized in the insurance industry. Before Northington, he was head of the investment banking and venture capital divisions of Conning & Company in Hartford, Connecticut; President of Beneficial Corporation’s insurance subsidiaries; and began his career as a litigation attorney in Connecticut. He received a J.D. from University of Connecticut and a B.S in history from Boston University.

Pouring Oil on Troubled Waters

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CC-BY-SA-2.0, FlickrFoto: Sten Dueland. El high yield seguirá sufriendo con los precios de petróleo bajos

Brent crude, the benchmark world oil price, has tumbled by 22% in the year to date, sending a barrel of oil down to $84 in early November, its lowest level in over five years and below the cost of producing it for many countries.

However the ability of the world’s leading oil cartel, OPEC, to cut production levels in order to artificially raise the oil price is quite limited, says Léon Cornelissen. In fact, the leading Middle Eastern producers have been strangely quiet on the issue, partly because they could wage a price war with the US, he says.

The US shale oil revolution has been partly responsible for massively raising supply, as it cuts its dependence on Arab oil, while at the same time demand for oil is falling as cash-strapped consumers use less fuel, and as countries resort to using greener power.

“The oil market has experienced a perfect storm from supply and demand side developments in recent months,” says Cornelissen. “On the one hand, the oil market is currently experiencing a supply boom – the strong production volumes generated by the continuing oil revolution in the US has surprised everyone. US oil output is now running at the fastest pace since measurement began in 1983.”

“At the same time the macroeconomic growth momentum of the global economy has slowed, leading to a less bright demand outlook for oil. The International Energy Authority cut its estimates for global oil demand growth by 250,000 barrels a day for 2014 and by 90,000 barrels a day for 2015.”

“So the question that is now prevalent is whether the oil market is going to rebalance next year and if so, in which way this rebalancing process is going to take shape.”

Benefits of low oil price

Cornelissen says the low oil price is mostly beneficial to the West, with research showing that a drop of more than 20% in oil prices typically generates an additional 0.4% in real GDP growth. This is mainly caused by consumers getting more spending power as fuel prices drop.

Investors should also remember that OPEC, a collective of 12 highly diverse and often troubled countries from Angola to Venezuela, is not always unified, Cornelissen says. “The reluctance to cut production by Saudi Arabia could also be aimed at bringing more alignment and discipline among OPEC producers for a more meaningful production cut later on,” he says.

“History (and game theory) has shown OPEC members to have an incentive to ‘cheat’ on production levels that were agreed at OPEC meetings, and the Saudis could use the recent price drop to increase their leverage over non-abiding members. It means the discussion at the forthcoming OPEC meeting on 27 November will be as tense as it will be crucial, as Venezuela has been calling for a production cut.”

‘History has shown OPEC members to cheat on production levels’

No ‘game of chicken’ with the West

Cornelissen says that OPEC may contemplate a ‘game of chicken’ with the US, given that many US oil producers are also suffering from the low oil price, and therefore they may be tempted to cut production themselves. However, this is countered by the scale of the US shale oil revolution and American political resolve to stop being reliant on the Middle East following the Iraq wars and continuing tension with Iran. And such a policy might also backfire within OPEC members, he says.

In the US, Cornelissen believes that the dominant strategy is likely to be a continuing increase in production. “The lack of OPEC-like coordination mechanisms in the US industry and its history of maximizing output instead of cashflow leaves us with the view that the US oil revolution will continue,” he says.

Headwinds against oil price hikes

Further out, Cornelissen believes that headwinds for a rebound in oil prices will remain strong due to the impact of non-OPEC members such as Russia, which is one of the world’s largest producers. “Even if there is a production cut by OPEC, non-OPEC supply will be encouraged to rise even further in reaction,” he says. “Struggling emerging economies like Russia, Mexico and Brazil are clearly in need of additional oil revenues and will react with higher output if prices are propped up by OPEC.”

Another impediment is the steadily appreciating dollar, he says. “A stronger dollar, as we expect for 2015, will be troublesome for the oil market as well because this makes the oil bill for importers outside the US more expensive.”

“Therefore, our view is that oil prices are going to stabilize, but a significant rebound back to the USD 100-115 per barrel bracket will not happen next year. Prices will likely drift higher, but remain below USD 90 for Brent.”

Widows Confront Years of Undue Hardship after the Loss of a Spouse, New Study Reveals

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A unique survey looking at the financial and emotional toll of losing a spouse -the 2014 New York Life “Loss of a Spouse Study”- finds widows are unprepared for the financial difficulty that the loss of a spouse creates. Following the loss of their spouse, 68 percent of widows reported significant life changes, with financial concerns rising to the top of the list. The burden of these changes amounted to years of undue hardship after the loss.

“The news is unsettling: women are not prepared for the loss of a spouse and the problems are financial and much more,” said Chris Blunt, co-president of the Insurance and Agency Group, New York Life.

The survey examined the repercussions of the loss of a spouse on 897 widows and widowers who were within 10 years of their loss. It focused on how the loss impacted daily life from both a financial and emotional perspective, narrowing in on financial security following the loss and how it may have changed as a result. Additionally, the survey explored the impact that life insurance has on their lives, both at the time of their loss and in the future.

Financial Burden is Real – and Greater for Women

Women suffer the burden of the loss more intensely than men. Forty percent of widows reported negative lifestyle changes the year following the loss, compared to 24 percent of widowers. The financial impact was even greater: two thirds of widows experienced a significant financial change compared to half of widowers. The top five life changes following the loss were financial in nature, with a greater percentage of widows impacted in these financial areas of their lives:


Life Changes Following Loss of A Spouse	Widows	Widowers
Adjusting to a change in income level	55%	34%
Budgeting for one income	46%	32%
Cutting discretionary spending	38%	24%
No longer being able to afford a vacation	22%	13%
No longer adequately saving for retirement	21%	10%

For some widows, the lifestyle changes were even more dire: two in five widows whose spouses did not have life insurance at the time of the loss (39 percent) reported that they were just making ends meet or struggling to meet basic needs within the first year of the loss.

Having a Financial Plan Is Often Not Enough

The majority of women reported feeling secure about their financial situation before the loss – yet after the loss, 59 percent reported they didn’t have enough life insurance in place to feel financially secure. Approximately half of women (47 percent) report that they wish they had some or more life insurance to help cushion the financial impact of their loss.

“These widows learned too late that they were underinsured,” added Mr. Blunt. “The message is clear – life insurance proceeds are important, but the need for that financial security blanket is much greater than what exists in many financial plans.”

Among those whose spouse had life insurance at the time of the loss, the life insurance proceeds lasted almost two and a half years – yet they wished these funds would have lasted more than 11 years longer, for a total of nearly 14 years.

These findings are directly in line with what New York Life’s Life Insurance Gap survey demonstrated last year. The Life Insurance Gap survey of 1,000 Americans age 25 and over with dependents found that many woefully underestimate their life insurance protection needs. It similarly revealed that the amount of life insurance protection in place equaled three years and the amount of protection needed totaled 14 years.

“These consistent findings give us the answer to the question I posed when the Gap survey findings were announced: ‘If families have three years of coverage in place, what happens in year four?’ Widows have given us the bleak answer: years of undue hardship,” added Mr. Blunt.

Real World Advice from Widows

Including life insurance protection, widows reported a wish list – the things they would have done to be better prepared for their loss:

*A Wish List When Looking Back*
Statement			Percentage
“I wish we had some or more life insurance on my spouse.”			47%
“I wish we had saved more.”			42%
“I wish we had detailed discussions about what might happen financially and otherwise if one of us passed.”			30%
“I wish we had a better financial plan in place.”			28%
“I wish we had organized all our important papers in one central location.”			18%

“This wish list can act as a financial survival guide for couples so they can ensure they are better prepared for a loss,” said Mr. Blunt. “These widows offer us insight into what life has been like for them since the loss: the financial strain for many has been very serious and for almost all the loss has been life changing. These insights should serve as a lesson for couples: there are actions that can be taken now to alleviate the future financial burden that comes with a loss.”

Pioneer Investments Names Fixed Income Client Portfolio Manager

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Pioneer Investments announced that Craig Anzlovar has been named Fixed Income Client Portfolio Manager. He is based in Boston.

Prior to joining Pioneer, Craig was a fixed income Institutional Portfolio Manager at Fidelity Investments, and a member of the firm’s liability-driven investing (LDI) strategy team. In this role, he was responsible for developing custom LDI solutions for institutional clients. He was also responsible for client servicing and representing the firm’s fixed income strategies to the marketplace. Prior to that Craig was an Investment Director at Fidelity responsible for product management and client servicing for the firm’s institutional high yield, bank loan and emerging market debt strategies.

“Pioneer has one of the industry’s strongest and most tenured fixed-income teams, and we have a continued focus on providing the highest level of service possible to our growing client base, said Kenneth Taubes, Chief Investment Officer, U.S. “We’re pleased to have someone with Craig’s experience joining us,” he added. As of Sept. 30, Pioneer Investments managed approximately $148 billion in fixed income asset globally, including approximately $40 billion in the U.S.

Craig earned his B.S. from Fairfield University and his M.B.A. from Babson College. He is a CFA^® Charterholder and a member of the Boston Security Analysts Society.

RBC WM Confirms its Departure from the Caribbean and its International Advisory Centers in the US

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RBC WM confirma su salida del Caribe y de otros centros internacionales en Canadá y EE.UU. — RBC Toronto. . RBC WM Confirms its Departure from the Caribbean and its International Advisory Centers in the US

RBC Wealth Management has confirmed it will leave its international wealth management business in the Caribbean and other international private banking and international advisory groups in Toronto, Montreal, and the US, as confirmed to Funds Society by a company spokesman, who wished to emphasize that these segments “only represent a small part of the RBC Wealth Management business.”

According to a release by the firm earlier this year “the international division of RBC Wealth Management-U.S. serves high-net-worth and ultra-high-net-worth clients worldwide from offices in New York, Houston, Miami, San Diego, Seattle and Wilmington, Del. More than 50 international financial advisors and private bankers serve the needs of international and domestic clients through private banking, credit, investment management, asset management, trusts and other solutions”.

Refering to the closure, RBC Wealth Management said it “is undertaking a process of realigning certain businesses within their international operations as part of a focused strategy that allows us to achieve sustainable, controlled, and profitable growth in our core markets, while providing an excellent service to our customers.”

This closure is in addition to those already announced in October and which resulted in the closure of the private banking offices in Miami and Houston, two units which specialized in cross-border business, which is now in the process of decommissioning. Now, the closure also affects the broker dealer business in the US and Canada related to international clients. We must recall that in April, the largest Canadian bank also announced its departure from the Chilean market after six years in the marketplace, a decision which was also due to a “strategic review” of its business in Latin America. A year earlier, RBC closed its offices in Uruguay.

RBC Wealth Management ensures that it looks at the business in a scalable way and aims more towards the business of wealth management focused on serving high-net-worth and ultra-high-net-worth clients from their key operations centers in Canada, United States, the British Isles and Asia, “because we know that we are more successful when we leverage and build on the strength of the other RBC businesses.”

Finally, the same source stressed that they shall continue to serve their customers as they strategically exit those businesses.

The business of RBC WM is among the five largest in the world. RBC Wealth Management has more than $ 442 billion Canadian dollars (392 billion US dollars) in assets under management.

U.S. Leads the List of the World’s Most Expensive Homes

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From cascading waterfalls and waterslides to bowling alleys and private islands, Billionaire.com’s eye-watering list of the world’s most expensive properties takes extravagant real estate to the next level. Five of the top ten are from the US and include homes in New York and Los Angeles starting from US$ 95 million.

The list was complied from extensive in-house research and consulting the world’s top property firms to find the current most expensive homes for sale.

1. Penthouse at the Tour Odeon Monaco, Monaco

Price: US$388 million

Scheduled for completion in early 2015, the Tour Odeon Monaco will be the second-largest building on the Mediterranean coastline and home to the world’s most expensive apartment; a five-floor penthouse costing US$388. Apartments in the building start at US$36 million and with 35,000 square foot of space, ready to be designed according to buyer taste, the penthouse is a mini-mansion. Outside, a waterslide connects the dance floor to a circular infinity pool, which looks like an enormous floating glass.

www.knightfrank.com

2. The Manor, Los Angeles, US

Price: US$ 150 million

Built in 1988 by entertainment tycoon Aaron Spelling and his wife Candy, “The Manor” was bought three years ago by Petra Stunt (Ecclestone). Since then, she has spent US$ 20 million on refurbishments and now has 123 rooms, including a gym, bowling alley and screening room. The Manor sits within 4.7 acres of LA’s most exclusive land and would be the most expensive house ever sold in the US should it meet the asking price.

To be sold privately.

3. Beverly House, Los Angeles, US

Price:US$ 135 million

It famously appeared in the movie The Godfather and was the honeymoon spot for JF Kennedy and his wife Jackie. With almost 365 days of sunshine a year the house is purpose built to take advantage of the Californian temperature, with floor-to-ceiling windows, large cool rooms, an outdoor tennis court, swimming pool and cascading waterfalls. The terrace seats 400 and, given there is also a nightclub in the house, it has all the ingredients for a successful party.

www.christiesrealestate.com

4. Rancho San Carlos, California, US

Price: US$ 125 million

This 30-room Monterey Colonial mansion, designed in 1929 by American architect Reginald Johnson, is surrounded by 237 acres of land in one of America’s most sought-after addresses; Montecito, Santa Barbara. After 100 years the Jackson family estate, with ten residential cottages, horse paddocks and arenas, and 100 acres of cultivated orchards, is finally changing hands. Oak-paneled walls in the formal room, imported from the Jackson’s Manor House in England, are still intact, as is the English whisky pub with a secret door. The house is built on two natural terraces with views down the valley, across the estate and over the Pacific.

www.sothebys.com

5. One Hyde Park, London, UK

Price: US$ 103 million

The Candy brothers launched this billion-dollar complex mid-way through the recession. Occupying an entire floor, this apartment divides into two wings, known as “The City” and “The Park”. A 65m hallway connects both wings. The Mandarin Oriental hotel provides prospective owners with a 24-hour hotel concierge, spa and recreation facilities, parking and valet, use of a private wine cellar and room service.

www.aylesford.com

6. 17 The Sherry-Netherland, New York, US

Price:US$ 95 million

Built in 1927, The Sherry-Netherland in Manhattan is a luxury residential hotel co-op with apartments for sale. Apartment 17 occupies an entire floor with seven bedrooms, eight bathrooms and a huge terrace overlooking Central Park and downtown Manhattan. Would-be owners have access to all the hotel amenities, including room service from the Harry Cipriani restaurant downstairs. Caveat emptor: the hotel requires up to US$60,000 of maintenance fees — per month.

www.knightfrank.com

7. The Penthouse at The Pierre Hotel, New York, US

Price: US$ 95 million

Once owned by Martin Zweig, a financial analyst who famously predicted the stock-market crash of 1987, this palatial Manhattan penthouse sprawls over three floors. But even if you’ve got a spare US$95 million, interested buyers must be first vetted by the hotel committee to ensure they are up to par. With 16 bedrooms, a grand salon (formerly the Pierre ballroom) and 360-degree views over Manhattan, this has justifiably been called the most spectacular penthouse in the world.

www.sothebysrealty.com

8. Du Parc Penthouse, Geneva, Switzerland

Price: US$ 94 million

On the shores of Lake Geneva, surrounded by the Dents du Midi mountain range in the UNESCO-protected vineyards of the Lavaux, is the former Palace Mont-Pelerin. This was renovated into 24 über-modern apartments, the penthouse of which costs US$94 million. A key to one of these apartments gives you lifetime membership for the Lavaux Golf Club, a 10-year membership for the Mirador Country Club and the services of lifestyle group Quintessentially for one year. Kempinski Hotel services, the use of a Rolls-Royce, butler, wine cellar, Davidoff cigar lounge and Givenchy Spa come included in the price tag.

www.knightfrank.com

9. Private Island Paradise, Exuma Cays, Bahamas

Price:US$ 85 million

This house comes with its own private island and with space for 22 guests and 29 staff; it’s the place to relax in the hands of others. A self-generating power source, fuel, telecommunications system and a large vegetable garden make the house almost entirely self-sufficient. On top of this it is only a one-hour flight from Palm Beach and completely tax-free, so, if you’re a tax exile with green fingers it might well be a perfect match.

www.sothebysrealty.com

10. Lyndhurst Road Mansion, London, UK

Price: US$ 77 million

The front door of this North London redbrick mansion opens to a grand entrance hall with an overhanging chandelier, balustrade and marble fireplace. The decor is bleeding-edge “nouveau”, with every conceivable luxury, including indoor pools, steam rooms and a cinema. Upstairs, the master bedroom with adjoined dressing room has a large half-moon-shaped window, which opens up to a view down the garden and across London.

www.knightfrank.com

For the full report and images visit this link.

Threadneedle Investments Launches Multi-Asset Income Fund

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Threadneedle lanza un fondo multiactivos enfocado a la generación de rentas — Photo: JJBAS. Threadneedle Investments Launches Multi-Asset Income Fund

Threadneedle Investments has launched the Threadneedle (Lux) Global Multi Asset Income Fund with immediate effect.

Managed by Toby Nangle, Threadneedle’s head of Multi-Asset Allocation, the Sicav is focused on income generation, targeting an income level of 5%. To be able to target this income in the current investment environment, the fund uses derivatives to enhance the anticipated yield. It is expected that this portfolio will be less volatile than a pure equity portfolio, Threadneedle said.

Nangle has 17 years’ investment experience and a proven track record in multi-asset fund management. As Threadneedle’s head of Multi-Asset Allocation, he is responsible for managing and co-managing a range of multi-asset portfolios, as well as providing strategic and tactical input to the Threadneedle asset allocation process.

The fund was previously launched with an absolute return investment strategy, but the company recently decided to revamp it betting on “Threadneedle’s core investment capabilities: asset allocation and income,” the company said.

It is now available in Austria, France, Germany, Italy, Luxembourg, Netherlands, Spain, Sweden and Switzerland.

“The investment approach of the fund enables the manager to invest directly across asset classes, principally in global equities and bonds. The fund may also invest up to 10% in other Threadneedle funds and uses derivatives for investment purposes and hedging, including the generation of additional income. It draws on the scale and diversity of Threadneedle’s wider investment platform and sophisticated risk management framework,” the company said.

Toby Nangle, head of Multi-Asset Allocation and manager of the Fund, said: “This fund offers investors the opportunity to receive a regular, targeted level of income from a range of assets. With investors looking for a degree of certainty around the level of income they receive from their investments, we aim to offer an appealing solution to these investors who are also concerned with the control of volatility. We aim to do this through our active asset allocation and risk management processes.”

Gary Collins, head of EMEA Wholesale distribution at Threadneedle, said: “Threadneedle has a strong asset allocation heritage, with around €52bn – 44% of assets under management – in some form of asset allocation mandate. Our income investment capability is very well known in the industry with a top performing product range.

“The combination of these two capabilities represents the blueprint behind our successful investment philosophy – working across asset classes and using the knowledge of our whole investment team to gain a perspective advantage and deliver the outcome desired by our clients.”

OMGI Signs LatAm Distribution Agreement

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Old Mutual Global Investors has entered a distribution agreement with Aiva in Uruguay to help broaden the business’s sales capability through third party channels in the US Offshore and Latin American markets.

Headquartered in Montevideo, Aiva is a Latin-America platform business. Over the last 16 years, it has provided savings solutions and long-term investments to clients in Latin America, as well as administration services to Old Mutual in the region.

Old Mutual acquired a majority stake in Aiva in November 2012.

As part of this agreement, OMGI will be serviced by three dedicated sales professionals who will support Chris Stapleton, head of Americas Offshore Distribution.

Veronica Rey and Santiago Sacias will operate from Montevideo, with Rey providing day-to-day field sales coverage in the cross-border investment hub in Uruguay, as well as a regular presence in Chile, Brazil and Argentina. Santiago will be supporting the efforts of both Veronica and the wider team as an investment analyst and broker desk consultant.

Andres Munho will operate initially via a satellite presence in Miami, Florida, USA and, from 2015, will be based out of a local office in Miami’s financial district. Andres’s distribution coverage will encompass the gateway offshore investment hubs in South Florida and Texas, as well as Northern Latin America, which includes Mexico, Panama, Colombia, Peru and Venezuela.

Warren Tonkinson, head of Global Distribution, commented: “This new agreement demonstrates that Old Mutual Global Investors is committed to expanding its international footprint. After investing in the strengthening of our Hong-Kong based team over the last year, we are now delighted to have finalised this Distribution Agreement with such a well-respected and successful company in AIVA, a sister company within our parent company.

Old Mutual Global Investors recently announced key investment and distribution hires. Joshua Crabb has been appointed head of Asian Equities, supported by a new team of two investment analysts.

Ian Ormiston has joined as a European Smaller Companies Portfolio Manager and Russ Oxley and his Fixed Income – Absolute Return team will join in 2015. In addition, Allan MacLeod joined the company as head of International Distribution in November to spearhead Old Mutual Global Investors’ international growth plans.

Morgan Stanley Wealth Management Forms Global Sports & Entertainment Division

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Morgan Stanley Wealth Management has announced the launch of Global Sports & Entertainment (GSE), a new division that will serve the unique needs of veteran and emerging talent and their advisors in the sports and entertainment industries.

“High net worth earners in the sports and entertainment industries have sophisticated wealth management requirements. Our services are provided by a group of experienced Financial Advisors, backed by specialized training and the full resources of a leading, global investment bank, which we believe will set a new standard in the industry,” said Gregory J. Fleming, President of Morgan Stanley Wealth Management and Morgan Stanley Investment Management.

An inaugural group of Financial Advisors across the country has been chosen for their experience working with athletes, entertainers, directors, writers, producers, owners, agents and business managers. These Financial Advisors recently completed an education program, attaining the title of Sports & Entertainment Director. They provide sports and entertainment professionals with access to customized resources and programs, including asset and liability management, philanthropic and lifestyle advisory services, family governance and advanced financial planning, insurance, investment banking and private equity solutions.

GSE is led by Drew Hawkins, a Managing Director and veteran executive who served most recently as a Wealth Management Regional Director. “Sports and Entertainment professionals have unique financial profiles that do not subscribe to conventional planning. With the resources of the Global Sports & Entertainment division, our Directors are equipped to work with talent and their personal advisors – agents, business managers, family and other spheres of influence – to help make smart choices around how they invest, borrow, protect and give.” Mr. Hawkins said.

To help educate emerging talent on financial basics and issues relevant to those pursuing professional careers in the sports and entertainment industries, Global Sports & Entertainment is developing financial education curriculum to be taught in sports, film and music departments across the nation with pilots beginning in early 2015. According to Mr. Hawkins, “We are committed to cultivating money-smart young adults to help curtail issues that may arise from sudden wealth, unpredictable career spans and unintended consequences.”

Japan Enjoys its Most Positive Outlook Since 2005

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Global investors have a restored appetite for risk amid greater optimism over the outlook for profits and the economy, according to the BofA Merrill Lynch Fund Manager Survey for November. A net 47 percent of the global panel expects the economy to strengthen in the year ahead, a rise from a net 33 percent in October. Investors have expressed similar positivity over profits – a net 42 percent say that global corporate profits will improve in the coming year, up from a net 27 percent last month.

Investors have signaled that their optimism has been translating into action over recent weeks. In October, a net 16 percent of the panel said they were taking lower than normal levels of risk. This month, a net 2 percent are taking above-normal risk. The proportion taking out protection against a sharp fall in equities in the coming three months has fallen to a net -39 percent from a net -35 percent.

Asset allocators have shifted out of cash and increased their allocations to equities. A net 13 percent of respondents to the global survey are overweight cash in November, down from a net 27 percent in October. The proportion of asset allocators overweight equities has risen by 12 percentage points to a net 46 percent. Hedge funds have also increased their net allocations to equities – 43 percent of surveyed hedge funds are net long equities, up from 35 percent one month ago. Japan is the region most in favor, while investors are sending mixed signals about appetite towards Europe. Real Estate allocations have reached the highest overweight recorded since its inclusion in the survey in 2006.

“Deflation might be in the back of investors’ minds, but taking on risk, especially in equities, in Japan and in the dollar is at the forefront of their thinking,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Research. “European stocks were recently boosted bythe best earnings season in three years. However concerns over longevity of growth and deflation continue. Three wise themes of yield, quality, and large cap are the best places to hide in European stocks,” said Manish Kabra, European equity and quantitative strategist.

Japan – most positive outlook since 2005

Japanese equities have seen a second big pick up in allocations in consecutive months, and the trend is likely to continue. A net 45 percent of global asset allocators are overweight Japan, a rise from a net 32 percent in October and a net 23 percent in September. Japan is also the most favored region for the coming year. A net 27 percent of the investor panel says that Japan is the region they are most likely to overweight in the next 12 months. This represents a nine-year high and a rise from a net 14 percent in October.

Conviction over Japan appears to be underpinned by a belief in the profit outlook and a view that the country’s stocks are undervalued. A net 26 percent of respondents identified Japan as having the most favorable profit outlook for the year ahead – a rise of 10 percentage points month-on-month. And a net 17 percent say that Japanese equities are the most undervalued in the world.

As they assess Japan’s outlook, investors are weighing up the prospect of the yen suffering more depreciation in the coming year than the euro or dollar. A net 57 percent of the global panel expects the yen to fall in value on a trade-weighted basis. This, however, could make Japanese exporters attractive. The regional survey highlights how three of Japan’s largest exporting sectors – technology, industrials and autos – are the most favored by local investors.

Risk appetite overcomes fear of tail-risks

Investors have marked out deflation as the biggest risk to the market’s upward trajectory. Twenty-nine percent of the global panel said that eurozone deflation is the biggest “tail risk,” ahead of geopolitical crisis (21 percent). Furthermore, asked in a new question what is the greatest risk in 2015, 71 percent opted for deflation over inflation.

But while deflation is a concern, they don’t appear to see it as the most likely outcome. A net 35 percent of investors have said that they expect global core inflation to pick up over the year ahead.

Confused signals over European equities and concern over France

Investors appear unsure how to treat European equities. Global asset allocators increased their moderate overweight positions slightly this month – a net 8 percent are now overweight the region. But investors have also indicated that they would like to underweight the region in the coming 12 months. Meanwhile, investors inside Europe have indicated optimism over the region’s prospects for improving growth and profits – a net 62 percent of the regional respondents forecast improving earnings per share for the coming year, up from a net 32 percent in October. But, they have increased cash holdings in the past month and have indicated a growing appetite to underweight France and scale back holdings in Italy.