Wikimedia CommonsPhoto: Scott Service, co-portfolio manager at Loomis, Sayles & Company . Loomis Sayles Expands Scott Service’s Global Bond Portfolio Management Responsibilities
Loomis, Sayles & Company announced today that Scott Service, CFA, has been named co-portfolio manager on the following suite of investment strategies managed by the company’s global bond team:
Loomis Sayles Global Opportunistic Bond Fund (UCITS)
All institutional global aggregate strategies
All world government bond portfolios
Scott, a long-time global credit strategist and portfolio manager on the global bond team, joins co-portfolio managers Lynda Schweitzer, David Rolley and Ken Buntrock on the Fund. Prior to this promotion, Scott was a co-portfolio manager on the team’s global credit strategies. Together, the team oversees approximately $38 billion in global assets. Scott reports to Jae Park, chief investment officer.
“Scott is a valued member of the global bond team,” said Ken Buntrock, co-head of the global bond group. “As a team, we have enjoyed the success of a growing client base over the last ten years. By naming Scott a portfolio manager for our full suite of global bond products, we feel well positioned for future growth and success.”
Scott, a member of the global bond team since 2004, remains co-portfolio manager on the team’s global credit and global corporate strategies as well as several offshore funds including the Loomis Sayles Global Credit Fund and the Loomis Sayles Institutional Global Corporate Fund.
Scott joined Loomis Sayles in 1995 and was promoted to credit analyst in 1999. Between 2001 and 2003, Scott worked in Paris for Loomis Sayles’ parent company, Natixis Global Asset Management. He returned to the Loomis Sayles fixed income team in 2003 and became team leader of the global investment grade sector team. Scott joined the global bond team in 2004. Scott earned his Bachelor of Science from Babson College and an MBA from Bentley College.
Photo: Andrés Nieto Porras. Crucial Differences Amongst Multi Asset Funds
Research by ING Investment Management (ING IM) based on flow data from LIPPER confirms the overwhelming popularity of multi asset funds among investors in the recent years. Given the current environment, ING IM expects this trend to persist. At the same time, ING IM’s research reveals a number of important differences among these funds, in terms of expected returns and risks, which should be carefully considered by investors before putting their money to work.
Low growth and multiple financial crises have made investors more risk aware. In combination with the low interest rate environment this has made adaptability of fund managers, their absolute return focus and drawdown management more dominant themes for investors. Coupled with increased uncertainty in the markets, where purely behavioural factors can put pressure on asset prices, investors are seeking flexible funds with clearly defined return and overall risk objectives. Total return multi asset funds provide such characteristics and have been a popular choice among retail as well as institutional investors in the recent years.
Inflows increase
ING IM’s analysis of LIPPER fund data has found that asset allocation funds have been the most popular category of funds among investors in Europe in 2014 so far, with inflows topping over 54 bn EUR up until September. This was also the case in 2013 when asset allocation funds attracted more than 62 bn EUR. These flows were only seconded by sales of flexible bond funds, which saw inflows of around 29 bn in 2013 around 23 bn EUR up until September 2014.
What should investors focus on?
In the face of the apparent attractiveness of the total return multi asset proposition, the investment manager is flagging that investors need to focus more on proven risk awareness of the available multi asset funds. While the return objectives of all such funds are set well above government bond yields, it is essential take into account the riskiness of these funds, typically expressed as overall target volatility. Next to this, while the ability of multi asset fund managers to digest and react to changing market environment is at the core of the multi asset proposition, understanding the degree of flexibility and robustness of these funds at the outset is also essential for investors to decide on where to invest.
How do multi asset funds differ?
ING IM’s analysis of 20 of the largest and most well-known multi asset funds registered in Europe and available only to European investors, with combined assets under management of €165 billion reveals a wide variety of returns and risk. In this group of funds, annual returns before fees over the last 3 years averaged a solid 6.6%. At the same time however, there’s great diversity in the returns of the individual funds as well as their investment approach and the amount of overall risk these funds take on to achieve their returns. While the best performing fund in this group returned 9.8% on an annual basis before fees over the last 3 years, this figure was only 2.8% for the worst performing fund. At the same time the most risky of these funds showed an annualized volatility of 8.9% over this period, while this was only 2.1% for the safest one.
To get better insight in risk adjusted returns, ING IM has ranked the group in terms of their Sharpe ratios. This is the most well-known measure of the risk-return trade-off in an investment portfolio. A higher value indicates a greater reward to taking on risk. While the average fund of the first quartile of this group of 20 funds was able to achieve an annualized return of 8.6% before fees, with a volatility of just 4.5%, resulting and in Sharpe ratio of 1.87, this measure of risk adjusted performance was only 0.75 for the average fund in the fourth quartile, implying a significantly worse trade-off between risk and return. ING IM’s own flagship multi asset strategy – ING (L) Patrimonial First Class Multi Asset – ranks above the top quartile average according to Lipper data, with a Sharpe ratio of 2.04.
Valentijn van Nieuwenhuijzen, Head of Strategy Multi Asset at ING Investment Management, says: “Multi asset strategies are proving very popular with investors and as growing uncertainly fuels the markets, they are likely to be in even greater demand. However, there is a huge variance in the asset allocation of multi asset funds and their risk profiles, which could be made clearer to investors. For example, for downside risk mitigation purposes, with our Patrimonial First Class Multi Asset strategy we keep at all times at least 50% of the fund’s assets invested in very low risk assets such as high quality government bonds and money market instruments, while invest the rest in other potentially more rewarding assets such as equities and real estate.”
CenterSquare Investment Management, the real asset investment boutique for BNY Mellon, has launched an institutional investment strategy that invests in global infrastructure via publicly traded companies.
The investment universe for the strategy comprises companies throughout the world that manage, own or develop long-term real assets related to energy, communications, water, transportation, and other systems essential to a functioning economy. Within this universe, CenterSquare is focused on companies managing real assets with strong cash flow visibility, low direct commodity exposure, long duration contracts, and a steady long-term demand outlook.
“Global infrastructure assets are vital to economies worldwide and yet are significantly underfunded and underdeveloped,” said Todd Briddell, chief executive officer and chief investment officer for CenterSquare. “We see an opportunity to manage a liquid alternative asset class that features strong and historically stable yields and is poised for growth, driven by both economic and secular trends.”
Briddell said the global listed infrastructure strategy is a natural extension of CenterSquare’s expertise in listed real estate. “As in listed real estate, the return and risk characteristics of global infrastructure securities are based on the underlying real assets,” said Briddell.
CenterSquare’s global listed infrastructure team is led by portfolio managers Maneesh Chhabria, who was instrumental in the development of CenterSquare’s global real estate investment trust (REIT) platform in 2006, and Joshua B. Kohn, an energy investment specialist who joined the firm from Turner Investments.
CenterSquare has also brought in Theodore Brooks, III, previously a director of equity research at the power and utilities group at Barclays Capital, and Marshall E. Reid, previously a senior investment manager at the Teacher Retirement System of Texas.
CenterSquare was founded in 1987 and offers a variety of real asset strategies and products. CenterSquare manages approximately $6.8 billion in public real estate securities through CenterSquare Investment Management, Inc. and approximately $1.5 billion (gross) in debt and private equity real estate investments through CenterSquare Investment Management Holdings, Inc. (together referred to as “CenterSquare”), as of September 30, 2014. It manages investments for institutional investors and high net worth individuals throughout global markets and across public and private capital sectors. It is one of the investment boutiques of BNY Mellon Investment Management.
Photo: Robeco. Léon Cornelissen: "Africa Is A Continent of Opportunities and Risks"
Economic growth in Africa has been strong for years and the standard of living is rising. Does Africa’s future look rosy or will weak leadership and ebola cloud its prospects? Léon Cornelissen, Chief Economist at Robeco, explains in this interview why he sees both opportunities and risks.
What are the most important factors influencing Africa’s strong economic development?
The continent is characterized by immense diversity, yet there are a number of identifiable features that African countries have in common. These are mainly their rich commodity resources and their young and rapidly growing population. As a result, many countries are showing strong economic growth.
The situation in South Africa and Nigeria is particularly significant for investors. These countries are developing into major economies. But they are not the only ones to show growth. Among the smaller economies, Botswana is doing very well. Commodities play a role here, but also the country’s good governance. This last feature is important, as badly functioning governments are one of Africa’s core problems.
How important is the commodities sector for economic growth?
Extremely important. China invests heavily in Africa because it wishes to safeguard commodity supplies for its own economy. Economic growth in China will diminish gradually as a result of the country’s transition from an export-led to a more consumer- driven economy. Yet if we consider production per capita, China is still poor. A high catch-up demand can therefore be expected from domestic consumers. This will lead to a sustained hunger for commodities.
Then there is India. Since the Modi government came to power there, the likelihood of an upturn in economic growth has increased considerably. Commodity-producing countries in Africa are reaping major benefits from Asia’s strong growth.
Besides commodity production, what other opportunities does the continent offer?
Further privatization can make a major contribution in Africa, not only in commodity extraction. Provided governments give businesses more latitude, large amounts of foreign capital can still be attracted. Another positive factor is Africa’s population structure. While money is clearly required to educate its young population, the continent is free of the burden of an aging society. And of course Africa is huge, and therefore still has substantial development potential.
Due to global population growth, agriculture offers further opportunities. Examples are coffee and flowers from Ethiopia, fruit and vegetables from Morocco, and wine from Algeria. These countries can gain a substantial amount of ground if they manage to upgrade their production methods and succeed in making infrastructure improvements. And this is happening. Ethiopia, one of the poorest countries in the world, is investing in its infrastructure.
As economies prosper, they become more diversified. Nigeria has a major film industry, for instance. After Hollywood, and India’s Bollywood, ‘Nollywood’ is the biggest film production center in the world. It is the country’s second-largest source of employment.
What are the primary risk factors?
In many countries, the primary risks are political in nature. Individual situations vary considerably, and many countries – I mentioned Botswana earlier – have effective leadership, but in other countries, conditions are in danger of deteriorating. Nigeria developed a type of pacification model that appears to have succeeded in reconciling the Islamic North and the Christian South with the distribution of power. However, since the rules of the game are not always observed, the elections in February threaten to become fairly fraught. This is not a good sign. Egypt has similar problems. The economy is taking a positive turn there, but religious tensions could ruin everything.
Then there is Ebola, of course. This dreadful disease – and more particularly the fear it generates – is putting a damper on growth. All areas can come under pressure as a result: economic activity, tourism and foreign investments. And this is not the only disease on the continent: while AIDS and Malaria cause many more deaths than Ebola, they are not a risk factor, though they do have a damping effect on economic growth.
What are South Africa’s economic prospects?
South Africa is one of the BRICS countries, a loose association of emerging economies with large populations. However, this country, with its more modest population numbers, remains something of an outsider. Its commodities were the reason China and India wished to include South Africa. Meanwhile, it is a convincing member of the ‘Fragile Five’, the group of emerging countries that rely heavily on foreign capital to finance their growth ambitions. Its large current-account deficit has become obscured by lengthy strike action in the mining sector, but the underlying figures are still high. This also applies to the country’s budget deficit and inflation.
Medium-term growth prospects are moderate and will not bring down the country’s high unemployment rate. Structural problems affect education, infrastructure and energy distribution, and the country’s political situation is unstable. The ANC did not manage to win a two-thirds majority in the May elections and has now formed a government team that can hardly be described as small and decisive.
Is the low oil price a problem for countries such as Nigeria, Algeria and Angola?
Only in the short term. I expect the relative price of oil to rise again. Oil is a fantastic product, and it is not easy to find substitutes. The shale-gas revolution in America is likely to be short-lived. At some point the reserves will be exhausted. Oil exports remain a positive factor for these countries, as does exporting other commodities to different countries.
All things considered, Africa is a continent of opportunities in economic terms. Nevertheless, a downturn scenario is also possible. The main thing now is to improve governance. If the continent succeeds in this respect, it will be able to maintain its present high growth rate for a long time to come.
Alcentra Limited, the sub-investment grade specialist for BNY Mellon, announced last month the final closing of the Alcentra European Direct Lending Fund, L.P. with investor commitments totaling €850,000,000. The focus of the Fund is to provide debt financing to middle market companies in Europe. With the closing of the Fund, the firm’s committed capital for the strategy now exceeds €1,500,000,000.
“Direct lending is a large, attractive, long-term opportunity given the balance sheet constraints of European banks and the historical lack of non-bank lenders,” said Graeme Delaney-Smith, managing director and head of European direct lending for Alcentra. “Our size, experience and sourcing capabilities leave us well positioned, and has allowed us to invest a significant amount of the Fund over a relatively short period.”
“As one of the largest managers of sub-investment grade, corporate debt in Europe, direct lending has always been a key part of our business platform,” commented David Forbes-Nixon, chairman and chief executive officer of Alcentra. “This fund is a strong endorsement of Alcentra’s capabilities, with global investor participation by pension funds, insurance companies, endowments, foundations, wealth managers, and asset managers.”
Alcentra has been sourcing and arranging financings to middle market businesses in Europe since its launch in 2003. To date, Alcentra has invested over €2.0 billion in middle market companies across senior debt, unitranche, second-lien, mezzanine and equity investments. In 2012, Alcentra was among the first investment managers selected to participate in HM Treasury’s Business Finance Partnership initiative.
The Principal Financial Group has announced the Board of Directors has elected Daniel J. Houston president and chief operating officer effective immediately. Houston will oversee all global businesses including Principal Global Investors, Principal International, Retirement and Investor Services, and U.S. Insurance Solutions. In addition, Houston was elected to the Board of Directors. Larry D. Zimpleman continues as chairman and chief executive officer. Zimpleman will continue to oversee the company growth strategy, capital management and deployment, and corporate functions.
“The Principal has seen strong growth since the financial crisis due to our global investment management strategy, solid execution and great people. Dan has played an integral role in shaping and executing that strategy,” Zimpleman said. “He brings excellent operational expertise and global awareness along with deep talent leadership skills. In Dan’s 30-year career at The Principal, he has been on the ground in the field, managed numerous businesses, and helped lead the transformation of The Principal to a global investment management leader, all which will give him a clear view of where we’ve been and where this organization will go in the future.”
Houston joined the company in 1984 as a sales representative in the Dallas group and pension office. From there, he held a number of management positions in the company. He was named executive vice president in 2006, president of retirement and investor services in 2008, and president of retirement, insurance and financial services in 2009. A native of Iowa and raised in Houston, Texas, Houston received his bachelor’s degree from Iowa State University in 1984. He is active on a number of boards including the Partnership for a Healthier America, Employee Benefits Research Institute, America’s Health Insurance Plans, United Way of Central Iowa, Mercy Medical Center and the Iowa State University Business School Dean’s Advisory Council.
Zimpleman joined the company in 1971 as an actuarial student and became a full-time actuary in 1973. From there, he rose to a number of management and leadership positions. He was named senior vice president in 1999, executive vice president in 2001, president of Retirement and Investor services in 2003, president and COO in 2006, president and CEO in 2008, and became chairman of the board in 2009.
Fitch Ratings has affirmed the International Scale Asset Manager Rating at ‘Highest Standards’ for J. Safra Asset Management Ltda. The Rating Outlook remains Stable.
The ‘Highest Standards’ rating for J. Safra Asset reflects Fitch’s view that the company’s investment platform and operating framework are superior relative to the standards applied by international institutional investors.
The rating affirmation of J. Safra Asset reflects its well-formalized and consistent practices for investment process, risk controls and compliance, in addition to its robust and segregated structures for fiduciary administration and custody, in line with the best practices in the market. The rating also benefits from the solid franchise of the parent, Banco Safra S.A. (Banco Safra; Issuer Default Rating [IDR] ‘BBB’/Outlook Stable), the fifth largest private financial conglomerate in Brazil, from the company’s continuous investments in technology, satisfactory distribution channels and corporate structure of the group.
J. Safra Asset’s rating applies to its Brazilian domiciled investment activities and does not include offshore, private banking, wealth management, fund of funds, real estate funds, fiduciary administration and custody operations. Those areas have their own processes and policies, which are segregated from the traditional fund management.
Fitch believes that J. Safra Asset’s main challenges are: to increase its participation in higher value added funds, in the face of stronger competition; to keep a competitive edge using a lean investment personnel structure and to sustain a consistent performance mainly in the multimarket funds class.
The ‘Highest Standards’ rating is based on the following assessments:
. Santander Invests £33 Million in Monitise’s Platform to Drive Growth in Mobile Money Ecosystem
Banco Santander will invest £33 million to acquire ca. 5% in Monitise — a world-leading mobile money business — to accelerate the development of the company’s new technology platform. Through this partnership, Santander also expects to develop its own capabilities with one of the most innovative digital technology companies, as it seeks to become the bank of choice for its customers who chose to interact with the bank on digital platforms. This is a major step in the development of the fintech strategy of Santander, and will be managed in the context of the Santander Innoventures fund initiative, announced in July this year.
The collaboration currently being discussed includes an accelerated pipeline of opportunities, leveraging Santander’s expertise and scale and Monitise’s technology to build new Mobile Money capabilities for Santander’s global customer base. Santander, the largest bank in the Eurozone by market capitalization has over 107 million customers across ten main markets in Europe and the Americas.
Monitise also announced a deepening collaboration with IBM that will include the deployment of Watson, IBM’s cognitive computing engine, to support Monitise’s new technology platform. In addition, Telefónica will become an investor and strategic partner and MasterCard has reconfirmed its strategic partnership relationship through a follow-on investment.
Ana Botín, Santander Group Executive Chairman, said: “With this investment, Santander will become part of a network of trusted partners who will work together to address our customers’ needs whenever, however and wherever they chose to bank with us. Our aspiration is to be the best global retail and commercial bank; and we are working to give simple, personal and fair service to all of our clients. Clearly a digital offer is key to this strategic vision of our bank, and this investment, coupled with the exciting opportunities we see through the Santander Innoventures Fund to enhance further what we can offer our customers, provides an excellent base from which to build a global digital offering.”
As strategic partners, Santander and Telefónica will have the right, acting jointly, to nominate a single Non-Executive Director to be appointed to the Monitise Board.
Monitise co-CEO Alastair Lukies said: “The Mobile Money industry is now a global phenomenon. In developed markets it is fundamentally changing the way we bank, pay and buy. In emerging markets it is the foundation of new economic systems. There are two clearand distinct approaches appearing in this industry: disruptors looking for control and collaborators working together to share in a very big and sustainable opportunity. With our partners, we are delighted to be playing our role as an enabler to the Mobile Money collaborators. Via deepening partnerships, our increasingly connected mobile commerce services can become even smarter and more engaging for the businesses we work with.”
Hermes Investment Management has announced that Oliver Leyland, CFA, is joining its London-based emerging markets investment team as Head of Latin America and Senior Analyst.
Oliver joins from Mirae Asset Global Investments, where he was a Senior Equity Analyst based in New York covering Latin America and CEEMEA, as well as a member of the fund management team for GEM and global long-only equity products. Prior to this, Oliver had spent five years living in São Paulo, Brazil, where he was an Equity Analyst covering Latin America for Mirae. Further to this, Oliver previously worked at Citi in London as an Equity Analyst on its Pan-European Building and Construction team.
Reporting into Gary Greenberg, Head of Hermes Emerging Markets and Lead Portfolio Manager, the addition of Oliver brings the emerging markets team to nine and reinforces Hermes’ commitment to a responsible, disciplined and long-term approach to investing.
Gary Greenberg, Head of Hermes Emerging Markets and Lead Portfolio Manager, said: “Oliver joins our growing team with a wealth of Latin American experience at an interesting and critical time in the region’s development. His seven-plus years of experience covering Latin America, including his time in Brazil, will be invaluable as we continue to seek opportunities for investors in the region.”
The Hermes Emerging Markets portfolio was launched in 1993, giving it a respected track-record of over 20 years. The team’s approach combines top-down and bottom-up analysis to find quality companies trading at attractive valuations, in countries with conditions that are supportive to growth.
Photo: Mardetanha. Mexico Confirms its Incorporation into MILA, which Will Be Implemented in January 2015
The Mexican Stock Exchange reported last Monday that in reference to the relevant event released on June 19th this year in relation to the incorporation of the Mexican stock market into the Integrated Latin American Market (MILA), bilateral integration agreements have been signed between the BMV and the Colombia Stock Exchange, the Lima Stock Exchange, and the Santiago Commodities Exchange. Additionally, “Indeval Institución para el Depósito de Valores” (Indeval Institution for the Deposit of Securities) a subsidiary of the BMV, S.D., has signed account opening agreements and servicing deposits with Colombia, Peru and Chile.
The start of trading in securities as part of MILA will be carried out once the conditions laid down in the Internal Regulations and Operating Manual of the BMV and SD Indeval are met.
The first operation of the Mexican Stock Exchange (BMV) in the Integrated Latin American Market (MILA) will begin as from January 2015.
After confirming that operational exchanges can be made “in each and every way” between the four stock exchanges, and their functionality is confirmed, the Lima Stock Exchange, the Colombia Stock Exchange, the Santiago Commodities Exchange and the BMV shall agree on the “starting signal”.
“The market capitalization of the three MILA plazas is 602 billion dollars and that of Mexico is 527 billion dollars. The combined value of the four exceeds 1.1 trillion dollars, which is very close to that of Bovespa “.
Some brokerage firms in Mexico have attended the integration of the BMV into MILA, in order to approach the stock exchanges and intermediaries in these countries.
The meeting which was called “Brokers’ Meeting” in the stock markets of each nation, was held in order to consolidate alliances for routing orders through correspondent agreements and training by the stock exchanges.
The brokerage firms who participated in Mexico were GBM, Interactions, Credit Suisse, Deutsche, and Valmex.
During these various sessions, representatives of BMV Group presented the Mexican market structure, statistics, pattern and settlement systems and custodians.
