. Vuelta a lo simple: sacar más partido a la diversificación
Pioneer Investments announced the enhancement of its European Equity team with the appointment of Simone Ragazzi as European Equity Small Cap analyst.
Based in Milan, Simone will report directly to Cristina Matti, Head of Small Cap Europe.
Commenting on the appointment Diego Franzin, Head of Equities–Europe at Pioneer Investments said: “Pioneer Investments has been managing European Equity assets for fifteen years based on a consistently applied philosophy and process. This fundamental, proprietary research-driven approach to investment in the asset class has provided a strong track record over the medium to long term through all market cycles.’’
He added, “Over the past year, we have added resources to our team to further strengthen our European Equity capabilities and broaden our product range. We are thrilled to welcome Simone and his strong experience in European Equity research on board. His appointment represents a further enhancement of our research capabilities in the European Small and Mid Caps space.’’
Simone has over 10 years’ experience in the industry. He joins Pioneer Investments from MainFirst Bank where his sector coverage included European Luxury Goods and some Italian Consumer Small Caps. In MainFirst, he was recently appointed team coordinator of his sector. He previously covered Italian banks for almost 3 years and Italian consumer and luxury stocks for 8 years. Simone graduated from Bocconi University in Milan with a Major in Corporate Finance.
Foto: Carlescs79. Newton, de BNY Mellon, se alía con Cambridge para estudiar la inversión a largo plazo
Cambridge University Judge Business School’s Centre for Endowment Asset Management has entered into a five-year partnership with Newton Investment Management, part of BNY Mellon. This partnership will enable the Centre to further extend its research and educational efforts in the area of long-horizon investing. In recognition of this support, the unit will be renamed the Newton Centre for Endowment Asset Management.
Commenting on the new support arrangement and her firm’s partnership with Cambridge, Newton Chief Executive, Helena Morrissey CBE, said: “Newton has been a long-term supporter of the Centre for Endowment Asset Management. We share the Centre’s commitment to helping long-horizon investors make appropriate investment decisions. We look forward to collaborating with Professor Elroy Dimson and his team, and furthering the understanding of investment decisions and their impact on institutional returns. This underlines our commitment to the not-for-profit and charities sector.”
Newton believes in the importance of independent academic research, and the potential for long-term value creation through bridging the gaps between research, practice and policy. This complements the Centre’s aim of furthering academic knowledge and practitioner understanding of key themes linked to long-term investing. As well as the opportunities and challenges for long-horizon investors, the Centre’s agenda includes historical perspectives on current investment concerns and research on responsible investment strategies.
Centre Chairman, Professor Elroy Dimson, explained that: “The partnership with Newton will reinforce Cambridge University’s ongoing collaboration with practitioners, academics and organisations that take a long-term view of investment. Under the leadership of founding Academic Director Dr David Chambers, the Centre will be a global focus for research and education among academic institutes, asset owners and investment professionals.”
The Centre’s plans include the seventh iteration of the Endowment Asset Management Programme – an annual three-day forum held at Cambridge University, which brings together practitioners and academics with an interest in long-horizon investing. In March 2015, the Programme will, for the first time, include sovereign wealth funds alongside foundations, charities, endowments and family offices from around the world.
The Centre aims to continue publishing in the world’s most highly rated academic and practitioner journals. There is also a commitment to developing case studies of leading long-term investors to be used for interactive classroom teaching. Other activities include a biennial academic conference run in collaboration with the Vienna University of Economics and Business and supported by the POK Puhringer Foundation, and an annual research prize awarded in conjunction with the Commonfund Institute.
The Director of Cambridge Judge Business School, Professor Christoph Loch, added: “The Newton Centre for Endowment Asset Management, with its emphasis on rigorous research combined with practical relevance, is an exciting initiative. Cambridge Judge Business School values scholarship that has an impact on business and society, and Newton’s support is greatly valued by the School.”
Newton’s relationship with Cambridge University is built on a foundation of academic and sporting excellence. Newton has been the title sponsor of the Women’s Boat Race of Cambridge and Oxford Universities since a partnership was formed in 2010. The initiative aims to support and promote the development and improvement of the standard of women’s rowing clubs and equality in the sport. Newton’s parent company, BNY Mellon, is the title sponsor of the men’s race, held on the River Thames each spring. The two firms are working towards parity for the Women’s Boat Race and the Men’s Boat Race, in a joint initiative that will bring The Newton Women’s Boat Race to the Tideway in 2015, ensuring both events take place on the same day over the same historic Putney to Mortlake course.
HSBC Headquarters in Curitiva. Photo: Morio . HSBC Brazil Lays off 800 Employees, with the Final Figure Expected to Reach 1,000
The Brazilian subsidiary of the British bank HSBC has laid off about 800 employees during the last week, and according to calculations by the Workers’ Guild, which were published on Saturday by the newspaper “O Estado de Sao Paulo” and picked up by the local press, that figure is expected to reach 1,000.
Funds Society contacted the bank’s subsidiary in Brazil to confirm the news; the company, however, declined to comment on the news which has been reported in the local press and is echoing the international financial press.
The National Confederation of Financial Sector Workers (Contraf-CUT) reported that a group of workers at the Curitiba Agency (southern Parana state capital) went on strike in protest at the cuts that the Group is carrying out in the country.
Employees at the Curitiva administrative center in Sao Paulo also joined Curitiva in the stoppages. According to Contraf, layoffs are taking place across the country and represent 4.5% of the group’s workforce. In Brazil, the bank has over 1,700 branches and offices in 550 cities.
Likewise, HSBC Brazil has more than 21,000 workers nationwide and is the fourth largest private bank in the country and the seventh in terms of assets. As for the results of the British bank during the third quarter, although it recorded a 7% increase in net profits, results in Latin America fell by 56% before tax, mainly because of its business in Brazil and Mexico.
Photo: Allan Ajifo. Old Mutual Global Investors Launches Pan African Fund
Old Mutual Global Investors has announced the launch of the Old Mutual Pan African Fund. The Fund will be managed by Cavan Osborne, supported by Peter Linley, of Old Mutual Investment Group (Pty) Limited, a South African partner company of Old Mutual Global Investors.
Osborne and Linley are part of a 17 strong team based in Cape Town. This team includes 12 analysts, all of whom are either country or sector specialists. Osborne was named Best African Fund Manager by African Investor in September 2014 for his management of Old Mutual Investment Group’s existing African capabilities which are available for South African investors. The existing Old Mutual Pan African Fund has US$11.75 million AUM (as at 30 September 2014) and has delivered annualised US$ net returns of 13.4%* over the past three years.
The strategy, which is suitable for clients looking to invest over a five to seven year period, aims for long-term capital growth by investing in companies that benefit from economic developments and growth across the African continent. This includes those listed on regulated African stock markets and other global markets, where more than 50% of their revenue or profit comes from Africa. The strategy will invest in approximately 30 to 40 stocks and will be seeded with US$ 50 million.
Cavan Osborne, comments on the opportunities for investors in the new fund: “We believe that now is an excellent time for investors with a slightly higher appetite for risk to invest in Africa. The continent provides a diverse range of investment opportunities and is currently going through a massive growth period with economic forecasts suggesting there are good returns to be had over the next few years”.
“At Old Mutual Investment Group our focus is to identify those companies that we believe will benefit from growth in Africa, building a diverse investment portfolio that will deliver long-term capital growth for investors.”
Julian Ide, CEO, Old Mutual Global Investors, adds:“This is an exciting development for Old Mutual Global Investors as it is the first time that we have collaborated with our colleagues in South Africa to launch a fund for a global client base. We are committed to ensuring our fund range offers a variety of asset classes and approaches for clients. We believe that there are excellent investment opportunities to be found within Africa and our new Fund will offer clients access to the top talent in the industry.”
30 St. Mary Axe Building - The Gherkin. The Safra Group To Acquire London Premier Property 30 St Mary Axe
The Safra Group, controlled by Joseph Safra, and Deloitte, the receiver for the London property 30 St Mary Axe, today announced an agreement under which Safra will acquire 30 St. Mary Axe, a 180-meter office tower that is the second-tallest building in the City of London. Financial terms of the transaction were not disclosed.
Completed in 2004, 30 St Mary Axe, otherwise known as The Gherkin, provides highly flexible space and outstanding views of London. It is an iconic part of the London skyline, recognized around the world as a great achievement by noted architect Lord Norman Foster. It encompasses approximately 50,000 square meters of office space and its largest tenants are Swiss Re and Kirkland & Ellis.
Safra Group said, “The acquisition of 30 St Mary Axe is consistent with our real estate strategy of investing in properties that are truly special – at the best locations within great cities. While only ten years old, this building is already a London icon that is distinguished from others in the market, with excellent value growth potential. We intend to make the building even better and more desirable through active ownership that will lead to a range of enhancements that will benefit tenants.”
Photo: Stephen Thornber, Portfolio Manager of Threadneedle’s Global Equity Income . Threadneedle’s Global Equity Income Recaps Negatives and Positives for the Last Ten Months
Stephen Thornber, Portfolio Manager of Threadneedle’s Global Equity Income strategy, reviews the developments of the past ten months or so and outlines how the team has responded to recent challenges.
Style rotation
April and May of this year witnessed a significant movement away from growth stocks and into their value and defensive counterparts. Threadneedle’s positioning in more growth-oriented dividend stocks meant that it did not benefit from this rotation, unlike the more traditional, low-growth dividend strategies, which did gain an advantage.
Threadneedle continues to believe that its long-term strategy of investing in growing companies with high and sustainable dividend yields should generate superior returns. While it expects interest rates to increase only slowly, Threadneedle says we should be wary of low growth ‘bond proxies’ in the current environment.
Regional allocation
A diverging economic performance has seen US equities significantly outperform those in Europe and Asia this year. Additionally, the dollar has strengthened against the euro and most global currencies. Threadneedle’s Global Equity strategy has been positioned underweight the US, partly due to the fact that American stocks traditionally offer relatively low dividends.
Over thirty per cent of the portfolio is invested in the US, and Threadneedle could increase this exposure either through taking larger positions or selecting additional American stocks. However, they will continue to construct the portfolio from the best individual high-dividend stock ideas, which means that it is likely that they will remain structurally underweight the US market relative to the benchmark.
Sector allocation
The portfolio has been underweight the technology sector, which has outperformed this year. It has also been overweight the telecommunications sector, which has underperformed.
Thornber states that the portfolio will continue to be constructed by picking individual stocks on their merits rather than allocating by sector. In the past the team has had considerable success by investing in Asian technology companies with high dividend yields such as Delta Electronics. But the majority of US technology stocks, (even dividend payers such as Microsoft), remain well below their yield threshold for investing in a stock. The strategy will thus likely maintain its bias against technology. Within telecommunications, Threadneedle continues to avoid highly-indebted legacy, fixed-line operators, but favors exposure to younger, mobile-focused players, and those in faster-growing economies.
Exposure to China
The authorities in Beijing have tightened credit restrictions in order to cool China’s overheated property market. Consequently, sentiment towards companies with both direct and indirect exposure has weakened. The portfolio has been overweight Asia, and some of the more economically-sensitive Asian stocks to which they have exposure have underperformed.
Exposure to beta within Europe
Within the portfolio’s overweight position in Europe, exposure has been concentrated in Scandinavia, Germany, France and Switzerland. Unfortunately this has not shielded the strategy from deteriorating confidence, particularly following events in Ukraine. Positions in the media, financials, construction, industrials and telecoms sectors have all underperformed. Threadneedle continues to have confidence in the outlook for other investments held in Europe, but they are reviewing the scale of their overweight positioning given the softening outlook.
Acknowledging the positives
Notwithstanding the challenges outlined above, the strategy has benefited from positive investments this year. Highlights included the purchase of L Brands (Victoria’s Secret), in February, when the stock was depressed following weather- affected December results. The original investment case was based on both improving results in the US, as the economy brightens, and its global store roll-out plans. Since investing, the stock has paid two dividends, and gained c.20% on improved sales results and sentiment.
Elsewhere, UK healthcare stock AstraZeneca has outperformed following a takeover bid from Pfizer, which was ultimately rejected. Threadneedle recognized the attractive free cash-flow generation and improving prospects for the large cap pharmaceutical sector as early as 2012, as a number of companies moved towards or through patent expiries on major drugs. With fresh innovation, particularly in the area of immunoconcology, and tax-driven M&A, investor appetite for the industry has dramatically improved. We think AstraZeneca remains an attractive stand-alone investment, but would not be surprised should Pfizer return to the deal-making table in the future.
Conviction in the strategy remains intact
While recent performance has disappointed, the strategy has built an excellent long-term track record over the last seven years by patiently investing in ‘Quality Income’, i.e., companies with high, sustainable and growing dividends. Threadneedle plans to continue pursuing the approach that has underpinned this performance and is working hard to ensure that the good record is maintained. Thornber notes that investors should be aware that the portfolio has a defensive bias, and therefore its best relative performance usually occurs in weaker periods for the market. In that respect, he would remind investors that the last two years have been very rewarding, and that caution should be exercised in extrapolating recent trends over a longer period. It is also important to note that the strategy acts on a two to three-year view when taking investment decisions, and is prepared to ride out periods of underperformance to deliver its long-term objectives.
Foto: Moyan Brenn. AllianzGI Launches Flexible Emerging Markets Debt Fund
Allianz Global Investors has announced the launch of the Allianz Emerging Markets Flexible Bond Fund.
“We firmly believe that strong economic-growth prospects, favourable demographics and markedly improving fundamentals mean that emerging markets debt (EMD) is set to perform over the longer- term, despite any liquidity risk from a rise in US interest rates or country-specific geo-political tensions,” said Greg Saichin, CIO of AllianzGI’s EMD business and a 26-year veteran of the asset class.
The Allianz Emerging Markets Flexible Bond fund will invest across the full range of emerging markets debt instruments, including companies and countries of any credit rating or currency. The flexible approach enables the fund’s experienced team to construct a portfolio based on their conviction views of an asset class where individual securities can exhibit an exceptionally wide range of risk and return.
“The launch of this fund represents a significant milestone in our plan to make AllianzGI a benchmark in global emerging markets debt management. As a team of active, specialist EMD managers we understand and are able to navigate the diverse risks associated with this vast and varied asset class,” added Saichin, who has been a flexible bond investor for nearly 10 years having been an early pioneer of the approach.
Nick Smith, Head of European Retail Sales (Ex-Germany) at AllianzGI, added:
“This fund, which covers the full EMD spectrum, will give investors the opportunity to access carefully identified, high-conviction growth opportunities across some of the world’s most dynamic and diverse geographies, currencies and sectors.”
“This is an asset class where experience really counts. With no two emerging markets the same, our regional teams are able to act in clients’ interests in local time, using their skilled, experienced eyes to unlock the very best buying opportunities.”
The fund is a Luxembourg domiciled SICAV, available through the AGIF (Allianz Global Investors Funds) platform, a vehicle AllianzGI uses to distribute its funds to a number of markets across the globe. The fund is currently available to institutional investors in the UK and will be made available to retail investors later this year.
AllianzGI’s Emerging Market Debt franchise was launched in October 2013 on the conviction that emerging economies will expand more quickly than developed markets, offering potential for superior returns. The team is now 10 strong, with portfolio managers and analysts in London, New York and Hong Kong.
AdvisorShares announced that the AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) has received a Five-Star Morningstar Rating for both its three-year and overall risk adjusted performances from inception through October 31, 2014 out of 347 funds in Morningstar’s Mid-Cap Blend category.
TTFS is managed by TrimTabs Asset Management (TrimTabs), a Sausalito, Calif.-based SEC registered investment advisor affiliated with TrimTabs Investment Research, the renowned independent institutional research firm founded by Charles Biderman that focuses on equity market liquidity.
In pursuing its investment strategy, TTFS invests in companies that shrink their equity float—the total number of shares publicly available for trading—while growing free cash flow and reducing leverage on their balance sheets. These are important attributes that differentiate TTFS from a passive approach to buyback investing. Utilizing a quantitative algorithm, the manager screens approximately 3,000 U.S. companies on a daily basis and then invests in their highest ranked 100 stocks for TTFS’ equal-weighted portfolio. TrimTabs’ liquidity research shows that companies using free cash flow to shrink the trading float of shares create a potentially profitable supply and demand imbalance as more money chases fewer shares, and TTFS’ performance reinforces that notion. Since its inception on October 4, 2011, and through October 31, 2014, TTFS has outperformed the Russell 3000 Index.
Morningstar compares each ETF’s risk-adjusted return, with at least a three-year history, to the open-end mutual fund rating breakpoints for each of its respective categories. Consistent with the open-end mutual fund ratings, TTFS earned its five-star ranking as being in the top 10% of funds – that includes both ETFs and mutual funds – in the Mid-Cap Blend category.
“We are pleased that TTFS becomes yet another domestic equity strategy from AdvisorShares transparent actively managed ETF suite to earn a Five-Star Morningstar Rating™,” said Noah Hamman, chief executive officer of AdvisorShares. “Although statistically speaking it’s difficult for active equity managers to outperform their benchmark indexes, it’s not hard to find those managers who produce alpha especially when they’re fully transparent. This ranking is further testament to TrimTabs industry-leading portfolio management delivered with the sought-after benefits of a transparent active ETF structure.”
“For decades, our industry-leading liquidity research has shown that companies with positive free cash flow that engage in float shrink can create a profitable supply and demand imbalance as more money chases fewer shares,” said Mr. Biderman, chief executive officer of TrimTabs and co-portfolio manager of TTFS. “Our key assumption is that the enterprise value should not drop at companies that use a portion of their free cash flow to reduce the number of shares outstanding. Indeed over the past three years we have discovered that price of the remaining shares have gone up by more than the percentage of share count reduction.”
The increased market turbulence in the last couple of weeks is driving investors to question if they should be repositioning their investment portfolios, whether the current volatility is a new normal, and what will happen to different asset classes as interest rates start to rise and inflation moves further up the agenda.
Now in its nineteenth year, the newly launched 2015 Long Term Capital Market Return Assumptions by J.P. Morgan Asset Management aims to help investors answer these burning questions and navigate the increasingly complex investment universe.
Anthony Werley, Chief Portfolio Strategist in J.P. Morgan Asset Management’s Endowments and Foundations Group, and one of the leading authors of the paper, said, “It has been six years since the end of the great recession and we are certainly on the road to normalization. In general, due to continued headwinds, we believe that diversification across geographies and asset classes will be rewarded in the longer term.”
He continued, “Globally, we see decoupling continuing as the eurozone and Japan actively pursue easier monetary policies and the monetary policy cycle turns in the UK and US. In the US, we believe growth will be constrained compared to prior cycles and that inflation will remain range bound. In addition, long-term nominal return expectations for US treasuries, corporate bonds and equities are more subdued and the implied risk premia arguably offers limited protection against any missteps in the policy normalization process.”
The Assumptions put forward different considerations and opportunities for investors with different objectives, for example:
Opportunities for investors in search of diversification:
Use diversified hedge funds as fixed income substitute
Invest in commodities for their diversification benefit
Add duration in non-US government bond markets where central banks are easing
Opportunities for investors in search of higher returns:
Reconsider the case for emerging markets where valuations are lower and top-line growth is likely to be higher
Add direct or indirect leverage while funding rates are low
Invest in less liquid markets such as value-added real estate and private equity
As well as providing vital information to investment decision makers across all types of investors, including pension funds, wealth managers, insurance companies and endowments, the Assumptions also form the investment principles around J.P. Morgan Asset Management’s multi-asset portfolios, which include defined contribution target date funds, multi-asset income funds and tailored strategies within the Solutions Group.
Photo: Tuxyso . Advent International Raises Largest Private Equity Fund Dedicated to Latin America
Advent International announced that it has received $2.1 billion in commitments for Advent Latin American Private Equity Fund VI (“LAPEF VI” or the “Fund”), reaching the Fund’s hard cap after less than six months in the market. LAPEF VI is the largest private equity fund ever raised for Latin America.1 Advent’s previous fund dedicated to the region, LAPEF V, closed on $1.65 billion in 2010.
Over 60 institutional investors participated in LAPEF VI, including public and corporate pension funds, endowments and foundations, funds of funds, sovereign wealth funds, family offices and other financial institutions. The majority of the capital came from limited partners in LAPEF V, with Advent admitting a select number of new strategic investors into the Fund as well. Approximately half the capital was raised from North American investors, one-quarter from European investors and the remainder from institutions in Latin America, the Middle East and Asia.
“We are pleased with the strong support we received from both existing and new investors,” said Advent Managing Partner Patrice Etlin. “We believe the high level of demand reflects our leadership position in Latin America based on our strong 18-year track record and differentiated strategy for creating value in companies. Latin America continues to be an attractive region in which to invest. It is a large, growing market with an expanding middle class, opportunities for productivity enhancement, a high degree of family ownership and limited competition from other financial sponsors relative to the size of the markets.”
Continuing the strategy of its predecessor funds, LAPEF VI will focus on control-oriented investments in later-stage companies throughout Latin America, investing mainly in Brazil, Colombia and Mexico. The Fund will target sectors where Advent has significant experience both regionally and globally, including business and financial services; healthcare; industrial and infrastructure; and retail, consumer and leisure.
“LAPEF VI underscores our longstanding commitment to investing in attractive opportunities in our target sectors throughout Latin America,” said David Mussafer, Managing Partner and Co-Chairman of Advent’s Executive Committee. “We believe our industry and local market expertise, combined with our global resources and operational approach to creating value, provides us with a distinct competitive advantage in the region. We are pleased investors continue to recognize this and we remain focused on exceeding their expectations.”
