Foto: Barry, Flickr, Creative Commons. Convertibles globales, con Franklin Templeton
Northern Trust Asset Management has launched a new fund for institutional investors that encompasses quality small capitalization stocks across global developed equity markets.
The global small cap fund builds on Northern Trust Asset Management’s growing Engineered Equity strategies, with a US$37.4 billion in assets under management as of September 30, 2014. The fund, launched this month with an investment by Kemper Corporation for its Master Retirement Trust, is designed to efficiently capture the premium associated with high quality small capitalization stocks while minimizing uncompensated risk factors.
“Our Engineered Equity approach provides efficient exposure to global small cap equities with a bias toward high-quality companies and factors that generate persistent performance over time,” said Matthew Peron, Managing Director, Global Equity at Northern Trust Asset Management. “We worked closely with Kemper to develop a solution that fits their performance and risk budget needs, leveraging our core capabilities, and we believe this strategy will have broad appeal.”
The global small cap fund is an extension of Northern Trust’s factor-based U.S. small cap strategies, which have a 15-year track record and US$3.4 billion in AUM as of September 30, 2014. The new collective trust fund is available to U.S. defined benefit and defined contribution retirement plans and Northern Trust intends to offer the global small cap strategy to a range of investors through separate accounts and other fund structures.
John L. Thornton, New Non-Executive Chairman of PineBridge Investments. Courtesy of PineBridge. John L. Thornton Appointed Non-Executive Chairman of PineBridge Investments
The Board of Directors of PineBridge Investments announced the appointment of John L. Thornton as Non-Executive Chairman effective November 21, 2014. Mr. Thornton will assume the Chairmanship from E. Mervyn Davies, Lord Davies of Abersoch, CBE, who has successfully presided over the Board for four years.
Mr. Thornton has extensive international experience in business, finance and public affairs and has served on the boards of leading global public companies. Mr. Thornton will work closely with the Board and members of senior management in driving the firm’s strategy.
Richard Li Tzar-Kai, PineBridge Board Member and Chairman of Pacific Century Group said, “I would like to thank Mervyn for his leadership and wisdom during the development of PineBridge as an independent multi-asset manager. Our strong position and enhanced investment offering owes a great deal to him. We are pleased to welcome John as our new Chairman and look forward to drawing on his considerable international experience.”
Mr. Thornton said, “I am honored to be joining PineBridge Investments and look forward to working with the leadership of the firm. PineBridge’s developed and emerging markets experience is exceptional as is its ability to create unique investment solutions for clients.”
Mr. Thornton retired in 2003 as President and member of the Board of The Goldman Sachs Group, Inc. He is Chairman of the Board of Barrick Gold Corporation and serves as a Director of the Ford Motor Company. He is Co-Chairman of the Board of Trustees of the Brookings Institution in Washington, D.C. He is a Professor and Director of the Global Leadership Program at the Tsinghua University School of Economics and Management in Beijing. Thornton is a trustee, advisory board member or member of the China Investment Corporation, China Securities Regulatory Commission, Council on Foreign Relations, McKinsey Advisory Council and Morehouse College. Mr. Thornton holds an undergraduate degree from Harvard College, a degree in jurisprudence from Oxford University and a master’s degree from the Yale School of Management.
Neil Dwane, CIO of European Equity, Allianz GI. Quality Growth and Income, Two Strategies to Invest in Europe by AllianzGI
In order to obtain returns inthe current low-rate environment, risks have to be taken. For NeilDwane, CIO of European Equity at AllianzGI, it is essential to choosethe type ofriskyou assume. “There isgrowth in theworld, butyou have to look around carefully forcompanieswhich do show growth.In periods oflow growthsuch as now, stocks with high dividend yieldsare a good choice, and those withhighquality growth arethe other.”
Withthese two tips, Dwanefocuseshis discussion onwhat type of product iscurrently moreattractivewhen investingin European equities. Focusing onquality growth, he cites late 2007 as an example as the situation was a similarto the present moment“in whichquality wasmore affordable thancompanies with morequestionablefundamentals; in that environment, Quality Growth, managed to risein 2008 compared toa market whichfell by 40%.”
Delving deeper into this “return to quality,” Dwane points out that it may come either from quality of growth, “as in Inditex’ case”, as from quality of dividends, “as Repsol’s or Royal Dutch’s.” Dwane explained that right now, the right decisions must be taken, even within sectors, and gives the example of the banking sector: “between two large global banks such as HSBC and BBVA, we currently opted for HSBC. Firstly, BBVA is more expensive, and secondly, the recovery in Spain and much of Latin America is questionable, while HSBC bank is more diversified. “
For investors who prefer something less volatile, a strategy focusing on a high dividend yields is more appropriate.
In the high income strategy, Allianz GI’s management team scouts for companies which have a 25% higher yield than the market’s. “It is a quantitative process that we carry out each and every Monday to see which companies meet this criterion. Once we have the candidates, we see which securities have solid fundamentals by looking at the sustainability of the dividend, the generation of cash flows, the quality of the management team, etc. Businesses that meet our criteria will enter the portfolio. In turn, the sales discipline is simple: when a security we have in the portfolio reaches the market’s dividend yield, it’s offered for sale” Dwane explains.
In an interview with Funds Society, NeilDwane talks about bPost, the Belgian postal company, as an example of a company which fits these criteria. “bPost met the criteria of high yield dividends, but is also recently benefiting from Amazon’s entry into the Belgian market since most of the packages distributed by Amazon in Belgium travel through the bPost postal service. As befits a company of this type listed in Europe, bPost trades at a PE ratio of 6x and has an attractive yield of 6.5%, with an expected dividend growth of 10% due to improved cash flows” he adds.
Allianz GI’s European Equity Dividend strategy has an average dividend yield of 5.1%, with expectations that the yield will rise to 5.8% next year. “Therefore, a higher yield than that offered by high yield debt in the Euro zone is obtained through this strategy, and also, in the case of investing in dividends, you do so in high-quality companies, whilst if investing in high yield debt you are positioning yourself in companies with poor credit quality whose emissions, going back to par, have a potential drop of 35%,” argues Dwane.
Ann Steele, Portfolio Manager for Threadneedle’s Pan-European Equity Strategy. Sentiment towards Europe Has Changed. Was It All an Illusion?
Earlier this year, everything seemed to be running well in Europe. Mario Draghi had promised to “do everything necessary,” growth was returning to the economies of the euro zone, albeit slowly; and even peripheral countries showed recovery. Investors trusted this recovery and returned to the European market, and nobody would bank on the collapse of the euro.
But sentiment has now changed. Has it all been an illusion? Ann Steele, Portfolio Manager for Threadneedle’s Pan-European Equity Strategy, spoke to Funds Society on the problems besetting Europe. Her diagnosis is severe: “We’re in the same spot we were two years ago.” Steele puts some hard data on the table: “Earlier this year, the consensus estimated growth of 14%, in European earnings per share, we are now at 5%, and virtually everything is due to the currency effect. If we look at GDP, we see that growth has stalled. In fact, France does not grow, Germany’s growth is very weak, and Italy has negative growth. These three countries together generate two thirds of GDP in the Euro zone, the situation, therefore, is complicated.”
Economic sanctions on Russia, which even in the best of cases, will remain in force for some time, are affecting quite a few economies. The specter of deflation joins this economic stagnation. The Eurozone’s annual inflation data is, at 0.3%, “light years below the ECB’s 2% objective.” The falling oil prices will not help generate inflation in Europe. In short, “the banking and sovereign debt crisis has led to a growth crisis in Europe,” says Steele.
Some countries have taken bitter, but effective, measures. Steele cites Ireland’s example, which following the necessary reforms has managed to lower its unemployment rate from 15% to 11%, enjoys a recovery of 24% in housing prices, and has achieved 7.7%. GDP growth in the second quarter “The banks were recapitalized in 2009 and have taken off, and a tax reform, which has lowered corporate tax to 12.5%, has attracted worldwide multinationals to Ireland.” The country has managed to lower its budget deficit from 13.7% in 2009 to 2.8% in 2014.
Steele is disappointed that the Irish example does not abound in Europe. Even its island neighbor, the United Kingdom, which has maintained a fairly healthy rate of growth in recent years, is now slowed by political motives. “First we had the Scottish referendum, which will continue to generate debate and change.” Soon, the country faces a general election in 2015, and later, the referendum for the UK‘s permanence inthe EU, scheduled for 2017-18. “As a result, we have a market influenced by politics over the next couple of years,” states the Portfolio Manager, also adding that “we will not see any tax increases in the UK in April, as stated in the consensus, since elections are in May, so, at the earliest,they’ll come towards the end of the first semester.”
Europe faces a difficult road ahead, in which Draghi’s discourse and actions will have to demonstrate their effectiveness. While the European market’s valuation is relatively more attractive than that of the US, it doesn’t stand out in relation to either Japan or the emerging markets. What is the positioning for this market environment, of the pan-European strategy which Ann Steele manages.
It’s in times like these that good stockpicking shows its full potential. The portfolio manager has made several changes to her portfolio, which currently has 60 securities. On one hand, she has tended to invest more in large caps, or even in mega caps, dropping weight in small and mid cap which weigh heavily in domestic markets. By sector, Steele’s ideas for getting the best out of the current situation are:
Huge commitment onthe European pharmaceutical sector: among the 10 companies with the largest weight in the portfolio, four are pharmaceutical. “On one hand I am overweight in the sector because it has a defensive nature, but mostly because the portfolio of products under development in the field of cancer control is awesome right now, with a range of very encouraging products which act by boosting the immune system so that therapies to fight tumors could change radically. Roche and Novartis have good franchises in such drugs.”
Sale of domestic banks in which she invested in 2013: Currently, her strategy is underweight on banks, but it has not always been so. Just over a year ago Steele banked on the recovery of European domestic markets and was overweight on domestic medium-sized banks in countries like Spain, Italy and Ireland buying names like Bankinter, Banco Popular and Bank of Ireland. “On seeing the results of some of these banks during the first quarter of 2014, I undid many of these positions, and am now underweight in the sector, and I don’t have any German or French banks in the portfolio,” she explains.
Success stories such as Pandora and Richemont: Steele is underweight in consumer defensives “because of its high correlation with the development of emerging markets” and overweight in consumer cyclicals. However, she points out that in this field, the big companies of luxury goods are having uneven behavior. For example, LVMH, which is not in the portfolio, has performed weakly in the alcoholic beverages sector, while it did well in jewelry and watches. “To capitalize on this trend, I have the Swiss luxury goods company, Richemont, in the portfolio; it specializes in fine jewelry and watches, and also has a net cash position of 4.7 billion Euros.” Another success story which forms part of Steele’s portfolio is the Danish jewelry company Pandora, which has experienced a change in its management team to become a major exporter globally, and now plans to enter the Chinese market.
“Now, the strategy has a lower beta than a year ago, as well as a lower tracking error, and 3.5% in cash, more than usual. I see value in the European market, but also problems of growth, both political and geopolitical, so it’s a good time to step aside and wait,” says Ann Steele, portfolio manager for Threadneedle’s strategy for Pan-European Equities.
Foto: Atmtx, Flickr, Creative Commons. Deutsche AWM sigue contratando profesionales para su banca privada en Nueva York
Deutsche Asset & Wealth Management (Deutsche AWM) has announced that Heather Kirby, Charles Walker and Stewart Oldfield have joined the firm’s Private Bank. Based in New York, Kirby, Walker and Oldfield report directly to Andrew Gallivan, Managing Director and Head of the New York Private Bank.
“Over the past year, we have been focused on strategically hiring top talent as we aim to be the leading provider of customized wealth solutions to high-net-worth and ultra-high-net-worth clients in the Americas,” Chip Packard, Co-Head of Wealth Management in the Americas, said. “I am confident Heather, Chuck and Stewart’s extensive industry experience and deep client relationships will help us to achieve our goals and further expand our platform.”
With over 30 years of industry experience, Kirby joined as a Managing Director and Private Banker. Prior to Deutsche AWM, she was a Managing Director and Private Banker at Citi Private Bank, where she focused on the ultra-high-net-worth market. Previously, she was a Managing Director at US Trust. Kirby earned a BA in American Studies from Yale University and an MBA from the New York University Stern School of Business.
Charles (Chuck) Walker joined as a Director and Private Banker. Walker brings over 25 years of industry experience and also joined from Citi Private Bank, where he was a Senior Vice President and Private Banker. Previously, he was a Senior Vice President and Private Client Manger at US Trust. Walker earned a BA in Economics from Duke University.
Stewart Oldfield joined as a Director and Private Banker with over 16 years of experience. Prior to Deutsche AWM, Oldfield spent 12 years at Credit Suisse in their Investment Solutions Group, where he was responsible for developing and providing portfolio solutions and liquid alternative investments to the Private Bank’s top institutional and family office clients. Oldfield received a BSBA cum laude in Finance and International Business from Georgetown University. He has been a CFA charterholder since 2002, CAIA charterholder since 2013, and is a member of the New York Society of Securities Analysts.
In 2014 Deutsche AWM has made several key hires in its Wealth Management division. Most recently, the Bank announced that it hired Lee Hutter as the Head of Wealth Management for the US Western region. Deutsche AWM also announced the opening of its Private Bank in Dallas in September.
. 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.”
