Family Office Exchange (FOX), a global membership organization of private family enterprises, their family offices, and key advisors, bestowed the FOX Founders Award on four family office industry pioneers at the 25th Anniversary FOX Forum in Chicago on October 29, 2014.
The honorees were Christine K. Galloway, President and CEO of Okabena Company, Dirk Jungé, Chairman of Pitcairn, Patricia M. Soldano, Chairman – Western Region at GenSpring Family Offices, and Loraine Tsavaris, Managing Director at Rockefeller & Company.
In presenting the awards, Sara Hamilton, Founder and CEO of FOX, commented, “Each of these individuals is the epitome of our best industry leaders, but in very unique ways. They were all pioneers in changing the wealth management industry to better serve the ultra-wealthy client. ”
The FOX Founders Award has only been presented once before– in 2009 to James E. Hughes, Jr., at the 20th Anniversary FOX Fall Forum.
Chris Galloway has worked for the Okabena Company, a single family office in Minneapolis, for 21 years. Retiring at the end of the year, she says, “Nothing is more meaningful than my role as ‘trusted Advisor’ to multiple generations of family members.”
Dirk Jungé, a fourth generation Pitcairn family member, is an outstanding example of a family leader who has served as a family steward for over 40 years. There is an old saying: “If you don’t create change, change will create you.” Dirk understands the need for innovation, coupled with his commitment to the time-tested principles that create family success, characterize his leadership style and underlie the business model of the 90-year old family office.
Pat Soldano has worked tirelessly for the past 20 years campaigning for elimination of the death tax based on her experiencing the devastating impact of estate taxes on families in her advisory practice. She founded The Policy and Taxation Group to educate lawmakers on the issues and impact of estate taxes on families.
The final recipient, Loraine Tsavaris, has been an advisor to families and to aspiring wealth advisors for more than 40 years. A strong supporter of FOX conducted research, she participated in the first FOX Thought Leaders Summit in 2004 about Conflicts of Interest and in every Thought Leaders Summit since.
Evercore Partners has announced that it completed on October 31, 2014 the acquisition of the ISI International Strategy & Investment and the remainder of its legacy Institutional Equities business.
The acquisition positions Evercore as an elite and scaled provider of non-proprietary capital markets advice and execution, broadening Evercore’s Investment Banking business and expanding its growth opportunities. The business, Evercore ISI, will initially provide macro research, as well as fundamental research coverage of more than 600 companies across 12 industries, or approximately 60% of the combined market cap of the S&P 500. Evercore ISI will serve more than 1,500 institutional investors globally, including the largest asset managers and fund complexes in the world.
“We are excited to announce the closing of the ISI transaction, moving us one step closer to our goal of creating the most elite independent investment banking advisory firm in the world,” said Ralph Schlosstein, President and Chief Executive Officer. “While it is still early days, client feedback to date affirms our expectation that Evercore ISI will have a positive effect on the growth rate of our overall Investment Banking business and that the Equities business will be an attractive business in its own right. Since the announcement of the acquisition in August, ISI has achieved a #5 ranking for its research product from Institutional Investor, and the firm has had record revenues in September and October, reflecting the support for this transaction from institutional investors globally. We are excited to welcome the entire ISI team to Evercore.”
“This step creates a broader and more effective banking firm because it provides Evercore with premier skills in all aspects of equities,” said Roger Altman, Executive Chairman. “I look forward eagerly to working with our new ISI colleagues.”
“Our clients’ support for this transaction has been extremely positive,” said Ed Hyman, Evercore ISI’s Chairman. “The combination of talent from the ISI and Evercore Equities businesses has created a powerhouse in research and distribution and we look forward to continuing to serve our expanded client network with the highest quality independent research, analysis and advice.”
Global ETP flows of $37.3bn were driven by fixed income with $19.9bn, although equity flows also finished strong as stocks rebounded from a sharp correction attributed to economic growth and low inflation concerns, according to BlackRock.
The fixed income inflows represented an all-time high, including records for US and European exposures, and year-to-date asset gathering of $73.3bn has already broken the annual record of $70.0bn set in 2012.
High yield corporate bond ETPs had the best month of the year with $2.3bn to lead inflows of $7.5bn across all income-oriented categories as interest rates fell further and the search for yield intensified.
EM equity redemptions of ($3.0bn) were impacted by tactical trading in broad funds, but opportunities remain for selective investors currently underweight EM, particularly for Asian economies with attractive valuations and less sensitivity to rates/central bank action.
Japanese equity flows of $0.6bn included $3.2bn in the second half of the month as stocks rallied on expanded Bank of Japan stimulus and news the Government Pension Investment Fund will double its domestic equity allocation to 25%.
Wikimedia CommonsGlen Finegan. Henderson nombra a Glen Finegan director de Renta Variable de Mercados Emergentes
Henderson Global Investors has hired Glen Finegan as Head of Emerging Market Equities. He will join the Henderson team on 5 January 2015.
Glen will report to Graham Kitchen, Head of Equities, and will have responsibility for managing the £1bn (€1.26bn / US$1.73bn) global emerging markets’ equities’ (GEM) franchise based in the UK.
Most recently Glen was a senior portfolio manager at First State Stewart covering GEM all cap strategies. He managed US$3bn as lead manager and was co-lead on US$10bn. Before joining First State Stewart in 2001 he was a geophysicist within the oil and gas industry.
In addition, as part of the wider review of the emerging markets business, Chris Palmer will leave Henderson. Chris joined during the Gartmore acquisition in 2011 and served as Director of Emerging Market Equities.
Pixabay CC0 Public Domain. Mark Mobius: El regreso de Argentina
Xavier Hovasse, manager on the Carmignac Emerging Discovery fund, has said that while the near term focus will be on Brazil in Latin America, it is the longer term prospects of Argentina that could shine depending on factors such as next year’s presidential election there.
Latin American makes up about 30% of the portfolio. Carmignac has previously stayed away from Argentina, for reasons such as the uncertainty surrounding the country’s participation in bond markets.
Currently, the country’s administration is fighting a battle with bond holders, who are owed debt in dollars. Going forward, the government might push to change the debt denomination to the local currency, Hovasse suggests.
Beyond that a key moment will take place with elections next year, which could mark the start of a different type of administration in terms of its dealings with international investors. Besides a new president, there are also Senate and Deputy elections taking place. Should that occur then Hovasse describes the country as “some day becoming the best frontier opportunity”. “The country has a relatively large population, that is well educated, and where you can find good entrepreneurs.”
Locals do not have credit because they do not want to put their money into the bank; so the deposit to GDP ratio is very low compared to similar sized economies. Hovasse estimates that debt to GDP ratio is around 45%.
The country has significant estimated reserves of onshore shale gas, which could become economically extracted if the government could encourage investment into the oil industry.
One of the challenges to investing is that the country has been involved in some unusual developments. For example, Hovasse said that the country was the only one in recent times that managed to have hyperinflation despite also enjoying surpluses, effectively leading into quantitative easing while having no debt. This is a completely different situation to a market such as the US, where quantitative easing occurred at a time when the government hit a sovereign debt crisis.
However, while Carmignac is not invested currently it is preparing to invest massively when it it feels there is a sound basis for change in the country. Hovasse said this might not be immediately following next year’s election, but at the same time there are potential candidates already putting forward policies that in his opinion look interesting.
Looking around Latin America more broadly, Hovasse, who joined Carmignac Gestion in 2008 from BNP Paribas Investment Management, said Colombia was one of the most interesting markets in the region, with sectors such as food retail still in a situation of low market penetration – about half of food sales in the country are still via non chain independent stores.
Colombia generally is enjoying the dividends of a peace deal between the government and FARC, which looks to be withing striking distance, and local politicians are impressing investors, for example, via a fiscal responsibility law. Ratings agencies have upgraded the country in recent years, and it is seen as less dependent on commodities exports than a number of other countries in the region.
Mexico offers potential in the banking sector, as about half the population do not have bank accounts – the result of previous financial crises that saw retail banking customers leave and never come back. Government reforms are progressing, and there is scope to privatise the country’s oil industry.
Insurance is another sector across the region where market penetration rates are low, thus offering good scope for growth, Hovasse added.
Brazil is set to provide the most immediate challenges to investors, after the presidential election. The country enjoyed a commodities and credit boom over the past decade, but the credit needs to be paid off, while commodities prices have weakened.
Cashflow and demography
Two key factors in determining investments in emerging markets are cashflow and demography, Hovasse said. His portfolio looks for companies with good cash flow growth; it is seeking companies with good prospects of self funding their growth. This varies by sector, with industries such as mining being capital intensive.
Hovasse does not look to ebitda. The key metric is free cashflow to equity yield before expansion capital expenditure. Hovasse said there is a split between maintenance capex and expansion capex, and he is looking for the figure after maintenance, but before expansion.
On ongoing challenge is the way accounting differs between jurisdictions. But by looking at cashflow and capital expenditure requirements, it means the fund will never buy a Gazprom or Petrobras.
The manager also uses the cash realisation ratio. If this is higher than 1, it means income statement multiples will make a company look more expensive than it is, so it is attractive from a valuation point of view. Cash return on invested capital is another key metric, Hovasse said.
Demographics are another key factor, he added. When women have fewer children they can be more economically active and provide better education to children, as well as result in other advantages to an economy. Hovasse said he is looking for evidence of populations growing “intelligently”. An example of where this factor suggests investors should stay away is Russia. The poor demographics affect the consumer story there, he said, even as investors struggle with other issues such as corporate governance and the impact of the oil price on the economy and a structural capital flight.
Wikimedia CommonsFoto: Mattbuck. deVere Group lanza su división de Inversión Estratégica, que liderará Tom Elliott
deVere Group announced the launch of deVere Investment Strategy that will be headed by Tom Elliott, a former Executive Director at JP Morgan Asset Management, who has 25 years experience in the financial sector and was appointed deVere Group´s International Investment Strategies in 2013.
The independent financial advisory organizations, which has a growing presence across America, has officially introduced its new Investment Strategy division. deVere Group, has 80,000 clients globally and more than $10bn under advice and management.
The founder and chief executive of deVere Group, Nigel Green, comments: “We’re thrilled to announce the introduction of deVere Investment Strategy, a free service that aims to help investors better understand the economic, political and social factors that drive capital markets, and which in turn influence returns on portfolios.
“This pioneering service, which offers a comprehensive view of global economies, regular updates on current stock markets and fixed income trends, in-depth analysis and detailed outlooks from Tom Elliott, one of the best-known and experienced experts in his field, is unlike any other in our sector.
“We’re confident that deVere Investment Strategy will be a powerful tool in helping our clients make informed investment decisions”.
He continues: “The launch of deVere Investment Strategy underscores our commitment to using our resources to continually lead and shape the industry and is further evidence of our laser-like dedication to helping clients hit their important goals through intelligent insights.”
For his part, Mr Elliott comments: “After months of strategic planning, research and development, I’m incredibly excited about the introduction of this trailblazing service that requires no fees or logins and that I hope will add real value to investors.
“An informed investor is a smarter investor and as such I look forward to delivering timely and relevant commentaries.” “It’s a privilege to be able to be working directly with our clients and helping them to reach and hopefully exceed their financial objectives by providing a holistic, bespoke approach to investment advice.”
. Institutional Investors Expect More High Dividend Investment Opportunities in Emerging Markets
Institutional investors expect to see more emerging market equities paying high dividends over the next few years. New research from ING Investment Management (ING IM) amongst institutional investors reveals that between now and 2016, 61% believe the number of emerging market stocks paying these will increase – 14% anticipate a ‘dramatic’ rise here. The corresponding figures for the next five years are 68% and 18%.
Nicolas Simar, Head of the Equity Value Boutique at ING Investment Management, comments: “Over the long term, dividend investing accounts for more than 70% of total real equity returns and some of the most attractive opportunities here can be found in emerging markets. They are widely expected to be the primary driver of global economic growth due to their strong fundamentals. In addition to this, dividend yields in emerging markets are already relatively high and growing faster than those in developed markets.”
In terms of why institutional investors expect more emerging market companies to pay high dividends in the future, the main reason is many are becoming ‘cash rich’ and can afford to do this – the view of 29% of those interviewed. This was followed by 22% who said improving corporate governance and transparency in the region will fuel a rise in dividends paid, and one in five who believe it is because they are looking to attract more investors. Some 14% believe the main reason will be because more emerging market companies will be listing and they need to pay high dividends to attract investors.
ING IM’s Emerging Markets High Dividend Equity Fund invests in stocks of companies located in emerging markets around the world that offer attractive and sustainable dividend yields and potential for capital appreciation. The strategy combines quantitative screening with fundamental analysis to identify stocks that trade below their intrinsic value and offer an ability to grow their dividend in the future. The fund focuses on finding the strongest dividend payers from a valuation perspective and not the highest yielders.
Photo: Joka Madruga. Maduro Would Do Venezuela a Disservice by Turning His Back on International Investors
Venezuela’s international debt issued in hard currency has increasingly been under selling pressure in disappointment with the governments half hearted attempt to reform the hopelessly ineffective and intransparent currency regime (that includes three official FX rates) as well as President Maduro’s decision to let Rafael Ramirez become Political Vice President and release him from his hitherto duties as Economic Vice President, PDVSA President and Oil and Mining Minister. In his role as Economic Vice President Rafael Ramirez was widely respected as the longest serving cabinet member under Hugo Chavez and as one of a very few pragmatic and reform friendly politicians in the current administration. Global Evolution, an asset management firm specialized in emerging and frontier markets debt, has published a piece of research discussing theses topics.
Should Venezuela default?
Adding fuel to the fire, an article, named ‘Should Venezuela Default?‘, written by two respected Venezuelan economists, Ricardo Hausmann and Miquel Angel Santos, was published at the beginning of September, basically asking if not Venezuela should default on its foreign debt instead of letting its population down by defaulting on food imports, lifesaving drugs imports, transport and services etc. The fact that Ricardo Hausmann is a former minister of planning of Venezuela and former ChiefEconomist of the Inter-American Development Bank, whereas Miguel Angel Santos is a senior research fellow at Harvard’sCenter for International Development explains why the article has been subject to intense focus and discussions.
The economic regime is a run down mess
According to Banco Central de Venezuela real GDP growth was running around 1% YoY in Q4 2013 while inflation has risen sharply since early 2013; from around 20% to more than 63%. In this environment of runaway inflation, price controls are common with some prices remaining fixed for several years and with gasoline being the most extreme example, being fixed for 18 years. Needless to say, a 18 years price fix on gasoline is fiscally costly and has discouraged any attempt onfuel efficiency. Anecdotally, when Global Evolution was on a trip to Venezuela in October 2013,(driving a V8 four-wheel drive SUV) filled up the fuel tank for USD 1.
The bright spots in the economy
The oil export, the current account balance together with a fairly low public debt stock and a benign foreign debt to GDP ratio are the bright spots of Venezuela’s economy. Whereas the economy and the Venezuelan society may well implode if allowed to deteriorate further over the next decade, Global Evolution has no doubt that the sovereign has the capacity to service its external debt in the coming 2-5 years.
Maduro would do Venezuela a disservice by turning his back on international investors
What the article from Hausmann and Santos questions is the willingness to pay and in this respect Venezuela has a very good track record. Of course, things may look different under President Maduro, but with oil production running at 2.5mn barrels per day and proven reserves that holds the potential to raise production to at least 4mn barrels per day (6mn in a best-case scenario) if investments are made, Maduro would logically have little incentive to turn his back on the international capital market since international investors – be it foreign direct investors or portfolio investors – would be the ones to fund PDVSA’s production expansion and the subsequent increase in hard currency earnings. Currently, at face value, Venezuela’s oil exports generate annual hard currency earnings close to USD 100bn. However, when discounted for export financing to Petrocaribe (see below) and earnings used for the repayment of the debt to China, Venezuela’s crude export generates a still sizeable USD 70bn per year.
Low hanging fruits
Given the relative benign debt servicing cost on Venezuela’s sovereign debt in hard currency and the international debt of state owned oil company PDVSA (on average a total around USD 12.5bn per year over the next 10 years), a debt default would not free up much money in a broader perspective. Instead of running the risk of being excluded from international capital markets for years, the government could pick up low hanging fruits such as the heavily subsidized Petrocaribe solidarity program in which Venezuela basically finance the purchase of crude oil for 17 Caribbean countries. If Venezuela sold oil to these countries at market prices this would easily pay for the bond maturities of both Venezuelan sovereign bonds, the bonds issued by state owned oil company PDVSA and US based PDVSA owned refinery and retail gas station chain, CITGO.
Conclusion
Venezuela is one of the few net international creditors in the World with a current account surplus, high per capita income and low levels of external debt relative to peers, so from that perspective it does not immediately appear a high risk credit. Global Evolution does not view Venezuela as a likely default candidate in the near future and expects it to continue to service its debt. Should President Maduro choose to default on Venezuela’s sovereign debt it would be purely a populist ideological decision that would do little to help the Venezuelan people or economy in the medium to longer term perspective.
Venezuela is now yielding significantly above Ecuador that chose to default on part of its sovereign debt as recently as in 2009 and above Ukraine, a country at war, in severe economic contraction and with a much less sustainable debt situation. Global Evolution is aware of the challenges facing Venezuela and remains cautious on several fronts, but all things considered, current market levels appear attractive given the risks involved.
Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Strategies in the Americas Region.
Photo: Cornelius James . New York Private Bank & Trust Launches Specialty Finance Company for the Film & Television Industry
New York Private Bank & Trust and Aperture Media Partners, LLC have formed a specialty finance company providing comprehensive financing solutions to the filmed entertainment industry. The new company will operate under the name Aperture Media Partners and is structured to create a one-stop shop for producers and distributors seeking financing for film and television projects.
Aperture offers a full spectrum of standard and customized senior and mezzanine credit products including: bridge loans, finishing funds, gap loans, library advances, print and advertising (P&A) loans, production loans, sales agent advances, tax credit monetization, and ultimates financing. The company structures, lends, and syndicates loans through a network of banks, hedge funds, private equity and family offices.
Aperture is managed by Chief Executive Officer and Co-founder, Jared Underwood, and Chief Operating Officer and Co-founder, Andrew Robinson, two leading bankers in film and television finance. The two have over 30 years of combined lending experience and have financed over $10 billion in transactions to nearly every leading independent film company and producer in the industry.
John Hart, Vice Chairman of New York Private Bank & Trust and Head of its Private Banking division, welcomed the Aperture team, stating: “Aperture fits well within NYPB&T given its combination of thorough underwriting and high level of product customization.”
“Jared Underwood and Andrew Robinson already have an industry leading reputation for creative and client-centric thinking,” Mr. Hart continued. “NYPB&T will provide them with exciting new tools to fulfill their vision and further grow their thriving business.”
“We are delighted to have New York Private Bank & Trust‘s support and look forward to becoming an industry leader through our affiliation with the bank,” Mr. Underwood said. “With the backing of NYPB&T, Aperture Media Partners becomes a one-stop shop, efficiently providing senior and mezzanine capital to the film and television industry. We will be well positioned to leverage our talents and industry insights to capitalize on a number of existing and future opportunities.”
Is the Euro crisis over? What if China slows down? Do liquidity premium exist?
“The future is like a corridor into which we can see only by the light coming from behind.” This quote sums up the hazardous nature of the exercise to try and tell what the future will bring, certainly with respect to the world economy and asset returns. As stated by Robeco in a recently published report on this matter, all we have to go by is what we have seen in the past. So, the outlook2015-2019 presented by Robeco in this video is as much a story about the past, as it is for the future: Robeco assumes that the long-term returns that we have seen in the past will – under normal circumstances – be a good guideline for the future. Interestingly, the further we try to look into the future, decades out, the more we tend to assume that the returns we have seen over the past hundred years will be more or less repeated. The shorter the outlook –and with short in this context Robeco refers to the five-year outlook being presented here– the more emphasis will be put on recent history.
A fair question is why it should be expected to see similar long-term, steady-state returns, even though the past hundred years can in no way be compared to the hundred to come. The simple answer, according to Robeco, is that the past hundred years have seen enough turmoil and volatility to be considered a good sample of possible hurdles that we will face in the next hundred years: wars, (hyper) inflation, natural disasters, booms, busts and financial crises – the world has had our share of turbulence. Yet underlying all this is Robeco’s conviction, which stems from their belief in the ingenuity of human beings, that we will realize equivalent returns. Robeco believes that mankind will continue to overcome complex and threatening situations. They trust that the drive of innovation and productivity gains will persist. Certainly, there will be setbacks as there have been in the past, but generally Robeco believes that growth, and with it returns on financial assets, will continue more or less as before.
You may access an Executive Summary of this report through the pdf file attached, and you may download the full report through this link.
