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European Frontier Markets: Focus on Romania Prior to its Presidential Elections

In September 2014 Global Evolution visited Romania to get better insight on whether there is any upside to the current slow growth environment in the coming quarters. With respect to the weak growth and low inflation Lars Peter Nielsen, Senior Portfolio Manager at the firm, was also interested in getting a stronger sense of the subsequent path of monetary policy. Furthermore he wanted to examine if the current IMF program is dead or if there is reason for optimism with respect to reactivating the program after it went off-track during the summer. Finally, the aim was to get a better sense of possible surprises in the presidential elections (1st round scheduled for 2 November), or if incumbent Prime Minister Victor Ponta is a certain winner.

During the trip Global Evolution met with Central Bank officials, government officials, IMF, World Bank, local banks and local asset managers. These are some comments by Lars Peter Nielsen on the key findings from this trip.

Recession in H1 2014

After a reasonably strong economic performance in 2013 growth has slowed dramatically in 2014 thereby leaving the country in technical recession in the first half of 2014 with two consecutive quarters of negative growth.

It is primarily investments that have taken a big hit in the last couple of quarters.

According to the Ministry of Finance we will see stronger public investments in the second half of 2014 as several projects co- financed with the EU will start coming online. Furthermore, the government has already announced that the “special construction” tax will be lowered again, which should help private investments as well. Finally private consumption is also expected to pick up. All that said it is unlikely that we will see a strong economic rebound and full year 2014 growth is likely to settle in the 1.5-2.0% range. For 2015 most market participants expect growth around 3%, which in our opinion would be a reasonable growth rate. However, we are also a bit skeptical since the government will have to tighten its fiscal stance further if it is to comply with the demands from EU.

Inflation running very low

Like most of Eastern Europe inflation is running very low and as for the rest of the region a lot has to do with declining food inflation, weak growth and deflationary pressure from the Euro zone. It is very difficult to see inflation in the short to medium term moving above the Central Banks target of 2.5% +/- 1%-point.

Expansionary monetary policy

The backdrop of weak growth and low inflation has seen the Central Bank pursuing a relatively expansionary stance which has resulted in a 725bps cut in the policy rate since the peak in 2008 of which 200bps have been cut since July 2014. Currently the policy rate stands at just 3%. The Central Bank will be very vigilant about the exchange rate and adjust the short term rate accordingly to secure a very stable EURRON in the 4.40 – 4.45 range. This means higher interest rates whenever there is pressure on the currency. The bank’s sensitivity towards the exchange rate is due to the high pass- through to inflation and the still relatively high level of FX denominated borrowing by households and companies. That being said we still believe the Central Bank is biased towards pushing rates lower whenever there is room for it.

IMF program off track

The current stand-by program (SBA) went off track in June when the IMF visited the country for the third review under the program. The disagreements are on some structural reforms, privatizations and not least uncertainties on the 2015 budget. The IMF is aware that it is impossible to make adjustments to the budget ahead of presidential elections in November so the fund has agreed to postpone negotiations till after the elections. From a funding perspective the program is not important but it is still a good anchor to have and it would be a negative signal if the program was cancelled. We think the program will come on track again even though the negotiations will be tough.

Politics – Victor Ponta most likely the next president

Current Premier Minister Victor Ponta remains favorite to win the presidential elections in November but it is not a given. Apparently the opposition candidate, Klaus Werner Iohannis, from the National Liberal Party is gaining ground and is now seen as a serious contender. Klaus Werner Iohannis has been the mayor of Sibiu since 2000 and is credited for turning Sibiu into one of the most popular tourist destinations in Romania. We don’t see the election as a real risk since either we will have more or less the status quo of Victor Ponta, albeit with changes to the government since Ponta can obviously no longer be prime minister, or we will have an even better outcome if Klaus Iohannis wins.

Valuations

Even though nominal yields have been on a long term downward path we still think that valuation is reasonably attractive since real rates have moved higher due to the very low inflation. That being said we are very much aware of a possible uptick in inflation later in the year and will react promptly to higher food inflation numbers.

The exchange rate also seems reasonably fairly priced if you look at long term REER trends with the current level very close to the 5 year moving average. Furthermore we believe the Central Bank will hold the currency very stable against the EUR in the 4.40 – 4.45 range for the remainder of 2014.

To conclude we are neutral on Romania FX vs. EUR but see further possible gains in the bond market during Q4, 2014. We will be very mindful for a possible uptick in food inflation that can put upward pressure on headline inflation and end the downward trend in nominal yields.

Lars Peter Nielsen, is Senior Portfolio Manager at Global Evolution.

Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Stragtegies in the Americas Region.

You may access the full report through the attached pdf file.

Credit Suisse Makes Changes in the Leadership of the Investment Banking Division

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Credit Suisse announced appointments to the Executive Board, changes to the leadership of its Investment Banking Division, and the appointment of a new CEO of Asia Pacific. These changes will take immediate effect.

Jim Amine and Tim O’Hara have been appointed to the Executive Board and will join Gaël de Boissard to head the Investment Banking Division.

Helman Sitohang will assume the role CEO of Asia Pacific.

Eric Varvel has decided to step down from the Executive Board and assume the role of Chairman Asia Pacific and Middle East Regions.

Gaël de Boissard, Jim Amine and Tim O’Hara will partner in leading the Investment Banking Division. Jim Amine will continue to have responsibility for the Investment Banking Department, while Tim O’Hara will continue to head the Equities business. Gaël de Boissard’s role remains unchanged. He continues to head the Fixed Income business and remains the CEO of Europe, Middle East and Africa and a member of the Executive Board. Jim Amine and Tim O’Hara will join the Executive Board and report directly to the CEO.

Helman Sitohang will assume the role of CEO of Asia Pacific, reporting directly to the CEO. He will also continue to retain his role as Head of the Investment Bank for Asia Pacific. APAC is the region with the highest economic growth and Credit Suisse is continuing to allocate additional resources to accelerate and maximize the growth opportunities in this region.

Eric Varvel will assume the role of Chairman Asia Pacific and Middle East with a primary focus on our most important clients and assisting senior management on strategy. Eric will step down from the Executive Board, but will continue to report to the CEO in his new role.

Urs Rohner, Chairman of the Board of Directors of Credit Suisse, said: “In our Investment Banking Division, Eric Varvel and Gaël de Boissard have been instrumental in adapting our business to the new market and regulatory environment. Jim Amine and Tim O’Hara have also been integral to the success of the division, with our Investment Banking Department and Equities businesses demonstrating strong results and great momentum. I believe that the combination of Jim, Tim and Gaël will provide the right partnership to drive the business forward.”

Brady Dougan, CEO of Credit Suisse, said: “Eric Varvel has done a great job as CEO of Asia Pacific and I believe will provide important continuity of management and with client relationships in the Chairman role. Helman Sitohang has been instrumental in the success we have achieved to date. Moving into the CEO role is a natural progression and I believe he, along with the strong management team we have in the region, will be able to produce excellent results, demonstrate growth and build on the impressive momentum we have in Asia Pacific.”

Composition of the Executive Board as of October 17, 2014
− Brady W. Dougan, Chief Executive Officer
− James L. Amine, Head of Investment Banking – Investment Banking Department
− Gaël de Boissard, Head of Investment Banking – Fixed Income; Regional CEO of EMEA
− Romeo Cerutti, General Counsel
− David R. Mathers, Chief Financial Officer and Head of IT and Operations
− Hans-Ulrich Meister, Head of Private Banking & Wealth Management and Regional CEO of Switzerland
− Joachim Oechslin, Chief Risk Officer
− Timothy P. O’Hara, Head of Investment Banking – Equities
− Robert S. Shafir, Head of Private Banking & Wealth Management and Regional CEO of Americas
− Pamela A. Thomas-Graham, Chief Marketing and Talent Officer and Head of Private Banking & Wealth Management New Markets

Regardless of Who Wins the Election, Brazil is Likely to go Through a Challenging Time in the Years to Come

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Steve Drew, Head of Emerging Market Credit at Henderson Global Investors, has provided a brief analysis on the first round of the Brazilian elections over the weekend. He believes the incumbent, Dilma Rousseff, will be re-elected president. He added that voters are split between more of the same – an incumbent promising investment in social programs and infrastructure, or the promise of fighting inflation and reform. No matter who wins the election, Brazil is likely to go through a challenging time in future.

Steve Drew, Head of Emerging Market Credit at Henderson Global Investors said:

“As expected, the results of the voting on Sunday did not produce a clear winner in the presidential election, taking the battle to a second round vote on October 26 between the incumbent, Dilma Rousseff, and her rival, Aécio Neves.

The runoff campaign will be a battle between opposing visions for development in Brazil. Opinions are divided as to which candidate will ultimately win the presidency. Voters are split between more of the same, with an incumbent president that is promising investment in social programs and infrastructure, and one that aims to fight inflation and spur economic growth with much needed reforms. The winner on October 26 will likely be the candidate who can persuade the third-placed Marina voters that their program is good for the future of Brazil. Many investors are hoping the pro-business Neves will implement market-friendly policies, fight inflation and usher in badly needed reforms aimed at spurring growth in the country. There is evidence that investors are currently long risk assets in Brazil with big capital inflows primarily from Russia, but also from crossover US accounts.

While a ‘Neves win’ would initially lead to risk-on sentiment in the markets, a ‘Dilma win’ would do the opposite, as investors perceive that reforms are off the agenda. However, even the risk-on mood may be temporary as the reality bites of how Brazil can re-engineer growth in a faltering economy.

While it is likely that, in the case of a ‘Dilma win’, Brazil’s sovereign credit rating could be downgraded to junk within 12-18 months, a ‘Neves win’ may only push the downgrade further down the line as growth projections for Brazil for either candidate are not great enough for a country fighting inflation to escape a downgrade.

The downgrade would have negative consequences for Brazilian companies, where even the country’s biggest asset, the quasi-sovereign Petrobras oil company, would find it more difficult to refinance its c.US$140bn of debt. The conditions for other companies would be even tougher.

In the case of a ‘Neves win’, the initial risk-on reaction would create investment opportunities, the best of which will likely be found in liquid instruments — taking a view on the appreciation in the currency or short-dated local real bonds. The price of Brazil’s external debt would also rally as credit spreads would contract.

However, any depreciation in the currency will be largely good for the corporate sector, giving companies room to maneuver in cutting prices to raise export volumes. Companies such as Fibria and Suzano (pulp and paper), and Marfrig (food processing) are currently trading quite rich to their fundamentals and could be among those benefiting from the drop in the real.

Regardless of who wins the election, and currently it looks more likely that Dilma Rousseff will be re-elected as president, Brazil is likely to go through a challenging time in the years to come. Given the poor prospects for growth, with inflation above target and the massive underinvestment in infrastructure, badly needed reforms will simply not be coming soon enough.

“From a risk/reward stance, we believe Brazil should remain an underweight position for the foreseeable future. There will be times to go long the market, but it should happen on an opportunistic and tactical basis”, concludes Steve Drew, Head of Emerging Market Credit at Henderson Global Investors.

Franklin K2 Alternatives Sicav Opens to International Investors

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Franklin Templeton Investments has announced that international investors can now access its first multi-manager, multi-strategy Luxembourg-registered Sicav fund focused on alternative investment strategies.

The fund, called Franklin K2 Alternative Strategies Fund, was soft-launched a month ago and follows a similar strategy to the US-registered Franklin K2 Alternative Strategies Funds.

Based in Stamford, Connecticut, the investment team consists of the fund’s co-lead portfolio managers David Saunders, co-founding managing director of K2 Advisors, Brooks Ritchey and Rob Christian, both senior managing directors, K2 Advisors.

The fund aims to combine Franklin Templeton’s top-down market views with low volatility and capital appreciation whilst providing a low correlation to traditional asset classes.

David Saunders commented: “In today’s volatile, low interest rate environment, many investors are looking for actively-managed investment solutions from established managers employing strategies that can help reduce volatility in unpredictable markets while providing attractive risk adjusted returns.”

Old Mutual GI Launches AR Fixed Income Team

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Old Mutual Global Investors will open an office in Edinburgh as part of the formation of a Fixed Income Absolute Return Team, which will launch its activities in 2015, including supporting a new range of absolute return fixed income products.

Russ Oxley has been appointed head of Fixed Income Absolute Return Team, and be joined by Huw Davies, Joshua Heming, Adam Purzitsky, Paul Shanta and Jin Wong. The new team members have previously worked at Ignis Asset Management.

Oxley will report to Julian Ide, CEO of Old Mutual Global Investors.

OMGI currently has a nine strong Fixed Income Team, headed by Christine Johnson, who reports to Stewart Cowley, investment director, Fixed Income and Macro. That team will remain in place.

Ide said: “This is a very exciting development for Old Mutual Global Investors. By adding the investment skills of this new team to our existing highly regarded team, we will have one of the asset management industry’s most powerful fixed income operations. I look forward to working with all of this invigorated team next year.”

The manager has made a number of appointments over the past couple of years as it targets a top five market position in the UK, as well as expanding into other markets.

“With this Setback, the Markets are Challenging European Politicians to Undertake Change”

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“Con este recorte, los mercados realmente están retando a los políticos europeos a acometer el cambio” — Neil Dwane, Chief Executive Officer of European Equity, Allianz GI. “With this Setback, the Markets are Challenging European Politicians to Undertake Change”

This last week has been tough for the markets. What began on the previous week with a correction in commodity prices has now moved to the stock markets. “Investors have realized that global growth is slowing down,” said Neil Dwane, Chief Investment Officer for European Equities at Allianz GI, in an interview with Funds Society. As pointed out by this expert, this situation was triggered by weaker-than-expected inflation data in China, and especially “the negative PPI data, which raises concerns of a serious scenario for commodities and growth, coinciding with the end of tapering”.

Thus, investors are reacting to a scenario of lower growth and rising interest rates. A combination that last week led to yields on government bonds in Italy and Greece reflecting new concerns about sovereign risk in certain countries of the Eurozone. Some truncated corporate transactions, such as the U.S. pharma AbbVie’s takeover bid on UK’s Shire Pharma, have tumbled an entire sector, “bringing some hedge funds down along the way with bulkier positions,” added Dwane.

“All these factors represent a setback, so maybe it’s time to reassess the positions on our portfolios” he explains, adding that technical factors have also helped to aggravate the situation short-term because up until this week US$20bn of the US$70bn which North American investors had assigned to the European stock markets in recent years, had already flowed out, “but surely last week there were further outflows.”

If before this week, European equities were cheap, both in absolute terms and especially in relative terms to U.S. equities, now they are even cheaper. Dwane points out a number of factors to consider when allocating assets to European equities:

AQR (Asset Quality Review)– in late October, the ECB has to give its verdict on the quality of Eurozone banks. Until the last LTRO auction, this was never considered a very important event as the ECB had not been aggressive with the banks, “which is negative, because the banks need to recapitalize and if they don’t, nothing can change in Europe.” However, Dwane believes that after the banks’ lukewarm reception of the last auction, the ECB will be harder with European banks, forcing them to “ask for capital, which is something that they really need, so that within a year they will be ready to give credit,” thus helping the European economy to grow. So, something that at first may seem negative for banks and for the market as a whole, would be positive in the long term, and will provide an an opportunity to enter the market at more attractive prices.
Changing political disposition– this is an additional source of instability for Europe. Until now, European politicians have not taken the need for change seriously. “Countries like Spain and Ireland have taken measures, but others like Italy are still evasive. With this setback, markets are really challenging politicians to undertake change. While in the short term this means more uncertainty, if there is evidence of a serious political commitment from countries like Italy, France, and even the ECB, the European stock market could rally strongly.
Weak Euro –This is the factor which undoubtedly provides greater support for European corporations, their profits, and therefore their share price. “Unlike the detrimental effect of a stronger dollar on emerging markets, which see a rise in both the cost of the goods they need to import, and the cost of refinancing their debt, for Europe, a weak Euro against the dollar represents an extensive competitive advantage for their companies.” Dwane highlights that the effect of a weaker Euro will start to show up in corporate profits after a while, but even if it comes with a time lag the markets will welcome it. He adds that if you look at historical data, the average dollar rally is usually 20%, in this case it only accumulates a 9% rise so statistically, it could continue. “Probably in a few months we will start to see recommendations from analysts advocating buying Adidas and selling Nike, due to the effect of the dollar,” he added as an example.

Considering the risks and opportunities in European equities, Dwane concludes by pointing out not to lose sight of the attractive valuation of many of the European markets relative to the U.S. Using the cyclically adjusted PE ratio, and not even considering the market drop in recent weeks, the U.S. trades at a PE ration that exceeds 25x, while Germany, Netherlands, France, UK, Spain, Ireland, Italy, Portugal, and of course Greece, are clearly trading below the historical average for this ratio, which is in the vicinity of 17,5x.

This, Dwane notes, “does not have to result in a better performance of European markets over the U.S. in the coming months, but statistically there is a high probability that the annual returns of the U.S. market over the next decade will be around 2%, while that of Greece, would be of 15%.”

Allianz GI suggests two strategies for partaking in this future return given the current market environment: first, quality growth. Dwane explained that “there is corporate growth in Europe, but you have to know where to find it; the current environment is best for stock pickers.” On the other hand, a good argument in times like these is investing in companies with high dividend yields. To begin with, they receive the support of the global search for yield, and currently they offer a higher yield than that of European corporate bonds. In addition, companies that pay dividends tend to behave with less volatility than those that do not.

Oppenheimer Operations Expand Across Multiple Sectors in New York, San Francisco and Houston With Six New Hires

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The Investment Banking division of Oppenheimer & Co. Inc., a unit of Oppenheimer Holdings, is pleased to announce six new executive hires to the healthcare, rental services and logistics, energy, technology and real estate teams.

The new hires include: Alexander Lim, Managing Director – Healthcare; Neha Motwani, Executive Director – Healthcare; Fred Larsen, Managing Director – Rental Services and Logistics; Ramzi Nassar, Managing Director – Oil Field Services; Blake Williams, Managing Director – Hardware and Emerging Technology; and Steven Cheng, Executive Director – Real Estate.

The recent hires underscore the firm’s recent growth, particularly in investment banking. Oppenheimer’s capital markets business segment, including investment banking, generated $150 million through the first six months of 2014, a 13% increase over last year, according to the company’s most recent quarterly release.

“We are very pleased that our multi-product, multi-sector focus is not only resonating with our clients, evidenced by our recent growth, but is also attracting such talented bankers to our platform,” said Bruce McCarthy, Managing Director, Co-Head Investment Banking and Head of Mergers & Acquisitions. “We are very excited with the addition of these senior bankers,” said Marc Thompson, Managing Director, Co-Head Investment Banking and Head of Technology. “They each bolster our ability to deliver our middle-market clients a combination of tremendous domain expertise and Oppenheimer’s best-in-class service offerings.”

About the profiles…

Alex joins the firm from Lazard Freres, where he was responsible for origination as well as leading client overage and execution for companies in the biotech, diagnostics and life science tools sector. He will continue his focus on the Healthcare Life Sciences sector and is based in Oppenheimer’s San Francisco office.

Neha joins Oppenheimer from Stifel, where she covered companies in the life sciences sector. During her 15-year career, she has been involved in more than 70 equity and financial advisory transactions. She continues to focus on Healthcare Life Sciences and works out of the company’s New York office.

Fred joins Oppenheimer from Henley Associates, an independent financial advisory firm that he helped found. Before that, he was at Piper Jaffray where he was responsible for global transaction origination, execution and client coverage for middle market transportation and logistics firms. He joins Oppenheimer’s Rental Services & Logistics group and is based in New York.

Ramzi joins the company from the Global Energy Investment Banking of Citigroup Global Markets. He previously worked at an engineering firm and was General Manager and President of eLinear Solutions Middle East FZ in the United Arab Emirates. Ramzi began his investment banking career at Morgan Stanley, and then worked at CIBC World Markets’ M&A Group. He joins Oppenheimer’s Energy group and will continue to focus on the Oil Field Services sector out of Oppenheimer’s Houston branch.

Blake joins Oppenheimer’s Technology group from Cowen, where he was responsible for client relationships with mid-cap domestic and international companies in the semiconductor, capital equipment, emerging technology and optical sectors. Prior to Cowen, Blake spent nine years with Piper Jaffray as a Managing Director in the Technology, Media and Telecommunications Group and as Head of Semiconductor, Component and Communications. He is now based in San Francisco.

Steve moves to Oppenheimer from Big Ocean, a boutique investment banking firm. He began his investment banking career at RBC Capital Markets in 2005. He will continue his focus on the Real Estate Investment Trust (REIT) sector and work out of the New York office.

Oppenheimer & Co. Inc. (Oppenheimer), a principal subsidiary of Oppenheimer Holdings Inc. and its affiliates provide a full range of wealth management, securities brokerage and investment banking services to high-net-worth individuals, families, corporate executives, local governments, businesses and institutions.

Wells Fargo Advisors Miami Recruits a Team of Four Advisors from Merrill Lynch

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Wells Fargo Advisors Miami ficha a un equipo de cuatro asesores de Merrill Lynch — Wells Fargo Building in downtown Miami. Photo: Daniel Christensen. Wells Fargo Advisors Miami Recruits a Team of Four Advisors from Merrill Lynch

Wells Fargo Advisors Miami International has hired a team of four new advisors for its high net worth families division (HNW); a team which hails from Merrill Lynch, and which will join the company’s international complex in Miami, as was reported by Wells Fargo through a notice published in the Miami Herald, the local newspaper.

Eugene Montoya and Francisco de la Cámara each join the firm as Managing Director of Investments, while Mario Baro joins as Senior Vice President of Investments and Kevin Montoya as Financial Advisor.

According to the company, these four professionals join Wells Fargo Advisors in order to serve the bank’s clients from their international complex in Miami. Wells Fargo has over 100 years’ experience advising HNW families.

HSBC Private Banking Hires Vicente Garcia as Head of Mexican Market for Switzerland and Luxembourg

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HSBC Private Banking contrata a Vicente García como market head México para Suiza y Luxemburgo — Photo: Restu20 . HSBC Private Banking Hires Vicente Garcia as Head of Mexican Market for Switzerland and Luxembourg

According to information passed to Funds Society by sources close to the appointment, HSBC Private Bank has hired Vicente Garcia as the institution’s Head of Mexican Market in Geneva and Luxembourg, a post which he took up a few weeks ago from And Private Wealth of Andbank group.

With over 15 years experience in the Mexican market, living in Mexico during six of those years, he has extensive experience in financial markets, products, and investment and estate planning, as shown by his Linkedin profile.

From1999 until 2011, Vicente Garcia worked between Geneva and Mexico as private banker in Santander Private Banking, where he held the positions of Senior Relationship Manager and Team Leader for Mexico’s table. He began his career as a trader at Banque Kankaku and Cogetex, where he worked in Geneva for two years.

Garcia, CFA, has a degree in International Relations from The Graduate Institute for International Studies (IUHEI).

Janus Capital Group Agrees to Acquire Exchange Traded Product Provider VelocityShares

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Janus Capital Group has announced it has agreed to acquire VS Holdings Inc., the parent company of VelocityShares, LLC, a provider of institutionally-focused exchange-traded products (ETPs), including exchange-traded funds. VelocityShares is focused on developing instruments that enable investors to manage risk and has been delivering innovative products for a wide range of global investors since its launch in 2009.

The transaction includes an initial upfront cash consideration of $30 million and is expected to close in the fourth quarter of 2014. Closing of the transaction is subject to certain conditions, including regulatory approval.

“This acquisition positions Janus within the rapidly growing rules-based and active ETF universe, enhancing the customized solutions we can provide to our clients and enabling us to work with the growing segment of financial advisors and institutions focused on these instruments,” said Richard M. Weil, Chief Executive Officer of Janus Capital Group. “Today’s announcement is a continuation of our strategy of intelligent diversification, adding new talent to support innovation and smart solutions for our clients. We are excited to have the VelocityShares team join our organization, and we are confident their expertise and product innovation capabilities will be beneficial to our clients and shareholders.”

VelocityShares was founded in 2009 and is managed by Nick Cherney, Richard Hoge and Steve Quinn. VelocityShares’ initial growth was driven by the development of exchange-traded notes in the volatility and commodity space. The company quickly developed a market leading position in tactical trading products serving short-term investors and traders by focusing on helping clients develop sophisticated trading strategies and volatility management solutions. These productswill continue to be distributed by the VelocityShares team through its existing distribution channels.

VelocityShares has more recently leveraged its expertise to launch a second business around innovative and intelligent ETFs for diversified long-term investment portfolios, currently focused on volatility hedged equities and equal risk weighted solutions. These ETF offerings, along with future product innovation, offer significant synergies between VelocityShares and Janus.

VelocityShares is headquartered in Darien, Connecticut and employs 11 professionals, many of whom are ETF industry veterans and have extensive product development, product structuring and sales experience. As of September 30, 2014, it has raised $2 billion in assets.

“Janus’ global distribution network and commitment to product development creates very unique opportunities to deliver institutional quality ETFs to a wide range of investors,” said Nick Cherney, Co-Founder and Chief Investment Officer of VelocityShares. “Our combined company will be well positioned to grow our ETP business and continue to be a leading provider in the market place.”

Janus Capital Group Inc. was advised by Wells Fargo Securities LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and VS Holdings Inc. was advised by Freeman & Co. Securities LLC and Stoel Rives LLP.