Foto: AidaNeus, Flickr, Creative Commons. MetLife y el fondo soberano noruego compran la torre de One Beacon Street en Boston
MetLife and Norway’s sovereign wealth fund Norges Bank Investment Management (NBIM) have announced that they have bought the One Beacon Street office building in Boston for approximately $561 million. This is the second property investment in Boston and the fourth overall for the joint venture, which now has a real estate portfolio with a gross value of approximately $2.4 billion.
MetLife and Norges Bank Investment Management bought the 34-story office tower from a joint venture of Beacon Capital Partners and insurer Allianz. MetLife will own 52.5 percent of One Beacon Street and be the managing member, while Norges Bank Investment Management will own the remaining 47.5 percent.
Located in Boston’s financial district, One Beacon Street is LEED Platinum certified and offers more than one million square feet of office space. Built in 1973, One Beacon Street is currently about 85 percent leased, with current tenants including the Massachusetts Housing Finance Agency, the University of Massachusetts, the University of Massachusetts Building Authority, Standard Life Investments (USA) Limited and JPMorgan Chase Bank, National Association.
“One Beacon Street in Boston adds a high-quality asset in a core market to our joint portfolio with Norges Bank Investment Management,” said Robert Merck, senior managing director and global head of real estate investments for MetLife. “Our partnership with the world’s largest sovereign wealth fund is built on a strategy of providing first-rate asset management and of investing for the long-term to bring strong returns to our stakeholders.”
The three other properties in the joint venture’s portfolio are: One Financial Center in Boston; District Center (formerly the Thurman Arnold Building) at 555 12th Street, NW, in Washington, D.C.; and 425 Market Street in San Francisco.
Last Wednesday, the SEC approved amendments on money market fund (MMF) rules. Seth Roman, a portfolio manager at Pinoneer Investments who specializes in the sector, summarized the areas of reform as they relate to institutional and retail money market investors. Mike Temple, Senior VP, Director of Credit Research, Pioneer Investments shares the expert’s view in followPioneer.com:
The SEC’s new rules require prime institutional money market funds to float their NAVs and to use liquidity fees and gates on a discretionary basis. Meanwhile, prime retail money market funds would be able to maintain their stable NAV but would be subject to liquidity fees and gates.
Since the floating NAV issue has been in the money market universe for some time, Wednesday’s SEC vote was not a surprise. It will take time to see the full impact, because full implementation is two years away. Nonetheless, we can see money leaving institutional funds and going any number of places . . . government money market funds, ultrashort funds and bank deposits. The choice of venue obviously depends on investor preferences and risk tolerance.
Below is an outline of the SEC’s reform changes to money market funds.
*Government MMFs are exempt from liquidity fees and gates. However, they could voluntarily opt into them, if previously disclosed to investors.
The SEC changed the rules for institutional money market funds in an attempt to prevent a run – it does not want another Lehman scenario. It appears that the SEC is working to reduce the effects of “shadow banking” (i.e. money market funds) on the market and drive more assets into the hands of banks. This, in turn, allows regulators to have more control of the financial system.
Driving Investors to Change Strategies
By tightening money fund rules, the SEC is essentially driving investors to change their cash strategies. As I mentioned above, the path to take is up to the investor. They have numerous options to choose from, and it’s likely institutional money market assets will shift into a range of other strategies. Investors looking to minimize risk for safety of principal may go with bank deposits, despite their low yields. But other investors who want yield may turn to ultra-short strategies, which come with slightly higher risks but potentially higher returns.
I don’t see a reduction in liquidity. I see a change in how liquidity is distributed throughout the market.
followPioneer.com is an investment insight blog written by investment professionals at Pioneer Investments.
The latest update of the BlackRock Sovereign Risk Index (BSRI) details quarterly movers in the 50-country index and highlights Argentina’s position. Argentina’s BSRI score dipped as the IMF slashed the country’s long-term GDP forecasts, hurting its Fiscal Space score.
A history of defaults and political upheaval have been the country’s Achilles’ heel – and have dragged Argentina’s overall score lower as the country negotiates with holdout creditors who have rejected its debt restructuring. Weak Willingness to Pay is the main drag on Argentina’s overall score.
Also, revisions to the IMF’s long-term GDP growth forecasts resulted in some large ranking shifts in the quarter. Belgium (up four notches in our 50-country index), UK (up three), Israel and Netherlands (both up two) benefited from upward revisions to their GDP growth forecasts. Spain had the biggest BSRI score gain (and its ranking rose four notches to 38th) due to an improved IMF assessment of its net debt position.
Brazil (down four to 31st) fell the most in the rankings (along with China). Brazil’s debt is becoming more front- loaded. Short-term debt rose to 21% of GDP from 12% a quarter earlier, IMF data show.
China fell four notches to 23rd on a modest decline in its BSRI score. China’s score is closely bunched together with that of countries such as UK, Poland and Israel. Russia dropped three spots due to a decline in its perceived Willingness to Pay and a downward revision to its growth prospects against a backdrop of rising tensions with Ukraine.
Drawing on a pool of financial data, surveys and political insights, the BSRI provides investors with a framework for tracking sovereign credit risk. The index uses more than 30 quantitative measures, complemented by qualitative insights from third-party sources.
The index breaks down the data into four main categories that each count toward a country’s final BSRI score and ranking: Fiscal Space (40%), Willingness to Pay (30%), External Finance Position (20%) and Financial Sector Health (10%). Fiscal Space includes metrics such as debt to gross domestic product (GDP), the debt’s term structure, tax revenues and dependency ratios. Willingness to Pay measures a government’s perceived effectiveness and stability, and factors such as perceived corruption. External Finance Position includes exposure to foreign currency debt and the state of the current account balance. Financial Sector Health gauges the banking system’s strength.
. Hispania Acquires Four Office Buildings and Two Hotels in Madrid
Hispania Activos Inmobiliarios, through its subsidiary Hispania Real SOCIMI, has acquired from IDL Group a portfolio consisting of four office buildings and two hotels, all of them located in Madrid.
The transaction has amounted to €42.15 million, fully disbursed with Hispania’s own funds.
The acquired office buildings are located in the surroundings of the A1 highway, in the north of Madrid, and have a gross leasable area of 14,547 square metres, plus 387 parking spaces.
All four buildings are of recent construction, have an average occupancy of 71% and are located within consolidated business complexes and areas with ample growth potential. The acquired assets are the Arcis Building and Talos Building -both situated in Las Tablas and nearby the new BBVA headquarters-, a building at Av. Bruselas, in Arroyo de la Vega, and a fourth one situated within the complex Poeta Rafael Morales, in San Sebastián de los Reyes.
Regarding the hotel portfolio, it includes the NH Pacífico, a 3* hotel with 62 rooms in Avda. Ciudad de Barcelona, and NH San Sebastián de los Reyes, a 3* hotel with 99 rooms and located within the Poeta Rafael Morales business complex. Both hotels are currently operated by NH Hoteles under long-term rental contracts.
According to Concha Osácar, Board Member of Hispania, “thanks to this acquisition, Hispania continues consolidating its presence within the office segment by investing in high-quality office buildings in the secondary business centre of Madrid as well as strengthening its hotel portfolio with two hotels operated by the renowned Spanish chain NH Hoteles”.
With this transaction, Hispania has already invested €262.8 million out of the €550 million raised in its IPO on March 14th, and is building a portfolio which already includes a gross leasable area of 84,307 sqm in office space -predominantly in Madrid and Barcelona-, 213 dwellings in Barcelona and 3 hotels, one of them in Marbella and the other two in Madrid.
Ignacio Saldana, Afore XXI Banorte’s CIO, during the interview. Courtesy photo. Afore XXI Banorte Expects to Award its Commodities Mandate in September and Fund its Equities Mandates
As explained by Ignacio Saldaña, Afore XXI Banorte’s CIO, during an interview with El Financiero TV picked up by Funds Society, Afore XXI Banorte is about to fund its equities mandate, something they wanted to do in the month of September, but which will most likely be delayed until the end of the year.
Saldaña explained that, in this regard, they are working with both managers and with its custodian, State Street, in order to achieve it. Afore XXI awarded the European equities mandate, to Schroders and BlackRock, last January. These management companies will receive 1.75% of the assets under administration, which according to Consar’s figures from last December amount to 9,632 million pesos (US$725 million).
“We are working closely with the two management firms so that we can be ready in due time and proper form to fund the two equity mandates before closing this year,” he said.
Saldaña also referred to the commodities mandate, a mandate for which they applied to eight mandataries, including four which have already been shortlisted, but which he preferred not to disclose at this stage. 3% of assets managed by the afore go to this mandate, a volume for which they will need at least two asset managers. In a couple of months they should be finished with the selection process and will announce the names of the selected asset managers.
Afore XXI Banorte manages 25.9% of the total resources of the afores, ranking it as the largest afore by volume in the market.
Saldaña also referred to Consar’s role and to how the regulator has increased the afores’ investment capacity in foreign instruments.
As to whether they believe Consar will make modifications to the investment regime and where they would like to see these changes, Saldaña highlighted that the regulator has continued to make changes to the regime. “Our system has expanded constantly. The portfolios are acquiring quite a substantial size as a percentage of our domestic product and the size of our market,” he added, while stressing that hence the importance of a growing portfolio diversification.
Therefore, he said, it is becoming increasingly difficult to manage such portfolios which also grow globally. “We believe that the authority will continue to expand the diversity in this regard,” he said. “Bit by bit we gradually increase the diversification of our portfolios, which is essential for when things get complicated.”
Afore XXI’s Investment Committee has approved to have 9% of its assets under mandate, which currently represents about US$4.05 billion by the end of 2015. In this sense, the manager stressed that the key is to “increase the diversification of portfolios to sail ahead in difficult times.”
As for his plans for higher yields in an environment of low rates, Saldaña reiterated that the key is “to continue to diversify our portfolios” and recalled that when the current system started, it was launched with a single bond fund, which led the way to a second fund with some equity, until they gradually evolved to four funds.
“The regulatory authority has been expanding the investment regime and the way of obtaining higher yields is to maximize our investment regime, which is one of the plans which always exists in Afore XXI Banorte. Our focus is on increasing investment mandates with foreign managers. The afores have to participate in the reform environment which the country is experiencing. We cannot be left aside and we must find a way to get into power projects, infrastructure, and technology. We have to find a way to capitalize so that the savings of Mexican citizens may benefit,” said Saldaña.
Natixis Global Asset Management (NGAM) has announced four new appointments to its Portfolio Research and Consulting Group. Julien Dauchez joins as Consultant, Xavier Lassau and Narimane Agha join as Junior Analysts and Graham Brewster is relocated from the Boston Portfolio Research and Consulting Group; all four will be based in the firm’s London office and will report to James Beaumont, head of the London Portfolio Research and Consulting Group.
The Portfolio Research and Consulting Group was first launched in the US in 2011 and has since grown to a team of 30 people in the US and the UK bringing financial advisers an independent perspective on their model portfolio allocations and helping them build more durable portfolios for their clients. The team brings advanced analytical capabilities derived from sophisticated, institutional grade software to help advisers improve the way they create and manage client portfolios. Their analysis focuses primarily on risk, including identifying and qualifying risk, developing a risk budget and understanding risk exposures to improve diversification with a goal of achieving better returns with lower overall volatility.
Dauchez, who brings sixteen years’ of investment experience and significant expertise in creating financial solutions for institutional investors, will focus on expanding the group’s activities in France, Switzerland, Luxembourg and Belgium as well as among institutional investors. Prior to joining NGAM, Dauchez ran his own consultancy firm and was a Director at Barclays Capital where he worked on delivering cross asset fund solutions and quantitative investment strategies for private banks and pension funds in Europe and the US.
Brewster worked for 3 years with the US Portfolio Research and Consulting Group and he joined the London team to help deliver a consistent global service to advisers and their clients across the globe. Lassau joins from Amundi in Paris where he was a quantitative risk analyst and Agha joins from Natixis AM, also in Paris, where she worked as a quantitative analyst in the risk measurement team.
Of the appointments, Beaumont commented “As concerns escalate over the state of investors’ retirement pots, the role of the financial adviser has never been more crucial, and it is the responsibility of asset managers to ensure that the adviser community is fully equipped. We are continuing to expand our portfolio analysis capabilities to provide advisers with the tools they need to build portfolios that meet their clients’ long term investment objectives.”
Foto: ING Berrrio, Flickr, Creative Commons. Los ETFs: el gran desconocido del inversor retail/wealth
AltaVista Research, a boutique research firm dedicated to the fundamentally-driven analysis of ETFs, has announced the expansion of its coverage universe to include Fixed Income ETFs. This new coverage will help investors compare bond funds as well as position their portfolios for potential increases in interest rates.
Beyond basic fund information such as issuer breakdown, credit quality, and performance, AltaVista’s Fixed Income ETF coverage is the first and only analysis to include rate sensitivity analysis and default-adjusted yield to maturity, which helps investors determine whether they are being adequately compensated for higher risks of lower-credit quality issues.
Users can access this new analysis through the ETF Research Center, the online portal for financial advisors and individual investors to access AltaVista Research’s ETF analysis.
The launch of coverage includes 30 of the most widely held bond funds across 6 categories, accounting for about $195 billion in assets, or more than 75% of all fixed income ETF assets. Together with existing coverage of equity funds, subscribers can screen, analyze, and construct portfolios from among 835 ETFs with more than $1.5 trillion in assets.
“As with equity ETFs, we conduct a fundamental analysis of each fund’s underlying constituents. For fixed income funds, this allows us to estimate, for example, the likely change in a fund’s price in response to changes in interest rates, based on the duration and convexity of each security in the fund. We think this information is quite useful to financial advisors trying to position clients’ portfolios for an eventual increase in interest rates,” explains Michael Krause, President and founder of AltaVista Research.
Foto: epsos.de, Flickr, Creative Commons. Las boutiques tienen mejor imagen de marca que los gigantes de la gestión patrimonial
Boutique wealth shops carry a much higher brand cachet than bigger firms among multimillionaires, according to a recent survey by the Luxury Institute. While Rockefeller Wealth Management rose to the top of the list, several of the biggest firms, including Merrill Lynch and UBS Private Wealth Management, continued an ongoing descent toward the bottom.
In the study, the Luxury Institute asked multimillionaires with an average net worth of $15 million and average annual income of $800,000 to evaluate wealth firms on factors including product quality, exclusivity, social status and ability to deliver special client experiences, and assigned firms a score based on the responses.
Rockefeller Wealth Management, a New York-based multi-family office, topped the list of highly ranked wealth managers. Coming second was Atlanta-based Atlantic Trust Private Wealth Management. Convergent Wealth Advisors was a close third, followed by First Republic Private Wealth Management and Bessemer Trust.
“Consumers are opting for boutique firms,” says Luxury Institute CEO Milton Pedraza. “Wealthy consumers really value relationships and the smaller boutique firms really deliver.”
Some of the biggest firms meandered at the bottom or sunk lower. Merrill Lynch tumbled to last place out of 39 firms, while UBS Private Wealth Management came in second to last. Bank of America, Goldman Sachs and Charles Schwab rounded out the bottom five.
The brand reputation problem facing some of the largest firms is partially driven by legal and regulatory woes and other negative press coverage some of the brands attracted since 2008, Pedraza says. “Any time you have news that’s a negative in the media, these firms are going to get hit,” he says. “The larger firms took a beating.”
Other big brands, including, Citi Private Bank, Barclays Wealth, HSBC Private Bank and Wells Fargo also ranked in the bottom half of brands.
The rankings reflect general wealthy individual perceptions of overall brands, rather than specific client experiences, Pedraza ways. While the specific rankings tend to vary from year to year, quartile placement remains relatively stable, he says. This year’s results continue an ongoing trend of boutique wealth shops rising in the rankings and wirehouses and bigger firms sliding lower, he says. While dropping slightly from its number three spot in 2013, Bessemer Trust made the top five list several years in a row. Brown Brothers Harriman, which took the top spot last year and in 2012, tumbled off the top five list. Northern Trust, Vanguard Personal Investors and J.P. Morgan Private Wealth Management also fell out of the top five.
Boutique shops have an advantage over larger firms when it comes to creating a connection with wealthy investors, says Linda Beerman, chief fiduciary officer and head of wealth strategies for Atlantic Trust. “Our clients feel they have an exclusive relationship with their client service representatives,” says Beerman. “It’s really a high-touch, client-service driven model.”
Offering unique experiences and hosting events is one way Convergent Wealth Advisors positions itself as a luxury brand, says Douglas Wolford, president and chief operating officer for Convergent Wealth Advisors. “Wealthy people can find any number of people who are good investors, but what most wealthy people want is an experience,” Wolford says. “Boutiques provide that experience better than big companies.” “We focus on trying to provide clients with experiences that money can’t buy,” says Wolford.
Such experiences go a long way in attracting wealthy clients and enhancing the firm’s reputation as a luxury brand, Wolford says. “Convergent is a luxury brand and we take care to protect that as part of our image,” he says. And that image has contributed to client development, according to Wolford. Convergent Wealth Advisors has seen its Independence by Convergent unit, which caters to investors with between $1 million and $10 million in assets, grow in recent years, driven in part by brand perception, Wolford says. That division has added about 300 new high-net-worth clients over the past two years.
Overall, wealthy individuals are apt to place a greater degree of trust in smaller, boutique firms, says Pedraza. For brands at the bottom, “There’s only up they can go,” Pedraza says.
Foto: "Guvernør Joko Widodo og statsråd Trond Giske" por NHD-INFO. Indonesia: una democracia mayor de edad
The official results from the Indonesian presidential elections confirmed that Joko Widodo (Jokowi) won with a convincing margin. Wim-Hein Pals, Head Emerging Markets Equities at Robeco, considers this a positive development but will wait for concrete signs of structural reforms before changing its neutral weight in Indonesia.
“Following Jokowi’s election, we expect the market’s focus of attention to shift to the coalition-building talks and the possibility of a near-term fuel price adjustment. As for the former, it is important to watch whether Golkar will switch allegiances, or if a large number of its party members join Jokowi. This would be a positive for reform momentum as it would make it easier for the coalition to pass laws in parliament”, highlights Pals in a report published by Robeco.
Cutting fuel subsidies is urgent
The second topic to watch is a possible fuel price adjustment. Fuel subsidies are the most urgent challenge. The recently revised fiscal projections and proposals to limit subsidized fuel sales confirmed that fuel subsidy costs would far exceed budget targets. The revised fiscal deficit target for this year is 2.4% of GDP, from the budgeted 1.7% of GDP. Energy subsidies, which were originally targeted below 3% of GDP, are now officially projected at 3.5% of GDP.
Maintain Indonesia’s neutral weight
According to the report, Robeco Emerging Markets Equities will remain neutral in Indonesia for now, for three main reasons:
A lot of the good news, i.e. a Jokowi win, has been priced in after an enormous rally since the start of 2014. This makes the market slightly overvalued in their opinion based on price/earnings and other valuation multiples.
Jokowi now has to deliver on important issues, such as infrastructure developments and cutting fuel subsidies. There is therefore an ‘execution risk’ as far as his policy is concerned.
Indonesia’s macro situation is not bad (not part of the so-called fragile five family anymore), but it still has a twin deficit. Albeit manageable, a fiscal deficit and a deficit on the current account remain.
You may access Robeco’s Emerging Markets EquitiesTeam full report on Indonesia through this link
Foto: Ennor, Flickr, Creative Commons. Competencia fundamental para los equipos de ventas de las gestoras en 2016: adaptación al cambio
Investors worldwide are caught between a desire to achieve greater investment returns and an aversion to taking risk. To help individuals overcome these traditional investment challenges, Natixis Global Asset Management has announced a commitment to fund a three-year, $1 million research project at the Massachusetts Institute of Technology focused on investor behavior and personal benchmarks to be led by industry thought leader Andrew W. Lo, Ph.D., Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management and director of the Laboratory for Financial Engineering (LFE) where the research will be conducted.
In addition, Natixis will provide Lo and LFE researchers with access to data from its Durable Portfolio Construction Research Center’s global surveys of individual investors, financial advisors, and institutional investors, now in their fifth year and containing responses to more than 500 survey questions by more than 30,000 participants.
“The research we’re funding at MIT will lay the foundation necessary to revolutionize traditional investment strategies designed to help investors build better portfolios and increase their chances of long-term success,” said John Hailer, chief executive officer of Natixis Global Asset Management in the Americas and Asia. “Our firm has been on the forefront of innovative strategies for many years, advocating for a durable portfolio construction model with a recently added focus on helping investors develop a personal, outcome-based approach to achieve success. It’s time to introduce a new paradigm for investing.”
With almost $900 billion in assets under management, Natixis is one of the world’s largest investment companies and was named the #1 fund family for 2013 performance in the annual Barron’s/Lipper Fund Family Ranking.
This new research program will begin by studying the industry practice of using an index as a benchmark and developing a more modern approach to benchmarking based on an individual’s unique circumstances as well as current market dynamics. As part of this effort, LFE researchers will be developing algorithms to mimic irrational but common investor behavior (e.g. buying high, selling low, and moving to cash for extended periods of time) in an attempt to quantify the systematic mistakes made by investors. This will lead to the third phase of the research involving the creation of new customizable benchmarks and indexes that adapt to changing market conditions and behavioral challenges.
“The Holy Grail of developing automated, customized processes for making better investment decisions is not unique to our times or the financial industry,” said Lo. “But what is unique is the confluence of breakthroughs in financial technology, computer technology and institutional infrastructure that, for the first time in the history of modern civilization, makes automated personalized investment management a practical possibility.”
MIT Sloan Prof. Lo is the Director of the MIT Laboratory for Financial Engineering, a partnership between academia and industry created to drive advances in capital markets, risk management, and financial technology research. He is also a Principal Investigator at the MIT Computer Science and Artificial Intelligence Laboratory and an affiliated faculty member of the MIT Department of Electrical Engineering and Computer Science. “Many companies and experts have been talking about the need for change for years now,” said Lo. “I’m grateful to Natixis Global Asset Management for taking on this challenge by investing in research designed to benefit investors globally.”
Outside of academia, he is the founder, Chairman and Chief Investment Strategist of AlphaSimplex, a Cambridge-based investment advisor focused on the dynamic relationship between risk and return in the financial markets. The firm manages more than $4 billion in assets for institutional and mutual fund investors.
The $1 million grant will be made to MIT as a part of the Natixis Global Asset Management Durable Portfolio Construction Research Center’s ongoing commitment to providing investors, financial advisors and policymakers with valuable insights to assist all investors over the long term.
