BTG Pactual is looking for new talents for its trainee program. Candidates can be either Brazilians or foreigners, with a degree in Business Administration, Accounting, Economics, Math, Engineering and other sciences and technology, and must have graduated between June 2012 and December 2014. Candidates must also be fluent in English and Portuguese.
BTG Pactual is the leading investment bank in Latin America, with over 2,800 employees working at 19 offices in Latin America (Brazil, Chile, Peru, Colombia and Mexico), the US, the UK and China. In 2013, it was elected the Most Innovative Investment Bank in Latin America by The Banker and the Best Investment Bank in Brazil and Chile by World Finance.
In selecting candidates, those individuals more aligned with the bank’s culture stand out. BTG Pactual prioritizes identification with the values of the Bank over prior technical knowledge. Candidates who show initiative, focus on results, a long-term vision, an entrepreneurial spirit and determination are likely to receive a better evaluation. The apprenticeship experience at the Bank is based on day-to-day activities and candidates must be able to deal with managing multiple tasks.
The selection process includes online tests, as well as group dynamics and interviews with the HR area, managers and partners of the Bank. The job openings are for the São Paulo and Rio de Janeiro offices, which means those approved must be willing to live in either of these two cities. This edition of BTG Pactual’s Trainee Program features 40 job openings.
The program lasts for one year, starting in January 2015. During this period, trainees will undergo job rotation, meaning they will work in up to three different areas of the Bank. Job rotations occur every 4 months and individual performance will be assessed at the end of each period. Trainees will be closely monitored by the HR team and by the managers, and will receive a plan of technical and behavioral training throughout the Program. The technical training sessions are developed internally in partnership between HR and the business lines. Partners, associates and other senior managers of the respective areas are responsible for organizing these sessions. In addition to a salary, BTG Pactual offers trainees a health plan and restaurant/supermarket vouchers.
As an institution based on meritocracy, trainees may be retained on a full-time basis at the end of the program, in accordance with their performance during the period. This is the sixth edition of the trainee program and the retention rate of trainees usually surpasses 95%.
CC-BY-SA-2.0, FlickrFoto: Petr Dosek. No hay burbuja en la deuda high yield europea pero los inversores deben permanecer alerta
There is much talk at present about the European high yield market and whether the supposed bubble is about to burst.
Investors have enjoyed a stellar five year performance since the financial crisis. The BofA Merrill Lynch European High Yield Constrained index returned 165%, outperforming the stock market by over 40% (FTSE World Europe index). Spreads on the BofA Merrill Lynch European High Yield Constrained index have tightened more than 1700 basis points to approximately 350 bps over the German Bund. After such a buoyant period it is hardly surprising that concerns are emerging about the future trajectory of the asset class.
In a recently published report, Aberdeen AM discusses these issues explaining why they believe the European high yield is not in bubble territory, but investors still need to be alert.
Though yields are at all-time lows and the asset manager expects returns to be more muted it does not adhere to the argument that the asset class is a bubble for a number of reasons.
Tight valuations are not the same as a bubble
Aberdeen AM believes there are fundamental reasons why spreads trade where they do. Default rates are low and they expect them to stay low. The majority of issuance continues to be used to refinance debt, which has allowed companies to borrow at lower interest rates and extend maturity profiles. Failure to refinance debt when it comes due or an inability to fund interest expenses are the two most common triggers for default. Aberdeen AM estimates 25% of the market is pricing to call by the end of 2015, which will bring the cost of debt down meaningfully for these companies assuming no great exogenous shock occurs. Furthermore, companies are increasingly preparing for or are rumored to be preparing an IPO later this year. This is generally a positive as it is a de-leveraging event (“equity claw” clauses in the docs) and provides a tangible equity cushion.
Spreads nowhere near all-time lows
In 2007 spreads fell to 179 basis points at a time when the market was lower quality and a quarter of the size. Aberdeen AM thinks, based on historical trends with spreads where they are there is room for further tightening. Having said that they believe this is more likely to come from rising government bond yields than capital upside as high bond prices and call options limit that. However, assuming defaults remain low there should be some ability for spreads to cushion government yield increases. Spreads primarily compensate investors for default risk and loss given default. The good news is that since 2010 nearly half of new issuance in European high yield (as of year-end 2013) has been secured, which means recovery rates going forward will be higher than they have been historically. This needs to be factored in when looking at what spreads are discounting in terms of default rates. Aberdeen AM is of the opinion that today spreads represent no worse than fair value when analyzing them in this way.
Correlation to government bonds is low
If there is a bubble the asset manager believes it is in government bonds which have experienced a 30-year bull run and have been artificially supported by quantitative easing. However, even if this is a bubble, they think it is unlikely to burst anytime soon. Given the anemic state of the European economy the European Central Bank is unlikely to raise interest rates any time soon. Eurozone unemployment is not expected to fall much below 12% this year, inflationary pressure is currently non-existent and the most bullish Eurozone growth forecasts cap out at 1.5% for 2014. Even when rates do start to rise, the effect on high yield may be somewhat limited compared to say investment grade. The average maturity in European high yield market is around four years; so relatively short-dated. The four year bund yields 0.4% so almost all the yield is spread which is a key reason sensitivity to government bonds is so low.
Outlook
Whilst Aberdeen AM is not anticipating a significant sell-off in European high yield the asset manager is certainly cautious and would view a period of consolidation or even a modest correction as healthy. In what is often a seasonally weak period for financial markets, the second quarter could offer better opportunities to top up positions in favored holdings. At the same time, they believe investors need to be watchful as lower quality companies continue to take advantage of the borrowing environment and bondholder protection from covenants erodes. Longer term, the maturity wall and interest rate expectations suggest 2017 could be when defaults begin to tick up. Between now and then there is the opportunity to possibly harvest a healthy income yield.
1 The BofA Merrill Lynch Euro High Yield Constrained Index contains all securities in The BofA Merrill Lynch Euro High Yield Index but caps issuer exposure at 3%. The BofA Merrill Lynch Euro High Yield Index tracks the performance of EUR denominated below investment grade corporate debt publicly issued in the euro domestic or Eurobond markets.
2 The FTSE All-World Europe Index is a free float market capitalization weighted index. FTSE All-World Indices include constituents of the Large and Mid capitalization universe for Developed and Emerging Market (Advanced Emerging and Secondary Emerging) segments. Base Value 100 as at December 31, 1986.
According to ING IM, the rally in peripheral bond and equity markets has not come to an end, as the fundamental picture is still sound. Yet, the recent rise in volatility and the increased short-term risks have made the asset manager decide to close their overweight positions in both bonds and equities of Eurozone peripherals.
One of the consequences of the risen interest of investors in the peripheral markets is that it has become a “crowded trade”. Investor positioning and in particular the concentration of active exposures have been very dominant drivers of market dynamics this year. The recent volatility in peripheral markets seems to be the latest reflection of the sensitivity of “consensus” trades for position squaring on the back of sudden mood swings over the direction of policy or politics.
Rally in Spanish and Italian markets since July 2012
Both bond and equity markets of peripheral Eurozone countries like Spain and Italy have been enjoying a strong rally, effectively since ECB President Mario Draghi held his famous “whatever it takes to save the euro” speech on July 26, 2012. The ongoing rally resulted in declining risk premiums and increasing investment flows towards these countries’ markets, as investors increasingly perceived the systemic risks surrounding the Eurozone to be fading, while at the same time economic data started to improve.
In the past months, the anticipation of additional stimulus provided by the ECB and upgrades of credit ratings by the rating agencies also led to a further tightening of credit spreads. The intensification of the search for yield by investors, combined with stretched valuations in other fixed income asset classes (like investment grade and high yield credits), have also contributed to the decline in risk premiums.
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CC-BY-SA-2.0, FlickrJames Swanson, Chief Investment Strategist at MFS Investment Management. Three Things to Think About This Spring
Chief Investment Strategist, Jim Swanson, reviews why equity and fixed income prices have been going up, while China’s moderating pace of growth is a concern but not an immediate threat to the global economic expansion. Three things to think about this spring…
Photo: Romina Campos. Henderson Makes a New Appointment in Uruguay
Capitalising on its growing presence in Latin America, Henderson Global Investors has appointed John Philip Davies of Accurate Partners, as its representative in Uruguay based in Montevideo to work with global and local leading private banks. Commenting on the appointment Ignacio de la Maza, Director of Sales Iberia and Latin America, said “This strategic appointment aims to develop Henderson’s presence in Uruguay while enabling the firm to further deliver and re-enforce its commitment to better service for clients in the region.”
John has had a distinguished career to date having started his profession at Bank Boston in Uruguay and Argentina before working for Deutsche Bank in London, and then becoming the Regional Head Latin American for Dominion Funds, a niche Swiss Fund Manager. His previous position was Senior Sales Executive for MAN Group in Latin America. John has a BA in Business Administration from ORT University in Uruguay and Masters in Finance from CASS Business School in London.
Henderson Global Investors is already active in various Latin American markets with a diverse array of investment funds. All of these products are available to Henderson’s clients in Uruguay as well, including the principal Luxembourg based SICAVs.
Ignacio de la Maza added: “There is a clear and growing commitment on behalf of Henderson to work in the region and to this end the Latin American Sales Team will continue to be strengthened”.
Manchester Capital Management (MCM) announced that Daniel Goldstein has joined MCM as a Senior Managing Director based out of its Montecito office.
In his role, Daniel will be working closely with clients and Ted Cronin, CEO of MCM, to advise on wealth management and family office services. Daniel’s extensive experience with the many varied aspects of running a single family office will complement the skills of the MCM team, allowing the firm to offer a more comprehensive array of services.
Founded in 1993, MCM is a boutique wealth management firm with 33 professionals advising wealthy families across the United States. The firm maintains offices in Manchester, VT, Montecito, CA, Charlottesville, VA and New York, NY.
For twenty years prior to joining the firm, Mr. Goldstein was advising ultra high-net-worth families across Europe and in the United States on their liquid investments, businesses, structuring, direct real estate investments, family dynamics, yachts, concierge services and philanthropy. For 15 years he was a director of a global single family office principally located in Europe, with activities ranging across Europe, the U.S., Africa and India. Previously he was the investment analyst on a two-person team managing a $1.25B portfolio for a U.S. family foundation. He has spoken at and chaired numerous family office, investment, family business and philanthropy events around the world.
As a Board member, he has helped found and develop several international non-profit organizations. Before entering the family office field, Daniel worked in finance in both the private and public sectors in the U.S. He earned a B.A. in Fine Arts from Colgate University, as well as an M.B.A. in Finance and an M.S. in Science and Technology Studies from Rensselaer Polytechnic Institute, both with honors.
BNY Mellon announced it has reached an agreement to sell its One Wall Street office building in lower Manhattan for $585 million to a joint venture led by Macklowe Properties. The sale was brokered by CBRE. The sale is expected to be completed in the third quarter of 2014, subject to customary closing conditions.
“We’re pleased to have reached this agreement. Once finalized, it will advance our plan to consolidate office space in New York City, lead to a more functional and efficient work environment for our employees, and deliver a solid financial gain to the company,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon. “We expect to announce our decision for new leased space in the New York region in the next two months.”
BNY Mellon has occupied the 50 story, 1.1 million square foot building since 1989, when The Bank of New York acquired the Irving Trust Company. The company’s headquarters moved from 48 Wall Street to One Wall Street in 1998. The original lot was purchased by the Irving Trust Company in 1927 for $14.5 million and construction was completed in March 1931. The building, considered one of New York’s landmark Art Deco skyscrapers, was designed by architects Voorhees, Gmelin and Walker. Maine granite was used for the base, and the building is sheathed with Indiana limestone.
Macklowe Properties was founded in the mid-1960s by Harry Macklowe. For the past 40 years, the company has been an active and profitable developer, acquirer, redeveloper, owner, and manager of a diverse array of real estate investments. The company has successfully achieved a full level of vertical integration, combining design, planning, construction, management, accounting, and executive-level ownership and operation to provide for absolute responsibility and control over its assets. These investments, which have covered virtually every sector of the property market, have included the development, acquisition, and repositioning of office and apartment buildings, land assemblages, and conversion of industrial and loft properties. In the aggregate, these developments have totaled over 10 million square feet and have taken place in nearly every commercial and residential submarket of Manhattan.
Photo: Mattbuck. Horizons ETFs and Fiduciaria Bogotá Launch an ETF that Tracks S&P Colombia Select Index
Horizons ETFs Management (LATAM), a member of the Horizons ETFs Group, has announced the launch of its second Latin American exchange traded fund, the Fondo Bursátil Horizons Colombia Select de S&P, which provides investors with exposure to the S&P Colombia Select Index. The Horizons Colombia Select ETF began trading on Thursday on the Bolsa de Valores de Colombia (BVC) under the ticker symbol HCOLSEL.
The Horizons Colombia Select ETF will seek to replicate the returns of the Index. S&P Dow Jones Indices LLC designed the Index to provide exposure to the largest and most liquid domestic stock issuers in Colombia. S&P’s selection universe for the Index is based on all the securities in the S&P Colombia BMI that trade on the BVC.
The Horizons Colombia Select ETF was developed in association with Fiduciaria Bogotá S.A., one of Colombia’s largest mutual fund providers. Fidubogotá will act as the management company to the Horizons Colombia Select ETF and Horizons ETFs Management (Canada) Inc., an affiliate of Horizons LatAm, will act as portfolio manager.
“With a single investment, investors can now have efficient access to the Colombian equity markets,” said Federico Torres, Head of Latin American Sales for Horizons LatAm. “In our view S&P has developed a superior index strategy for Colombia which reduces the issuer and sector concentration risks that exist in current Colombian stock market benchmarks. Since no single stock will have more than a 15 per cent weight in the Index and no sector will have more than a 40 per cent weight, investors in the Horizons Colombia Select ETF can be confident they will be gaining exposure to a more diversified Colombian solution than what currently exists,” added Torres.
“The Horizons Colombia Select ETF is our second ETF launch in Latin America, and gives investors low cost exposure to a more diversified index than other benchmarks in the marketplace,” said Howard Atkinson, Managing Director of Horizons LatAm and the Global Head of Sales and Marketing for Mirae Asset Global Investments’ ETF business. “One of our strategic objectives is to take the best practices we’ve learned from our global ETF business and leverage them in local markets. We have a strong business relationship globally with S&P and are pleased to be able to offer their top-tier index strategies to Latin American investors.”
The Horizons Select Colombia ETF is the first ETF launched in the Colombian market and administered by Fidubogotá, the local pioneer of end-to-end custody and administration solutions for funds.
“We are very proud to bring this product to market in conjunction with Horizons ETFs. For us, it is essential that fiduciaries, especially Fiduciaria Bogotá, offer products that have been developed according to international standards,” said Cesar Prado, President of Fidubogotá. “We think the combination of our strong local presence combined with an adherence to global best practices puts us in a unique position to offer value to a capital markets sector that has been historically dominated by foreign competitors.”
CC-BY-SA-2.0, FlickrFoto: cbaskin99. Seis consejos para maximizar el rendimiento en un entorno de tipos bajos
With interest rates still so low by historical standards, fixed income is potentially overvalued. In addition, low interest rates for a long period of time have led to stretched valuations in other asset classes such as equity and credit. Benjamin Nastou, CFA, and Natalie Shapiro, Ph.D., Quantitative Portfolio Managers at MFS, published recently an Investment Insight, highlighting that in this circumstances, a balanced portfolio of stocks and bonds can probably be expected to generate lower returns than such a portfolio would have delivered historically.
Therefore alpha — or return over the benchmark — that can be added through active management will probably be more important than it has been historically. For example, an extra 100 basis points of return represents a much higher percentage of expected total return at 4% – 5% than at 8% – 9%.
In this kind of environment, the quantitative portfolio managers at MFS would think about making a few sensible tilts to take advantage of investment opportunities that may help to improve risk-adjusted performance. Note that these suggestions are based largely on the valuation component of their quantitative process highlighting that while valuation works well in the long run, patience may be required over the periods when valuation does not work as an investment signal.
These are their suggestions:
Exercise caution overall. With the possibility that both stocks and bonds may be overvalued, we would expect to hold a little more cash than usual.
Avoid taking excessive duration risk. At such low interest rates, bond investors are probably not being compensated for the risk of rising rates.
Exercise caution with high-yield and high-grade bonds. We may not be seeing asset quality issues, but with discount rates and credit spreads so low, high-yield and high-grade valuations appear stretched. This suggests that bond investors are not being compensated for credit risk.
Exercise caution with respect to US equities. The United States has enjoyed stronger performance relative to most other markets, leaving US stocks looking expensive by historical standards.
Avoid emphasizing small-cap over large-cap equities. Within the US equity market, small caps have had the strongest performance and look the most stretched from a valuation perspective. For context, when small caps were more expensive than large caps in the early 1980s, large caps outperformed small caps by 6% annually over the subsequent decade, and the valuation gap between small caps and large caps is even greater now.
Consider non-US and emerging market equities. This may be challenging given the lingering economic problems in some emerging countries, but from a valuation perspective, we believe stocks in these markets appear priced to deliver returns that are more in line with their historical averages.
Of course, no investment strategy — including asset allocation — can guarantee a profit or protect against a loss. But according to MFS, these steps may help to make the most of a low-return environment. The authors conclude the report saying: “And we always advocate the importance of investing over a longer time horizon, establishing a broadly diversified portfolio and rebalancing regularly as the cornerstone of a disciplined investment process, and working with skilled managers who have demonstrated the ability to add alpha through superior security selection in stock and bond markets”.
In a new research, Credit Suisse assess the demographic (“consumers and workers”) case for emerging markets (EM), arguing that they are “still very relevant and important”. The report provides a demographic perspective focused on fundamentals and argues that from a consumer and worker viewpoint and based on growth potential, emerging economies are still relevant and important for global growth.
“They are important for global companies based on their large potential markets given the emerging middle class consumers and increasingly skilled and educated workers. From an investment perspective too, given the smaller equity and bond markets but higher savings of emerging markets against the need for infrastructure and investments, emerging markets should remain attractive. But this will be subject to caveats of good corporate governance, transparency of investment process, ease of repatriating capital gains or dividends abroad. The role of emerging markets in world trade has increased. While the heterogeneity across emerging markets is high, a globalized world where flow of information, goods, services and people has become easier, more emerging markets are now part of the global economic and investment diáspora”.
These are the conclusions:
Emerging economies account for 39% of global GDP in current USD terms, 50.4% of global GDP in PPP terms, 82.5% of global population, 49.6% of global exports and 11.5% of global market cap based on latest available data. The 2013 GDP growth of emerging markets was 3.4% p.a. higher than that of advanced countries. The population growth of developing regions is projected to be 1% higher than that of developed regions in 2010-2015. Their old-age dependency ratio is projected to be 40% of that in developed regions.
Credit Suisse studied 10 emerging market economies: Brazil, China, India, Mexico, Nigeria, Russia, South Africa, Turkey, UAE and Ukraine comparing them to USA, Germany and Japan. China and Nigeria are most promising in terms of GDP growth and GDP per capita growth.
The demographic dividend theory attributes the contribution of demographic factors to GDP per capita growth in two stages. The first stage applies to young emerging economies where youth and human capital skills play a major role. The second stage applies to more developed ageing economies where harnessing of the accumulated savings via well-developed capital markets contributes to growth in GDP per capita.
The potential first stage demographic dividend is still available to young economies like India, Nigeria, South Africa, Turkey and Mexico. They can reap the dividend by increasing education and skills as well as reducing the male vs. female labour force participation gap. The first dividend appears to be over for Brazil, China, Russia and Ukraine and therefore it is essential to have financial markets to capitalize on their savings growth during the second stage – this requires more financial market development.
Financial market development depends on other institutional factors such as law and order, political risk, corporate governance, transparency etc. UAE is the least corrupt, most competitive and easy to do business within our sample but is the least democratic. Ukraine and Nigeria are ranked as most corrupt and least competitive. These institutional factors need to be improved in order to foster financial market development.
The rising middle class in these countries offers great potential for global companies. An increasing share of the middle class is projected to come from emerging markets in the future with China and India projected to overtake the USA in terms of share in global middle class consumption.
