Photo: Thomas Wolf. Nuveen Investments Extends Global Reach with Expanded Platform in Chile
Nuveen Investments, has announced the Chilean Comisión Clasificadora de Riesgo has approved 15 Nuveen mutual funds for investment by Chilean pension funds. Nuveen Investments will partner with Raymond James, through their subsidiary RJ Delta Capital, to make these strategies readily available to pension funds in Chile.
This latest effort builds upon Nuveen’s growing presence in Latin America, and meaningfully advances the firm’s goal of broadening its global reach through offering world-class investment expertise to institutional and individual investors as well as the advisors and consultants who serve them.
“Chile is a very important part of our overall regional strategy,” said Oscar Isoba, Nuveen Investments’ Senior Vice President and Head of Business Development for Latin America. “The Chilean asset management industry has been a regional pioneer and a great advocate for investors throughout the area. This focus aligns with our own commitment to helping our growing base of global clients meet their financial goals.”
The newly registered funds draw upon the deep expertise of several Nuveen affiliates, and include the following:
• Nuveen Core Bond Fund • Nuveen Core Plus Bond Fund • Nuveen Dividend Value Fund • Nuveen Global Infrastructure Fund • Nuveen High Income Bond Fund • Nuveen Inflation Protected Securities Fund • Nuveen Large Cap Growth Opportunities Fund • Nuveen Mid Cap Growth Opportunities Fund • Nuveen Strategic Income Fund • Nuveen Tactical Market Opportunities Fund • Nuveen Santa Barbara Dividend Growth Fund • Nuveen Tradewinds Global All-Cap Fund • Nuveen Winslow Large Cap Growth Fund • Nuveen Symphony Credit Opportunities Fund • Nuveen Preferred Securities Fund
Photo: Work by Harry Wilson Watrous (1857–1940). Americans Find Discussing Personal Finances as Difficult as Talking About Religion and Politics
A new survey from Wells Fargo revealed that Americans find discussing personal finances as difficult as talking about other thorny discussion topics like religion and politics. Nearly half of Americans say the most challenging topic to discuss with others is personal finances (44%), whereas death (38%), politics (35%), religion (32%), taxes (21%), and personal health (20%) rank as less difficult. These results come from Wells Fargo’s Financial Health study, a national online survey conducted by Market Probe, Inc., of 1,004 adults between the ages of 25 and 75, designed to take the pulse of Americans’ perceptions of their own financial health.
“It’s not surprising people don’t want to talk about money, investments, tax strategies, or even how much to put aside for a child’s education,” said Karen Wimbish, director of Retail Retirement at Wells Fargo. “But not spending time today to think about the future can be costly in the long-run. I think of personal finance in the same vein as my health—I wouldn’t keep concerns about my physical health private. I’d consult a doctor or talk to a friend or family member about it.”
Although people find it easier to talk about politics and religion over money, that doesn’t mean financial concerns are not top-of-mind. Two in five (39%) Americans report that money is the biggest stress in their life, 39% say they are more stressed about finances now than they were last year, and a third of Americans (33%) report losing sleep worrying about money. When asked what they would do differently if they could go back five years, more adults cite regrets about saving and spending (49%) than about shortcomings in all other areas of their life, including taking better care of their physical health, diet and fitness (42%), pursuing different personal relationships (21%), and working more to improve their career (16%).
Knowing what to do also appears to be a major barrier to a healthier financial life. In terms of getting in physical shape and exercising, respondents said the hardest part is “motivating themselves to get started” (40%) and “sticking to a plan” (36%). But for financial health and saving money, the hardest part is “knowing the best approach” (35%) and “sticking to a plan” (35%). Only 9% of respondents said motivation was the biggest barrier for improving financial health. In addition, about a third report they are more worried about their financial health than their physical health.
“When someone is physically out of shape, they typically understand that eating well and exercising more will help get them back on track,” said Wimbish. “With money, however, there’s a lack of understanding about the importance of designing a plan. Only a third of adults have some type of financial plan or a simple household budget in place, which means most Americans don’t have the roadmap needed to improve their financial health.”
According to the study, a majority of Americans feel financially healthy when addressing their basic needs, but feel less so when trying to control spending and saving for retirement and emergencies. Two thirds (67%) feel in financially good or great shape with regards to paying their monthly bills, and over half (56%) feel financially good or great in their ability to live within their means. However, only 40% feel financially good or great about their amount of discretionary spending and about their “rainy day” savings. Only a third (33%) described feeling good or great shape in their ability to retire comfortably.
Conversations about money
Seventy-one percent of adults surveyed learned the importance of saving from their own parents. Despite this, only a third (36%) of today’s parents report discussing the importance of saving money with their children on a frequent basis, with 64% indicating they talk about savings with their kids less than weekly or never.
For a quarter of married or partnered adults (25%), financial concerns have had an impact on these relationships. About a third (33%) have difficulty discussing money with their spouse or partner, and a quarter (25%) often have heated discussions with their significant other about money and household finances.
Gender differences
The study revealed some distinct differences between women and men when it comes to money matters. Half of women (50%) find it difficult talking with others about personal finances, versus 38% of men. Women are also less confident about their investment knowledge. Only 29% of women said they know where to invest in today’s market (compared to 42% of men).
Almost half of women (45%) grade their financial literacy a ‘C’ or below, while 65% of men assess their level of financial literacy as a ‘B’ or higher. Men also express greater confidence in their ability to maintain their standard of living, with 57% feeling in good or great financial shape in this area versus 49% of women.
The study also revealed the following saving and spending-related behaviors:
Adults are far more likely to have their car serviced (82%) or take a vacation each year (69%) than review their finances (43%).
Those who feel to be in poor or average financial health are twice as likely to update their Facebook profile (47%) than they are to review their finances (25%).
Two-thirds (65%) of adults spend at least two hours watching television each day, while only one third (34%) spend at least 15 minutes thinking about their finances daily.
One in four (25%) adults would rather pay for a personal trainer than a financial advisor.
About a third (32%) of retirees feel more stressed financially now than they did before retiring—especially those who retired early (before age 60).
The Dreyfus Corporation (Dreyfus), a BNY Mellon company, has announced that it has launched the Dreyfus Global Emerging Markets Fund, an actively managed, equity mutual fund. The fund is designed to seek capital appreciation by investing in emerging market countries including those located in Africa, Asia, Europe, Latin America, and the Middle East. Dreyfus has engaged its affiliate, Newton Capital Management, Ltd., to serve as the fund’s sub-adviser. Dreyfus is the fund’s investment advisor.
“The current volatility in emerging markets worldwide has created noteworthy opportunities for those investment managers who have a history of emerging markets expertise,” said Dreyfus President Charles Cardona. “Newton has more than 20 years of experience investing in emerging markets and emerging market equities. Using Newton’s distinctive global thematic approach to investing, we are confident Newton will continue to locate emerging markets opportunities.”
Newton employs a fundamental bottom-up investment process that emphasizes quality, including stock fundamentals and balance sheet strength, return on capital employed through the market cycle, and governance prioritizing shareholder interests. The process of identifying investment ideas begins by using a dynamic framework of identifying a core list of investment themes. Newton has currently organized its themes into four main areas of change: debt, crisis and policy; innovation; energy, environment and infrastructure; and geopolitics and demographics. Newton’s themes are based primarily on observable global economic, industrial, or social trends that Newton believes will positively affect certain sectors or industries and cause stocks within these sectors or industries to outperform others.
“As emerging markets equities are currently experiencing increased volatility, we believe there are increased investment opportunities available there for the long-term,” said Helena Morrissey CBE, Chief Executive Officer of Newton. “Newton has a long history investing in emerging markets and is delighted to be subadvising the Dreyfus Global Emerging Markets Fund, building on its strong investment record running this strategy in the UK. The fund seeks to capture the growth available in emerging markets through a high-conviction actively-managed portfolio, which uses Newton’s investment themes to guide its long-term approach, together with strong fundamental stock-picking skills to not only find the best companies in which to invest, but also to identify those sectors and industries that are best avoided.”
Robert Marshall-Lee and Sophia Whitbread, CFA, are the fund’s primary portfolio managers. Mr. Marshall-Lee, the lead portfolio manager, is the investment leader of the emerging markets equities team at Newton, where he has been employed since 1999. Ms. Whitbread is an investment manager on the emerging markets equities team at Newton, where she was employed from 2005 to 2010 and rejoined in January 2011.
Newton’s dedicated Emerging Markets Core Team utilizes the global research team of 29 in identifying the best emerging markets ideas globally. To pursue its goal, the fund normally invests at least 80% of its net assets in common stocks and other equity securities or derivatives in emerging market countries represented in the Morgan Stanley Capital International Emerging Markets Index (MSCI® EM Index), the fund’s benchmark index.
. Swiss Re Acquires a Majority Stake in Colombia's Insurer Confianza
Swiss Re Corporate Solutions and owners of Compañía Aseguradora de Fianzas S.A. Confianza (“Confianza“) have signed an agreement under which Corporate Solutions will acquire a 51% stake in Confianza. This arrangement will provide Colombian corporate clients local access to Swiss Re’s commercial insurance products and services.
Confianza, established in 1979 and based in Bogotá, offers a broad range of surety insurance products, third-party liability and all-risk construction insurance solutions.
This transaction supports Swiss Re Corporate Solutions’ growth strategy and will enable it to expand business in Latin America through local representation. Agostino Galvagni, CEO of Swiss Re Corporate Solutions and a member of Swiss Re Group’s Executive Committee, comments: “We are very pleased to join forces with Confianza, a firm with an excellent reputation and understanding of the local market. The combination of our capabilities and expertise will create a strong commercial insurer for corporate clients in Colombia.”
For Confianza, this transaction marks an important development in their history. Through this agreement, the company will broaden its range of products with an initial emphasis on solutions for clients in the country’s growing infrastructure sector.
Luis Alejandro Rueda Rodríguez, CEO of Confianza, says: “This investment, underpinned by Swiss Re Corporate Solutions’ financial strength and innovation capabilities, will reinforce our leading position in the market. Together we will be able to offer clients large capacity and technical expertise to support Colombia’s growing economy and the new government infrastructure projects.”
The transaction is subject to approval by the relevant authorities and is expected to close in the second half of 2014.
Photo: JLPC. Private Equity and Venture Capital Investments in Latin America Exceed Previous Record by US$1b
Private equity and venture capital firms committed US$8.9b through 233 investments in Latin America in 2013, representing a six-year high and a 13% increase over 2012, according to data released by the Latin American Private Equity and Venture Capital Association (LAVCA). Activity in the last six months has been accelerated by major buyout deals in Brazil, Chile, and Colombia.
In both Mexico and the Andean countries, local GPs were able to capitalize on growing investor interest by securing new commitments from international investors and local pension funds. More than US$1b of new capital was raised in Mexico through six funds while US$1.4b was raised via Andean region funds and Peru and Colombia country-specific funds.
Overall, fundraising in 2013 was again dominated by smaller funds with 49 managers reporting 52 partial or final closings, totaling US$5.5b (versus 42 partial or final closings from 40 firms in 2012). Exits in 2013 were consistent with 2012 figures (US$3.8b), generating US$3.7b in proceeds.
“The private equity and venture capital community in Latin America has been quietly building a foundation that is capable of withstanding existing and future market complexities,” said Cate Ambrose, President and Executive Director, LAVCA. “The region continues to experience regular milestones in the face of emerging market volatility, such as this year’s record in investments, however, it will be important to see how global LPs respond once some of the billion dollar plus funds reenter the market.”
Investments in the oil & gas sector dominated in 2013, including major deals in oil & gas infrastructure. Overall oil & gas captured 18% of the US$8.9b total. It was also the sector with the highest average ticket size. Twelve deals deployed roughly US$1.6b in new capital.
Additional findings include:
Private equity managers continued to market funds that reflect the mid-market opportunity (closings below US$600m).
Brazil again dominated in fundraising and investments for the region, capturing 43% of the total amount raised during the period and 68% of the total amount invested.
Capital raised by Mexican managers will allow them to target new opportunities generated by reforms.
In Colombia, managers invested US$1.1b through 20 deals, a record figure for that market. Activity in the country was driven by four oil & gas deals that contributed 72% of the capital deployed.
Continuing a 5-year growth trend, nearly half of all deals were in IT-related sectors, supported by VC activity in the region.
Consumer/retail continued to be a relevant theme among private equity investors, both in terms of dollars and deals.
There were eight PE-backed IPOs in three key markets (Brazil, Mexico, and Chile) via four different stock exchanges.
The full report will be made available free to LAVCA Members in March.
Wikimedia CommonsJulie Neitzel, WE Family Offices. Erik Bethel (SinLatin Capital) and Julie Neitzel (WE Family Offices) Join MFF’s Board of Directors
Erik Bethel, Partner and Co-Founder of SinoLatin Capital (SLC), and Julie Neitzel, Partner at WE Family Offices, have been elected to join the Board of Directors of The Miami Finance Forum (MFF), South Florida’s leading financial services networking organization.
“Julie and Erik are top-notch business leaders with world-class experience,” said MFF Board Chairman Carlos Deupi. He added, “we are excited to welcome Erik to our Board of Directors and grateful to have Julie’s continued involvement at MFF in her new role. Erik and Julie are key additions to our team and we know that they will bring unique perspectives and significant value to our board.”
Erik Bethel brings an extensive business portfolio to MFF with 18 years worth of experience in private equity and investment banking in the natural resources and infrastructure sectors of China and Latin America. Before joining SLC, Mr. Bethel worked for ChinaVest, the oldest private equity fund in Mainland China. Previously, he worked in the Latin American private equity, mergers and acquisitions and corporate finance groups at Morgan Stanley, J.P. Morgan Partners, Emerging Markets Partnership, and Compass Point Capital Partners. His transaction experience spans the infrastructure, agribusiness and mining sectors. Mr. Bethel graduated with distinction from the United States Naval Academy, Annapolis with a B.S. in Economics and a B.S. in Political Science. He also received an MBA from The Wharton School of Business.
“I am delighted to join the Miami Finance Forum’s Board of Directors this year, and I look forward to contributing to an organization that provides unique business and networking opportunities for finance and investment professionals both locally and throughout the region,” said Erik Bethel, who also serves on the Board of Directors of Rio Cristal Resources, a Peruvian zinc mining company.
Julie Neitzel has worked extensively with entrepreneurs and high net worth families in all areas of investment capital management and multi-generational planning, helping them solve complex wealth issues for more than 25 years. Ms. Neitzel joined MFF’s Advisory Board in late 2013, and has now been elected to join the Board of Directors. Prior to her current position as Partner at WE Family Offices, Ms. Neitzel was the President of Miami for GenSpring Family Offices. She has held many leadership roles at not-for-profit organizations by supporting education, the arts and public service areas. She has been a guest lecturer and speaker on topics including women and investing, entrepreneurship, private equity investing, real estate investing and wealth challenges. Ms. Neitzel earned her MBA in Finance from American Graduate School of International Management and her Bachelor of Arts degree in International Studies from Bradley University, graduating magna cum laude.
“It was a pleasure to have participated in the Advisory Board last year, and I am now thrilled to assume a new role as part of MFF’s Board of Directors,” said Juile Neitzel. “The Miami Finance Forum has made great strides to poise itself for a successful year, and I look forward to working with a diverse and qualified team to drive this momentum forward,” she added.
. Los dividendos mundiales marcan récord al superar el billón de dólares en 2013
Dividends paid by the world’s listed companies burst through the $1 trillion mark for the first time ever in 2013, according to the Henderson Global Dividend Index, a new quarterly report analyzing equity income from around the world.
Investors harvested $1.027 trillion of dividends during the year, an increase of $310bn since 2009. In that year, which marked a post-financial crisis low point for equity income, firms delivered $717bn to their shareholders. This dramatic growth means the Henderson Global Dividend Index (HGDI) reached 143.2 by the end of 2013 (100 marks the beginning of the series at the end of 2009).
Andrew Formica, CEO of Henderson said: “We have undertaken this research because we are seeing increasing calls from our clients for our range of international equity income products. The trillion dollar dividend is a huge milestone for equity investors and illustrates that dividends are now a vital component of investors’ returns. The search for income is more than just a response to rock bottom interest rates in recent years. It marks a generational shift as ageing populations must increasingly rely less on state pensions and more on their own savings to provide for retirement. Not only that, but they will need to stay invested in equities much longer than in the past too. This demand for equity income is a trend we see continuing through 2014 and beyond.”
Different parts of the world are producing very different results. By far the fastest growth initially came from Emerging Markets. Collectively, dividends from these countries have more than doubled since 2009 (+107%), up from $60.9bn to $125.9bn, an average annual growth rate of almost 20%.
The BRIC (Brazil, Russia, India and China) countries, which between them make up 55% of all Emerging Markets dividends, have grown a third faster than their peers in the last five years. However, after 2011, growth from Emerging Markets slowed to a crawl as the commodity cycle ended and currencies fell. Asia-Pacific grew its dividends 79% over the five year period.
By contrast, dividends from Europe ex UK moved ahead 8% since 2009 reaching $199.8bn in 2013. It is still comfortably the second most important region in the world for income, after North America. Within Europe, Scandinavian countries have seen a dividend boom, while those worst hit by the euro crisis are returning far less to their shareholders than they did five years ago. France is the most significant country, contributing a quarter of the region’s dividends ($50.5bn), though in dollar terms, its total payouts are flat since 2009. Germany contributes less than its economic power would suggest, owing to a less developed equity culture, but its growth rate is double the region’s average over five years.
The US has increased its payouts 49% over five years, and is by far the largest source of dividend income ($301.9bn), accounting for one third of the global pie. The UK’s share (at 11%) is disproportionately large compared to the size of its economy. UK payouts have grown in line with the global average (+39%) since 2009. Japan is up 29%, though the devaluation of the yen has pushed the 2013 total ($46.4bn) below the 2012 level.
From an industry perspective, the fastest growth in payout has come from the technology sector, more than doubling since 2009 (+109%) thanks in particular to Apple, which paid almost one sixth of global tech dividends last year from a standing start in 2012. For dividends technology is a relatively small sector overall, however. Financials pay the most, $218bn in 2013, almost a quarter of the global pie (24%) and have risen 76% since the post-crisis nadir. The oil industry, which has grown steadily, if unspectacularly, is a global dividend stalwart, providing $1 in every $7 of dividends in 2013. The mining sector, whose dividends doubled during the commodity boom, has slipped back over the last two years as that bubble deflated.
The top ten dividend payers, dominated by oil companies, banks and telcos, accounted for $97.1bn in 2013, equivalent to $1 in every $11 (9.4%) of the global total.
Despite the total payout reaching a new record, growth slowed to a crawl in 2013. Dividends inched ahead just 2.8%. In Q4, they actually fell year on year, dragged down by Japan, but also a drop in the US, where big special dividends paid in the last quarter of 2012 were not repeated. The strong US dollar against many currencies also reduced the translated value of dividends in 2013. The Henderson Global Dividend Index peaked at 143.9 at the end of September.
For 2014, Henderson Global Investors expects dividend growth to accelerate after the slower pace of 2013, with developed markets delivering better income growth than developing ones.
Alex Crooke, head of global equity income at Henderson Global Investors said: “Over the five year period of our research, dividends provide a clear picture of the major global economic events and trends. The rise of emerging markets, and their cooling, the inflation of the commodity bubble and its subsequent deflation, the Eurozone crisis, and the US resurgence from the recession are all there to be seen. The research also shows just how divergent the fortunes of different countries and different industries are. It also shows how areas that rank low in free float terms, especially emerging markets, are actually generating large amounts of income, often because governments with big stakes mandate generous payouts. The reliance on a few big stocks, though significant, is less at a global level than it can be in some countries, especially the UK. This means that a global approach to income investing can bring real diversification benefits. A disciplined, research-driven approach to stock picking can maximize the income investors earn from their savings.”
Foto: Dalbera, Flickr, Creative Commons. Una combinación ganadora
La Française, a leading European asset manager, and TAGES Capital, an alternative multi-management solutions provider part of the TAGES Group, have announced the signing of a strategic partnership. Under the terms of the partnership, La Française will acquire a 40 per cent stake in TAGES Capital and delegate the management of its existing range of funds of hedge funds and UCITS funds with approximately $1 billion of AUM to TAGES Capital. Pascale Auclair, Chief Executive Officer of La Française des Placements, and two other La Française executives will be appointed to the management committee of TAGES Capital. The transaction is subject to the customary regulatory approval processes.
As part of the agreement, two La Française fund managers will join the investment team of TAGES Capital in London, the hub of alternative fund management. The enlarged team will manage the existing La Française fund of hedge funds product range and ensure the continuity of services for existing French investors. La Française will be the exclusive distributor of La Française and TAGES alternative multi-manager funds in France. Outside of France, the two groups will collaborate on international development opportunities.
TAGES’ unique business model, focused on the delivery of customized solutions to clients, extensive research and robust manager selection has driven significant asset growth. As of December 31, 2013, TAGES Capital had approximately $2bn of assets under management and advisory.
Xavier Lépine, founder of Alteram and Chairman of La Française said: “At La Française, we aim for excellence. This partnership means that La Française will be a benchmark shareholder in a top-tier player in the alternative asset management space in Europe. As founder, some ten years ago, of Alteram, a leading fund of hedge funds manager, I’ve always believed in the value of alternative multi-management, but to achieve excellence, you need the appropriate vehicles, substantial resources and impressive track-records. Together with TAGES, La Française will have all of the above!”
Salvatore Cordaro, founder and Chief Investment Officer of TAGES, said: “We share La Française’s enthusiasm for this alliance, which strengthens our competitive position in Europe. We are excited that such an important asset manager has decided to become our partner and we are confident that La Française’s expertise will make a tangible contribution to our business. TAGES Capital’s unique approach to multi-management investing, through our focus on providing investment solutions rather than products, helped us reach important milestones and grow the business in a challenging market environment.”
This unique partnership aligns the interests of both shareholders (La Française & TAGES) and investors. With combined assets under management and advisory in excess of $3 billion, La Française and TAGES will be well placed to further grow the multi-manager business.
Photo: Lima Andruška. Azimut Completes the Acquisition of FuturaInvest’s 50% Starting Financial Advisory Services in Brazil
Azimut, an Italian asset manager, through its Brazilian sub-holding, AZ Brasil S.A. and the partners of FuturaInvest Group, have completed the purchase of 50% FuturaInvest financial advisory company and 50% of FuturaInvest asset management company (dedicated to funds of funds and managed accounts). Moreover, subject to the satisfaction of certain conditions precedent and to the approval of the Banco Central do Brasil countersigned by the President of Brazil, the transaction will entail also the acquisition of 50% of FuturaInvest DTVM (Distribuidora de Titulos de Valores Mobiliarios). FuturaInvest DTVM is a regulated financial institution authorized to distribute financial products to local investors.
FuturaInvest, with 35 people and 9 offices around Brazil, is specialized on providing advisory and asset allocation services via funds selection, financial education, and asset management services through funds of funds and managed accounts to around 2,500 clients. As at 23rd January 2014 FuturaInvest has more than R$ 240 million of assets under advisory (equivalent to around 74 million euros).
The Brazilian investment industry has R$ 2.4 trillion in AuM as at December 2013 (730 billon euros) representing the 6th largest market in the world.
The transaction involves mainly the subscription of a capital increase (for a countervalue of around 3.9 million euros) to finance the business plan. The partnership also provide for a potential adjustment to the subscription price in connection with the growth of business over the first three years of operations.
Pietro Giuliani, Azimut’s Chairman and CEO, comments: “This is a very important day. From now on we will be able to start implementing our integrated business model in Brazil. FuturaInvest Consultoria, operating in open architecture model, will be our vector to provide high standard financial advisory services to Brazilian investors.”
Capital Strategies Partners has an agreement with AZ Fund Management to distribute its products in Latin America.
. Advertising Fuels the Trend When Investing in Mobile Technologies
The biggest trend in recent years has been the shift towards mobile, where the technology curve for smartphones has been upwards sloping for some years. But now this growth is set to slow, says Jack Neele, manager of the Robeco Global Consumer Trends Equities Strategy.
Instead, the clever money will be made in the service providers for smartphones, along with the major players in e-commerce software and services, particularly in advertising, he says. “In the first phase, the makers of phones were in the ascendancy, and this favored the big companies like Apple and Samsung,” says Neele. “Now, almost everyone has a smartphone, so what we’re seeing now is greater use of the apps and functions available on them, and this greatly benefits the companies that offer services on the platforms that the giants of Apple and Samsung have created.”
Advertising fuels the trend
He says the development of advertising technology on smartphone services is a good example. And perhaps not surprisingly, this shift is in itself being powered by social media. “Growth for Apple, Google and the big guys will slow down, and growth will be seen instead in the companies that can monetize their presence on online platforms,” says Neele.
This includes titans like Facebook, whose global reach is approaching that of US companies such as Coca-Cola which took generations to achieve the same level. The chart below shows Facebook’s penetration in the world: it is now used everywhere except in rainforests, deserts… and China (where it is banned).
“We’re already seeing this with the way that ads are being sold,” says Neele. Ads were too small to be properly read on phones, but now they’re being put into feeds on platforms like Facebook and LinkedIn. These companies have found a new way to monetize their services, and that’s where we’ll see the real growth.
“Google has always been able to know what you search for, and they sell ads on that basis. But the technology is far more advanced now in targeting advertising to an individual’s real taste, rather than just what they search for.” That can be best seen with Twitter and TripAdvisor, as they go one step further in telling advertisers what you really like, he says. Most individuals include all their friends or business contacts on Facebook or LinkedIn. As these relationships are diverse, advertisers can target the core profile, but it is more difficult to know what the user’s real beliefs are.
“Twitter knows what you’re interested in from who you follow and what you tweet. Everything you follow on Twitter can be used to target you with promotions,” he says.“TripAdvisor is another good example of the trend towards precise targeting. Advertisers who use TripAdvisor can tell where you have been, what you like, and what you didn’t like, so it is easy to target you with ads or offers.”
Smartphone ads still lag print
The market for advertising on smartphone services has plenty of growth potential, as it is still relatively underdeveloped. And surprisingly, it still massively lags print. The chart below shows the relationship between the time that US citizens spent using one type of media, and the proportion of advertising spending directed at that medium.
As one would expect, the traditional print market has declined, though it still attracts 23% of all advertising spending. The TV and internet markets are fairly evenly matched between time spent and advertising. But there is a large disparity in mobile, where US consumers now spend 12% of their time, but with only 3% of advertising directed at the medium. If the gap was closed, it would generate USD 20 billion in business, according to the research.
Source: Cisco Visual Networking Index, Morgan Stanley Research
Mobile video also underdeveloped
The increasing use of mobile video is another trend that has massive potential, says Neele. This does not just apply to advertise by companies on bespoke video channels such as YouTube, which has been owned by Google since 2006.
The development of 3G and now 4G services allowing ultra-fast data transfer means any company can now fairly cheaply offer streaming services promoting their products on websites that can be tailored to appear on smartphones. Research suggests that mobile video may generate up to 66% of all mobile data traffic by 2017, as the chart below shows.
The easy use of smartphones has itself changed the nature of e-commerce, says Neele.
“About 10 years ago, most people worked during the week and shopped only at weekends. Internet shopping made it possible to shop after work on weekday evenings. Now mobile phone technology makes it possible to shop at any time. Consumer trends have shifted to being able to shop on your phone whenever you like,” he says.
Neele reflects his belief in the greater monetization of internet-based technology by his investment choices for the Global Consumer Trends Equities strategy. He holds large positions in Google, Facebook, TripAdvisor and Amazon. And as online shopping has greatly boosted the use of credit cards for online payment, Neele also holds MasterCard and Visa.
