CC-BY-SA-2.0, FlickrFoto: @Doug88888, Flickr, Creative Commons.. Diane Sobin, nueva responsable de Renta Variable estadounidense en Threadneedle tras la marcha de Cormac Weldon
Cormac Weldon, Head of US Equities at Threadneedle Investments, has resigned and will leave the firm in April following full transition of his responsibilities, announced the asset management firm. Portfolio Manager Stephen Moore will also leave Threadneedle.
Diane Sobin becomes Head of US Equities reporting to Leigh Harrison, Head of Equities at Threadneedle. In addition to investing in the London based team, Threadneedle announced that it would increase its collaboration with Columbia Management’s substantial US Equities team. Columbia Management is the US-based asset management subsidiary of Threadneedle’s parent company, Ameriprise Financial. Threadneedle and Columbia manage a combined $117bn AUM in US Equities, with 56 Portfolio Managers and 58 analysts located in London, Boston, New York, Minneapolis, Portland, Hartford and Stamford, managing a full range of strategies.
According to Citywire, Cormac Weldon and Stephen Moore will be joining Artemis, a London-based asset management boutique, in April.
Mark Burgess, Chief Investment Officer at Threadneedle said: “Cormac has decided to leave Threadneedle after 17 years and we wish him well and thank him for his valuable contribution to the firm. Following his departure, we will continue to invest in our London team under Diane’s leadership, while also better and more fully utilizing the research resources of Columbia Management.”
Campbell Fleming, Chief Executive Officer at Threadneedle said: “Threadneedle has a well-established team-based investment process that has produced a strong and consistent track record of results for clients and this will not change. The extensive additional resources and expertise available to our US Equities team will provide added depth to our overall offering.”
Diane Sobin joined Threadneedle in September 2011 from Columbia Management, where she was a New-York based US Equities Portfolio Manager. Diane has 30 years’ experience in the industry, 28 years managing US Equities. She joined Columbia Management in 2001, and co- managed large and mid-cap value mutual funds and institutional portfolios. Diane will assume lead manager responsibilities for the Threadneedle American Select Fund. Diane currently co- manages the Threadneedle American Smaller Companies Fund along with Cormac and she will assume responsibility for this fund.
Nadia Grant, whose appointment was announced on 20 January and who starts at Threadneedle on February 3, 2014, will join Diane. Nadia joins from JP Morgan Asset Management where she was a portfolio manager focusing on US equities within the global multi-asset group, managing over $5bn in multi-asset solutions.
Nadia Grant will become lead manager of the Threadneedle American Fund. Ashish Kochar and Neil Robson will become co-managers of the Threadneedle American Extended Alpha Fund and the Threadneedle American Absolute Alpha Fund. Ashish and Neil currently manage the Threadneedle Global Extended Alpha Fund, which has achieved first quartile performance over 1, 3 and 5 years. Ashish joined Threadneedle in 2008 and has nine years’ experience in asset management. He previously worked as an analyst in the US Equities team. Neil Robson joined Threadneedle in 2011 and has 25 years’ experience as a fund manager covering global equities.
Photo: Guanajuato city. Fibra Inn Announces the Acquisition of Hotel Mexico Plaza Leon Centro Max, to Be Converted to Wyndham Garden
Fibra Inn, a Mexican real estate investment trust specializing in the hotel industry serving the business traveler, announced the acquisition of Mexico Plaza Leon Centro Max Hotel, located in the state of Guanajuato. This hotel will be converted to the Wyndham Garden brand.
This is the third hotel acquired from Grupo Mexico Plaza, which is a regional hotel chain primarily present in central Mexico. The acquisition price was Ps. 150 million, excluding Ps. 6.9 million in expenses for brand name change. Fibra Inn’s internal committees approved the purchase of this property at a stabilized cap rate of 10.1%. The acquisition was paid in cash with the proceeds from the initial public offering that took place on March 13, 2013.
The conversion of this property to the Wyndham Garden brand will be completed by April of 2014. This property has 126 rooms, will operate under the limited service segment and its operation will be conducted by the Fibra Inn´s Hotel Operator, subcontracting the current Hotel Operator.
Fibra Inn opted to purchase this hotel for the following reasons: Bajio is an area with high economic growth, driven by the automotive industry, with an increase in direct foreign investment that has led to occupancy growth rates and increased demand for groups and extended stay. Leon is a market with a strong hotel demand, as it is the Bajio’s most important city in terms of highest hotel occupancy as reported by the Ministry of Tourism and the largest in the state for its economic activity. Leon in one of the most benefited cities due to the Bajio’s economic growth, capturing the majority of the hotel demand compared with other cities of the area; it is the most complete in services and installations, which makes it a more attractive option compared to other less important cities of the state of Guanajuato. The hotel has experienced a solid performance with the regional Mexico Plaza brand, which is expected to improve even more upon conversion to the international Wyndham Garden brand. It is a hotel focused on suites, which is a segment with longer duration of stay and less competition.
With this acquisition, Fibra Inn has 20 hotels in its portfolio, plus two under development, with a total of 3,976 rooms, of which 3,312 are currently in operation.
German and Australian stocks are among the more attractive equities singled out in the Mellon Capital Management Corporation Investment Perspective for Winter 2014. Equities across the regions appear poised to benefit from positive earnings forecasts and attractive valuations, the report said.
“We see moderate overall growth for the global economy, with positive momentum in the U.S. and Europe, which is similar to the projections we made in the third quarter of 2013,” said Jeff Zhang, executive vice president and chief investment officer for Mellon Capital. “We did see slight easing in leading economic indicators for both Japan and the UK.”
Among developed markets, Mellon Capital believes German equities are positioned to benefit from their exposure to the improving global economy, particularly as demand for autos increases in the U.S. and emerging markets. In addition to attractive valuations, Australian stocks also appear to offer higher dividends and lower volatility than in many other markets, Mellon Capital said.
In Asia, Mellon Capital said it is positive on Korean equities as they are supported by strong earnings forecasts and a potential pickup in exports if the developed market economies recover in 2014 as the consensus is expecting.
Mellon Capital said it is negative on Latin America. In Brazil, government policies could create market volatility prior to the October election; and Mexico appears hampered by a slow recovery and high valuations, the report said.
In the U.S., Mellon Capital said it expects a moderate-growth environment that could create investment opportunities in information technology and energy.
Mellon Capital said it continues to favor stocks over bonds due to a combination of reduced macro uncertainty, a benign backdrop for earnings growth, and a potential increase in term premia as the Federal Reserve tapers its bond purchase plan.
Wikimedia CommonsPhoto: Gates Fundation. Bill and Melinda Gates Letter Argues Against 3 Poverty Myths that Block Progress for the Poor
Philanthropists Bill and Melinda Gates pitched an optimistic future for the world’s poor in their annual letter of 2014, arguing against three myths that, according to them, hurt efforts to bring people out of poverty, save lives and improve living conditions. The co-chairs of the world’s largest charitable foundation sought to dispel false notions that poor countries are doomed to stay poor, that foreign aid is wasteful and that saving lives will cause overpopulation.
“All three reflect a dim view of the future, one that says the world isn’t improving but staying poor and sick, and getting overcrowded,” Bill Gates writes. But, “by almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful”.
Myth One: Poor countries are doomed to stay poor
“I’ve heard this myth stated about lots of places, but most often about Africa. A quick Web search will turn up dozens of headlines and book titles such as ‘How Rich Countries Got Rich and Why Poor Countries Stay Poor.’ Thankfully these books are not bestsellers, because the basic premise is false. The fact is, incomes and other measures of human welfare are rising almost everywhere, including in Africa”, says Bill Gates in the letter.
“I was born in 1955 and grew up learning that the so-called First World was well off or “developed.” Most everyone in the First World went to school, and we lived long lives. We weren’t sure what life was like behind the Iron Curtain, but it sounded like a scary place. Then there was the so-called Third World—basically everyone else. As far as we knew, it was filled with people who were poor, didn’t go to school much, and died young. Worse, they were trapped in poverty, with no hope of moving up. The statistics bear out these impressions. In 1960, almost all of the global economy was in the West. Per capita income in the United States was about $15,000 a year (that’s income per person, so $60,000 a year for a family of four.) Across Asia, Africa, and Latin America, incomes per person were far lower. Brazil: $1,982. China: $928. Botswana: $383. And so on”, he continues.
But the change is posible, and Gates uses Mexico as an example: “Years later, I would see this disparity myself when I traveled. Melinda and I visited Mexico City in 1987 and were surprised by the poverty we witnessed. There was no running water in most homes, so we saw people trekking long distances by bike or on foot to fill up water jugs. It reminded us of scenes we had seen in rural Africa. The guy who ran Microsoft’s Mexico City office would send his kids back to the United States for checkups to make sure the smog wasn’t making them sick.Today, the city is mind-blowingly different. Its air is as clean as Los Angeles’ (which isn’t great, but certainly an improvement from 1987). There are high-rise buildings, new roads, and modern bridges. There are still slums and pockets of poverty, but by and large when I visit there now I think, “Wow, most people who live here are middle-class. What a miracle.”
So the easiest way to respond to the myth that poor countries are doomed to stay poor is to point to one fact: They haven’t stayed poor. Many—though by no means all—of the countries we used to call poor now have thriving economies. And the percentage of very poor people has dropped by more than half since 1990, he argues.
Gates is optimistic enough about this that he is willing to make a prediction. “By 2035, there will be almost no poor countries left in the world. (I mean by our current definition of poor.) Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments. A few countries will be held back by war, politics (North Korea, barring a big change there), or geography (landlocked nations in central Africa). And inequality will still be a problem: There will be poor people in every region.
But most of them will live in countries that are self-sufficient. Every nation in South America, Asia, and Central America (with the possible exception of Haiti), and most in coastal Africa, will have joined the ranks of today’s middle-income nations. More than 70 percent of countries will have a higher per-person income than China does today. Nearly 90 percent will have a higher income than India does today. It will be a remarkable achievement. When I was born, most countries in the world were poor. In the next two decades, desperately poor countries will become the exception rather than the rule. Billions of people will have been lifted out of extreme poverty. The idea that this will happen within my lifetime is simply amazing to me.”
Myth Two: Foreign aid is a big waste
“You may have read news articles about foreign aid that are filled with big generalizations based on small examples. They tend to cite anecdotes about waste in some program and suggest that foreign aid is a waste. If you hear enough of these stories, it’s easy to get the impression that aid just doesn’t work. It’s no wonder that one British newspaper claimed last year that more than half of voters want cuts in overseas aid. These articles give you a distorted picture of what is happening in countries that get aid”, says Gates. “I worry about the myth that aid doesn’t work. It gives political leaders an excuse to try to cut back on it—and that would mean fewer lives are saved, and more time before countries can become self-sufficient.
He argues that, although there is no perfect program, “broadly speaking, aid is a fantastic investment, and we should be doing more. It saves and improves lives very effectively, laying the groundwork for the kind of long-term economic progress I described in myth #1 (which in turn helps countries stop depending on aid). It is ironic that the foundation has a reputation for a hard-nosed focus on results, and yet many people are cynical about the government aid programs we partner with.”
Myth Three: Saving lives leads to overpopulation
“Going back at least to Thomas Malthus, who published his An Essay on the Principle of Populationin 1798, people have worried about doomsday scenarios in which food supply can’t keep up with population growth. As recently as the Cold War, American foreign policy experts theorized that famine would make poor countries susceptible to Communism. Controlling the population of the poor countries labeled the Third World became an official policy in the so-called First World. In the worst cases, this meant trying to force women not to get pregnant. Gradually, the global family planning community moved away from this single-minded focus on limiting reproduction and started thinking about how to help women seize control of their own lives. This was a welcome change. We make the future sustainable when we invest in the poor, not when we insist on their suffering”, writes Melinda Gates.
Foto: LendingMemo, Flickr, Creative Commons.. Brókers y custodios corren el riesgo de perder negocio por la elevada edad de los asesores con los que trabajan
43% of financial advisors are either at or are approaching retirement, according to new research from global analytics firm Cerulli Associates. “The average age of financial advisors is 50.9 and 43% are over the age of 55,” reports Kenton Shirk, associate director at Cerulli. “Nearly one-third of advisors fall into the 55 to 64 age range.”
And this creates challenges. “As the advisor population ages, broker/dealers and custodians are at risk of losing AUM as advisors exit the industry,” Shirk explains. “The independent channels are most at risk because they have the oldest advisors on average.” Broker/dealers continue to struggle to recruit new young advisors into the industry to offset those advisors who are nearing retirement, Shirk continues.
Cerulli suggests firms encourage advisor teams to bring in junior advisors and train them in a specific area of expertise in order to increase the success rate of these new recruits. To guard against asset attrition, broker/dealers and custodians need to provide support and resources to help advisors tackle succession planning, and development of internal succession candidates.
CC-BY-SA-2.0, FlickrLéon Cornelissen, Robeco’s Chief Economist. Three Reasons Why Deflation Won’t Take Hold in the Eurozone
Inflation used to be the main focus for European central bankers’ interest rate policy as prices rose forever upward. Now their main fear as we begin 2014 is the reverse scenario – the risk of deflation. It is potentially a huge problem, as falling prices mean that consumers do not buy goods because they expect them to become cheaper in the future, stalling economic growth and triggering a recession.
However, there are three reasons why a Japanese-style era of falling prices that cost the country a ‘lost decade’ in the 1990s will not take hold in the Eurozone, says Robeco’s Chief Economist, Léon Cornelissen.
“The economic recovery, a strong will by policymakers and a wholly different culture combine to make deflation extremely unlikely in the Eurozone,” says Cornelissen in his January outlook for investors.
It’s thanks to the euro’s success! The risk has ironically been largely caused by the recent success of the euro. After years of underperformance as the Eurozone lurched from one crisis to another, the euro has appreciated by almost 13% against other major currencies since mid-2012. The Japanese experience was that a strong yen markedly contributed to the country’s slide into deflation in the 1990s.
The evidence for deflation is certainly getting stronger. Figures published on 7 January showed that headline inflation fell to 0.8% on an annualized basis in December 2013 from 0.9% in November. Core inflation – which strips out more volatile food and energy prices – fell to a record low of 0.7% in December. But this implies disinflation, where the rate at which prices rise is reducing, rather than the more dangerous deflation, where prices actually fall.
“We see three arguments for optimism that deflation will not take hold in the euro area,” says Cornelissen. “Firstly, the Eurozone is experiencing a recovery, and the southern periphery in particular is enjoying an upswing. So it is hard to see how an accelerating European economy can fall into a deflationary trap.”
“Of course, some argue that the European recovery isn’t self-sustaining, and due to ongoing austerity measures, a fall back into a recession is likely. Not so. It is more likely that budget deficit and debt targets will be postponed once again until Eurozone economies are fully back on track.”
Super Mario will act on instinct Then there is the political and regulatory will. “Mario Draghi, the president of the European Central Bank (ECB), has already said that he is well aware of the deflationary risks and is prepared to act against them,” Cornelissen says. Inflation is already well below the ECB’s 2% target, but Draghi has insisted it cannot be allowed to permanently fall below 1% “and thus into ‘the danger zone’.”
“As interest rates in the Eurozone head towards zero, this is a clear signal that the ECB is prepared to resort to unconventional monetary measures if the need arises, putting pressure on the euro exchange rate and limiting deflationary risks.”
Thirdly, there are also significant cultural differences between Europeans and the Japanese, Cornelissen says. “The prospect of a Japanese-style deflationary environment is politically unacceptable within the Eurozone,” he says. “The long stagnation period in Japan can be partly explained by the unusually consensus-driven and mono-ethnic nature of Japanese society, which was prepared to suffer for the national good. Such stoicism is unlikely within the Eurozone.”
Banking union is the real problem Cornelissen says the real potential threat to deflation getting a foothold is “the slow, insufficient, unsatisfying progress towards a true banking union within the Eurozone, which is a recipe for slow growth.”
“Such a scenario fails to break the link between weak banks and weak states, and reminds observers of the Japanese-style ‘convoy system’ which keeps afloat the zombie banks that keep alive zombie companies, preventing creative destruction and a reset. That is, of course, partly true for the Eurozone.”
“However, the general health of the European banking sector is better than that of the Japanese. As such, the unhealthy tolerance of weak banks and sovereigns within the Eurozone is in our opinion more of a long-term problem for the bloc. This issue will be obscured by the ongoing recovery and therefore is insufficient to push the zone into Japanese-style deflation.”
It is also important to remember that the Eurozone has been in this situation before in the period just after the 2008 financial meltdown, Cornelissen says.
The Eurozone survived a brief period of deflation in 2008/09
As the graph above shows, in 2008/2009 a dramatic drop in inflation ended in a five-month period of mild deflation. “Such a short-term period of mild deflation is not a disaster, so long as deflationary expectations do not become entrenched. We are still far from such a development in the Eurozone,” Cornelissen says.
Robeco’s forecast is for inflation to gradually rise to 1.2% in the Eurozone in 2014 as growth picks up, in line with the consensus of other investment managers.
Wikimedia CommonsMohamed El-Erian . El-Erian Will Leave PIMCO in Mid-March
PIMCO announced that Chief Executive Officer and Co-Chief Investment Officer Mohamed A. El-Erian has decided to step down from his role and leave the firm in mid-March. He will remain a member of the Allianz International Executive Committee and, as of mid-March, also advise the Board of Management of Allianz on global economic and policy issues.
PIMCO’s founder William H. Gross will continue to serve as the firm’s Chief Investment Officer. At the same time, the firm has appointed a new portfolio management and executive leadership team. They will immediately begin to transition into their new roles.
Among these appointments, Andrew Balls will be Deputy Chief Investment Officer; Daniel Ivascyn, Deputy Chief Investment Officer; Douglas Hodge, Chief Executive Officer; Jay Jacobs, President; and Craig Dawson, Head of Strategic Business Management.
“Mohamed has been a great leader, business builder and thought leader for PIMCO and our clients. Together we have guided the firm and served our clients during a period of significant change in the global economy and financial markets. We are pleased that he will remain a part of the Allianz Group”, says Gross.
And added: “PIMCO‘s focus remains on delivering value to our clients through superior investment performance and client service. The firm’s new leadership team embodies PIMCO’s culture and values, and it reflects the strength and depth of our talent in both portfolio management and business management. With this team to lead us forward, PIMCO is in great hands.”
“I have been extremely honored and fortunate to work alongside Bill Gross, who is one of the very best investors in the world. His talents are truly exceptional, as is his dedication. I have also been amazingly privileged to work with the most talented group of professionals in the investment management industry. Their commitment and tireless work on behalf of our clients have been a consistent inspiration for me since I first joined PIMCO back in 1999. I wish them continued great success”, said El-Erian.
“PIMCO has become one of the leading investment management firms in the world through a relentless focus on performance, innovation, and delivering value to our clients, and that will not change. The firm has made important progress over the past several years to become ‘Your Global Investment Authority’ by expanding the scope of our investment platform and business, and we will continue to execute on this vision”, said Hodge.
The appointments
Balls is a Managing Director in the London office, a member of the Investment Committee and Head of European Portfolio Management. He joined PIMCO in 2006. Ivascyn is a Managing Director in the Newport Beach office, Head of Mortgage Credit Portfolio Management, and a lead portfolio manager for PIMCO’s alternatives investment strategies. Morningstar named him 2013 Fixed-Income Fund Manager of the Year (US). He joined PIMCO in 1998.
Hodge is a Managing Director in the Newport Beach office and is currently PIMCO’s Chief Operating Officer. Previously he led the firm’s Asia Pacific region from the Tokyo office. He joined PIMCO in 1989. Jacobs is a Managing Director in the Newport Beach office and is currently the Head of Talent Management globally. Previously, he was the Head of PIMCO’s German business, based in Munich. He joined PIMCO in 1998. Finally, Dawson is a Managing Director and is currently Head of PIMCO Germany, Austria, Switzerland and Italy, based in the Munich office. He is also Head of Product Management for Europe. In his new role, he will relocate to the Newport Beach office. He joined PIMCO in 1999.
Wikimedia CommonsMichael Baldinger, CEO de RobecoSAM. RobecoSAM publica el Anuario de Sostenibilidad. ¿Qué empresas llegaron a lo más alto?
RobecoSAM, the investment specialist focused exclusively on Sustainability Investing, today announced the publication of its annual Sustainability Yearbook. The yearbook looks back at companies’ sustainability performance in 2013 and ranks them as Gold, Silver or Bronze. The top performing company from each of the 59 industries is awarded RobecoSAM Industry Leader. Since 1999, RobecoSAM has been assessing and documenting the sustainability performance of over 2,000 corporations on a yearly basis and has a sophisticated proprietary database.
Corporate participation at an alltime high
A record number of companies participated in RobecoSAM’s Corporate Sustainability Assessment. Out of the largest 3,000 companies that are invited, 818 companies from 39 different countries participated with a 31% increase in participation from companies in emerging markets. RobecoSAM views this as a positive development in corporate sustainability and therefore recognizes the top industries by participation rate.
Ranking: The Top 3 Industries by Participation Rate
Household Products
Professional Services
Computers & Peripherals and Office Electronics
RobecoSAM raises the bar: Which companies make the cut?
This year, RobecoSAM made it more challenging to be a yearbook member. Now not only do companies need to be in the top 15% of their industrybut they must also achieve a score within 30% of their Industry Leader’s score to make the cut. This effectively makes being a yearbook member a more exclusive acknowledgement of a company’s sustainability practices.
For investors, the Sustainability Yearbook identifies companies that are strongly positioned to create longterm shareholder value. RobecoSAM’s annual Corporate Sustainability Assessment fouuses on examining financially material factors that impact a company’s core business value drivers. Factors such as a company’s ability to innovate, attract and retain talentor increase resource efficiency matter from an investor’s point of view because they impact a company’s competitive position and long-term financial performance.
Michael Baldinger, CEO, RobecoSAM said: “Companies still face the challenge of convincing investors to embrace sustainability as a means of generating shareholder value.” Baldinger is confident that this can change: “Starting with their own corporate pension funds, industry leaders are in an ideal position to encourage investors to integrate sustainability into their investment strategies.”
With the publication of the Sustainability Yearbook, Baldinger encourages the CEO’s of the RobecoSAM Industry Leadersto talk to their pension fund managers. He said: “Help them understand the financial and competitive benefits of corporate sustainability strategies and how these translateinto shareholder value”.
Each year RobecoSAM picks out the most prominent sustainability topics and shares its expertise through white papers in the prelude to the Sustainability Yearbook.The trending topics this year are:
Focus on Financial Materiality of Sustainability
Sustainability Leaders in the Emerging Markets –Myth or Reality?
Foto: Camknows, Fckr, Creative Commons. Votando en el sector inmobiliario
Major institutional investors around the world are poised to increase their allocations to alternative investments, with a bias towards real estate and real assets, during 2014, according to a global survey of institutions conducted by BlackRock and with approximately 100 institutional investors surveyed, representing the firm’s Americas, EMEA and Asia-Pacific markets, including corporate and private pension funds, insurers, investment managers, and government entities. In total, the investors surveyed represent more than $6 trillion in assets under management, with an average AUM of $70 billion.
Approximately half of institutions surveyed– 49% – expect to increase their real estate allocation and over 40% indicated they will increase their investment in real assets this year. At the same time, about one-third of the institutional investors surveyed intend to reduce their cash holdings in 2014.
“Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets, and rising correlation between stocks and bonds,” said Robert Goldstein, Senior Managing Director and head of BlackRock’s Institutional Client Business and BlackRock Solutions.
“Divergent economic and geopolitical conditions globally offer institutions a menu of real estate and real asset opportunities that meet a variety of investment objectives,” said Goldstein. “In real estate, while core, income producing investments in developed markets are still in favor because of their liquidity and safe cash flows, we anticipate that institutions looking for income-producing alternatives will turn their attention to more opportunistic real estate investments outside their home markets,” said Goldstein.
“We’re also seeing a growing interest in infrastructure debt. These types of investments can potentially offer institutions high fixed yields, with stable cash flows and long duration.”
Seeking Out Better “Portfolio Buffers”
“The results of the survey likely reflect a recognition that, going forward, the portfolio diversification benefit traditionally offered by equities and bonds might be less powerful than in the past,” Goldstein said. “Indeed, the price correlation between US equities and bonds, which had been negative from 2009 through mid-2013, has been positive ever since then – suggesting that institutions definitely will be looking to other asset classes for more effective ‘portfolio buffers’ in coming months.”
A Growing Interest in Hedge Funds and Private Equity
“Within the alternatives category, we believe hedge funds and private equity also will command a growing role in institutional portfolios in 2014, with investors casting a wide net for appropriate diversification tools,” said Goldstein.
Nearly 30% of institutions surveyed intend to increase their hedge fund allocations this year. In the Americas, over 40% of institutions are likely to increase their hedge fund allocation; none is planning a decrease. The trend is less true for EMEA, where 35% of institutions intend to allocate less to hedge funds and just 20% will allocate more.
Approximately one-third of institutions surveyed anticipate allocating more to private equity. Private equity is less popular with EMEA institutions and smaller investors (those with less than $20 billion in AUM), with these investors indicating they will either maintain or reduce current private equity allocations.
. World’s Ultra Wealthy Hold a Fifth of Their Wealth in Real Estate Assets
Private wealth is increasingly shaping the world’s real estate markets and the use of private equity in major property deals worth at least US$10 million has nearly trebled since 2009. Real estate now accounts for around a fifth of the invested wealth of the nearly 200,000 ultra high net worth individuals (UHNWIs) in the world, according to new analysis from international real estate advisor, Savills, in association with Wealth-X, the world’s leading UHNW intelligence provider.
In “Around The World In Dollars And Cents”, Savills estimates that the total value of the world’s real estate is now around US$180 trillion, some 72% of which is owner occupied residential property. Of the US$70 trillion that is ‘investable’ and therefore traded regularly – including US$20 trillion of commercial property – over half is being bought by private individuals, companies and organisations. Investing institutions, listed companies and publicly owned entities are becoming relatively less important to world real estate as a result.
Around 3%, or US$5.3 trillion, of the world’s total real estate value is owned by UHNWIs. This wealthiest 0.003% of the world’s population has real estate holdings which are worth an average of US$26.5 million each.
“Global real estate is mostly residential and held by occupiers, but private owners are becoming more important in the world of traded investable property,” says Yolande Barnes, head of Savills world research. “Since the ‘North Atlantic debt crisis’ of 2008, sovereign wealth funds, wealth management companies, private banks and family offices have stepped into the property deals that corporate bankers have deserted.
She added that: “In the world’s leading cities, the willingness of private wealth to take the place of debt finance or to take a higher-risk development position is now making the difference between deals done or schemes mothballed.” Savills estimates that around 35% (or 6,200) of global big ticket (>US$10m) deals in 2012 were only possible because of private funding.
Mykolas D. Rambus, CEO of Wealth-X, confirms the growing importance of private wealth: “We forecast that the UHNW population will grow by 22% by 2018, its combined wealth – currently US$27.8 trillion – is expected to total over US$36 trillion by 2018. This presents huge opportunities for those involved in global real estate investment to create the right product in the right locations.”
European and Asian UHNWIs hold by far the biggest share of all privately owned real estate, together accounting for almost 80% by value. European UHNWIs hold 31% of their wealth in real estate and Asians 27%, with a total value of around US$4.2 trillion, according to Savills.
The firm has also analysed the way private money moves around the real estate world and found that the majority (92%) of investments are within the ‘home’ global region. North America stands out as uniquely domestic, with American UHNWIs placing 99% of their real estate investments within their own country.
Meanwhile, mature and emerging nations have seen much more cross-border inward investment. Just under half (44%) of UHNWI investors in Africa and two-thirds (66%) in Latin America are from outside the home region.
European real estate markets are the largest and most international, having attracted the most global inward investment, relative to size, with London the standout global destination for private inward real estate investment from virtually every corner of the globe.
“In recent years there has been a tendency for UHNWIs to focus on ‘safe haven’, trophy properties for capital growth and wealth preservation”, says Barnes. “In future, we anticipate that some will begin to seek more productive, long-term income-producing positions. “UHNWIs will be competing more directly with institutional investors in future but, being more opportunistic and less constrained by formal criteria, are more likely to become pathfinders and pioneers than corporate investors are.”
