CC-BY-SA-2.0, FlickrMarco Ruijer, portfolio manager líder de portafolios de deuda de mercados frontera hard currency, ING IM. ING IM lanza un fondo de deuda de mercados frontera que completa su gama de deuda emergente
ING Investment Management launched the Frontier Markets Debt Hard Currency fund on December 9. This fund will invest in the Frontier Markets universe and will target outperformance of the JP Morgan Next Generation Markets (NEXGEM) Index by active management.
The firm highlights that “the fund is an attractive addition to the current offering from the Emerging Markets Debt (EMD) boutique enabling clients to receive broader EMD strategy selection and experienced EMD investors to implement their EMD views more specifically. This fund further strengthens ING Investment Management’s reputation as a pioneer EMD manager”.
The fund was launched with a USD 100 million contribution in kind from the Emerging Markets Debt Hard Currency fund, partially replacing its direct existing frontier markets debt exposure.
ING is a pioneer in the EMD strategies with one of the longest track records in the industry dating back to 1993 (for EMD Hard Currency) and 1998 (for EMD Local Currency). The firm has been investing in Frontier Markets since 1993. Jeremy Brewin, head of the team, has relevant investment experience since 1974. Jeremy has also been named as a ‘’Top Performing EMD Manager’’ by Citiwire. Both Marco Ruijer and Daniel Eustaquio; Portfolio Managers have 15 years’ experience respectively. Furthermore, many of the team members have deep roots in emerging/frontier countries, providing valuable perspective and understanding of the dynamics of these economies.
ING IM has a historically strong commitment to emerging markets. Its key strength in Frontier Markets is ING IM’s global multi-site team, organized to correspond with the three core time zones that span Asia, Europe, the Middle East, Africa and the Americas. EMEA region is covered from The Hague, Latin America is covered from Atlanta and Asia is covered from Singapore. According to the firm, the multi-site approach is also instrumental to trade the portfolios around the clock maximizing regional information access and better liquidity conditions found in major markets such as Hong Kong and Singapore, London and New York during local peak hours.
Photo: Averette. Olivier Livenais Appointed CEO of Crédit Agricole Private Banking in Miami
Olivier Livenais replaces Mathieu Ferragut, who has been appointed Head of Americas Region, Crédit Agricole Private Banking.
Olivier Livenais began his career with Société Générale in 1998 as Organizational Project Manager. He joined the Crédit Agricole Group in 2000 at the General Inspectorate, where he held the positions of Inspector then Head of Mission. In 2007, he moved to Crédit Agricole Private Banking as Finance, Risk and Strategy Manager. Since the holding company was set up in November 2011, he has been Finance and Supervision Director.
Olivier Livenais is a graduate of Ecole Supérieure de Commerce business school, Grenoble (1998).
Last July, Mathieu Ferragut was appointed new Head of the Americas Region at Crédit Agricole Private Banking, based in Miami. Mathieu Ferragut is in charge of managing and coordinating the Crédit Agricole Private Banking business in South America and developing customer and service synergies across the countries in the region.
Mathieu Ferragut began his career with Crédit Lyonnais Singapore in 1996 as Information Systems Project Leader. In 1998, he was appointed Chief Operating Officer of Crédit Lyonnais Private Banking Asia. In 2000, he joined the Miami branch of Crédit Lyonnais, where he held the positions of Chief Operating Officer and Chief Compliance Officer for seven years. He was appointed Deputy CEO of Crédit Agricole Miami Private Banking in 2007, then CEO in 2008.
Mathieu Ferragut graduated from Institut Supérieur de Commerce business school in 1993. He holds a Bachelor’s degree in Accounting and Finance (1994) and a Master’s degree in Finance (1995).
Kommer van Trigt, head of the Robeco Rates team. Fed’s Dovish Policy Set to Continue
The US Federal Reserve (Fed) is likely to continue signaling its ‘dovish’ policy after finally beginning its tapering program, Robeco’s Rates team believes.
The central bank on 18 December decided the US economy was strong enough to justify cutting USD 10 billion from its USD 85 billion of monthly asset purchases. It was the last Federal Open Market Committee (FOMC) meeting of outgoing Chairman Ben Bernanke.
The Fed will now only adjust its tapering message “very gradually”, says Kommer van Trigt, head of the Robeco Rates team.
Positive for risk markets
“This should be positive news for risk markets. But as time progresses and the economic recovery continues as expected, it will be more difficult for the Fed to keep market expectations in check,” he says.
For now, Van Trigt is positive: “The Fed has managed to jump over the hurdle of announcing tapering without inflicting much damage to risk appetite.”
The initial market reaction to the announcement was positive. Government bond prices remained more or less stable on the news, while equities and credits rallied.
Two reasons for market thumbs-up
“This reaction is explained by two reasons,” says Van Trigt. “First and foremost, the start of the reduction was communicated well in advance of the actual event. Markets have been anticipating the start of tapering since the possibility was first mentioned in May and expectations and prices have been adjusted accordingly.”
The second reason why yesterday’s initial reaction was positive is the way in which tapering was announced. The Fed successfully communicated that the start of tapering should be seen separately from any intentions to lift official interest rates. This can be seen from its comments and expectations.
The 10-year Treasury bond yield had risen from 1.6% in May to 2.9% this month, as tapering essentially means the end of easy money, and the beginning of rising rates. This raises bond yields and lowers their values.
‘It will take until the end of 2014 to bring purchases down to zero’
A previous attempt to announce potential tapering in the summer took markets by surprise, causing money market interest rates to rise sharply and bond prices to fall.
Gradual pace of tapering
“The gradual pace at which they intend to reduce asset purchases is a signal by itself. If USD 10bn of bond purchases is cut every time the FOMC meets, it will take until the end of 2014 to bring purchases down to zero,” says Van Trigt.
He also welcomed the Fed’s announcement that official rates would remain unchanged “well past the time that the US unemployment rate declines below 6.5%”. It is currently 7.0%.
And emphasis that the central bank placed on using its 2% inflation target when making a future decision on interest rates also shows dovish intentions, he said. US inflation is currently well below that at 1.2%, giving plenty of room for maneuver.
Stronger economic figures
In their adjusted forecasts, the FOMC members expect the 6.5% unemployment level to be reached around mid-2014, while they expect inflation to remain at or below 2% up until the end of 2016. The first rate hikes are expected for mid-2015 and this view has not changed in spite of the decision to start reducing asset purchases.
“All in all, the Fed’s comments and its latest forecasts signal its intention to keep monetary policy very accommodative well into 2015. This explains the positive reaction in markets ranging from credits to equities,” says Van Trigt.
Photo: Mattbuck. Barclays W&IM Sells its Portfolio of Latin American Clients to Santander Private Banking
Santander Private Banking has acquired the business of Latin American and Caribbean clients of Barclays Wealth & Investment Management, a business which the British bank controlled from Miami and New York, as was confirmed to Funds Society by Barclays.
According to other sources familiar with the transaction, the portfolio to be transferred is worth $5 billion, with a team of about twenty bankers divided between New York and Miami. As partof the agreement, the transfer of the accounts to Santander is subject to the client’s approval,saidanothersourceclose to the deal.
In a brief statement to which Funds Society has had access, Barclays declared that “subject to the consent of affected customers and any staff affected by the transfer, we have reached an agreement with Santander Private Banking to transition our business in Latin America and the Caribbean to Santander.”
Santander Private Banking has offices in Geneva, Nassau, Houston, New York, San Diego, Miami and Seattle. Funds Society got in touch with Banco Santander for their comments regarding the operation, but the banking institution declined to comment.
Last September, Barclays issued a new strategy aimed at reducing the complexity of certain areas of their business, and as part of that strategy, the division of Wealth & Investment Management at Barclays has since then been proceeding to limit the number of regions from where they serve their clients, including clients in Latin America and the Caribbean.
At that time Barclays W&IM confirmed the closing down of 100 private banking centers, five booking centers, and the reduction of its workforce worldwide as part of a policy aimed at increasing profitability.
CC-BY-SA-2.0, FlickrStephan Kuhnke, CEO at Bantleon Bank. "Our Objective is Absolute Return, Our Purpose is Capital Preservation”
Founded in 1991 by Jörg Bantleon, it’s not until the year 2000 that this firm, focused on the management of high quality bond portfolios, starts to manage assets. Their strategy and focus towards “secure” investments took them in 2012 to surpass EUR10 bn in assets under management. The premises are clear “first preserve the capital, and then maximize concentration in order to achieve attractive returns” as matter of fact almost 60% of the company’s capital is invested in Bantleon funds.
With offices in Switzerland and Germany, Bantleon counts with a team of 32 people, of which 13 of them are asset managers or investment professionals, stable and with little rotation. Their offer includes investment grade bond funds, absolute return and multi strategy funds, fundamentally directed toward institutional clients.
In 2008 they launched the Bantleon Opportunities L strategy that benefits from the joint economic development of both the bond and equity markets. The returns come from the intense duration management together with the flexible investment in equities that can be of either 0% or 40%.
“Our fundamental focus is on predicting the estate of the economic cycle” comments Stephan Kuhnke, CEO of Bantleon Bank and responsible for portfolio management and trading, in an exclusive interview for funds society.
“On the equity side of the portfolio we invest in the DAX, as it’s the index that best represents the real economy, compared to the MSCI World that underperforms in upswings but falls less in downswings. The companies in the DAX are export oriented and therefore highly correlated to the economic cycle and it’s also the most liquid index”.
According to Kuhnke, their model counts with two components, strategic and tactic. “For the strategic component we analyze the fundamental environment to predict where we are within the economic cycle and determine if we invest or not in equity.” The floor is zero. The tactical side combines trends and momentum.
The results of both components have to be positive in order for the strategy to invest in equity. If either is negative, they do not enter the equity market. “Our objective is absolute return, our purpose is capital preservation”.
The bond portfolio plays with the carry and the duration of the bonds, that ranges from 0 to 9 (0-2-4-9). “We mainly invest in debt with AAA rating”.
Since its launch Bantleon Opportunities has never had a negative year. Even during the most turbulent markets like the 2000-2002 crisis or the collapse of the financial markets in 2008, their management method has been very stable. This good track record has got them various Lipper and Bloomberg prizes and a 5 star Morningstar rating. In 2012 and this year, Bantleon has been awarded with the FeriEuroRatingServices as the best manager in Germany, Austria and Switzerland in the absolute return category.
As for 2014, Kuhnke expects the economic cycle to continue its positive trend until the second quarter that will be followed by some slower growth. “In this scenario we will be long in equities and reduce the duration of our portfolio.”
Nevertheless, towards the third quarter of the year, “things will change towards a low growth environment that will lead us to close our position in equity and increase duration”.
CC-BY-SA-2.0, FlickrFoto: Dave Haygarth. Perspectivas Multi-Activos: cuatro temas de inversión en renta variable para 2014
Philip Saunders, portfolio manager across the Investec Managed Solutions Range, gives four equity themes for 2014
1) Continue to avoid the mega-cap dinosaurs
Market indices around the world are dominated by companies that have seen better days. They look cheap and offer tempting dividend yields but often face serious strategic challenges. Some will prosper and some rejuvenate themselves but most are likely to continue to languish. Small caps, mid-caps and the smaller large caps are likely to go on out-performing. We prefer quality growth stocks, especially in the cyclical sectors, well-judged recovery stocks and small & mid cap stocks around the world. What does this mean for investors? In our view this is positive for actively managed equity funds that are prepared to diverge significantly from the weightings of the major market indices.
2) Increase exposure to emerging market equities and debt on weakness
Emerging markets have been disappointing in 2013 with slower growth and weakening currencies leading to sustained downgrades to forecasts of corporate earnings growth. This in turn has undermined equity valuations. Valuations are now attractive in both absolute terms and relative to developed markets but earnings forecasts continue to be reduced. Bond yields have backed up, partly in tandem with developed market yields, partly due to domestic problems. Some currencies have fallen to attractive levels. An emerging markets crisis, marked by currency collapses, capital flight, much higher interest rates and a recession, is highly unlikely but markets could continue to be dull in the short term. Nevertheless, a strategy of building long term equity exposure during the year is likely to be well-rewarded while further currency weakness could provide an attractive long term opportunity to invest in emerging markets. What does this mean for investors? In our view this is an opportunity to add exposure to emerging market equities and debt into weakness – but be prepared to be patient
3) Quality and ‘contrarian’ stocks should continue to out-perform
Many investors in 2013 made the mistake of assuming that ‘quality’ was synonymous with large-cap defensive sectors. Quality implies consistent business strategies, durable market opportunity, long term growth, well-managed finances and high returns on invested capital. These characteristics are to be found in all sectors, both cyclical and non-cyclical. Typically, quality stocks are not cheap but reassuringly expensive; nevertheless sustained long term growth ensures attractive investor returns. ‘Contrarian’ investing in out-of-favour stocks and sectors can also be highly rewarding but the investment world is full of value traps; stocks that appear cheap and pay generous dividends but whose businesses are in long-term decline.
Turn-around stocks are cheap because they are high risk but value realisation depends on business turn-around if investors are to regain confidence. The world is full of value investors but there are many fewer prepared to pay up for quality or with the courage to identify and back companies with real turn-around potential. What does this mean for investors? In our view, investors should be wary of lowly valued stocks with a high yield which are often cheap for a reason. Paying up for quality and buying true contrarian stocks should continue to be rewarded.
4) Resource equities are about value added, not commodity prices
Commodity prices continue to trade sideways, the performance of the energy sector has improved but mining shares, especially precious metal miners, have languished. The problem for energy companies has been replacing reserves at reasonable cost but for miners it has been scaling back over-ambitious expansion plans.
Reducing costs, improving license terms and returning cash to investors have been key across both sectors. Investors continue to shun mining stocks, despite compelling cashflow valuations. They favour integrated majors, many of which are strategically challenged, rather than the growth companies. This creates great opportunities for active stock-picking. What does this mean for investors? We think the outlook for the resource sector is better than implied by current investor pessimism, especially given the opportunity for adding value through stock selection.
Wikimedia CommonsWilliam Finnegan from MFS. The Family Wealth Conversation
William Finnegan, Senior Managing Director of Global Retail Marketing at MFS highlights the challenges investors face when their inheritance gets passed on to their heirs. He provides solutions to this challenge to make this transition a smoother process.
Private equity firms often get a bad rap in the popular media — picture Gordon Gekko in the 1980s movie Wall Street and, more recently, negative characterizations during the last presidential election — but new research by Stanford faculty member Shai Bernstein should dispel some of the myths about this class of investments.
“The public debate about private equity often lacks data upon which to base its arguments,” says Bernstein, who is an assistant professor of finance at Stanford Graduate School of Business. “We wanted to take an in-depth look at the operations of these privately held firms, which are, more often than not, hidden from the public eye.”
After a rigorous analysis of private equity (PE) buyouts in the restaurant industry in Florida, which looked at 103 separate deals from 2002 to 2012 and 3,700 restaurant locations, Bernstein and Harvard Business School faculty member Albert Sheen found strong evidence that private equity buyouts actually improved management practices and operations, as well as decreased prices, all with a minimal impact on employment.
While the study focuses on a single industry and geography, Bernstein stipulates that the findings are indicative of the broader value created by PE buyouts. As he explains, the restaurant industry has much in common with other sectors that attract private equity firms — they have tangible assets, relatively simple operations, and predictable cash flows. “We believe we can draw broader conclusions from these deals,” he says, although noting that some caution should be used in making generalizations.
The researchers decided to focus their efforts on restaurants because of the industry’s pervasive practice of dual ownership, in which a parent company directly owns and manages some locations and others are franchised. In general, a parent company has much less control over franchisees than locations that are directly owned. According to Bernstein, this provided a uniquely controlled experiment about the value added by PE firms, allowing the researchers to compare the effect of private equity ownership on direct-owned versus franchised locations.
Wikimedia CommonsPhoto: Rosana Prada. Azimut and Futurainvest Sign a Joint Venture To Provide Financial Advisory Services in Brazil
Azimut, Italy’s leading independent asset manager, and FuturaInvest, have signed an investment and shareholders agreement to set up a partnership to provide financial advisory services in the Brazilian market.
FuturaInvest, founded by 6 partners with proven experience in the financial industry with an average tenure of 12 years and a strong track record, counts 35 people and 11 offices around Brazil, 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.
Subject to the satisfaction of certain conditions precedent, the transaction will entail the acquisition, through AZ Brasil, of a 50% stake in three entities: (i) a financial advisory company, (ii) an asset management company (dedicated to funds of funds and managed accounts) and, (iii) subject to the approval of the Banco Central do Brasil countersigned by the President of Brazil, in FuturaInvest DTVM (Distribuidora de Titulos de Valores Mobiliarios). FuturaInvest DTVM is a regulated financial institution authorized to distribute financial products to local investors (operative since September 2013).
The overall transaction value is around $5.3 millon (R$ 12.5 million) mainly paid via a capital increase, which will finance the growth envisaged in the business plan. Furthermore, the agreement contemplates the possibility of a maximum adjustment to the subscription price in connection with the business development over the first three years of operations. As at 30th November 2013 FuturaInvest has around $97 million.
Azimut and FuturaInvest management share the same medium-long term commitment and will cooperate to grow the existing business also by hiring new financial advisors, opening new offices to extend the country’s coverage and increasing the funds of funds product offering.
Myths about the innate differences between men and women when it comes to investing behavior and performance are debunked in a new research report publishedby the Merrill Lynch Wealth Management Institute. A study of 11,500 investors found that while men and women differ in their approach to investment decision-making, gender is less a determinant of investing success than other social, demographic and circumstantial factors.
The Merrill Lynch report, “Women and Investing: A Behavioral Finance Perspective,” suggests that the basis of previous research, which focuses on investing behavior of men versus women, has relied on stereotypes that are limiting in scope. The goal for researchers and advisors is to move away from gender comparisons and instead focus on women’s varied and unique perspectives.
Numerous studies have found that compared to men, women are more averse to investment risk, less engaged in investment decision-making, trade less often and establish investment goals that put the needs of family and community ahead of personal needs.
Merrill Lynch analyzed the behavior and preferences of women investors through a wider lens of social and demographic factors, and found that men and women are far more alike than many people have thought.
Key findings of this research include:
Eighty-five percent of women agree that risk-taking is beneficial, and 81 percent of women feel they can adapt to changing market conditions and investment outcomes.
Men and women who have a similar level of financial knowledge share similar risk behavior. The greatest differentiating factor among investors is their perceived financial knowledge, and women are more likely than men to say they have lower levels of financial knowledge. More than half (55 percent) of women, but only 27 percent of men, agree they know less than the average investor about financial markets and investing.
One-half (50 percent) of women and 55 percent of men want to be personally engaged in making investment decisions.
Approximately one-half of women (51 percent) are concerned they might not reach a key investment goal: having enough money for the rest of their lives. While 58 percent of women say their focus on investing is to meet the needs of their family, more than 40 percent said they do not feel they should put financial support for other family members ahead of their own goals.
“Our research reinforces the importance of concentrating on the unique, personal goals of each investor. Doing so can identify a deeper understanding of the individual’s concerns and priorities which may better align investments to achieve the outcomes the investor desires,” said Michael Liersch, head of Behavioral Finance for Merrill Lynch Wealth Management. “We believe we need to change the dialogue with both men and women, to discuss what really matters to them and what they want their investments to achieve.”
The Merrill Lynch report provides three key action steps action steps for advisors to better understand the unique perspective of men and women clients:
Engage both men and women in dialogue about the investment process. Identifying the right level of engagement can be useful in gaining experience and confidence with investing and managing investments toward desired outcomes.
Make investing personally meaningful. Articulating specific, personally meaningful goals – such as meeting lifestyle needs or leaving money to family members – can help investors develop the right investment strategy.
Structure communication with key decision makers. Identifying various perspectives on investment can help joint decision makers come to the right set of investment-related actions.
A copy of the Merrill Lynch paper “Women and Investing: A Behavioral Finance Perspective” is available here.
