New research from Cerulli Associates finds that 47% of asset managers expect to hire dedicated marketing personnel and 41% expect to hire dedicated sales personnel in the next 12 months to support alternative investments.
“We’ve seen an increase in asset managers capitalizing on investor interest in alternatives by broadening their product lines,” explains Pamela DeBolt, senior analyst at Cerulli. “To be successful, managers must deepen their staff of dedicated professionals to support these efforts.”
The November 2013 issue of The Cerulli Edge-U.S. Asset Management Editionexamines product management teams, alternative investment staffing needs, and asset managers’ use of resources to target third party intermediaries.
“Alternative products can be complex and hard to understand for both advisors and end clients,” DeBolt continues. “Firms will be most successful when marketing and sales efforts include a significant educational component.”
According to Cerulli, firms have hired more dedicated sales professionals than any other alternatives-related position in the past year. The number of sales personnel dedicated to alternative products increased 54% from 2012 to 2013 among managers that distributed alternatives to both retail and institutional clients.
“Looking ahead, we are seeing the hiring shift slightly from sales toward increasing marketing staff,” DeBolt states. “Larger firms tend to create more collateral and educational tools, and appropriate levels of staff are required to maintain and update these tools.”
As alternative investments are becoming an increased focus and a larger business line for some firms, Cerulli recommends continued evaluation of support levels to ensure that the appropriate resources are committed to alternative product lines on an ongoing basis.
Goldman Sachs announced the sale of a majority stake in its UKpensions insurance business Rothesay Life. Funds managed by Blackstone and GIC each acquire 28.5% of the shares, with MassMutual acquiring a 7% holding. Goldman Sachs retains a 36% stake. The transaction is subject to regulatory approval.
Michael Sherwood, Vice Chairman of Goldman Sachs, said: “Rothesay Life’s success has now brought it to a size at which it is more capital-efficient for Goldman Sachs to share its ownership with other investors. As a market leader in a dynamic industry, Rothesay Life can continue its growth as a standalone business with the benefit of diversified ownership. We are pleased to remain the largest shareholder alongside three world class investors.”
The opening of the Shanghai Free Trade Zone marks one of the milestones of what will become “the new China” – with new opportunities for investors.
The zone is a testing ground for reform as the country seeks to move from the heavily state controlled and export-led “old China” to a modern economy, says Victoria Mio, Robeco’s portfolio manager for Chinese equities.
China aims to move towards a more consumer-led economy, with greater emphasis on developing the nascent service industry, and less state control over private enterprise.
“China has been undergoing a period of transition ever since the financial crisis and the recessions that hit the west, as it can no longer rely on exports for growth. The new China is related to the growth that these structural reforms will bring about,” says Mio.
“The new China is related to the growth that these structural reforms will bring about”
A busy few months for legislators Politically, the wheels are already in motion. Since the new Chinese government took office in March, it has been actively formulating further reform that will begin in earnest in 2014. The 3rd Plenary Session of the ruling Communist Party is due to meet in November to authorize extensive financial and economic restructuring.
Opening the Shanghai zone in September is a precursor to China’s application to join the Trans-Pacific Partnership, a powerful trade zone that includes Japan, the US, and 10 other Pacific Rim nations representing about 40% of global trade. Membership requires complete freedom of capital, which has thus far been controlled by the Chinese government.
“China is trying to reduce the role of government in the economy. The Shanghai zone will enable companies engaged in key growth areas to do conduct their business without government approval,” says Mio, who is based in Hong Kong.
The reforms are described as China’s ‘Big Bang’ whose impact will be similar to the way western financial markets were reformed in the 1980s. They also aim to help the country’s achieve its ambition of establishing the renminbi as a global reserve currency in future years.
“China is trying to reduce the role of government in the economy”
Investment opportunities are plentiful It means many opportunities for investors, says Mio. Her fund has outperformed the benchmark ever since it was set up in 2004, thanks to its blend of fundamental and quantitative stock-picking techniques combined with a thematic macroeconomic overlay analysis*.
Investors had been spooked this year by fears of a hard landing for Chinese growth following a weaker-than-expected first half, but GDP has accelerated in the second half, and the annual target of 7.5% is now seen as being easily met.
“We think that improving the quality of growth, to be driven by consumption, domestic demand and services-orientated business, and less driven by exports and government, is how the new China will move forward,” she says.
Services-based refocusing China – long the factory of the world, with a heavy emphasis on manufacturing – wants to move to a more services- based economy. In the Shanghai Free Trade Zone, the government has established a ‘negative list’ of ‘old China’ industries that saw heavy state control, and a ‘positive list’ of ‘new China’ businesses that will be promoted.
Negative industries include state monopolies in mining and transport; ‘ideological industries’ such as media; and strategic manufacturing such as railways. The positive industries include financial and professional services, technology, healthcare, education and culture. Those companies on the positive list will not need to obtain government approval for their activities.
Reforms that will be tested within the Shanghai Free Trade Zone include a relaxation of controls on foreign banks and fewer restrictions on foreign shipping at the world’s largest port. The government aims to reduce the barriers to entry for progressive, positive list companies.
The new themes will also focus on cutting China’s notorious pollution levels, offering opportunities for investors in companies engaged in the key growth areas of alternative energy and environmental protection. In technological development, mobile phone penetration is about 90% and internet use even lower at 45%, compared to more than 100% in the west (including smartphones and tablets).
The Chinese economy in numbers
Stock picking strategy Mio’s fund looks to pick the strongest players in each sector. The fund invests in Chinese stocks quoted in Hong Kong and Shanghai, currently representing the old and new Chinas. “It’s a good time to invest – valuations are low right now,” she says.
“Chinese stocks are trading on 9.2 times forward earnings when the long-term average is 12.2 times. It’s been lower than average because of lower GDP growth, but the slowdown has bottomed out.”
“Now China is in a period of cyclical recovery, and that’s very good for the stock market. This has been confirmed by the number of Chinese companies giving more positive guidance for the second half.”
The consensus for earnings growth for MSCI China companies is 10.1% for 2013 and 9.6% for 2014. In the first half, the earnings of index members rose 12% before slowing in the third quarter and recovering in the fourth.
Some risks remain So what are the risks? China remains heavily indebted, with total borrowing equivalent to 209% of GDP, although most of this debt is held by domestic households and corporates rather than foreigners. Debt levels are still much lower than western competitors such as Japan (392%), the UK (292%) and the US (253%).
Property bubble risks have emerged, though this has tended to be concentrated in the four ‘Tier-1’ cities of Shanghai, Beijing, Shenzen and Guangzhou where housing demand has considerably outstripped supply. Mio says other Chinese cities from Tier 2 and below where the majority of people live have similar house value-to-mortgage levels as in the west.
And China will remain a net exporter, partly still reliant on the austerity-hit west, as the steady appreciation of the renminbi hampers the price competitiveness of Chinese exports. The currency has already appreciated by 19% against the US dollar over the past five years, but is still considered “moderately undervalued” by the IMF.
Although the Eurozone recovery remains on track, slowing inflation and euro appreciation is putting pressure on the ECB to loosen monetary policy further this week. However, ING Investment Management does not expect a rate cut (yet). Also the euro does not seem to be much overvalued. Meanwhile, markets are again more driven by liquidity.
The output gap in the Eurozone has steadily widened since 2008 which implies consistent downward pressure on domestically generated inflation. As the graph shows, inflation in the euro region is on a clear downward trend since the end of 2011.
Developments of EUR/USD and inflation since 2007
Pressure on ECB to loosen policy further The slowing inflation highlights how sluggish the region’s recovery is. In October, inflation fell from 1.1% in September to a lower than expected 0.7%, the lowest rate since late 2009. Core inflation (ex food and energy) also fell and is now just 0.8%.
The ongoing decline in inflation, combined with the rise in the euro, is therefore set to increase the pressure on the ECB to loosen monetary policy further. The possibility of a further cut in the policy rate, or new liquidity measures in the form of an LTRO (long-term refinancing operation), is however not a forgone conclusion as the central bank’s governing council seems to be quite deeply divided. Slowing inflation and the appreciation of the euro are arguments in favour of a rate cut, while the improvement – while still fragile – in the real economy and the expectation that inflation will pick up next year (the ECB’s inflation forecast for 2014 is 1.3%) are the main reasons cited by those favouring no change in policy.
Despite the pressure to loosen policy further, the central bank may yet wait until its December meeting when the new quarterly ECB staff macroeconomic projections will provide more insight. This week President Draghi might state that the risks to inflation have shifted to the downside and that an interest rate cut is a possibility, in a bid to – at least temporarily – halt the euro’s rise and keep interest rate expectations low.
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The Carlyle Group announced that Kewsong Lee will join the firm as Deputy Chief Investment Officer for Corporate Private Equity. Mr. Lee comes to this newly-created position at Carlyle from Warburg Pincus where he was Managing Director and Member of the Executive Management Group. Mr. Lee begins his duties in late December and will be based in New York and Washington, DC.
Carlyle Co-Chief Executive Officer and Chief Investment Officer William E. Conway, Jr. said, “Carlyle’s greatest strength is the depth, continuity and collegiality of our global investment professionals. Kew will be a great addition to this team and will play a critical role in helping us ensure the platform we have created continues to make superb investments and create value for our investors.”
Mr. Lee said, “It is an honor to have the chance to join one of the industry’s most successful buyout platforms and to work with Bill and his team. This is an exciting time in Carlyle’s history and I am eager to learn and contribute. After 21 wonderful years at Warburg Pincus, I wish my colleagues all the best.”
As Deputy CIO, Mr. Lee will assist Mr. Conway in a range of activities related to investing and managing Carlyle’s Corporate Private Equity platform, which consists of 11 buyout and growth capital funds totaling $58 billion in assets under management. In addition to becoming a member of each fund’s investment committee, Mr. Lee will join the firm’s Management and Operating Committees, and also help with corporate development for the firm.
Mr. Lee joined Warburg Pincus in 1992, and was a Member of the Executive Management Group. Most recently, he led the firm’s Consumer, Industrial and Services group, and in the past, played an instrumental role in developing Warburg Pincus’s leveraged buyout and special situations efforts. He also led the firm’s financial services practice and helped drive the firm’s capital markets activities. Prior to Warburg Pincus he was a consultant at McKinsey & Company, Inc.
During his Warburg Pincus tenure, Kewsong Lee led numerous transactions, including The Neiman Marcus Group, Aramark, Transdigm, Polypore and Arch Capital Group.
In addition to serving on a variety of corporate boards, he is involved with several committees at Harvard University, and is a Trustee of Choate Rosemary Hall and a member of the Executive Committee of Lincoln Center Theater.
Mr. Lee, 48, earned his MBA from Harvard Business School and his AB in Applied Mathematics in Economics from Harvard College
Photo: Dominicus Johannes Bergsma. Grupo SURA Closes a Positive Quarter With a 28% Annual Growth in Revenues
Grupo SURA published its 3Q13 results, a period that highlights operating revenues amounting to COP 304,919 million (USD 160 million). The above represents, so far this year, a total sum of COP 702,313 million (USD 368 million) with a 28% annual growth.
Likewise, the accumulated net profit was COP 593,647 million (USD 311 million), with a 29.3% annual increase. Net contribution in the quarter was COP 244,217 million (USD 128 million), which represents a 293% increase compared to 2Q13, and 89% higher than the same period in 2012.
The sound performance in 3Q13 is based on the good operating results of subsidiaries Suramericana and SURA Asset Management, and on the recovery of global markets reflected on investment yields as well as the dividends registered on the income statement of Grupo SURA.
Figures backing the sound financial position
On the other hand, the Company’s assets reached COP 22.3 billion (USD 11.7 billion), a figure that displays an 8.2% increase compared with June, 2013, and a 3.15% increase at the end of 2012. With regards to Total Liabilities, a 15.8% decrease was achieved in the quarter, with closes at September with a historically low financial indebtedness coefficient of 2.2%. In addition, the result of the rating revision made by Standard & Poor’s is worth highlighting, which climbed from BBB- to BBB with stable outlook. This improved rating sheds light on the Company’s strengths in terms of the consolidation of its operations in Latin America, the performance of its businesses in different countries, the financial soundness of its investments. Indeed, S&P acknowledges, among others, the Company’s flexibility to access capital, sound investments portfolio, and stable flow of dividends.
Moreover, the financial results are supported by the Company’s inclusion, for the third year in a row, in the Dow Jones Sustainability Global Index, which assesses the social, economic and environmental performance of organizations. Grupo SURA obtained an important valuation in the economic setting, displaying one of the best scores.
It is also worth highlighting that the Company in Q3 successfully completed the merger process after acquiring 50% of AFP Horizonte in Peru, a process made by SURA Asset Management, subsidiary of Grupo SURA. The merger was completed within the terms set forth when the purchase was announced. The pension funds of subsidiaries rising from AFP Horizonte, assigned to AFP Integra, are already being managed by this pension fund manager of SURA, turning Integra into a largest pension fund of Peru.
“We are extremely satisfied with the Company’s results of the end of the quarter. Operations in different countries still display a good performance, our growth plans are still underway in accordance with the estimates made, and the market performance was favorable as well. Likewise, today we have a historically low debt indicator thanks to a rigorous plan implemented for this purpose since early 2012, which confirms the Company’s sound financial standing,” said David Bojanini, President of Grupo SURA.
Foto: Jenix89. Morgan Stanley to Invest $1 Billion in its Newly Created Institute for Sustainable Investing
Morgan Stanley Chairman and CEO James Gorman announced the establishment of the Morgan Stanley Institute for Sustainable Investing. The Institute will build on Morgan Stanley’s ongoing work to advance market-based solutions to economic, social and environmental challenges, operating from the foundational principle that sustainable investment can only achieve significant scale by attracting a broad range of private sector capital. Through product innovation, thought leadership and scholarship aimed at expanding opportunities for sustainable investing, the Institute will seek to drive capital toward investments promoting sustainable economic growth.
The Institute for Sustainable Investing will pursue three focus areas: financial products and solutions that enable clients to invest in sustainability-focused strategies seeking risk-adjusted financial returns; groundbreaking thought leadership that will help mobilize capital toward sustainable investing opportunities; and strategic partnerships with the public, private and nonprofit sectors designed to build capacity and best practices within the field of scalable sustainable investing.
The Institute’s first major commitments include:
Setting a goal of $10 billion in total client assets through Morgan Stanley’s Investing with Impact Platformin the next five years. By developing new products, innovative thematic portfolios and sustainable investing thought leadership, this platform will meet rapidly increasing client demand for opportunities to invest for positive environmental and social impact in addition to the goal of achieving risk-adjusted financial returns.
Creating new products − in coordination with Morgan Stanley Investment Management’s Long-Only and Alternative Investment Partners businesses − in which positive social and/or environmental impact is a core part of the underlying investment strategy.
Establishing an annual Sustainable Investing Fellowship program at Columbia Business School that will enable a select group of graduate students to pursue thought leadership in sustainable investing, coupled with an internship at Morgan Stanley to gain hands-on experience in product innovation, thought leadership and investment strategy.
Investing $1 billion in a sustainable communities initiativeto provide rapid access to capital for the preservation and enhancement of quality affordable housing units that are at risk of deteriorating into uninhabitable conditions or becoming unaffordable to low- and moderate-income households. The initiative will also seek to drive the integration of affordable housing with access to health care, healthy foods and other vital services. Morgan Stanley is partnering with leading community groups, including the Local Initiatives Support Corporation (LISC) and NCB Capital Impact, on the sustainable communities initiative. “This program takes our long partnership with Morgan Stanley to a new level,” said Michael Rubinger, LISC President and CEO. “It doesn’t just finance buildings; it fuels opportunity and focuses on quality of life. Together, we will be able to help low-income families live better and make their communities stronger and healthier.” Terry Simonette, President and CEO of NCB Capital Impact, said, “The sustainable communities initiative is the type of transformative investment that will help ensure the financing so desperately needed to provide access to healthy foods and other critical resources in our poorest communities. We are proud to partner with Morgan Stanley on this effort.”
Through these and future initiatives, the Institute for Sustainable Investing will further Morgan Stanley’s commitment to providing individual and institutional investors with products and strategies that address sustainability challenges at scale.
Morgan Stanley Chairman and CEO James Gorman launched the Institute in a speech at Columbia Business School today. Mr. Gorman said: “Morgan Stanley is in a unique position to harness the capital markets to help address the most pressing challenges facing society today, connecting governments, investors and businesses with the capital to execute at scale. Our philosophy is clear – the most effective solutions to sustainability challenges are those that can be brought to scale. Our clients are increasingly turning their attention to what it takes to secure the lasting and safe supplies of food, energy, water and shelter necessary for sustainable prosperity.”
Mr. Gorman will chair the Institute’s Advisory Board, which will include individuals from the private and nonprofit sectors with expertise in various aspects of sustainable investing including finance, policy and management (for a list of members, see the note to editors below).
Audrey Choi, who leads Morgan Stanley’s Global Sustainable Finance group, will be CEO of the Institute for Sustainable Investing. “As the world’s population grows toward 9 billion and beyond, meeting the exponentially growing needs for quality education, healthcare, housing and security will far outstrip current models of business, government or philanthropy,” said Ms. Choi. “The Morgan Stanley Institute for Sustainable Investing is committed to playing a catalytic role in forging innovative cross-sector partnerships that develop solutions to mobilize capital efficiently and effectively to meet these challenges at scale.”
William Stormont, ex co-manager at Henderson Global Investors in London, has joined Absolute Strategy Research in a sales consulting capacity, based in Vancouver, with the mission of introducing ASR’s research to fund managers in Canada and the US.
“I was formerly a client of ASR’s so was already familiar with the product and a supporter of their work. I have based myself in Vancouver, my native city, and am actively seeking to introduce ASR’s research to fund managers in Canada and the US. Though the firm is well represented in the New York and Boston areas there is considerable scope to grow in the rest of the US and Canada”, states Stormont to Funds Society.
William Stormont previously co-managed de Horizon Pan-European Equity Fund, at Henderson Global Investors in London, where he worked for nearly 6 years. Previously, he held several positions during 7 years at ABN Amro, including Head of International Hedge Fund Sales.
Gibraltar Private Bank & Trust announced that Douglas B. Sawyer has been hired as Senior Vice President, Market Executive in the bank’s Miami downtown office.
In his new role, Sawyer will be responsible for administration and growth of the market’s client portfolio as well as development of the Bank’s Fiduciary Account area. He has more than 30 years of experience in the financial industry. He was most recently president at Nason Consulting, a bank consulting company that provides strategic, operational, regulatory, management, staff and market guidance to community banks. Prior, he was an Executive Vice President at BankUnited for 8 years over which time he served as head of Bank Services, Wealth Management and Retail. Douglas also worked for 21 years at SunTrust Bank in various capacities, the most recent being executive vice president of retail overseeing the bank’s 25 retail branches in Miami-Dade County.
Sawyer is a Certified Financial Planner, holder of Series 7, 4, 24, 53, 63, 65 Securities License and holder of Florida Life Insurance and Variable Annuity License.
Douglas B. Sawyer earned a Bachelor of Science from Auburn University in Auburn, Alabama. His community involvement includes St. Thomas University Advisory Board, Christopher Columbus High School Board, Florida Bankers Association Government Relations Committee, Florida Banker Association / PAC Committee Chairman and American Heart Association, Past President, West Dade Division.
Wikimedia CommonsMap of the United States. Wealth-X Reveals America’s Wealthiest Individuals By State
Wealth-X has revealed a list of the 50 wealthiest American individuals by state (based on their business address) in 2013. These individuals are collectively worth US$540 billion, a 19 percent increase on last year.
The average net worth of the individuals on the list is US$10.8 billion – a US$1.7 billion increase on last year’s average of US$9.1 billion.
The top 10 individuals on the list – who all held the exact same spots on last year’s list – are collectively worth US$362 billion, 67 percent of the total wealth of the top 50.
Microsoft co-founder Bill Gates remains the wealthiest individual in America with an estimated net worth of US$70.8 billion, followed by Warren “Oracle of Omaha” Buffett, whose personal fortune is estimated at nearly US$60 billion.
Nine new individuals made the list this year: Micky Meir Arison (Florida); Brad Maurice Kelley (Kentucky); Kenneth B. Dart (Michigan); Whitney MacMillan (Minnesota); James Love Barksdale (Mississippi); John L. Morris (Missouri); Richard B. Cohen (New Hampshire); John A Yates (New Mexico) and Blake Roney (Utah). Collectively, their net worth is US$34 billion – 50 percent more than the combined net worth of the individuals who represented these same states on the list last year.
Below is the list of the 50 wealthiest individuals:
