EFG International is well known in the Americas as a leader in international private wealth management, with its Miami office as flagship and over 60 CROs (client relationship officers) in the region, dedicated to Latin American clients. Now, the EFG Group has taken the initiative to put its asset management division, EFG Asset Management (EFGAM), on the map. EFGAM’s reorganization started almost five years ago, and is now ready to compete with international management groups as a specialist asset management company catering for private banking professionals through strategies distributed under its New Capital brand.
“EFG’s fund management capabilities were historically highly decentralized,” says Mozamil Afzal, Global CIO for EFGAM, in an interview with Funds Society, “but after the 2009 crisis we reconstructed into a group which is much more integrated, and which has seen the closure of some businesses, the restructuring of others and a significant investment in technology and compliance, as well as the creation of a totally independent board of directors.”
EFGAM is headquartered in London with additional management centers in Miami, New York, Zurich, Geneva, Hong Kong and Singapore.
The management company has just over $9 billion in assets under management; of these, $5 billion are assets of EFG International’s HNW clients; $2 billion are from institutional accounts with management mandates, and $2.2 billion are under the strategies managed by EFG’s New Capital funds, established in 2003 and whose assets are spread approximately equally between customers from EFG’s internal channel and other external channels.
“The New Capital funds wereinitially aimed at the private banking client, but in 2009 we decided we wanted to establish the company in its own right, by building a first-class asset management company which could compete on an open architecture platform with any international asset manager,” says Afzal , who, at the same time admits to value highly EFG International’s internal channel because “it provides us with seed funds for our new ideas which are also highly inspired by what the private banking customer wants. “
As a strategy, New Capital is built based on three objectives, which are a product of its history as an asset management company specializing in private banking. “We know what we want,” says Afzal, “first, good returns; secondly, unique positioning of our products; and finally, an absolute return bias which defines exactly what the private banking client is looking for.”
In order to meet these objectives New Capital is launching products that “we, as clients of an asset manager, would like to buy.” When planning the launch of a strategy “we steer away from the most popular asset classes, because we would probably be late in the market,” seeking those asset classes, which will generate better than market returns in the coming years, with a focus on the much longer term.
The strategies launched by New Capital in recent years have focused on ideas like global wealth creation, through its “Wealthy Nations” fixed income strategy; or the belief that the future of economic growth lies in Asia, an idea that was implemented by launching the Asia Pacific Equity Income and China Equity strategies. In total, New Capital has seven UCITS strategies registered in Ireland with which it positions itself as an asset manager specializing in private banking, and with which it has managed to increase its assets under management from $150 million in 2009 to $2.2 billion today. “We’re not an asset manager for the retail client,” says Afzal, “but for the investment professional.”
Wikimedia CommonsFoto: US Navy. The Swiss Group SYZ & CO Moves into the Latin American Institutional Markets
The Swiss banking group SYZ & CO is moving into the Latin American institutional markets with the registration in Chile of the OYSTER European Opportunities fund. The clientele being targeted is mainly local pension funds, a fast- developing category of investors in the Andean region.
The assets of these pension funds are experiencing strong growth and should reach $800 billion by the end of 2013, of which an estimated $250 billion is potentially earmarked for international investments. The estimated growth for these pension funds exceeds 50% expected by 2016 with contributions running at nearly $2 billion per month. In Chile, for example, the assets in pension funds already amount to $170 billion, or 63% of GDP.
In order for the OYSTER funds to be distributed to pension fund administrators, SYZ & CO has entered into an agreement with HMC, a Chilean specialist in institutional distribution in the Andean markets.
Fast-developing pension funds
Apart from their swift growth, these pension funds also stand out in terms of their great openness to international investments. Chilean funds are, for example, allowed to invest up to 80% of their assets abroad. The total volume of investments that are possible abroad for the whole of Latin America therefore amounts to a potential nearly USD 250 billion, or more than 30% of the total. After having invested locally or in the North American markets, the region’s pension fund institutions are now showing an increased appetite for Europe, which offers some attractive prospects thanks to its lower share valuation levels and the diversification it allows, notably in terms of currencies.
A first OYSTER fund registered in Chile
SYZ & CO’s first fund to be registered in Chile is its flagship European equities fund, OYSTER European Opportunities. A second European corporate bonds fund should follow shortly, in order to satisfy Chilean pension funds’ appetite for fixed-income investments in euros.
A specialized local partner
In order for the OYSTER funds to be distributed to pension fund managers (PFMs), SYZ & CO has joined forces with HMC Partners, a local specialist in institutional distribution in the Andean markets. Established in Santiago (Chile) in 2009, HMC is also present in Colombia and Peru, two markets that are also very promising for institutional management. In Brazil, HMC has linked up with Itajubá, a company that distributes funds to a Sao Paulo-based institutional clientele. The cooperation with SYZ & CO is managed by Ricardo Morales, Managing Partner and co-founder of HMC.
Foto: Poco a poco. Crédit Agricole nombra a Jérôme Perrier director de su brazo financiero institucional en las Américas
Crédit Agricole Corporate and Investment Bank announced the appointment of Jérôme Perrier as Head of its Financial Institutions Group (FIG) for the Americas. At the same time, the bank named Jorge Fries as a Senior Banker for FIG, heading up the Insurance sector for the Americas.
Mr. Perrier was most recently Global Head of Strategy and Chief of Staff in Paris. He will make his headquarters in New York City, reporting to Jean-François Deroche, Senior Regional Officer for the Americas, and globally to Eric Chevre, Global Head of the Financial Institutions Group for Credit Agricole CIB.
Mr. Fries previously had been Managing Director and Co-Head of Special Situations and Current Assets with the Bank’s Securitisation team in New York, where he will continue to be headquartered. He will report to Mr. Perrier.
“Jerome brings important experience to a sector that we at Credit Agricole CIB regard highly to our strategic mission,” said Mr. Deroche. “With Mr. Fries for Insurance companies, and Gina Harth-Cryde and Rodrigo Rivera, our Senior Bankers in charge of the leading Banks and Financial Institutions in the US and in Latin America respectively, we have a very solid team that will enable us to further expand our services and involvement with the broad financial industry across the Americas.”
Mr. Perrier, who has been with the bank since 2007, has previously been in corporate strategy and development positions at Crédit Agricole S.A., Bank of America, PWC Consulting and Societe Generale, in New York, Boston and Paris. He has a BA from Middlesex University in London and a Masters from the Reims Management Business School in Reims, France.
Philippe Peirs has joined La Française to head-up International Real Estate Development. Philippe comes with a wealth of experience in the real estate industry and specifically in fundraising having worked for Société Générale for twenty years. His last position held was Managing Director and Head of Private Equity Fundraising Group. Philippe was instrumental in developing private fundraising advisory services at Société Générale CIB for third party investors that focused on European real estate, infrastructure and renewable energy. Philippe graduated from ESCP and has a Master of Science in Finance from London Business School.
Philippe Peirs is operating out of London. As Head of International Real Estate Development, Philippe will pursue Pan European, Middle Eastern and Asian development opportunities and work hand in hand with La Française partner Forum Partners, a global real estate investment management firm. “La Française is truly going in new directions and innovating in real estate asset management. The group has ambitious international development plans, and my arrival, which coincides with the capital stake taken in Forum Partners, clearly reflects the group’s commitment ,” comments Philippe.
Philippe Lecomte, CEO of La Française AM International and Head of Institutional Development (France and International) said, “Philippe is a valuable addition to our international development team. Having lived in London, the international real estate hub, for the past fifteen years, he has a full grasp of what motivates real estate investors. His extensive network should also contribute solidly to the funding of real estate transactions and future product launches. He’s a perfect match for the job.”
Citi Private Banking appointed Phillip Edwards as Director and Ultra High Net Worth Private Banker and Adam Gillam as VP and Ultra High Net Worth Private Banker to its team in Palm Beach, Florida.
According to the information, published by Reuters, prior to joining Citi, Edwards worked for JP Morgan Private Bank and Genspring Family Offices in Palm Beach Gardens. Gillam joins Citi from Wells Fargo in Palm Beach, where he was most recently a Vice President and Senior Private Banker.
Also in Florida, Raymond James recently recruited a team of advisors operating as Provenance Wealth Advisors (PWA). Headquartered in Fort Lauderdale, the firm is led by owners Eric Zeitlin, Todd Moll, Lee Hediger and Scott Montgomery.
According to Financial Advisor, the advisors at PWA joined Raymond James from Walnut Street Securities Inc., where they managed more than $1 billion in client assets and had annual fees and commissions of more than $5.4 million.
Co-owners Moll, Zeitlin and Hediger founded PWA in 2000 and affiliated with Berkowitz Pollack Brant, a large regional CPA and consulting firm in South Florida. Montgomery joined as a director/owner a few years later.
New research from Cerulli Associates finds that more than 60% of institutions’ asset flows were consultant-intermediated in 2012 with the rest coming from direct sales, according to their recent survey of institutional asset managers.
“Given the significance of investment consultants, just over half of the asset managers we polled plan on placing an even greater emphasis on fostering consultant relationships,” states Michele Giuditta, associate director at Cerulli. “This percentage initially appeared low to us, but our discussions with institutional distribution leaders confirmed that many firms are already devoting substantial resources to these efforts and plan on continuing to do so. This explains the high percentage of firms that plan on dedicating the same level of emphasis on the consultant relations effort in the future.”
In the fourth quarter issue of The Cerulli Edge – Institutional Edition, Cerulli analyzes distribution trends, including the changing consultant landscape and growth of outsourced chief investment officers, retirement distribution dynamics, and passive investing.
“Capital markets have become increasingly more complex, and the investment opportunity set has broadened to include more complicated investment products and vehicles,” Giuditta continues. “Given institutions’ growing needs, they seek more support and advice for their portfolios, which has led to an increase in the use of investment consultants.”
Cerulli reports that many investment committees are redefining their roles, delegating more of the day-to-day investment-related responsibilities to their gatekeepers, and focusing more on overall policy matters.
“Consultant relations professionals shoulder significant responsibility as investment consultants request more from their asset managers,” Giuditta explains.
Wikimedia CommonsPhoto: Katrina.Tuliao. Horizons ETFs Group Will Launch First Andean ETF in Colombia
S&P Dow Jones Indiceshas licensedthe S&P MILA 40 Index to Horizons ETFs Group to serve as the basis for an exchange traded fund. The ETF will be listed on the Bolsa de Valores de Colombia (BVC) and will be the first Andean equity focused ETF available in Colombia.
The S&P MILA 40 Index, launched in 2011, was the first in a series of indices for Latin America’s second-largest market. The Index gauges the returns of the largest and most liquid stocks trading on the Mercado Integrado Latinoamericano (MILA) platform, an integrated trading venture formed by the Chile, Colombia and Peru stock exchanges.
Alka Banerjee, Managing Director of Global Equity Indices at S&P Dow Jones Indices, said: “We are pleased to license the S&P MILA 40 Index to Horizons ETFs. As growth and development of the Andean equity markets continue, the S&P MILA 40 Index provides a transparent and relevant benchmark for this important region of the world.”
Howard Atkinson, Managing Director of Horizons ETFs Management (LATAM) LLC and Global Head of Sales and Marketing for the Horizons ETFs Group said: “We’re very pleased to expand our global partnership with S&P Dow Jones Indices. This is the second international market we’ve entered where the first ETF we launched has replicated an S&P index. The S&P MILA 40 Index offers a way for investors to follow the tremendous growth potential of the MILA region.”
Wikimedia CommonsEd Cowart, CFA, Manafing Director at Eagle AM. VARG Better than GARP as an Investment Philosophy which Focuses More on Value Than on Growth
As part of Nordea’s strategy of signing exclusive agreements with boutique asset management companies specializing in asset classes that are outside its normal range, the Nordic management company agreed to launch a UCITS US AllCap Equity strategy in 2012, sub-advised by US’ Eagle Asset Management.
At the event held in Miami by Citywire, Funds Society had the opportunity to talk with Ed Cowart, CFA, portfolio co-manager of this US AllCap Equity strategy, as well as of the strategies Large Cap Value and Equity Income which are also managed by the company, although these last two are only available to the U.S. domestic investor.
“Our investment strategy follows the VARG (Value and Reasonable Growth) philosophy which comes before the traditional GARP (Growth at a Reasonable Price) model, because valuation is paramount,” says Cowart. The main idea behind the VARG investment philosophy is that it protects against paying too much for a company, while the reasonable growth vector provides protection from falling into value traps and unlocks the shares’ future valuation.
Thus, the strategy, which maintains between 30 and 50 stocks in its portfolio, brings together the best ideas of each of the four co-portfolio managers who make up this team and who have worked together for many years. “Whenever we see an idea in which we have a greater conviction, we will make room for it, ensuring at all times that we have our favorite stocks in the portfolio.”
This team of four co-managers has over 100 years of combined investment experience in a variety of market environments, with an excellent track record in terms of the capture ratio in both bull and bear markets.
Cowart, who is also Managing Director of Eagle Asset Management, explains that the team usually talks for months or even years before making the final decision to invest in a company where it is always fundamental to combine the two essential themes of the strategy : fundamentals + valuation. “Great companies can be terrible investments if the price is not adequate” he says.
When holdings are added to the portfolio, it is with the view of maintaining them for 2-3 years, so that on average, portfolio managers are adding a new name each month, usually to replace another one in the portfolio. “The catalyst which helps us decide to enter into a company which we like and which is cheap, varies. For example now, with the shale gas revolution in the U.S., the triggers required for manufacturing companies, not necessarily related to exploration, to be added to our portfolio are all in place. “
Eagle Asset Management’s US AllCap Equity strategy was launched in its U.S. domestic version in the last quarter of 1999, but it was not until June 2012, with its launch on Nordea’s SICAV, that it achieved greater successes, growing from an initial seed capital of $2 million at its launch to the $1.2 billion under management today.
“Together, in these three strategies we manage about $4 billion, and we find no problem seeing the AllCap strategy grow beyond $10 billion because our portfolio is more mid-cap than small-cap,” says Cowart.
Generali Investments Europe has appointed Wilfrid Pham as Head of Equity department and Vivek Tawadey as Head of Credit Research. Both will focus on supporting the company’s investment team, that globally manages more than €320 billion, and ensuring a strong alignment between analyst and portfolio managers.
In his position Pham will strengthen the current Equity team organization based on more than 20 people in Paris and in other European locations of Generali Investments Europe. Vivek Tawadey will consolidate the strong credit research capability of Generali Investments Europe, that globally manages in excess of €300 billion of fixed-income assets, with a specialist team dedicated to credit (more than €100 billion in this asset class).
“Wilfrid and Vivek are outstanding asset management professionals, enabling us to strengthen our team significantly”, said Santo Borsellino, CEO of Generali Investments Europe. “Our aim is to make Generali Investments Europe a more international and pure play asset management Company, increasingly focused on new product development to meet the needs of our insurance and third-party clients”.
Pershing released a white paper on the pending regulatory changes for fiduciaries and the potential impact on how advisors manage IRA rollovers. The white paper, “Pursuing Rollovers in an Evolving Regulatory Landscape” provides insight into the anticipated regulatory changes that will modify the definition of a fiduciary. Pershing has released this white paper to help guide advisors on how they can accommodate these rules as it pertains to IRA rollovers and continue to deliver services to their clients.
IRA Rollovers are a critical client need as well as an important part of the advisory business. As the “Baby Boomer” generation retires, advisors will need to help manage the transition of billions of dollars from retirement plans into rollover IRAs. At the same time, retirement plan distributions and IRA rollovers are becoming more regulated by the Department of Labor (DOL) which will require advisors to be knowledgeable about the regulatory changes to come.
“It is important for advisors to understand the complexities of the regulatory environment,” says Robert Cirrotti, director of retirement solutions at Pershing. “Being knowledgeable of the current and pending regulations that will affect the definition of a fiduciary is essential for advisors. These new definitions require advisors to understand when they are considered a fiduciary and when they are not.”
As the DOL works on regulation to expand the definition of fiduciary advice, more advisors could be subject to regulation by the Employee Retirement Income Security Act (ERISA). According to the paper, advisors who are not fiduciaries can help participants with distributions and rollovers. For those who are fiduciaries, or who become fiduciaries under the expanded definition, the DOL interpretations mean that advisors should consider a prudent approach for assisting clients with rollovers, including:
Clearly defining the fiduciary services provided to a plan so as not to include rollovers
Ensuring that the decision to take a distribution and to rollover an IRA is the participant’s decision
Offering clients unbiased educational materials regarding distribution alternatives and rollover services
Providing written disclosure of fees and expenses for the IRA and its investments, as well as the advisor’s compensation
If regulations change to expand the fiduciary definition, it will focus more attention on an advisor’s fiduciary status with regard to a plan or participant. Because it is not possible to predict what the rules will be once they are finalized, advisors should always consider their current practices based on the current regulatory environment until pending changes are clear.
Pershing partnered with Fred Reish, a nationally recognized ERISA attorney and retirement plan expert, to develop the white paper. To obtain a copy of the white paper, “Pursuing Rollovers in an Evolving Regulatory Landscape”, you may visit www.pershing.com.
Fred Reish and Bruce Ashton also authored a White Paper for J.P. Morgan Asset Management titled“Fiduciary implications: Using re-enrollment to improve target date fund adoption”to provide advice and to give an opinion regarding the ERISA fiduciary implications of using a re-enrollment strategy when adding target date funds to an investment line up, which is accesible in pdf file through this link.
