Wikimedia CommonsYves Bonzon, CIO de Pictet. Los hedge funds, ¿siguen siendo convenientes?
Hedge Funds have performed poorly for the last three years compared to treasuries and corporate bonds, therefore people are questioning their relevance in portfolios. “We believe there’s a place in each portfolio for this kind of investment as long as it is allocated in the relevant asset class and, most importantly, when the mangers are carefully selected fort their skills and capacity to deliver performance”, says Pictet CIO, Yves Bonzon, in this video.
Investment banking faces a leaner, humbler future, says Jonathan Rosenthal, in a Special Report about International Investment Banking published by The Economist, though a select few banks will emerge from the financial crisis even larger and more powerful.
The report posts that revenues in investment banking have shrank from US$350 billion in 2009 to US$250 billion last year, a massive drop that has more to it than the typical cyclical factors.
According to Rosenthal, new regulation, such as Basel III and derivatives regulation is to blame. Investment banking is becoming a less profitable business forcing several players to quit the market. The problem is that big banks post big systemic risks, and regulators would not approve mega mergers in the sector. In the recorded interview Rosenthal explains how European banks are facing stricter capital requirements and as they cannot sell their investment banking business to other players, they are simply being forced out of the business, as has happened with UBS that has decided to scale down dramatically its investment banking operations to concentrate in private banking and wealth management.
The Economist notes how, in 2008 just after the financial crisis exploded, European Banks thought that it was their opportunity to catch up with their American counterparts. For example, Barclays took advantage of Lehman Brothers failure buying its investment bank activities, but in the end, American regulators invested massively in the recapitalization of their banking system whereas European banks are still coping with this issue. As a result, The Economist points out that without any doubt, “Wall Street is Back”.
This special report will be published in The Economist magazine on May 11th, 2013.
Wikimedia CommonsSteven Wieting en una intervención en Bloomberg TV. . Citi Private Bank nombra a Steven Wieting director de Estrategia Global
Citi Private Bank announced the appointment of Steven Wieting as Global Chief Strategist, with responsibility for formulating investment views and strategies for the business and its clients around the world, said the bank in a statement.
Steven is currently Managing Director and US Economist in Citi Research, and is held in high regard for his views including his extensive work on demographic and policy challenges with a focus on the implications for long-term asset market performance.
Steven will report to Eduardo Martinez Campos, Global Head of Investments at Citi Private Bank, and will remain based in New York in the role. He will be appointed Chair of the Global Investment Committee for the Private Bank, and joins the Investments Leadership Team.
Steven joined Smith Barney in 1996 and was appointed Lead Economist for Citigroup’s US Institutional Equities business in 2000. In this role, Steven advised Citi’s institutional investor and government clients globally on using macro developments to guide their portfolio decisions. While serving as both an economic forecaster and advisor to asset managers, Steven examined credit, commodity and foreign exchange market influences as well as corporate earnings forecasts and equity market insights.
He also served as economic advisor to the Morgan Stanley Smith Barney Global Investment Committee until early 2013 and was a voting member of predecessor Asset Allocation Committees at Citi. Prior to joining Smith Barney, Steven was an economics correspondent with Dow Jones, and he also served as a contributor to the Wall Street Journal’s “Credit Markets” column. Previously Steven worked for the US Department of Commerce.
Wikimedia CommonsFoto: Marc Faber at the Robeco World Investment Forum. “We are all doomed”: Q&A with Dr. Doom
Another crisis is inevitable, argued Marc Faber at the Robeco World Investment Forum. So how should investors position themselves? And how can you spot when the asset-price bubble will burst?
Q: Do you believe that current asset prices are an accurate reflection of risks?
A: No, certainly not. I believe that asset prices today have been distorted by artificially low interest rates. If interest rates are at zero, it is difficult to value anything. There is no real value.
Q: Would you say that the monetary easing in the US has been the core of the financial problems we are facing at the moment?
A: Yes, monetary easing and the expansionary monetary policies over the last 30 years, which led to excessive credit growth, have been a major factor in causing the financial crisis of 2007/2008 and the continuous malaise we have up to today. But I would also say that other interventions by governments, their fiscal measures, have also been very disruptive for the economy.
Q: You have talked about how these expansionary policies are like taking a mortgage out on future generations. Can they ever repay the debts that have been built up?
A: Future generations will never be able to pay their debts and the entitlements for retirees. But I also would like to introduce another concept: it depends on what you use the debt for. If you borrow money and build a factory that produces something that results in cash flow and profits, and allows the interest on the borrowings to be repaid, and to have surplus cash for further investments, that it is one story. But if you just borrow money to go on holiday, that is another story.
Q: What is the way out?
A: The way out is to do something different from what we have done in the past. Under the influence of today’s central bankers and neo-Keynesian politicians, there is more stimulation, more government intervention and more money printing. They do precisely the things that led to the crisis. But that is not the right medicine. The best thing would be for all the boards of central banks to resign. We need new people running central banks that have monetary responsibility.
Q: What should investors do?
A: We have to live with the fact that money is being printed. This money will flow into different sectors and different markets around the world. This will not lead to less volatility, it will lead to more. So you will have bubbles in NASDAQ, real estate, commodities, emerging markets and government bonds. Now we have a gigantic bubble in sovereign debt. Investors need to diversify and avoid buying asset markets that have become overly popular.
Q: We are still in the monetary easing phase. What is going to happen?
A: We will have a huge systemic crisis. The last time the financial sector went bust, it was bailed out by governments. The next phase is governments themselves go bust. Before they do that, they print money like there is no tomorrow. We do not know when the crisis will happen. It could happen tomorrow, but it could also happen in three, five or ten years’ time. Like when your computer crashes, there will be a re-booting of the global economy. But before that, most likely we will have high inflation rates, maybe we will have a deflationary collapse and we will have wars. We are all doomed.
Q: Are there indicators that can predict when the bubble will burst?
A: In my opinion, there is already one indicator that is already flashing a very heavy warning signal. Asset prices are going up, but the standards of living of the typical household in Europe and the US—I am not talking about the people who work for Goldman Sachs—are going down. The industrial economy is doing badly. The linkage between money printing and the industrial economy has already broken down. The rich are buying second homes in the Hamptons, luxury apartments in New York City and Mayfair, paintings, gold—all completely unproductive assets. They are not going to build a new factory. They are not going to start a new business. Nothing is being created economically.
Q: Why aren’t they investing?
A: They are not investing because of excessive regulation. Take, for example, ObamaCare. It is an administrative nightmare. People are reducing their business activity. Firms are not investing in the US, but instead they acquire other companies and downsize. They lay off people.
Q: Do you predict a revolution if income inequality increases further?
A: When the masses of the poor become more powerful than the few, the rich have to pay. Usually history has solved this problem through redistribution through taxation or by revolution. The bailout of Cyprus is the beginning: the rich have to pay more than the poor. In Cyprus, there is a social element where they go after the rich. Even in America there are clear signs, like individual retirement accounts being limited to USD 3 million. The writing is on the wall.
Wikimedia CommonsBy NASA. Capital Strategies come into agreement with REYL AM to distribute their funds in Latin America
Capital Strategies, a firm specialized in the representation of international managers with a niche profile, has signed an agreement to distribute the funds of Reyl AM in Latin America.
Reyl AM, is an investment boutique based in Geneva. With more than US$8 billion in assets under management, they offer equity, fixed income, and alternative funds. Their philosophy of investment is based on preserving the capital that generates sustainable alpha across all market cycles.
Nicolás Lasarte, partner of Capital StrategiesPartners and responsible of business development in LatAm comments, “Reyl is an asset management that is very known around Europe, especially in Switzerland. However, they have had no presence in Latin America. Capital Strategies will provide institutional distribution of their product in the region. Specifically Mexico, Peru, Colombia, Chile, Uruguay, and of course Brazil.”
Their flagship is the Reyl Emerging Markets Equities, which was awarded by Morningstar with 5 stars. Launched in 2009 with US$1.7 billion in assets under management, their main focus is based on a process of balanced and disciplined investment that will identify opportunities along all of the sectors, while investing in any capitalization. With a quantitative bias, their objective is to generate alpha in all of the market cycles.
“Besides being a number in terms of return, the size of the fund is very important to us,” notes Lasarte. “It allows us to access to small or medium companies, which is partly fundamental in the universe of emerging markets, by maximizing the uptake of growth of these countries by fund investors.”
“By having a policy in controlling the growth rate of assets like the policy that Reyl has, it appears to us as well that it is fundamental to have this policy in the universe of investment. Other funds with a bigger size have difficulties in investment with little companies because their tickets are way too big which decreases the generation of alpha,” he adds.
Wikimedia CommonsBy Humayunn Peerzaada . India, una joya que necesita capital extranjero para seguir creciendo
Given the amount of cash in the pockets of global investors today, India presents a wealth of potential. But to harvest this, the country needs capital. And while it does have a decent savings rate, it falls short on capital formation; it therefore needs long-term foreign capital, hubbies.comsaidin itsGuide to Investing in India 2013 divided into sixchapters: Demographics and consumption; Equity Markets; Fixed Income; Real Estate; Private Equity and How to Access the Indian Market.
In the absence of much organised analysis that helps long-term investors make sound decisions, Hubbies objective with this Guide is to provide a useful starting point to help answer some of the key questions in the minds of investors: What does the economy look like? What are its long-term drivers? What road-blocks does it face? And even if investors are convinced about the long-term fundamentals of the economy, are there shorter and medium-term factors that could de-rail the secular trend?
Assuming investors are convinced about the economy – how can they leverage the fundamentals? What asset classes are available? For each asset class, what are the fundamentals, as well as risk/return equations? And if investors are ready to buy, how do they access the investments? Should they invest through globally recognised fund managers or do the local investors have some competitive advantage? How can they access the local fund managers? Are there are restrictions or disincentives that change the risk/return equation?
If you want tosee thecomplete guideyou cansee this link
Wikimedia CommonsFoto: Marcosleal. Las trabas económicas de Brasil reducen el número de UHNWI del país y su fortuna total
UHNW population growth in has suffered from the steep drop in GDP growth but may stabilize should appropriate policies be adopted. This is one of the conclusions highlighted in the World Ultra Wealth Report 2012-2013 by Wealth-X, which, on the other hand, notes that Brazil’s attraction as an investment destination is supported by its net global creditor status, stable external liquidity position as well as enviable international reserves, which are approaching the US$380 billion mark, approximately half the region’s reserves. “Though the negative impact on an appreciating currency is widely recognized, there is official support for policies that support a strong Brazilian Real”, it adds, noting that the Real is expected to appreciate in view of excess global liquidity and investor thirst for high yield investment options, particularly in terms of global fixed income investments.
The total wealth in Braziliam UHNWI’s hands has fallen 6.7% from a year ago reaching US$865 billion while the number of UHNW individuals falls 1.7% up to 4,640 individuals.
According to the report, further liberalization of state-controlled sectors and companies, such as state-controlled banks and Petrobras, could boost Brazil’s attraction for investors, who have felt locked out of state controlled monopolies. Brazil reportedly received close to US$60 billion FDI flows from June 2011-2012. “The need to invest in energy and transport infrastructure, prerequisites for future growth, is urgent and should be at the forefront of government policy”.
Other hurdles that Brazil potentially faces would include, the inclination towards increased trade protectionism perceived growth in corruption and the need to address challenges face by the manufacturing sector in relation to the tax structure.
Wealth-X analysis shows there are 49 billionaires in the country. This group of billionaires, representing the top 1.1% if the UHNW population, control 34.7% of the total fortune attributable to the ultra wealthy segment. On average, these billionaires are US$6.1 billion each.
The lowest tier of the UHNW group represented by those worth US$30 million to US$49 million is the largest group, making up 40.8% of the total UHNW population in Brazil. They have combined fortune US$75 billion or 8.7% of the total wealth of Brazil’s ultra affluent.The report concludes pointing out that the Brazilian UHNW individuals are mobile and versatile, with at least 10% of UHNWI’s conducting business primarily outside of Brazil and at least 9% owning residences outside of Brazil.
Next month, Latin Markets is bringing over 400 industry leaders to the Private Wealth Brazil Forumon June 11 at the Tivoli Hotel in Sao Paulo. The one day forum focuses on providing updates regarding regulation, investment management, trust issues and strategies to protect and grow wealth. You can register through this link.
. Luis Moreno assumes the direction of Private Banking, Asset Management, and Insurance Division of Santander
Luis Moreno García has been named director of the division in Private Banking, Asset Management, and Insurance Division, assuming a week later that Javier Marín has been named Chief of Executive Officer (CEO) of the bank replacing Alfredo Sáenz, sources have been confirmed by Grupo Santander to Funds Society.
The appointment of Luis Moreno García has been communicated over an internal memo that has been signed by the new CEO of the bank (Javier Marín). Moreno, who started working in Grupo Santander in 1988, used to be the director of Marketing in that same division.
José Salgado Fuertes de Villavicencio has been named global head of Private Banking. The Private Banking Commercial area and the Private Banking Products and Market Intelligence area will report to him. In accordance with the established corporate model, each country’s private banking business units that are integrated within commercial banking will report globally to José Salgado, and locally to the region’s corresponding commercial banking head.
Also,Oscar Villoslada Montpart has been named global head of Insurance. The Insurance Commercial area and the Insurance Products and Market Intelligence area will report to him. The new head of the division’s Marketing area, to replace Luis Moreno, will be Maria Dolores Pescador Castrillo.
The division’s remaining business areas, Asset Management and Business Development, will maintain their current structures and heads. The corporate support areas will not undergo any modifications, maintaining, inaccordance with the model defined by the Group, the process of double reporting to the business division and to the corresponding corporate support division.
Jordi Comas, Managing Director of Andbank. Andbank expects to double its business in Latin America in four years, with a clear bet on Mexico and Brazil
Andbank has been in Latin America for more than ten years. A decade in which has focused all its efforts towards creating a market through acquisitions and new contracts in order to establish its model of private banking. However, its project has reached one of its most ambitious moments due to the bank’s plans of doubling its assets under management for the next four to five years, “taking into consideration the results,” according to Jordi Comas (Managing Director) in an interview with Funds Society.
Today, Andback manages US$15 billion under management, which means they are suppose to reach US$30 billion in five years, with a clear bet towards he Brazilian and Mexican markets. Fifty percent of the company’s assets come from foreign countries, and if goals are achieved, eighty percent of its business would come from the international division mainly from Latin America. “We want to be a Latin American private bank,” emphasized Comas.
“In 2012 we grew 20% and the idea is to keep growing until the international area takes up 80% of the business.”
In Andbank’s last 12 years, the result of the merger between two family banks from Andorra (Banc Angricol y Banca Reig) focused on private banking for more than 80 years and has experienced an important transformation that assisted important moments such as in 2008 when they decided to establish the markets that they considered vital for their strategy, and where they entered “with conviction and determination,” which was a crucial change in strategy that coincided with the arrival of the group led by Jordi Comas and Ricard Tubau, who is today’s Chief Executive Officer of the bank.
Restructuring the Business
Comas and Tubau, who came from the consulting business, specifically from the Boston Consulting Group (BCG), prepared a project that has put the bank in a very privileged position. After the merger in 2001, the international expansion began in 2003 and in 2008 a new period started, which Comas defined it as a period of economic success, a period that has opened the bank to the world. The whole bank was restructured in 2008 while maintaining the same direction, but still focusing on changing their profile.
“Comas believes that the banks that understand Latin America ‘are very few.’ We understand the idiosyncras, we have no rush and we invest for the long run.”
Since his arrival, the bank has grown in the volume of assets at annual rates close to fifteen percent, as well as maintaining one of the highest solvency rates in the sector (above twenty percent). Also, the payroll has doubled and the bank has upgraded from being in five countries, to now 12.
Based on this topic, Comas remembered that in 2008, only 5% of the business came from Latin America; a percentage that has reached 40% today. While in short-term markets, more than 50% will come from the international businesses. Andbank has offices with banking authorization in Spain, Luxemburg, Monaco, Bahamas, Panama, and Mexico. Therefore, adding up to seven banking authorizations, including Andorra. The bank also has offices in Switzerland and Miami where they have a broker dealer.
“Fifty percent of the business will come from other countries in the short run and expect it to continue growing. We have grown twenty percent in 2012 and the plan is to continue growing up to the point where the international area will generate 80% of the business,” according to his interview.
“The banks that understand Latin America are very few.”
The advisor thinks that the Banks that understand Latin America “are very few”. From Andbank, he said, “we understand the way of thinking, we are not in a hurry and we invest for the long run”. In his opinion, the bank has a competitive dynamic which is going to continue positioning the bank in the sector. At this point, he mentioned that, through the Columbus Asset management company, located in Mexico, where the bank used to acquire fifty percent of the ownership in 2008, that the business does not grow less than twenty-five percent each year.
“From an organic point of view, there has to be a 20% growth rate and buy things that are not too big.”
“In this market, the banks that are moving slowly leave us an excellent space in the private banking area, which is our core business. We compete in terms of speed and talent,” he emphasized.
In terms of the bankers’ profile, Comas said they have, “the best of the best in profitability. There are people older than 45 years old with experience of 15 or 20 years in the sector that participate in an exciting and ambitious project.”
“The crisis is going to hit the Banks that are not going to be able to adapt”
The executive recognized that according to today’s environment in this sector, “the crisis is going to hit the banks that are not going to be able to adapt,” as well as Andback having the opportunity to change and become a reference bank. “The transition had to be done, it is going to bring an expansion which will change the buesiness.”
If they want to buy other banks in order to grow, the executive recognized that therewill be more acquisitions in private banking, but he emphasized that it will be done in a planned way. “If you are not skilled, you will end up losing. From an organic point of view, we have to grow 20% per year and buy things that are not too big.”
Comas explained that every office that they open complicates the business because the bank is multi custody and multijurisdictional, which allows custody for third parties. Today the Bank has more than 650 in its payroll, from which half of this number is from employees located outside Andorra.
In terms of the type of client that the bank has in Latin America, it has a portfolio between US$7/10 million, a client with more than the average that the bank has in Europe.
Comas has a Bachelor’s degree in Economics and Business from the Autonomous University of Barcelona and an MBA from the Wharton School of the University of Pennsylvania. He started his professional career as co-founder and Chief Executive Officer of the publishing house Tibidabo Editions in 1984. Before starting to work in Boston Consulting Group in 1991, he worked for two years in the Research Area of La Caixa.
. Merrill Lynch Wealth Management nombra a Ashvin Chhabra nuevo CIO
Merrill Lynch Wealth Management today announced that Ashvin Chhabra is joining the firm as chief investment officer, head of Investment Management and Guidance (IMG). In his role, Chhabra will oversee the delivery of investment advice and strategy to Financial Advisors and their clients. He will also lead the IMG manager due diligence, investment analytics, and investment guidance teams, as well as the Ultra High Net Worth (UHNW) Investment Office.
Chhabra served as Merrill Lynch’s head of Wealth Strategies and Analytics between 2001 and 2007. During his time at Merrill Lynch, Chhabra delivered pioneering work to link behavioral finance to portfolio construction, the foundation of Merrill Lynch’s ability to deliver goals-based wealth management solutions to its clients.
Chhabra most recently served as the chief investment officer at the Institute for Advanced Study in Princeton, N.J. During his six years at the Institute, he worked closely with the Institute’s Board of Trustees’ Investment Committee, which is chaired by James H. Simons, founder of Renaissance Technologies.
Prior to joining Merrill Lynch in 2001, Chhabra was head of Quantitative Research at J.P. Morgan Private Bank. He holds a Ph.D. in applied physics from Yale University and is recognized as a leader in the fields of investment management, risk and asset allocation, and risk management. Chhabra is a frequent lecturer at leading universities and a board member of numerous academic and industry groups.
