Investors searching for core, low-cost exchange-traded funds (ETFs) to use as the building blocks of their portfolios helped push Schwab ETFs to a new milestone: the suite of 15 equity and fixed income ETFs reached $10.02 billion in assets under management as of February 8, 2013. Charles Schwab Investment Management (CSIM) reached this threshold just slightly more than three years after launching its first proprietary ETFs in November 2009.
“I want to thank investors for choosing Schwab ETFs as the right place for their hard-earned assets,” said Marie Chandoha, president of CSIM. “For Schwab ETFs, what matters most is that we continue evolving to meet client demand for quality ETFs in key asset classes at an incredible value. And, we think that crossing the $10 billion mark in such a short period of time is just the beginning.”
When Schwab debuted its first ETFs in 2009, the company broke new ground by offering them to clients commission-free online. In September 2012, Schwab made investing in ETFs more affordable for clients again by slashing expense ratios on all Schwab ETFs – they each have the lowest operating expense ratios in their respective Lipper categories.
Schwab’s 15 proprietary ETFs continue to be available commission-free online, and are part of the new $0 commission Schwab ETF OneSource™ featuring 105 ETFs from leading providers in major asset classes1. CSIM’s suite of ETFs spans the major asset classes, providing retail investors with the core building blocks of an investment portfolio. Eight of the funds now have a three-year track record, none have paid capital gains distributions to date, and all have competitive tracking errors. Three Schwab ETFs have over $1 billion in assets under management, including the Schwab Broad Market ETF (SCHB), Schwab International Equity ETF (SCHF) and Schwab U.S. Large-Cap ETF (SCHX). The Schwab Emerging Markets Equity ETF (SCHE) has $871 million in assets as of February 8, 2013.
Nuveen Investments, a leading global provider of investment services to institutions as well as individual investors, announced an update to the portfolio management teams for the following four Nuveen closed-end funds.
Nuveen Equity Premium and Growth Fund (NYSE: JPG)
Nuveen Equity Premium Income Fund (NYSE: JPZ)
Nuveen Equity Premium Opportunity Fund (NYSE: JSN)
Nuveen Equity Premium Advantage Fund (NYSE: JLA)
Effective immediately, Michael Buckius and Kenneth Toft, both of Gateway Investment Advisers, LLC, have been appointed co-portfolio managers of the funds. Mr. Buckius joined Gateway Investment Advisers in 1999 and holds the positions of senior vice president and chief investment officer. Mr. Toft joined Gateway Investment Advisers in 1992 and currently serves as senior vice president and portfolio manager. J. Patrick Rogers no longer serves as a portfolio manager of the funds. Each fund’s investment objectives and investment strategies remain unchanged.
Nuveen Investments provides high-quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates—Nuveen Asset Management, LLC, Symphony Asset Management LLC, NWQ Investment Management Company, LLC, Santa Barbara Asset Management, LLC, Tradewinds Global Investors, LLC, Winslow Capital Management, LLC and Gresham Investment Management LLC, all of which are registered investment advisers and subsidiaries of Nuveen Investments, Inc. In total, Nuveen Investments managed approximately $219 billion as of December 31, 2012.
We see more evidence that the Eurozone economy is tentatively healing, although the emergence from recession will be a slow one. A stronger euro can derail a recovery, yet ECB President Draghi may be able to talk down the exchange rate.
The euro declined after Mario Draghi’s press conference last week. It remains to be seen however if he could again “talk the talk without having to walk the walk”.
Eurozone economy is slowly healing…
We see more confirmation that the Eurozone economy is slowly starting to heal this year. The substantial drags on growth exerted by credit and financial conditions on the one hand and austerity measures on the other, should abate somewhat while an improvement in global demand will have a positive effect on exports. The latest economic data broadly seem to confirm this view as both the composite purchasing managers’ index (PMI) as well as the EC economic sentiment index has increased for three consecutive months now.
…largely driven by Germany
Most of the improvement is driven by Germany. This was also confirmed by the IFO business climate index which rose for the third consecutive month from 102.4 to 104.2 in January. As a rule of thumb, three rises in the row in the past signalled a recovery which is set to continue. The rise was mainly driven by the expectations component which correlates well with German growth momentum and confirmed the strong upward trend that started towards the end of the summer of last year. All this suggests that Germany indeed benefits strongly from the pick-up in global growth given its diversified export base.
Recovery will be a slow one
Nevertheless, it is important to emphasize that the Eurozone’s emergence from recession will be a slow one. We should not forget that the Eurozone economy has always been like an oil tanker (i.e. turning slowly) and this time around this should hold to an even larger extent. The winds of peripheral deleveraging are still blowing and outside Germany unemployment rates remain on a rising trend which exerts downward pressure on the consumer.
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Photo: Seabirds. RobecoSAM and S&P Dow Jones Indices introduce DJSI Emerging Markets
RobecoSAM and S&P Dow Jones Indices today announced the launch of the Dow Jones Sustainability Emerging Markets Index (DJSI Emerging Markets). The DJSI Emerging Markets offers investors a tool for measuring the performance of companies that RobecoSAM has recognized as leaders compared to their peers in terms of corporate sustainability and it also provides an effective engagement platform to encourage companies from emerging markets to adopt sustainable best practices.
A reference tool based on unique investment insights
RobecoSAM explains in a press release that although much progress has been made in terms of political and economic stability, many companies in emerging markets continue to operate in challenging surroundings. “The DJSI Emerging Markets seeks to identify corporate sustainability leaders by drawing on RobecoSAM’s extensive experience in measuring intangibles through the annual Corporate Sustainability Assessment (CSA)”. For example, RobecoSAM has identified resource efficiency as a potential driver of corporate success in the emerging markets based on the important role commodities play in the regional value chain.
Guido Giese, PhD, Head of Indexes, RobecoSAM, said: “The steady increase in the number of emerging market companies that participate in our CSA shows that businesses around the world are embracing sustainable practices as an important factor in their future competitive position. As the emerging markets have come of age, demand for a regional benchmark for sustainability investors has increased and we can now offer an appropriate product.”
Alka Banerjee, Vice President of Global Equity Indices at S&P Dow Jones Indices, said: “An important strategic reference point for sustainability investors around the globe, the DJSI are continuously advanced to respond to market trends and requirements. The DJSI Emerging Markets, the first index of its kind in the market, is launched in response to the evolving needs of the global investment community.”
New region – same proven rules
In keeping with the already existing suite of the Dow Jones Sustainability Indices family, the DJSI Emerging Markets is constructed on the basis of RobecoSAM’s annual CSA, which evaluates companies’ sustainability performance based on economic, environmental and social criteria. Constituents are selected based on the same criteria and best-in-class approach as companies competing for membership in the other DJSI.
In the emerging markets universe, only the companies whose Total Sustainability Score in the RobecoSAM Corporate Sustainability Assessment, based on the company’s participation and/or publicly available information, ranks them among the top 10% in their sector are eligible for index inclusion.
Out of a total of 800 emerging market companies that were eligible to participate in the 2012 CSA, 69 were identified as sustainability leaders in their respective sector and selected for index membership. As a result, the DJSI Emerging Markets tracks the performance of those leading companies from 20 developing economies. Like the existing DJSI Family, the new index can be customized to meet investor requirements with regard to value or faith based motivated exclusions or specific geographical subsets.
KeyCorp announced today that it has agreed to sell the company’s investment management subsidiary Victory Capital Management and its broker dealer affiliate Victory Capital Advisers to a private equity fund sponsored by Crestview Partners for $246 million in cash and debt, subject to adjustment at closing. Key intends to seek regulatory approval to use the gain from the sale to repurchase shares of its common stock.
“For Key, the divestiture is consistent with our strategic focus on businesses that leverage the competitive advantages of our core relationship banking model,” said Chairman and CEO Beth E. Mooney . “In addition, this transaction partners Victory with a widely recognized acquirer, allowing Victory to operate as a pure play investment management business, with management owning an equity position.”
The sale price consists of $201 million of cash at closing and a seller note. The initial face amount of the note will be $45 million, with its final value determined at the end of 2013. KeyCorp estimates the after-tax gain on the closing of the transaction in the range of $145 to $155 million, subject to final valuation of the note. The business to be sold represented $112 million in revenue and $88 million in expense of KeyCorp’s financial results in 2012.
Victory Capital Management has approximately $22 billion of assets under management and offers a wide range of investment strategies and vehicles for institutional and individual clients. Victory Capital Advisors, a registered broker dealer, provides mutual fund distribution services.
Crestview Partners is a value-oriented private equity firm based in New York City, with approximately $4 billion of capital under management.
The sale is expected to close during the third quarter of 2013. It was approved by the Victory Mutual Fund Board of Directors, and is subject to customary closing conditions and consents of the Victory Mutual Fund shareholders and certain investment advisory clients.
Morgan Stanley & Co. LLC acted as exclusive financial advisor and Sullivan & Cromwell LLP provided legal advice to KeyCorp.
Wikimedia CommonsBy: And2000 . The Carlyle Group Raises $308 Million for Investments in Peru
Global alternative asset manager The Carlyle Group (NASDAQ: CG) today announced it has raised $308 million for Carlyle Peru Fund, L.P. and its parallel vehicles, extending the South America investment presence the firm established five years ago.
The Fund will be invested by Carlyle in consultation with Credicorp, Peru’s largest bank, across industries including healthcare, retail and consumer, services to mining, construction and infrastructure businesses, and education. Carlyle opened its Lima office last year and now has four full-time investment advisory professionals based there.
Juan Carlos Felix, Carlyle Managing Director and Co-head of the South America Buyout team, said, “We see many long-term investment opportunities for our new Peru Fund in this vibrant market. South America is undergoing a transformational change toward more developed economies, with a new middle class being created, and we believe Peru is at the leading edge of that trend. We have the right team in place on the ground in Lima to partner with entrepreneurs and family business owners to create lasting value.”
Marco Peschiera, Principal and Head of Carlyle’s Peru team, said, “We believe the Peruvian private equity market remains underdeveloped, with a large percentage of medium-size family controlled businesses providing ample room for growth. Our team is well positioned to assess risks and rewards in Peru and we have a great local partner in Credicorp with its unmatched Peruvian platform. We will also benefit from Carlyle’s strong global presence and network in helping our local partners and founders take their companies to the next level of regional and global success.”
The $308 million Peru fund joins the nearly $1 billion raised by Carlyle for two investment funds dedicated to buyouts in South America and Brazil, which have invested in six companies under the direction of a team based in Sao Paulo, Brazil.
Nomura,Asia‘s global investment bank, announced today that Cliff Gallant has joined the firm as a Managing Director and senior analyst covering Insurance companies in the firm’s US Equity Research department.
Gallant, who joins Nomura from Keefe, Bruyette & Woods, is an established leader and highly-regarded analyst in the Insurance industry with nearly 20 years of experience. Gallant has been recognized by Institutional Investor and Greenwich with the #2 ranking in Insurance among boutique firms. Gallant has also been recognized with The Wall Street Journal‘s “Best on the Street” award in 2012 and in 2007.
Gallant will be joining Nomura analysts Glenn Schorr (Brokers & Asset Managers), Bill Carcache (Consumer Finance) and Keith Murray (Banks / Mid-Cap), and Financials Sales Specialist, Laurence Madsen , to further solidify Nomura’s successful Financials content franchise in the US.
It is time for western investors to diversify their dividends exposure into emerging markets where low levels of corporate debt, coupled with high profitability, support dividend growth.
Looking forward, we expect dividend income will grow in significance in overall EM equity returns, as capital gains achieved over the past decade will be difficult to repeat. Moreover, in a volatile equity environment dividend-paying stocks can smooth portfolio volatility. Today, more than 600 stocks in global emerging markets offer a dividend yield of more than 2% and are sufficiently liquid for institutional investors.
Emerging markets: more than a growth story
Until recently, emerging markets (EM) equities did not figure in an income seeker’s horizon. After all, companies in the developing world have generally preferred to use profits to grow the business rather then distribute them to shareholders. Hence, the perception that EM investments will offer share price gains but little income.
However, following the Asia crisis and several other crises in the 1990s companies in the emerging world began to embrace a dividend culture, prioritizing good cash flow and prudent balance sheets. Additionally, investors increasingly began to favour the stability of dividends. This trend has accelerated in the post-credit crisis environment as the ‘search for yield’ has intensified.
Currently, the dividend yield on EM equities is approximately 3%, higher than for some major developed markets, such as the US (2%) and Japan (2.6%). Also, EM companies will pay 35% of earnings as dividends in 2012. This is one third above what in was in the year 2000.
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Karl Dasher , Head of Fixed Income, will also become Chief Executive Officer, North America on July 1, 2013. Philippe Lespinard will be appointed Co-Head of Fixed Income from this date and will join the Group Management Committee, as Schroders told in a press release.
Massimo Tosato , Executive Vice-Chairman said, “We believe that Karl is the best person to help us realize the major opportunity we see to grow in North America and we expect it to become a significantly larger proportion of our total business over the next five years across Fixed Income, Equities, Multi-asset and Alternatives.”
Karl Dasher said, “Philippe and I have worked closely together since I recruited him as Chief Investment Officer Fixed Income. He has been integral to the improvements we have made to our Fixed Income business in terms of the enhanced investment process and depth of investor talent. I look forward to working with him to continue to grow the business.”
After 19 years with Schroders, Jamie Dorrien-Smith , Chief Executive Officer, North America, will step down from his role on July 1, 2013 and retire from the firm. He has headed North America since 2006, during which time we have seen a transformation in the performance of our Institutional business and the launch of our Intermediary business in the US. Jamie leaves with our thanks and best wishes for the future.
Opus Fund Services, an independent full-service fund administrator, today announced the expansion of its US platform with the opening of its New York office. The Park Avenue location will initially focus on business development and will be headed by the new Director of Sales and Business Development, Jorge Hendrickson.
Jorge previously worked at Concept Capital Markets, LLC in its Prime Services Group as Vice President of sales and business development. Prior to Concept he worked for five years on the buy side, most recently at Trading Cross Connects, specializing in allocating capital and infrastructure services to emerging managers. He was previously at Intrepid Capital Management and Bridgewater Associates.
