The Securities and Exchange Commission (SEC) has proposed a new rule that would update the dollar threshold for a fund to qualify as a “qualifying venture capital fund” under the Investment Company Act of 1940.
The proposed rule would increase the threshold to $12 million in aggregate capital contributions and unsolicited committed capital, up from the current standard of $10 million.
Qualifying venture capital funds are excluded from the definition of “investment company” under the Act. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 requires the SEC to index the dollar figure for this threshold to inflation once every five years.
The SEC’s proposed new rule is designed to implement this statutory directive and would adjust the dollar amount to $12 million, based on the PCE Index. In addition, the rule would establish a process for future inflation adjustments every five years.
According to the SEC, the proposed rule is intended to provide greater flexibility for venture capital funds and promote capital formation. The rule would also ensure that the definition of a qualifying venture capital fund remains up-to-date and relevant in the face of inflation. By adjusting the dollar threshold to $12 million, the SEC aims to provide greater clarity and certainty for funds seeking to qualify as venture capital funds.
The proposal will be published on the SEC’s website and in the Federal Register, and the comment period will remain open for 30 days after publication in the Federal Register.
Interested parties are encouraged to submit comments on the proposed rule, which will be taken into consideration by the SEC before making a final decision. The SEC’s proposed rule is an important development for the venture capital industry, and stakeholders are encouraged to stay informed and engaged in the rulemaking process, the press released ends.
Registered Investment Advisors (RIAs) managed to post the greatest growth in advisor and firm count over the last decade despite facing a 13% decrease in total channel assets in 2022, according to The Cerulli Report—U.S. RIA Marketplace 2023.
The advisor headcount in the RIA marketplace expanded nearly 8.6% in 2022, which is twice the annualized rate of 4.4% over the past ten years. This growth is attributed to new RIA firms and breakaway teams continuing to tuck into large established RIAs.
According to the research, this trend will continue, but likely at lower annual growth rates as the pent-up pipeline during the COVID-19 pandemic begins to normalize.
The overall total firm count of retail-focused RIAs grew greater than 11% in 2022, mainly supported by a large amount of new independent RIAs (12.3%).
However, the RIA channel remains diverse and fragmented—93% of all RIAs manage less than $1 billion in assets under management (AUM), whereas firms above this threshold manage 71% of channel assets and employ 47% of advisors. Cerulli anticipates that asset growth and market share gains will continue to be concentrated among firms managing more than $1 billion in AUM.
“2022 continued to highlight the obstacles that many smaller firms face due to not having the resources or capacity to differentiate and foster inorganic growth in a challenging market. The largest RIAs will continue to dominate as breakaway teams leave employee-based models to join large established RIAs that offer more autonomy, without advisors needing to sacrifice resources they are accustomed to,” says Stephen Caruso, senior analyst at Cerulli.
The research indicates that future market growth will be supported by continued investments from private equity firms and industry consolidators, allowing these firms to capitalize on acquisition opportunities among growth-challenged firms with complementary processes, talent, and clients.
Insigneo has announced the addition of financial advisors Patricia Holder and Nicole Spirgatis to its network.
Along with Renato Izaguirre as a Client Associate, they form Phoenix Private Client Group, a team dedicated to providing exceptional client service and expertise in Latin American markets, the press released said.
Holder and Spirgatis bring a combined 50 years of experience in financial services, specializing in Latin American markets.
Prior to joining Insigneo, they worked at Morgan Stanley, with Holder spending 25 years at the firm and holding advisory roles at Citi Smith Barney and Merrill Lynch. Spirgatis has a distinguished background at Merrill Lynch, Banco de Crédito del Peru, and Scotiabank.
“We are thrilled to join Insigneo and start this new chapter in our careers,” said Holder, Managing Director. “Our expertise in Latin American markets positions us to contribute significantly to Insigneo’s commitment to excellence. Together, we aim to navigate the complexities of wealth management, build lasting client relationships, and capitalize on opportunities in the dynamic international financial services industry.”
Holder and Spirgatis’ cultural fluency in Latin American markets highlights their ability to deliver tailored wealth management solutions. They recognize the importance of understanding local nuances to provide optimal client service, demonstrating their commitment to building relationships based on trust, expertise, and integrity, the firm added.
“We are excited to welcome Patricia and Nicole to Insigneo. Their experience and success in international markets align perfectly with our growth strategy,” said Jose Salazar, Market Head Miami-US. “Their addition strengthens our commitment to excellence and enhances our ability to serve clients in key markets.”
The addition of Phoenix Private Client Group is another milestone in Insigneo’s expansion efforts, reinforcing its position as a leading wealth management institution in the US and Latin America, the memo ends.
BNY Mellon Investment Management will highlight the virtues of the international context for equity investment at the IV Funds Society Investment Summit & Rodeo in Houston, exclusively for professional investors from Texas and California.
The event, scheduled for February 29th at the JW Marriott Houston by The Galleria, will feature James Lydotes, Head of Equity Income & Deputy CIO at Newton, presenting the BNY Mellon Global Equity Income strategy.
Lydotes will discuss the fund’s features, including “the goal of income and long-term capital growth from a portfolio of high quality global companies, the philosophy that dividend capitalization is the dominant source of long-term returns, and a disciplined and systematic buy/sell investment approach,” according to the information provided by the company.
Moreover, BNY Mellon attributes the strategy’s success to “buying companies with yields greater than 25% BM (FTSE World TR Index) and selling companies with yields below market.”
Additionally, through its boutique Newton, the American bank emphasizes the importance of investing in companies that meet profitability requirements, have sustainable dividends, and are traded at attractive valuations.
After the experts’ presentations, guests will be transported to the NRG Stadium to enjoy the Houston’s Livestock Show and Rodeo from the Funds Society’s private suite.
About James Lydotes
Lydotes is the Head of Equity Income at Newton and the Deputy Chief Investment Officer for Equities. He is also the lead portfolio manager for the Global Equity Income strategy. Additionally, he has been the primary manager for the Global Infrastructure Dividend Focus Equity and Global Healthcare REIT strategies since their inception in 2011 and 2015, respectively. He designed both income-oriented strategies to offer exposure to different themes within a risk-aware framework.
He joined Newton in September 2021, following the integration of Mellon Investments Corporation’s equity and multi-asset capabilities into the Newton Investment Management Group. Prior to joining Newton, he had 22 years of experience across multiple roles at Mellon Investments Corporation and The Boston Company Asset Management (both part of the BNY Mellon group).
J.P. Morgan released its 2024 outlook for the alternative investment landscape.
Uncertainty has remained a central theme in financial markets over the past several years. Surging inflation, rapid interest rate increases, slowing global growth, increased geopolitical risks and elevated stock and bond market volatility have all dramatically shifted the investment landscape, and alternative investments have not been immune.
To help investors take advantage of these market dynamics, J.P. Morgan asked experienced investment leaders from across its $213 billion Global Alternatives platform to share their 12- to 18-month outlooks on several alternative investment markets. Their insights into the trends, risks and opportunities influencing multi-alternatives strategies, core private infrastructure, private equity and commercial real estate are featured in individual papers within the research.
“The case for investing in alternatives remains as strong as ever,” said Anton Pil, Global Head of Alternatives for J.P. Morgan Asset Management. “These assets have historically helped investors diversify traditional portfolios by pursuing investment returns largely independent from publicly traded equity and bond markets, potentially helping to diversify portfolio correlations, lower overall volatility, expand investment income sources, mitigate inflation risk and enhance both absolute and risk-adjusted performance.”
Looking ahead into 2024, the firm expects to see growing demand for alternative investments driven by three broad themes: Displacement, Democratization and Diversification.
Displacement: Much of 2023 saw a slowdown in private market activity, which broadly pressured pricing in many alternative assets. This opened considerable investment value in some segments and could result in a compelling 2024 vintage, especially if the current interest-rate tightening cycle proves to be at or near its peak.
Democratization: Investment innovation continues to expand access to alternative investments through a growing range of strategies and structures available to a much broader number of investors.
Diversification: The investment markets of the past few years have shown the limits of relying solely on traditional stocks and bonds to provide adequate portfolio diversification in the current market cycle. Alternative investments can offer solutions to tap into new, dynamic investment opportunities designed to help better balance portfolio risk/return exposures.
More information about the research and J.P. Morgan’s alternatives offering can be found at the following link.
Morgan Stanley plans to eliminate several hundred jobs, in what would be the first measure of its kind under the presidency of Ted Pick, local press reported.
The cuts would affect less than 1% of the employees of the wealth management business, which has about 40,000 workers and is the firm’s largest unit, according to a person with knowledge of the matter, reported by the media AdvisorHub.
However, brokers and their support teams would not be affected by the layoffs, according to the specialized media citing the Wall Street Journal.
Among the employees who will be laid off are some from its self-directed E-Trade channel and its stock plan business, as well as management and sales positions, the report adds.
The press reports do not clarify if the positions will be related to the wirehouse’s international business section.
In June 2023, Morgan Stanley announced to its clients that it would make changes and increase requirements for international accounts with a main focus on some countries in Latin America.
This caused many advisors to leave the wirehouse for other firms such as Bolton, Insigneo, Raymond James, among others.
On the other hand, AdvisorHub recalls that the bank’s shares have been the worst-performing this year among its main American counterparts, with a drop of around 10%.
Last month, the company warned that it would take longer to achieve its profit margin targets in the wealth management unit and noted that the below-target results will last a bit longer.
The division, which was boosted for much of last year by higher net interest income, could see that benefit start to fade if the Fed begins to lower interest rates towards the end of this year, the report adds.
The unit’s new net assets remained below $50 billion for the second consecutive quarter in the last three months of 2023. This pace is lower than Morgan Stanley’s target of more than $300 billion per year.
State Street has promoted Diana Donk to its team as ETFs sales for the US Offshore business.
Donk brings more than 15 years of experience in the financial services industry, specializing in ETFs, mutual funds, and business relationship management.
In her new role as Experienced ETF Sales VP, she leads the distribution of US ETFs to investors in the Andean Region and Eastern Canada, as well as UCITS ETFs to US Offshore clients.
She is responsible for “developing and executing sales strategies, creating and maintaining strong client relationships, and providing market and product insights,” as described on her LinkedIn profile.
Donk joined State Street in 2019 from J.P. Morgan Wealth Management, where she worked in for the US Offshore business.
Prior to J.P. Morgan, she began her career in her native Peru at CONFIDE as a Portfolio Manager from 2006 to 2010 and then spent nearly six years (2010-2016) at Inteligo, where she was a portfolio manager and Senior Product Manager for mutual funds in Lima.
She holds an MBA from Hult International Business School, a Master’s in Economics from Universidad del Pacífico, and has the CFA Level II certification.
Based in New York, she reports directly to Heinz Volquarts, Managing Director Head of Americas International for Canada and Latam at State Street.
Photo courtesyFred Bates, Managing Director at BECON IM
Barings will showcase the investment opportunities available in credit at the IV Funds Society Investment Summit in Houston.
The event, scheduled for February 29th at the JW Marriott Houston by The Galleria, will feature Fred Bates, Managing Director of BECON IM, presenting the Barings Global Senior Secured Bond Fund and Barings Private Credit Corporation strategies.
Regarding the Barings Global Senior Secured Bond Fund, it is “a developed markets bond fund with daily liquidity that invests exclusively in bonds that are senior in an issuer’s capital structure and are directly secured by collateral,” according to the firm’s description.
On the other hand, the Barings Private Credit Corporation is “a semi-liquid direct lending solution with variable rate managed by one of the sector’s largest private credit managers.”
After the experts’ presentations, guests will be transported to the NRG Stadium to enjoy the Houston’s Livestock Show and Rodeo from the Funds Society’s private suite.
Seats are limited, so Funds Society is asking professional investors from the US Offshore market of Texas and California interested in attending to complete their registration at the following link.
About Fred Bates
Frederick S. Bates is the Managing Director and co-founder of BECON IM, a third-party distribution company specialized in wholesale business development and sales to intermediaries across Latin America and US Offshore. BECON IM represents several world-class global asset managers throughout the Americas, including Barings, Neuberger Berman, Schafer Cullen, and New Capital. Prior to joining BECON IM, Bates amassed nearly 20 years of experience at MFS Investment Management and Fidelity, holding senior positions in the United States, Latin America, and Europe.
According to a new survey by Natixis Investment Managers (Natixis IM), 72% of professional fund selectors from some of the largest wealth management firms in North America agree that active management will be crucial for achieving superior investment returns in 2024.
This comes after 61% reported that actively managed funds on their platforms outperformed their benchmark indices last year, and 67% expect markets to continue favoring active management.
The balance between active and passive investments has been a topic of debate for the past decade, with significant inflows into passively managed index funds across the industry. However, 46% of fund selectors surveyed by Natixis IM attribute the outperformance of passive investments to monetary policy, or a decade of artificially low interest rates and relatively little inflation. The factors that boosted passive investment may no longer hold up. Half (50%) of the selectors believe that investors overly reliant on passive investments like index funds will face some hard lessons in 2024.
Selectors Seeking More Active Funds and ETFs
Natixis IM surveyed 223 North American fund selectors, professionals responsible for evaluating and selecting funds and investment products for their company’s investment platform. These respondents represent private banks, wirehouses, registered investment advisors (RIAs) and RIA aggregators, independent or individual wealth managers, and other investment advisory firms that collectively manage $20.7 trillion in client assets in Canada and the United States.
“Fund selectors expect the investment landscape of 2024 to be anything but normal, not by historical, new, or soon-to-be-normal standards,” said Dave Goodsell, executive director of the Natixis Center for Investor Insights. “They’re looking to manage client investments, experiences, and relationships by adjusting the product and portfolio offerings of their firms to help clients stay invested and armed with protection in uncharted investment territory.”
45% of fund selectors aim to add more actively managed funds to their platforms. 67% say their firms now offer semi-transparent ETFs, and 89% of them plan to maintain or add more of these actively managed ETFs. 69% offer direct indexing options, with 84% planning to maintain or increase access to these direct indexing strategies, which allow investment managers to establish direct ownership of individual securities that make up an index through a separate account.
Active ETFs Gaining Popularity
Active ETF assets have surged in recent years. Active ETFs differ from traditional, passively managed ETFs in that they have a management team behind the portfolio, selecting securities based on a specific underlying investment strategy, rather than simply replicating an index.
The use of active ETFs helps address concerns about price pressures, which have been a promise of passive investing, and the need to generate risk-adjusted returns, which passive funds do not inherently provide. The majority of fund selectors (53%) cite return potential as the primary benefit of active ETFs, while also recognizing other advantages such as tax efficiency (46%), access to innovative strategies (44%), intraday trading (41%), and greater potential alpha (23%).
Model Portfolios and Separately Managed Accounts
Model portfolios and separately managed accounts (SMAs) are also critical components of fund selectors’ product plans for 2024. Three-quarters (75%) say that models provide greater investor confidence in uncertain markets and help keep clients invested during periods of volatility (70%) and offer a more consistent investment experience across the firm (80%). Not surprisingly, 63% say that using models also helps advisors build solid relationships with their clients.
In adittion, 82% of fund selectors say their firms offer some type of model portfolio.
Economic and Market Uncertainty
While most (57%) are optimistic about the market’s performance this year, their outlook is clouded by a high degree of uncertainty and unpredictable risk. The specter of slower growth in the future places a recession atop economic threats (53%), followed by the threat of war and terrorism (51%) and a feared drop in consumer spending (41%). Most fund selectors (68%) believe that valuations still do not reflect company fundamentals, and 60% expect stock market volatility to be even higher this year than last.
If recession fears were to materialize, 61% believe it would further expose the shortcomings of passive investments.
The Natixis Investment Managers Fund Selector Survey is part of a larger survey of 500 professional fund selectors in Asia, Europe/EMEA, North America, and the United Kingdom. The full report on the global survey findings can be found at the following link.
Amundi announces it has signed a binding agreement for the acquisition of Alpha Associates, an independent asset manager offering private markets multi-manager investment solutions.
This acquisition will position Amundi as a leading European player in this space with a team of over 70 experts, a combined $21,5 billions of assets under management, an enhanced multi-manager offering spanning across private debt, infrastructure, private equity and venture capital, and an enlarged client & geographical footprint. It will also reinforce the presence on secondary transactions, which is a relevant capability in the current market.
The transaction increases Amundi’s offering of private markets funds and tailor-made solutions for its existing institutional clients globally. Finally, it accelerates the development of suitable private markets products for individual clients.
Valerie Baudson, Chief Executive Officer of Amundi, commented: “Within the asset management industry, private markets have seen sustained growth in recent years, as investors have increased their allocation to this asset class in their portfolios. This segment should also benefit from the appetite of retail investors for real assets investment solutions. The acquisition of Alpha Associates will thus allow Amundi to significantly broaden its client base, capabilities, and product offering, in a promising market. This move, which is fully in line with our strategic objective to increase our footprint in Alternative and Real Assets in Europe, will allow us to create substantial value for our clients and shareholders.”
Founded in 2004, Alpha Associates is a Zurich-based, founder-led, specialist in private markets multi-manager solutions, which currently manages $9,18 billions of assets. Alpha Associates brings differentiating funds-of-funds capabilities in private debt, infrastructure, and private equity, to over 100 institutional investors, notably pension funds and insurance companies, with a strong footprint in Switzerland, Germany, and Austria.
“We are pleased to join Amundi, a major global player in the asset management industry, and play an important role in Amundi’s plan to accelerate its footprint in the private markets segment. We are excited to work with Amundi’s private markets team, which shares Alpha’s ambition to generate outstanding risk-adjusted performance for clients,” added Peter Derendinger, founding partner and CEO of Alpha Associates, who will head the combined business declared.
These capabilities will be combined with the existing private markets multi-manager set-up of Amundi: a dedicated Paris-based team with over 20 years of experience, currently managing $12,96 billions of assets on behalf of institutional clients, mainly in France, Italy and Spain. As part of the transaction, Amundi’s and Alpha Associates’ multi-manager activities in private markets will be combined into a new business line, the press release said.
An expanded offering in a high growth segment benefiting from long-term trends Private markets have been one of the most dynamic areas of asset management in the past years, as investors are looking to diversify their portfolio with an alternative asset class that has proven to provide attractive returns with moderate volatility over the cycle. Multi-manager offerings are well suited to accompany investors on this path, as they provide access to a broader range of management skills, hence enhanced diversification and improved risk profile. Thereby, multi-manager investment solutions should also allow to offer real assets products to an underinvested retail client segment.
A transaction creating substantial value
This transaction, compliant with Amundi’s financial discipline, and in line with its strategic plan, will be significantly value accretive thanks to revenue synergies and strong growth potential. The return on investment will be above 13% in year 3 including revenue synergies.
Dominique Carrel-Billiard, Head of Alternative and Real Assets at Amundi, commented: “We are looking forward to welcoming and working with the talented teams of Alpha Associates. The multi-manager model is one that offers strong resilience thanks to diversification in terms of asset classes and management companies. In addition to the significant growth potential for the institutional clientele, it is also adapted to address the retail market. The enlarged Amundi Alternative & Real Assets business will be ideally positioned to serve the needs of a growing set of clients and benefit from strong tailwinds in the industry.”
The transaction is expected to be completed by the third quarter of 2024, subject to regulatory approvals.
