Alfonso del Moral. Foto: InvestmentEurope. T. Rowe Price abre oficina en España con Alfonso del Moral al frente
T. Rowe Price has appointed Alfonso del Moral as head of Relationship Management for Spain and Portugal as part of its continued focus on the intermediary markets in Europe. He will also join the T. Rowe Price EMEA Executive Committee.
Del Moral joins from Dicania, a third party representative of international asset managers in the Spanish market, where he was the co-owner and director. Prior to this, Mr. del Moral held leading positions with Aviva Investors and Schroders in Madrid. Mr. del Moral has 15 years’ of investment experience, primarily working with international asset managers in the Spanish and Portuguese markets.
Peter Preisler, head of Global Investment Services, EMEA at T. Rowe Price commented: “Alfonso’s appointment further underlines our commitment to building a strong intermediary business across Europe. We have existing clients in Spain but the market has developed so strongly that we believe it warrants us having a dedicated team. Alfonso has extensive knowledge of the market and is well positioned to develop our relationships further. Spain and Portugal are important markets for us as we continue to build our intermediary business.”
Almost two-thirds of investors in Latin Americaprivate equity are forecasting annual net returns of over 16% in the next 3-5 years, according to the annual Coller Capital/LAVCA Latin American Private Equity Survey. This compares with just 23% of investors that expect this level of return from their global private equity portfolios (according to Coller Capital’s Global Private Equity Barometer).
For Latin American private equity investments outside Brazil, investors’ outlook is even more positive, with three quarters of them expecting net returns of over 16%. In terms of individual countries, Limited Partners (LPs) are most optimistic of all about returns from Colombia and Mexico, closely followed by Peru.
The pace of new commitments to Latin American private equity will remain strong in the coming year, with 78% of LPs maintaining or accelerating their commitments to the region.
More Latin America-based investors plan to increase than to reduce their target allocations to alternative assets (private equity, real estate and hedge funds) – and private equity receives the strongest vote of confidence, with 61% of Latin America-based LPs planning to increase their allocations to the asset class in the coming year. These plans are reflected in LPs’ hiring intentions; nearly half of investors will recruit new staff for their Latin America-focused private equity teams in the next 12-18 months. (Almost no investors expect to reduce the size of their teams).
The risk-reward equation for Latin American private equity as a whole is also improving, according to a majority of LPs. On the other hand, the risk-reward equation for Brazil specifically is seen as worsening, with almost twice as many LPs (42%) seeing a deterioration, compared with the 23% who believe the country’s risk-reward equation is getting better. (Interestingly, international investors are somewhat more optimistic about Brazil than their Latin American counterparts).
Coller Capital’s CIO Jeremy Coller commented:“Investors are signalling continued growth for private equity in Latin America. Their positive outlook is reflected in the attractive returns they expect, both from the region as a whole and especially from the less developed private equity markets of Colombia, Mexico and Peru.”
LAVCA President Cate Ambrose said: “The private equity and venture capital community in Latin America has become increasingly sophisticated in recent years. Not only are international investors growing their Latin America teams, but local investors are increasing their allocations to alternatives creating a dynamic environment for fundraising and investing.”
Both Latin American and international investors expect trade sales to become even more dominant as an exit route in the next couple of years. They think the second most common exit route will be secondary buyouts – followed in third place by IPOs. All these exit routes are expected to become somewhat more common.
You can find the whole report in the attached document.
London skyline. Guggenheim Securities Agrees to Acquire Lazard Capital Markets' London Operations
Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, has announced the execution of a definitive purchase agreement to acquire the London operations of Lazard Capital Markets (LCM), expanding the firm’s international presence. Consummation of the transaction is subject to approval by the Financial Conduct Authority.
The acquisition, upon approval, would allow Guggenheim to conduct a range of sales and trading operations, with an initial focus on European corporate and sovereign debt and U.S. and foreign equities.
Guggenheim plans to operate the business under the new name of Guggenheim Securities International Ltd.
“We are excited to have the opportunity to extend Guggenheim’s products and services to clients in Europe,” said Alan Schwartz, Executive Chairman of Guggenheim Partners and CEO of Guggenheim Securities. “At a time when many European clients are looking to restructure and find funding in the capital markets, we believe that the client-focus partnership model that has served us so well in building our business in the United States will allow us to extend our growth throughout Europe, and this is an important step toward that.”
As part of the acquisition, Guggenheim is welcoming LCM’s team of 10 professionals, led by Duncan Riefler, who ran the LCM London office. He will report to Ronald Iervolino, Senior Managing Director and Head of Fixed Income, based in New York.
“My colleagues and I are looking forward to joining the Guggenheim team and providing the same world-class client service in Europe that has long been the firm’s hallmark in the rest of the world,” Mr. Riefler said.
Joining Mr. Riefler from LCM are David Corney, Phillip Bloch, Jay Larkin, Nannette Bax-Stevens, Piero Greco, Samir Patel and Alison Kilsby. In addition, Dennis McKenna and Tomas Mannion will also be joining the platform in high-yield trading and research roles, respectively, marking the start of the growth commitment from Guggenheim.
Before joining LCM, Mr. Riefler was a co-founder and partner of Sonas Partners in London, an independent brokerage focused on trading fixed-income securities. Prior to that, he had a 19-year career at Merrill Lynch with a number of roles within fixed income in New York and London. He holds a BA from Denison University.
CC-BY-SA-2.0, FlickrLanzamiento de drones BQM-74E desde USS Lassen. Página oficial de la U.S. Navy. Para reducir el coste de viajar en avión… ¿Eliminamos al piloto?
There has been much talk of the future of flight, with drones one day delivering packages to your house the latest example to generate headlines.
Now I don’t know about you, but I’m OK if the drone fails to deliver a package. However, I’m not so sure I want the drone failing to deliver me to my intended destination.
I prefer to have a pilot up front who has the same interest as me in having our plane arrive safely. As fabulous as technology is, I like the comfort of a professional being in control, just in case the technology does not work as planned. A malfunction or technical problem has never happened to any of us, right? So why worry? Wink-wink, nudge-nudge.
So, call me Mr. Belt and Suspenders. I like the security. And so do most investors who own passive funds. According to our survey, they buy for security, thinking passive funds are less risky.
Unfortunately, the pilotless passive portfolio is not less risky. Sure it costs a little less because it is entirely dependent on technology. But, contrary to popular opinion, a passive investment attempts to have the same risk as the index it is tracking. It can be just as vulnerable to risk as all technology can be.
For example, in the two most recent market crises, as with most bubbles, the index became overweight with the highest demanded securities, in this case, technology and financial services stocks. So passive funds tracking the S&P 500 Index also experienced the bubble. They were, on average, no safer than active funds. In fact, the average actively managed large-cap blend fund does a better job protecting clients than the passive large-cap blend fund when analyzing rolling 10-year periods.
Why? Because a pilot can make adjustments that a computer may not always be programmed to understand.
So when you get that chance to fly for a little less, make sure the flight is equally safe. Take the piloted portfolio.
Article by William Finnegan, Senior Managing Director, Global Retail Marketing, MFS
Diego Besga, partner at Team Real Estate Development. Courtesy photo. Cities North and West of Miami Are Attractive Real Estate Alternatives
The real estate industry in South Florida is experiencing a very sweet moment which is evident by the numerous projects approved and under development in the area, where cities like Hollywood and Fort Lauderdale are attracting prospective buyers looking for prices cheaper than what is currently available in Miami, said Diego Besga, COO and Business Development Director at Team Real Estate Development (TRED).
Markets emerging around Miami, such as in Hollywood, represent an opportunity for Team Real Estate, Besga pointed out. That is why they have leapt into investing in land in the heart of Hollywood, near the city’s main commercial area of shops and restaurants, and in close proximity to where the H3 Hollywood complex, a 15 storey building with 247 units, including studios and one, two, and three bedroom apartments, is being built.
“There is a group of buyers who don’t have access to the Miami market due to the prices that are being generated in the city.” Besga explained that these are buyers with budgets of less than $ 400,000 but who are looking for similar alternatives, and there are other cities in the south of the state where such properties are available.
Almost 50% of H3 Hollywood is already sold and buyers include mainly Argentines, Colombians, Russians, and Venezuelans, followed by locals and Canadians. To Besga, the price is very attractive at under $300 per square foot, while, according to data from Zillow Web which specializes in United States real estate, the average price in Miami currently stands at $379.
According to Zillow, the real estate prices in Miami rose by 10.6% last year, and are expected to rise this year by another 2.1%. Compare the $379 per square foot average price in Miami to the $159 per square foot average price in the metropolitan area of Miami-Fort Lauderdale. An average home in Miami is priced around $388,350, although the average selling price is $323,500, while the average rent is $2,200 per month in Miami and $ 1,800 in Fort Lauderdale.
For Besga, everything emerging north of Miami and west of downtown, as well as Miami’s Brickell area, is starting to become an attractive product, especially if the price is right.
As to whether Miami could be incubating a new real estate bubble, such as that suffered in the 2008 crisis, Besga emphasized that the situation is not the same. “I see a very strong market, for many years ahead. I do not think a new bubble is being created, amongst other things, because of the deposits required,” he pointed out.
Currently, most presale operations require deposits of 50% for closing, while a few years ago they were 10%.
Although Besga does believe that there will be a small price adjustment downward, he is convinced that nothing like 2008 will happen, because Miami is considered, especially by Latin Americans, as a safe place for protecting their wealth, and where it will continue generating value. “Prices are a little high, but not for a situation like that of 2008 to occur,” he said.
Team Real Estate Development (TRED) is a firm consisting of four Argentine partners, and which operates mainly in Argentina, and in the states of Florida and Georgia. Apart from the H3 Hollywood project, they have a wide portfolio of properties in both states, including rental properties, offices, hotels, and off-plan developments. In Fort Lauderdale they have a new residential development on the drawing board, which they hope to start building in early 2015.
Wim-Hein Pals, head of Robeco's emerging markets team since 2004. The Unsuspecting Power of Quant in Emerging Markets
Emerging markets equities can produce handsome rewards for investors – but they carry risks that are not seen in the developed West. Political turmoil and generally more volatile markets require a more cautious approach to capitalize on a fast-growing area for investors.
That is where Robeco’s pioneering use of sophisticated quantitative models can help cut the risks and pick the winners. The unsuspecting power of quant has been proven in its ability to identify risks that standard models either cannot see or overlook.
This is backed by decades of experience; Robeco was looking at emerging markets long before most other asset managers, investing in Peru as early as 1930, and was the first European firm to set up a bespoke emerging equities fund in 1994.
And the ability to procure superior risk-adjusted returns has been further enhanced by Robeco’s equally pioneering use of sustainability investing techniques. These methods are particularly suited for finding – and even predicting – systematic risks such as political change and social unrest in emerging markets.
“We were the first in Europe to start a dedicated emerging markets strategy 20 years ago, so we were the pioneer on the continent,” says Wim-Hein Pals, co-founder and portfolio manager of the Robeco Emerging Markets Equities fund since its inception and head of the emerging markets team since 2004.
“From the start we had a country allocation framework which is still in place and gave us the caution; we didn’t just jump in blindly and buy everything left right and center. We started cautiously with a top-down structure and thoroughly analyzed everything we wanted to invest in.”
Pioneering quant capabilities
Using sophisticated quant techniques can enhance opportunities while minimizing risks, and Robeco also has a long history with this, due partly to excellent links with Dutch universities at which many staff members have earned PhDs on quant modelling and economics.
“We started to develop our first quant models in the early 1990s,” says Wilma de Groot, portfolio manager for quantitative emerging markets equity, and a quant researcher at Robeco since 2001. “We firstly did this with developed markets using stock selection models and then in 1999 we tested these proven variables, such as valuation and momentum, in emerging markets and found they also worked well.”
“Since 2001 the stock selection model has been used across the investment process and since 2006 our quant capabilities have used the emerging markets model as their sole performance driver.”
“So we were one of the first to use the quant techniques in emerging markets. The cautious element comes in by running a well-diversified portfolio with a large number of names, and by using our integrated risk management techniques. These enhance traditional variables by eliminating risks which are not rewarded with returns. We are therefore less sensitive to turning points in the market.”
Sustainability as standard
Quant is combined with sustainability investing techniques, particularly investigating environmental, social and governance (ESG) factors, to minimize risks further. “In 2001 we started to use sustainability analysis with our proprietary survey,” says Pals.
“We had a good feeling about the outcomes, particularly for the governance angle; the social and environmental angles of ESG came later. Not every emerging markets investor is active on ESG to put it mildly, and so this is still quite pioneering as we do a lot more than the competition does.”
Emerging markets are by their very nature volatile, and are sometimes exposed to geopolitical shocks. But this doesn’t necessarily affect investment performance, providing you know what you are doing. Country allocation is backed by the expertise of a large team, including investment specialists on the ground in up-and-coming countries such as India and China.
Managing risks and rewards
“The political angle is deeply incorporated in the country allocation framework; we include also the currency angle, which is related to the local political or economic situation,” says Pals. “The military coup in Thailand for example means more political risk in the country than was there a year ago, but isn’t always translated into financial markets or prospects, because the Thai equity market has been one of the strongest in 2014.”
“Not putting all your eggs in one basket is the starting point for being cautious, and we have a well-diversified portfolio in emerging markets. We spread the political risks; there are sometimes problem countries, but there are also good situations such as India, where the country elected a new government in May 2014. We have been overweight on India since 2013 and so enjoyed a pre-election and a post-election rally, getting the best of both worlds without buying overvalued stocks.”
William H. Gross. Courtesy of Janus Capital . Bill Gross Leaves PIMCO to Join Janus Capital Group
Bill Gross, who helped found Pimco is joining competitor Janus Capital, according to a statement released by the manager.
Gross is listed on Pimco’s website as founder, managing director and CIO of Pimco, where he has been since co-founding the firm in 1971. He “oversees the management of more than $1.9 trillion of securities”.
According to Janus’ statement, Gross will manage its recently launched Janus Global Unconstrained Bond fund “and related strategies”
“Gross’ employment will be effective September 29, 2014 and he will begin managing the Janus Global Unconstrained Bond Fund and related strategies effective October 6, 2014.”
“Gross will be based in a new Janus office to be established in Newport Beach, California and will be responsible for building-out the firm’s efforts in global macro fixed income strategies. His concentration on such strategies will be separate and complementary to Janus’ existing and highly successful credit-based fixed income platform, built under the leadership of Janus’ Fixed Income chief investment officer, Gibson Smith.”
Richard Weil, CEO of Janus Capital Group, said: “Bill Gross has an exemplary track record with decades of success and he will offer an exceptional approach to navigating today’s increasingly risky markets with a focus on macro, unconstrained strategies. His involvement provides Janus a unique opportunity to offer strategies and products that are highly complementary to those already managed by our credit-based fixed income team. With Bill leading our global macro efforts and Gibson our credit-based fixed income team, I am confident Janus will be able to meet the needs of virtually any client.”
Gross said: “I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization. I chose Janus as my next home because of my long standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets. I look forward to a mutually supportive partnership with Fixed Income CIO Gibson Smith and his team; they have delivered excellent results across their strategies, which deserve more attention.”
Data from Pimco shows that the Total Return fund, managed by Gross, has assets of close to $222bn. Year to date it has returned 3.59%, and over five years it has returned 5.15% on an annualised basis. Returns have averaged 7.91% annually since inception.
A statement from Pimco declared that Gross would leave the manager “immediately”, and that it would “confirm shortly the election of a new CIO. Relevant portfolio management assignments will also be announced at that time.”
Pimco CEO Douglas Hodge added: “While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco’s clients, over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take Pimco forward.”
Pimco owner Allianz stated that succession planning meant it was confident that Gross’ departure would not cause problems.
Michael Diekmann, CEO of Allianz Group, said: “The management and investment structure put in place in January as well as the thorough succession planning gives us complete confidence in Pimco’s investment and executive leadership team.”
Photo: Eckhard Peche. Global Adpoption of RMB Grows by 35% in Two Years
SWIFT’s latest RMB Tracker shows that over the past two years, RMB payments worldwide have nearly tripled in value. In addition, the RMB is now supported by a much broader base with 35% more financial institutions using the RMB for payments with China and Hong Kong.
Today, more than one third of financial institutions around the world are now using the RMB for payments to China and Hong Kong. Asia leads the way at nearly 40% adoption, with an increase of +22% since 2012. The Americas follows at 32% adoption with an increase of +44%. Europe falls closely behind the Americas at 31% adoption with an increase of +47%, and the Middle East and Africa is at 26% adoption, with an increase of +83% during the same two-year period.
“It is encouraging to see that RMB usage by financial institutions and corporates is steadily growing”, says Stephen Gilderdale, Head of New Business Development at SWIFT. “More financial institutions using the RMB will improve the utility of the currency in Hong Kong, China and other offshore centres. As the currency continues to grow, opportunities will arise leading to the development of new products and services denominated in RMB. These new products and services will help drive greater use of the RMB globally while making it a more efficient currency to manage.”
Overall, the RMB strengthened its position as the seventh-ranked global payments currency and accounted for 1.64% of global payments, an increase from 1.57% in July 2014. In August 2014, the value of RMB global payments decreased by 6%, whilst all currencies dropped by 10%, which is a trend most likely attributable to lower seasonal payments activity.
Photo: Rupert Ganzer. Further Euro Weakness Should Help Europe's Exporters and Many of the Stocks That We Invest In
Global equities performed strongly in August, aided by the S&P 500 index which passed the 2,000 mark for the first time. In the US, sentiment was boosted by upwardly-revised GDP data, with the economy growing at an annualized rate of 4.2% in the second quarter of 2014. The US macroeconomic data contrasted with the data released in Europe, where preliminary Italian Q2 GDP was reported at -0.2% quarter on quarter and sentiment surveys also disappointed. In this environment, and perhaps counter- intuitively given the strength in equity markets, core government bonds also performed robustly as speculation grew that weaker economic news could encourage the European Central Bank to launch its own bond-buying program. In the event, the ECB cut its main interest rate by 10 basis points in early September and made a firm commitment to purchases of asset-backed securities (ABS), but stopped short of announcing purchases of government bonds.
In the US, benchmark 10-year bond yields rallied from 2.56% on 31 July to just 2.34% at the end of August. UK, French and German benchmark 10-year bond yields also declined during the month. Emerging market debt, as measured by the JP Morgan EMBI+, also registered gains, although the asset class could not keep pace with the rally in core debt markets as the geopolitical crisis in Ukraine continued, with Russia retaliating to Western sanctions by banning the import of a range of Western products. In commodity markets, the Bloomberg Commodity index registered a total return of -1.1% in US dollar terms in August.
Looking forward, investor attention is likely to remain focused on Europe and the macroeconomic challenges there. We certainly believe that the low bond yields seen in markets such as the US and UK reflect concerns of deflation and potential full-blown quantitative easing in Europe, rather than the generally positive US and UK domestic economic data. While we are encouraged that the ECB has committed to ABS purchases, we would question the potency of interest rate reductions. Interest rates have been low in Europe for a prolonged period but this has not stimulated the economy or inflation. What needs to be addressed is whether the transmission mechanism is in place to move the liquidity from the ECB to the real economy. Given that some action from the ECB had already been flagged, we do not expect the impact of the ECB’s measures to be revolutionary. Nonetheless, the policy moves should give investors more confidence in the ability of the ECB to meet its mandate, and the possibility of outright QE still remains. The immediate impact of the ECB’s moves has been to weaken the euro further, which should help Europe’s exporters and many of the stocks that we invest in.
In terms of our multi-asset portfolios, we have made one small change to our asset allocation in recent weeks, by moving US equities from neutral to overweight. Valuations for US stocks are broadly comparable to those observed before the Global Financial Crisis. If the Global Financial Crisis had occurred due to the overvaluation of equities rather than the faulty foundations upon which the global financial architecture was by then built, this measure of valuation would be of significant concern. As it is, the relative valuation of US equities compared to other regions appears somewhat unremarkable as the outperformance of US equities has moved more or less in step with the outperformance of US earnings – keeping the ratio of forward price/ earnings ratios relatively stable over recent years. Moreover, the US remains free of the macroeconomic concerns that continue to dog Europe, and a stronger dollar should help to keep inflation in check given that the consumer accounts for the bulk of the economy. We remain positive on the outlook for equities overall, with US companies alone having implemented $159 billion of buybacks in Q1 2014.
In fixed income, we remain cautious on core government bonds and continue to see better opportunities in corporate credit, including high yield. Against expectations, core government yields have remained very low this year and therefore high yield continues to stand out as offering relatively attractive levels of income in what is still a near-zero-interest-rate world. We are constructive on UK commercial property as capital values continue to improve, supply is constrained in a number of areas and the asset class continues to offer an attractive real yield.
Monthly economic and market commentary by Mark Burgess, CIO at Threadneedle
Andy Rothman, Investment Strategist, Matthews Asia. Why Invest in China, Now that Growth is Slowing Down?
Andy Rothman, Investment Strategist and author of the blog, Sinology, published by Matthews Asia, addressed the main misconceptions which the Western investor usually holds about the Asian giant, during the investor forum which the company held recently in San Francisco.
The role of private enterprise in China: In 1984, the only private “businessmen” the country had were farmers who sold their produce at the roadside. Today, over 80% of jobs are private, 70% of investment is private, and 100% of new job creation is private. In fact, currently the engine of the economy is private and, notes Rothman, public policies will also end up being private.
Contrary to what most people believe, China is not an exporting country, currently, China’s net exports are even negative. The Chinese economy is driven by private consumption and by investment, not by exports. In fact, China is already the world’s most powerful consumer, with a 9.1% growth in private consumption, fuelled by growth in the disposable income of the richest families, but also of the poorest.
Role of the housing “bubble”: in recent years, the price of housing has increased generally, but has done so at a lower rate than urban disposable income. Therefore, Rothman claims that it is questionable that a housing bubble has been created. However, with a decrease in the sale of new homes and a halt to their price growth, there is no doubt that the market has calmed down, but there is no collapse as there is no massive indebtedness and no ABS market to multiply the risk of collapse.
Shadow Banking: there are many risks within the Chinese financial sector, but they are not the same as those the Western World has suffered. Basically, the problem is that the party owns almost all the banks in China, so their transparency is questionable, yet shadow banking is not the problem, as Rothman points out.
Rothman concluded his presentation at the Matthews Asia Investment Forum with the next question. Why invest in China, now that growth slows down? The investment strategist recommended putting this growth in perspective. In 2003 the economy grew by 10%, while now it is growing at around 7.5%, yet the current GDP is three times higher than in 2003, so in absolute terms the economy grows more each year now than when it was growing at 10%.
For Rothman, the main problem in China in 10-20 years time is the lack of confidence in the Communist Party and in public institutions. When a situation of widespread discontent is reached due to an economic recession, which will occur in the distant future, there could be a situation of social revolution if the institutions have not reinvented themselves for that moment. However, within a reasonable time horizon of a long-term investor, the risk of this social revolution occurring within the next decade is very low.
