US Equities New Record High Overrides Fears of Rising Inflation

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Pixabay CC0 Public Domain. USA

The U.S. equity market set a record high during the last week of July with the benchmark S&P 500 index closing higher for the sixth consecutive month, overriding fears of rising inflation and a potential slowdown in economic growth.  On July 19, the U.S. Business Cycle Dating Committee announced that the COVID-19 induced two month U.S. recession from March to April of 2020 was the shortest on record, putting the 1980 February to July recession in second place.

Upcoming key events include Fed Chairman Powell’s keynote speech at the Jackson Hole Economic Symposium on this year’s theme “Macroeconomic Policy in an Uneven Economy,” on Aug. 26, which follows the July jobs report that came out on August 6th. Goldman Sachs economists “expect the Fed will first hint that it intends to decrease the size of its $120 billion monthly asset purchases at its September meeting, formally announce tapering in December, and begin tapering in early 2022.” Chairman Bernanke’s 2013 ‘taper tantrum’ statement that the Fed “could in the next few meetings take a step down in its pace of purchases” started a five-day, 40 basis point rise in the 10-year UST  yield to 2.6% and 5% drop in stocks.

GAMCO’s Private Market Value (PMV) with a Catalyst™ stock research ideas highlighted as ‘stock picks’ during BARRON’S 2021 Midyear Roundtable, published in the July 19, issue, were: CNH Industrial (CNHI) that recently purchased Raven Industries (RAVN), a leader in precision-agriculture technology, Mexico’s TV network Grupo Televisa (TV) popular with the Spanish-speaking population, Deutsche Telekom (DTE) with a valuable stake in T-Mobile US (TMUS), Vivendi (VIV) a play on music streaming, ViacomCBS (VIACA) a restructuring play, Liberty Braves Group (BATRA) with John Malone at bat, Madison Square Garden Sports (MSGS) with James Dolan up, and Traton (8TRA) a truck maker spun out of Volkswagen with 25% of the Class 8 truck market in Europe, and now in the U.S. via its purchase of Lisle, Illinois based Navistar Inc.

Looking to M&A, Willis Towers Watson (WLTW) and Aon (AON) mutually agreed to walk away from their all-stock, $30 billion merger. Willis Towers Watson agreed to be acquired by Aon in March 2020 and terms of the deal called for Willis Towers shareholders to receive 1.08 shares of Aon for each share.  In June, the U.S. DOJ filed suit to block the deal even though the European Commission had already granted conditional regulatory approval after the parties had agreed to sell overlapping business units that generated billions of dollars in revenue. Following efforts to negotiate additional divestitures to mollify the DOJ, an impasse was reached with the regulator and the parties opted to continue as separate companies. Willis Towers Watson received a $1 billion termination fee from Aon as a result, and will use the funds to buy back $1 billion of its stock. The unexpected move resulted in spreads widening on other mergers in sympathy. 

Although this was a shock to the M&A market, we believe conditions are strong for continued strength building off of the record $2.8 billion from the first half of the year.  Favourable dynamics remain in place, including historically low interest rates, accommodating debt markets, substantial dry powder held by private equity firms and management teams looking to better compete in an overall evolving global marketplace.  While more deals do not necessarily translate to outsized returns, it, coupled with these various drivers, certainly provides for an encouraging landscaping and backdrop for investment opportunities within a portfolio like ours. 

Rounding out our outlook with the convertibles space, the global convertible market saw some weakness in July, weighed down by a few large Chinese issuers. While some of these issues are now more attractively priced, we continue to view them cautiously. July was also the worst month for new issuance globally in nearly two years with only $3.4 billion of convertibles pricing. We are confident that issuance will pick back up as companies exit quiet periods around earnings and we approach typically busier fall months. The fundamental reasons for increased convertible issuance are still quite intact with low interest rates, increasing equity prices, and favourable tax environments available to most potential issuers.

To summarize, GAMCO continues to expect more deals — mergers, spinoffs, and other forms of financial engineering. Stocks should continue to do well with politicians spending to ensure a good economy for the midterms, and convertibles are an appealing way to stay invested in equities with the benefit of asymmetric risk exposure.

 

___________________________________________

To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:

GAMCO MERGER ARBITRAGE

GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.

Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.

Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.

Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of  approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.

Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476

GAMCO ALL CAP VALUE

The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.

GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise.  The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach:  free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.

Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155

GAMCO CONVERTIBLE SECURITIES

GAMCO Convertible Securities’ objective is to seek to provide current income as well as long term capital appreciation through a total return strategy by investing in a diversified portfolio of global convertible securities.

The Fund leverages the firm’s history of investing in dedicated convertible security portfolios since 1979.

The fund invests in convertible securities, as well as other instruments that have economic characteristics similar to such securities, across global markets (but the fund will not invest in contingent convertible notes). The fund may invest in securities of any market capitalization or credit quality, including up to 100% in below investment grade or unrated securities, and may from time to time invest a significant amount of its assets in securities of smaller companies. Convertible securities may include any suitable convertible instruments such as convertible bonds, convertible notes or convertible preference shares.

By actively managing the fund and investing in convertible securities, the investment manager seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market.

Class I USD          LU2264533006

Class I EUR          LU2264532966

Class A USD        LU2264532701

Class A EUR        LU2264532610

Class R USD         LU2264533345

Class R EUR         LU2264533261

Class F USD         LU2264533691

Class F EUR         LU2264533428 

Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to nd out what those restrictions are and observe them.

Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reect the manager’s current view of future events, economic developments and nancial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.

Emerging Market Investors Wait for the Right Moment to Deploy Cash

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Pixabay CC0 Public Domain. Los inversores de los mercados emergentes esperan el momento adecuado para hacer uso del efectivo

Emerging market (EM) investors are holding high levels of cash in their portfolios, waiting for markets to stabilize before investing in higher-yielding assets, according to HSBC. Its latest quarterly EM Sentiment Survey found that 45% of investors polled have in excess of 5% of their portfolios in cash and 59% don’t expect to deploy it over the next three months.

“Emerging market investors are waiting for the right time to invest because the markets have been gyrating wildly over the past two months. Only last month, the US Federal Reserve turned more hawkish and the focus was on rate rises and tapering and this month the pendulum has swung completely the other way as investors worry about the continued impact of COVID on growth”, said Murat Ulgen, Global Head of EM Research at the firm.

The survey -the fifth of its kind in a series first launched in June 2020- was conducted between 8 June 2021 and 23 July 2021 among 124 investors from 119 institutions representing 506 billion dollars of EM assets under management.

The poll shows that around half of investors are neutral on the prospects for EM countries over the next three months, although 40% are now bullish, up from 34% in the first quarter of the year. Risk appetite (measured on a scale from 0 to 10 where 10 means the greatest willingness to take risk) also rose modestly to 6.17 from 6.04

EM investors are, however, becoming less optimistic on the growth outlook for EM countries over the next 12 months and have, therefore, also downgraded their inflation expectations. The proportion who are optimistic on growth dropped to 60% in the most recent survey, down from 89% at the end of last year, and those expecting inflation to rise dropped to 59% from 77% at the end of the first quarter.

Rates, the biggest concern

Nevertheless, a clear majority of investors (56%) still expect to see higher policy rates across EM countries with many central banks, including those of Brazil, Russia, Hungary and Mexico, already having hiked rates in 2021. “The feeling among investors is that while the growth outlook is dimmer and inflation is less of a concern than at the beginning of the year, EM countries will continue to hike rates because they are trying to pre-empt Fed tightening and avoid a repeat of the taper tantrum we saw in 2013-2014,” commented Ulgen.

The prospect of tightening by the US Federal Reserve was cited by more respondents as a concern than any other issue, ahead of inflation and COVID-19. This is encouraging investors to focus on economies with rapid rate increases. In this sense, Ulgen pointed out that when you fear that global rates are going to rise, “you’re going to be looking for a higher risk premium to invest in the emerging markets as insulation against tapering”.

With expectations for further rate rises in EM countries, 40% of survey respondents expect EM FX to appreciate against the US dollar, up from 22% in April. Those expectations tend to be most bullish in countries that are frontloading rate hikes, notably Russia and Brazil. Similarly, the poll results suggest investors are seeking a higher risk premium in fixed income as well, citing Russia (22% of the total), Nigeria (13% of the total) and South Africa (12% of the total) as the top three markets with a more favourable outlook in local currency debt.

While Asia remains the most favoured investment destination, the net sentiment has declined as investors are focusing on countries that are benefitting from the rise in commodity prices, including Latin America, Middle East and Africa.

Lastly, engagement with environmental, social and governance (ESG) investing continues to rise, with 45% of respondents now running an ESG portfolio either directly indirectly, up from 30% in June 2020. Climate change, inequality, and minority shareholder protection remain the top three ESG concerns respectively.

Natixis IM Appoints Nathalie Wallace as Global Head of Sustainable Investing

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Natixis iM
Foto cedidaNathalie Wallace, nueva directora global de inversión sostenible de Natixis Investment Managers. Nathalie Wallace, nueva directora global de inversión sostenible de Natixis Investment Managers

Natixis Investment Managers has appointed Nathalie Wallace as Global Head of Sustainable Investing, effective 1st September. She will report to Joseph Pinto, Head of Distribution for Europe, Latin America, Middle East and Asia Pacific, and will be based in Boston. 

In a press release, the asset manager has revealed that, in her role, Wallace will be responsible for driving the firm’s ESG commitments across its distribution network, its affiliate managers and through its participation in industry-wide initiatives. She will also focus on supporting clients on their ESG journey from early stage integration to allocation to impact investing. “ESG is at the heart of the strategic ambitions of Natixis IM, which targets to have 600 billion euros of its AUM, equivalent to around 50% of the total, invested in the sustainable or impact investing category by 2024.

Wallace joins from Mirova US, where she was Head of ESG Strategy & Development. She earned her bachelor’s degree at the Institut Supérieur de Gestion Business School in Paris, France and is a Certified International Investment Analyst (CIIA). She served as French Foreign Trade Advisor from 2014 to 2020 and is a member of the CFA Institute’s ESG Technical Committee.

“Having most recently worked at Mirova, our dedicated sustainable investment affiliate, Nathalie, with her deep knowledge and long industry experience, is ideally placed to lead our strategy to support clients in their journey to align their ESG beliefs with their investment goals, and to help us further our contribution to the transition to a more sustainable global economy”, commented Tim Ryan, CEO of Natixis IM.

Robert Sharps Becomes T. Rowe Price’s New CEO

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Foto cedidaRobert Sharps, asumirá como CEO de T.Rowe Price en 2022. Rob Sharps

T. Rowe Price has recently announced key leadership transitions. Its CEO and chair of the Board of Directors, Bill Stromberg, will retire on December 31, 2021, after 35 years at the firm. In a press release, the asset manager has revealed that Rob Sharps, its current president, head of investments, CIO and a member of the firm’s Management Committee, will succeed him as of January 1.

Sharps will then become president and CEO, take over as chair of the Management Committee and join the Board of Directors. He joined T. Rowe Price in 1997 as an equity analyst and his role and influence have broadened in recent years as he has taken a more active role in corporate strategy, product development and key client relationships. Before becoming head of investments and group CIO, Sharps was co-head of Global Equity, the longtime portfolio manager of the US Large-Cap Growth Equity Strategy, and portfolio manager of the former US Growth & Income Equity Strategy.

“I am honored to be the next CEO of T. Rowe Price and am grateful for the confidence that both Bill and the Board have placed in me. T. Rowe Price is well positioned to execute on significant opportunities ahead, and I am excited to lead our business forward and continue helping our clients achieve their financial goals”, he said.

Alan D. Wilson, lead independent director, highlighted that Stromberg has been a remarkable leader and highly effective CEO: “He has deftly navigated the firm through a period of significant change and disruption in the industry. Under his leadership, significant investments in our investment, distribution, product, operations, technology, and corporate function teams have helped the company deliver strong results for clients and take advantage of strong markets to grow assets under management, revenues, earnings, and dividends”, he added.

Lastly, Stromberg commented that, over the course of hist 20-year partnership with Rob, he has consistently demonstrated his abilities as “a talented investor, a principled decision-maker, and an accessible and impactful leader of people and processes”. 

Additional leadership transitions

The firm has also announced other changes in senior positions. Specifically, Céline Dufétel, chief operating officer (COO), chief financial officer (CFO), and treasurer, will be stepping down, but she will serve in an advisory role until August 31, 2021, “to ensure a seamless transition”. Jen Dardis, currently head of Finance, will take over her roles and join the Management Committee. 

Besides, Eric Veiel, currently co-head of Global Equity, head of U.S. Equity, and chair of the U.S. Equity Steering Committee (ESC), will become head of Global Equity, as of January 1, 2022. At that time, Josh Nelson, currently associate head of U.S. Equity, will become head of U.S. Equity and chair of the U.S. ESC and will join the Management Committee.

Reasons to Remain Optimistic in the Convertible Space

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butterflies-1127666_640
Pixabay CC0 Public DomainBonos convertibles . Bonos convertibles

The U.S. equity market set new records during the second quarter with the benchmark S&P 500 index marking its 34th record close of the year on the last day of June.  U.S. stocks gained for a fifth straight quarter, the longest run since 2007, and this year’s first-half performance was second only to 1998. According to BofA, ‘stocks were the only major asset class with positive returns in 1H.’

The Fed’s aggressive monetary policy has forced short-term nominal U.S. interest rates down close to zero percent. The Fed is buying $80 billion of U.S. Treasuries and $40 billion mortgage bonds a month, swelling its balance sheet.  The mid-month June FOMC statement surprised the markets by pulling tapering expectations for the first rise in short rates forward, citing strength in the U.S economy from vaccinations progress, strong fiscal and monetary stimulus, and the ongoing recovery in sectors hardest hit by the pandemic.  With a focus on upcoming U.S. employment and economic releases, the Fed may have to shorten its taper lift-off date again as reverse repo market pressures continue to rise.

Evercore ISI’s economist Ed Hyman writes: The Pandemic Recession has been counted as a recession by the NBER, albeit totally unique with the biggest plunge ever, the shortest recession ever, and the sharpest rebound ever. Nonetheless, the most likely path forward is a typical expansion which have lasted 5 to 10 years.

Mergers and acquisitions activity remained vibrant in the second quarter with $1.6 trillion in announced deals – a new record – bringing global deal volume in the first half to $2.8 trillion, also a record. Market conditions remain conducive for continued M&A including historically low interest rates, accommodative debt markets and a desire to better compete globally. We realized gains on deals that closed including Corelogic, Extended Stay, Signature Aviation, and Cooper Tire. Newly announced deals in June include Lydal’s acquisition by Clearlake Capital for $1.3 billion, Cloudera’s acquisition by KKR and CD&R for $5 billion and CAI International’s acquisition by Mitsubishi Capital for $1 billion. We remain constructive on the M&A market and our ability to earn absolute returns.

Streaming wars and Tech, Media and Telecom deals will be heating up in Sun Valley, Idaho during a five-day conference which started July 6th.  Media moguls from major companies including Netflix, Walt Disney, Discovery, Amazon, WarnerMedia, Comcast, ViacomCBS, Lions Gate, News Corp, and Fox were in attendance, bringing potential deals and the future of media to the spotlight.

In the convertible securities space, performance improved in June as underlying equities moved higher. Issuance continued at a more normal pace than the record numbers occurring earlier in this year. Convertibles remain a very attractive way for companies to raise capital quickly at agreeable terms, and we anticipate that 2021 will be another year of strong issuance. The global market for convertibles is approaching $600 Billion USD, with the US accounting for nearly 3/4 of the total outstanding.

Globally, convertibles have become very equity sensitive this year, with 54% in what we would consider equity equivalent issues, only 34% in total return issues and 12% in fixed income equivalent. By comparison, we remain focused on total returns for our shareholders, with 22% of the fund in equity equivalent issues, 72% in total return, and 6% in fixed income equivalent. As a result our portfolio has a 2.2% yield, 25% premium, 61 delta and average price of 120. The global convertible universe yields 1.4% with a 24% premium, 64 delta, and 129 average price. By picking up yield but maintaining a similar conversion premium and delta closer to par, we believe this more balanced mix of holdings will help us participate in further equity upside while still offering the asymmetrical return profile that makes convertibles attractive investments.

For the month of June, our top contributors to fund performance included QTS Realty and Splunk. QTS Realty is a data center provider that is being acquired by Blackstone Group. The stock was up sharply on the news and the convertible preferred moved higher as well due to its equity sensitivity. Splunk provides software for data analytics and security. The stock moved higher on news of a strategic investment from Silver Lake. Top detractors from performance this month included Southwest Airlines and JetBlue. Both of these airlines had moved higher in anticipation of travel accelerating, but the stocks and convertibles moved lower despite positive headlines in the month of June

 

 

_____________________________________________________

To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:

GAMCO MERGER ARBITRAGE

GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.

Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.

Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.

Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of  approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.

Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476

GAMCO ALL CAP VALUE

The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.

GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise.  The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach:  free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.

Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155

GAMCO CONVERTIBLE SECURITIES

GAMCO Convertible Securities’ objective is to seek to provide current income as well as long term capital appreciation through a total return strategy by investing in a diversified portfolio of global convertible securities.

The Fund leverages the firm’s history of investing in dedicated convertible security portfolios since 1979.

The fund invests in convertible securities, as well as other instruments that have economic characteristics similar to such securities, across global markets (but the fund will not invest in contingent convertible notes). The fund may invest in securities of any market capitalization or credit quality, including up to 100% in below investment grade or unrated securities, and may from time to time invest a significant amount of its assets in securities of smaller companies. Convertible securities may include any suitable convertible instruments such as convertible bonds, convertible notes or convertible preference shares.

By actively managing the fund and investing in convertible securities, the investment manager seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market.

Class I USD          LU2264533006

Class I EUR          LU2264532966

Class A USD        LU2264532701

Class A EUR        LU2264532610

Class R USD         LU2264533345

Class R EUR         LU2264533261

Class F USD         LU2264533691

Class F EUR         LU2264533428 

Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to nd out what those restrictions are and observe them.

Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reect the manager’s current view of future events, economic developments and nancial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.

Allfunds Strengthens its US Reach Through an Agreement with Interactive Brokers

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sparkler-839806_1920
Pixabay CC0 Public Domain. Allfunds refuerza su presencia en Norteamérica gracias a un acuerdo con Interactive Brokers

Allfunds, the world’s leading B2B wealthtech and fund distribution platform, has strengthened its reach within the US market by entering into an agreement with Interactive Brokers LLC, a leading global securities broker and custodian with over 348 billion dollars in clients assets, as of June 2021.

The firm has explained in a press release that the agreement will help Interactive Brokers offer mutual funds to RIAs, broker-dealers and self-directed investors. This is facilitated through Interactive Brokers’ Mutual Fund Marketplace which gives clients access to more than 40,000 funds worldwide, including 37,000 no-load funds from over 400 fund families.

The Mutual Fund Search Tool can be used to search for funds by country of residence, commission charged, fund type or fund family. It can be accessed by clients from over 200 countries and territories and includes many prominent fund families, including funds from Amundi, BlackRock, Franklin Templeton, Invesco, Lombard Odier, MFS Meridian, PIMCO and Schroder. In addition, over 7,700 funds are available with no transaction fees. Also, included within the platform is the ability to view suitable share-classes for RIAs and institutional investors.

Allfunds is in the process of building a pool of eligible funds to facilitate access of Offshore UCITS funds in Canada under the relevant local exemptions regime. “This will open the opportunity to fund managers to sell their products in an efficient and cost-effective manner to certain client types”, has pointed out the firm.

In its view, this agreement strengthens its “already sizeable reach” in the USA offshore market. In 2020 Allfunds opened its representative office in Miami to focus on the offshore market mainly composed of private banks, as well as, broker dealers, wirehouses and self-clearing firms. Allfunds is a global leader in open end fund offerings with clients in 60 countries and over 1.5 trillion dollars in assets under distribution. 

“We are thrilled to continue to work with Interactive Brokers, a true leader in the electronic broker space. We have seen great success over the last several months working together and we look forward to seeing additional flows from Canadian and US investors into the platform. At Allfunds we are committed to transparent, efficient and cost-effective access to funds and this agreement with Interactive Brokers helps reinforce these values in the North American market”, has stated Laura Gonzalez, Global Head of Wealth Management at Allfunds.

Wells Fargo AM to Become Allspring Global Investments with Joseph A. Sullivan as CEO

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Foto cedidaJoseph A. Sullivan como nuevo CEO de Allspring Global Investments (anterior Wells Fargo AM).. Wells Fargo AM pasa a llamarse Allspring Global Investments bajo el liderazgo de Joseph A. Sullivan como nuevo CEO

Private equity firms GTCR LLC and Reverence Capital Partners, L.P. have announced that upon closing of their acquisition of Wells Fargo Asset Management, announced last February, the newly independent company will be rebranded as Allspring Global Investments. As part of the transition, Joseph A. Sullivan will become Chief Executive Officer, in addition to his previously announced role as Executive Chairman.

Sullivan will succeed Nico Marais, WFAM’s current CEO, who will retire upon closing of the transaction and continue to serve Allspring as a senior advisor. With this new name, the asset manager seeks to reflect its “rich history” in investment leadership and its commitment to renewal, growth, and meaningful client outcomes as a newly independent firm.

“I am honored and energized to have the opportunity to lead Allspring, as we enter a new era for the firm. In spending time with Nico and the organization over the past few months, I have been incredibly impressed by the depth of investment expertise and quality of our people and leadership. Our new name truly embodies a renewed corporate culture and commitment to continue to invest thoughtfully and partner with our clients to navigate the future”, said Sullivan.

Collin Roche, Managing Director of GTCR, highlighted that these announcements mark “key milestones” in the transformation of WFAM into a focused, independent, global asset management firm serving private wealth and institutional clients around the world. “We are excited about the possibilities of our new name and that Joe Sullivan will become Allspring’s CEO. He is recognized as one of the asset management industry’s most respected leaders, and he will be exceptionally valuable as we execute on our growth strategy. We would like to thank Nico Marais for his strong leadership of WFAM, and we are pleased that he will continue to serve as a senior advisor”, he added.

Meanwhile, Marais commented that his is “a tremendously exciting time” for the company, and as they make this transition, he believes it is the right time for him “personally and professionally” to step down from active leadership and assume a new advisory role: “I have cherished my time as CEO of WFAM and am very appreciative of the passion and professionalism of our people. We have accomplished a great deal, including the transition to independent ownership. I look forward to working with Joe and the team, and I am confident about what the future holds for the organization”.

Lastly, Milton Berlinski, Co-Founder and Managing Partner of Reverence Capital, noted: “Today’s leadership and name announcements give us even stronger conviction that the partnership between WFAM, GTCR  and Reverence puts us in a powerful position to execute on our strategic vision for Allspring. We are pleased to have a leader of Joe’s stature to take us forward as a newly independent company, and we are very grateful to Nico for his strong continued partnership during this time.”

Natixis IM Names Joseph Pinto Head of Distribution for Europe, Latin America, Middle East and Asia-Pacific

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Foto cedidaJoseph Pinto, director de distribución para Europa, América Latina, Oriente Medio y Asia-Pacífico de Natixis IM. . Natixis IM nombra a Joseph Pinto director de distribución para Europa, América Latina, Oriente Medio y Asia-Pacífico

Natixis Investment Managers has announced changes among its senior positions, with Joseph Pinto appointed Head of Distribution for Europe, Latin America, Middle East and Asia Pacific; and Christophe Lanne named Chief Administration Officer. 

In a press release, the asset manager revealed that they will continue to report to Tim Ryan, member of the Natixis Senior Management Committee, Global CEO Asset & Wealth Management within Groupe BPCE’s Global Financial Services division, and to serve on the Management Committee of Natixis Investment Managers. They are also members of the Natixis Executive Committee.

Both professionals have a long track record in the asset management industry and will have a high level of responsibility in the company’s business after their promotions. Pinto, who was previously Chief Operating Officer, will oversee client-related activities and support functions for these regions.

Meanwhile, Lanne will oversee global operations and technology as well as human resources and corporate social responsibility strategy. He was previously Chief Talent & Transformation Officer at the firm.

“These appointments reinforce our ambition to progress among the top fifteen largest asset managers in the world and become the most client centric asset manager. With our affiliates’ distinctive investment capabilities: Active Management, Real Asset Liability Driven Investments, and Quantitative Management, and a more client-centric organization, we remain committed to delivering the best investment outcomes and the best experience for our clients”, said Tim Ryan.

Lastly, Nicolas Namias, CEO and Chairman of the board of directors commented that the appointments of Pinto and Lanne to these newly-created roles will support their pursuit of “the ambitious goals” they have set for Natixis Investment Managers under their strategic plan, BPCE 2024: “Notably the ongoing diversification of our activity as we bolster our commercial momentum and reinforce our position as a global leader in asset management”.

Complacency over Inflation May Be the Biggest Risk Facing Investors

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Pixabay CC0 Public Domain. La complacencia respecto a la inflación podría ser el mayor riesgo al que se enfrentan los inversores

The “Roaring Twenties” lived up to the hype in the first half of 2021 as most major indexes –S&P 500, FTSE 100 or Shanghai Composite- posted double-digit returns. Looking into the second half of the year, strategists of Natixis Investments Managers believe that along with rising returns, investors should especially watch two things: inflation and valuations.

These are the conclusions of a mid-year survey of 42 portfolio managers, strategists and economists representing Natixis IM, 16 of its affiliated asset managers, and Natixis Corporate and Investment Banking. It shows that even as the market considers the first real dose of inflation in 13 years, complacency may actually be the biggest risk facing investors.

More than a year into the pandemic, with light at the end of the tunnel, Natixis experts believe that long-term consequences of the last year will be slow to unfold. Still, the year-end outlook remains constructive with few risks on the horizon, suggesting investors best keep their eyes wide open as the long-term effects slowly begin to unfold. 

“The Wall of Worry continues to keep sentiment in check. We hear many concerns about peak growth, and we remind investors not to confuse peak growth and peak momentum. We expect the pace of the recovery to ease, but ease to levels that are still very supportive for corporate earnings,” says Jack Janasiewicz, Portfolio Manager & Portfolio Strategist for Natixis Investment Managers Solutions.

Despite big returns from investment markets, the global economy has not yet fully reopened. More than half (57%) of strategists project it will take another six to nine months for the world to fully reopen. Others are similarly split between whether the economy is gearing up for the reopening towards the end of 2021 (21%) or whether it will be delayed until the second half of 2022 (19%).

Strong growth in the US

Regionally, sentiment runs most positive for the US economy. After watching it reopen sooner and faster than expected, with Q2 growth set to be 11% (annualized), two-thirds say they expect it to neither stall nor overheat in the second half, suggesting still strong growth ahead.

Looking at China, where economic growth has recovered to pre-pandemic levels, six in ten say the recovery has already peaked. Less than one-third (31%) think there’s more room for the Chinese economy to run in the second half of the year.

In Europe, where vaccination efforts are a few months behind the US and reopening is set to accelerate during the second half, 57% believe the economy will continue to lag the US, though 43% do believe it will catch up to the rest of the world through the end of the year.

Is complacency the real risk?

In this context, no single risk stood out for Natixis strategists in this annual survey, with no risk factor rated above an average of 7 on a scale of 10. Taken together, the views suggest that investors should monitor risks and investors be on the watch for potential headwinds.

 

Gráfico Natixis

“Indications are that inflation will prove transitory, driven by consumers fresh out of lockdown and flush with cash, coupled with supply chain bottlenecks. But the risks are clearly to the upside. Even the Fed had to acknowledge that inflation would run hot in 2021, though it is confident it will not spiral beyond that,” said Lynda Schweitzer, Co-Team Leader of Global Fixed Income at Loomis Sayles.

Value continues to lead in equities

One of the key market trends to come out of the pandemic has been the rotation to value investing. Looking into the second half of the year, 64% of those surveyed say value has at least a few more months to run, though only a quarter (26%) believe that outperformance could last for a few years. Only 10% believe the value run is already over, a sentiment that was strongest among the 21% of respondents who see markets stalling in the last two quarters of 2021.

Chris Wallis, Chief Investment Officer at Vaughan Nelson Investment Management points out that for value to continue to outperform, “we will need inflation to prove transitory and further fiscal spending by the federal government”.

It all comes down to the Fed

Of all factors that could impact market performance over the second half of 2021, strategists say that Fed moves matter most, rating them 7.2 out of 10. Similarly, they cite economic data releases (6.7), fiscal spending (6.1) and liquidity (6) as key leading market drivers, demonstrating just how much sway central banks continue to hold over markets. Valuations (5.2), vaccinations (5.1) and geopolitics (5) round out the pack, showing that respondents are looking past the pandemic and that, while valuations are high, they often do not lead to a correction on their own.

The outlook for emerging markets in the second half of the year is also dependent on the Fed, according to the survey. Indeed, 45% of respondents caveat their call for EM outperformance with the dollar and yields remaining contained, showing how far-reaching the Fed’s impact is. Only 10% of respondents gave an outright “yes” to EM outperforming into the end of the year, while 14% say EM needs Chinese growth to remain robust and nearly one in three (31%) said “no,” emerging markets will not outperform during the second half of 2021, regardless of any caveats.

ESG and crypto positioning

In considering two of the leading investment stories to come out of the pandemic, Natixis strategists have the strongest convictions about ESG (Environmental, Social, and Governance) investing. Throughout the pandemic, ESG strategies generated impressive results in terms of both returns and asset growth. Few think the success will be short-lived, as one in ten of those surveyed think of ESG as a fad. Instead, 48% say these investments are becoming mainstream and 26% call them a must-have investment.

When it comes to cryptocurrencies, the asset manager believes that while they have been grabbing headlines over the past year, two-thirds of those surveyed believe the market under-appreciates the risks, 17% say crypto is nothing more than a fad and 12% believe it is a disaster waiting to happen. “Not one of the 42 strategists surveyed believes cryptocurrencies are a bona fide alternative to traditional currencies”, the analysis adds.

Post-pandemic winners remain the same

As we start to look post-pandemic, respondents saw little change in the projected post-pandemic winners compared to last year’s survey. This year, strategists call for technology (88%), healthcare (83%), ESG investing (76%), and housing (74%) to be the winners from the crisis.

Given that nearly six in ten strategists (57%) put stay-at-home business in the winners’ column, it appears many think it will take time for the sector to mirror the return to the office. Convictions do not run as strong for energy (38% winner / 62% loser) and travel (52% winner, 48% loser), an outlook that aligns with a full reopening sometime in the first half of 2022 rather than the last half of 2021.

BlackRock Takes Minority Stake in SpiderRock Advisors

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Pixabay CC0 Public Domaincaccamo. caccamo

BlackRock and SpiderRock Advisors have entered into a strategic venture to expand access for wealth firms and financial advisors to professionally managed, options-based separately managed account (SMA) strategies. As part of the agreement, BlackRock will make a minority investment in SpiderRock Advisors.

This new venture builds on BlackRock’s position as a market leader in personalized SMAs, with its franchise managing over 190 billion dollars in SMAs as of March 31. This includes the acquisition of Aperio, a provider of personalized index solutions, which took place at the end of 2020.

SpiderRock Advisors will offer wealth management firms and financial advisors more tools to deliver tax-efficient, personalized portfolios and risk management solutions. This leading provider of customized options strategies in the U.S. wealth market manages approximately 2.5 billion dollars in client assets as of March 31, 2021.

The firm’s strategies are available through all of the major RIA custodians and are focused on risk management and yield enhancement for diversified portfolios as well as concentrated stock positions. BlackRock’s market leaders and consultants in U.S. Wealth Advisory will serve as the primary distribution and marketing team in introducing SpiderRock Advisors’ advisory services and strategies to wealth firms and financial advisors.

BlackRock is already an industry leader in SMAs for U.S. wealth management-focused intermediaries. The firm’s SMA franchise specializes in providing customized actively managed fixed income, equity, and multi-asset strategies. In its view, the venture with SpiderRock Advisors will expand the breadth of personalization capabilities available to wealth managers through this firm.

!We are excited to partner with BlackRock to introduce SpiderRock Advisors and our options management capabilities to a wider audience of firms and their clients,” said Eric Metz, President and Chief Investment Officer of SpiderRock Advisors. He believes that innovative advisors understand the value of managing risk “as we navigate a challenging capital markets landscape”.

“Between potential tax reform, historically low interest rates, and volatile equity markets, options-based strategies and solutions can often solve client objectives more efficiently than conventional allocations and techniques. With BlackRock’s breadth of industry relationships, SpiderRock Advisors will be able to partner with more advisors to deliver tailored portfolios and help investors achieve their investment goals“, he concluded.