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Carbon Investing: An Emerging Asset Class

fire-gbb8066590_1920 — Pixabay CC0 Public Domain. Inversión en carbono: una clase de activos emergente

A very important tool in combating climate change is to put a price on carbon emissions. This price factors in the negative externality of climate change and creates an incentive for the invisible hand of the market to move companies and economies away from burning fossil fuels. Achieving Paris Agreement climate targets will require the widespread use of carbon pricing to steer the world onto a low-carbon and sustainable pathway.

Currently, carbon pricing follows two main methods: carbon taxes and cap-and-trade systems (or emissions trading systems, “ETS”). The advantage of an ETS over a carbon tax is that the total amount of CO2 released by participants in the scheme is capped at a pre-determined ceiling, which is subject to annual reductions. In addition, through the use of tradable emissions allowances, CO2 reduction can be facilitated at the lowest total cost to society.

Carbon allowances have become a liquid and investable asset class that traded approximately US$800 billion in 2021 across physical carbon, futures, and options; this was more than double the volume of twelve months earlier. Carbon has exhibited attractive historical returns and a low correlation with other asset classes, making it potentially attractive within a diversified portfolio.

The World Carbon Fund is a unique investment fund that invests across multiple liquid and regulated carbon markets. It is managed by Carbon Cap Management LLP an investment management boutique based in London. Carbon Cap have established a team with industry experience gained across carbon pricing, carbon trading and fundamental carbon markets research.

The Fund’s objectives are to generate absolute returns with a low correlation to traditional asset classes as well as having a direct impact on climate change. The Fund uses long-biased allocations across the carbon markets in order to capture the medium-term positive returns forecast in these markets. It also deploys a range of shorter-term alpha generating strategies including arbitrage and volatility trading.

There is a widespread acknowledgement that the price of carbon needs to continue to appreciate in order to provide sufficient incentive to meet Paris Agreement targets. 2021 saw significant price rises in each carbon market in which the Fund invests which has helped towards a positive return of more than 70% since its launch early in 2020.

The carbon markets can display high levels of volatility and the Fund operates within clearly defined risk framework in order to maximise risk adjusted returns. In general terms there is low correlation between the individual carbon markets and this apparent anomaly can be used both as an alpha source and to manage down overall portfolio risks.

The Fund is an Article 9 fund under the EU’s SFDR. It seeks, through its investment activities, to contribute directly to the reduction in global CO2 emissions targets. In addition, the investment manager contributes a fixed percentage of performance fees generated to purchasing and cancelling carbon allowances/offsets.

Investors in the Fund are institutions, wealth managers, family offices and private clients. As well as seeking to provide investors with non-correlated returns and climate impact, carbon investing can also act as an inflation hedge as higher carbon prices are seen to be correlated to consumer price indices.

South Hub Investments S.L, a company founded by Carlos Diez, will be responsible for the distribution of the funds in Spain. The company performs this function thanks to an agreement with Hyde Park Investment International LTD, an MFSA-regulated entity, which has 16 years of experience in European fund distribution.

Australia, the Netherlands, and the United States Again Earned Top Grades in the First Chapter of the Global Investor Experience Study

| Por Beatriz Zúñiga | 0 Comentarios

track-and-field-g2474d8e0c_1920 — Pixabay CC0 Public Domain. Australia, Países Bajos y EE.UU. se revalidan como los mercados más favorables para los inversores en cuanto a comisiones y gastos de los fondos

The fees investors pay for their funds are falling, according to Morningstar’s latest global report on fees and expenses in the industry. According to the report’s findings, Australia, the Netherlands and the United States receive the best ratings, while Italy and Taiwan are once again the worst performers.

The report Global Investor Experience (GIE) report, now in its seventh edition, assesses the experiences of mutual fund investors in 26 markets across North America, Europe, Asia, and Africa. The “Fees and Expenses” chapter evaluates an investor’s ongoing cost to own mutual funds compared to investors across the globe.

As explained from Morningstar, a key point of this report is the analysis it makes on the running costs borne by an investor for owning mutual funds, compared to other investors around the world. And whose result reflects in a global ranking compared to the last edition of this report in 2019.

ranking costes

Morningstar’s manager research team uses a grading scale of Top, Above Average, Average, Below Average, and Bottom to assign a grade to each market. Morningstar gave Top grades to Australia, the Netherlands, and the United States, denoting these as the most investor-friendly markets in terms of fees and expenses. Conversely, Morningstar again assigned Bottom grades to Italy and Taiwan indicating these fund markets have amongst the highest fees and expenses.

Australia, the Netherlands, and the U.S. earned top grades due to their typically unbundled fund fees. This is the fourth study in a row that these three countries have received the highest grade in this area, according the study.

“The good news for global fund investors is that in many markets, fees are falling, driven by a combination of asset flows to cheaper funds and the repricing of existing investments. The increased prevalence of unbundled fund fees enables transparency and empowers investor success. However, the global fund industry structure perpetuates the use of upfront fees and the high prevalence of embedded ongoing commissions across 18 European and Asian markets can lead to a lack of clarity for investors. We believe this can create misaligned incentives that benefit distributors, notably banks, more than investors,” said Grant Kennaway, head of manager selection at Morningstar and a co-author of the study.

Highlights

The majority of the 26 markets studied saw the asset-weighted median expense ratios for domestic and available-for-sale funds fall since the 2019 study. For domestically domiciled funds, the trend was most notable in allocation and equity funds, with 17 markets in each category reporting reduced fees.

Lower asset-weighted median fees are driven by a combination of asset flows to cheaper funds as well as the repricing of existing investments. In markets where retail investors have access to multiple sales channels, investors are increasingly aware of the importance of minimizing investment costs, which has led them to favor lower-cost fund share classes.

Outside the United Kingdom, the U.S., Australia, and the Netherlands, it is rare for investors to pay for financial advice directly. A lack of regulation towards limiting loads and trail commissions can cause many investors to unavoidably pay for advice they do not seek or receive. Even in markets where share classes without trail commissions are for sale, such as Italy, they are not easily accessible for the average retail investor, given that fund distribution is dominated by intermediaries, notably banks.

The move toward fee-based financial advice in the U.S. and Australia has spurred demand for lower cost funds like passives. Institutions and advisers have increasingly opted against costlier share classes that embed advice and distribution fees. The trend extends to markets such as India and Canada.

Price wars in the ETF space have put downward pressure on fund fees across the globe. In the U.S., competition has driven fees to zero in the case of a handful of index funds and ETFs, and these competitive forces are spreading to other corners of the fund market.

In markets where banks dominate fund distribution, there is no sign that market forces alone will drive down asset-weighted median expense ratios for retail investors. This is particularly evident in markets like Italy, Taiwan, Hong Kong, and Singapore where expensive offshore fund sales predominate over those of cheaper locally domiciled funds.

The U.K. has introduced annual assessments of value, one of the most significant regulatory developments since the 2019 study. These require asset managers to substantiate the value that each fund has provided to investors in the context of the fees charged.

Methodology

The GIE study reflects Morningstar’s views about what makes a good experience for fund investors. This study primarily considers publicly available open-end funds and exchange-traded funds, both of which are typical ways that ordinary people invest in pooled vehicles. As in previous editions, for this chapter of the GIE study, Morningstar evaluated markets based on the asset-weighted median expense ratio by market in addition to the structure and disclosure around performance fees and investors’ ability to avoid loads or ongoing commissions. The study breaks up the markets into three groups of funds: allocation, equity, and fixed income. The expense ratio calculations consider two perspectives: funds available for sale in the marketplace and funds that are locally domiciled. In this most recent study, we have adjusted the assets used in the weightings for available-for-sale funds in each market to better reflect the propensity of domestic investors to invest in nonlocally domiciled share classes.

You can read the complete study in the following link.

Santander Wealth Management & Insurance Hires Laura Blanco and Augusto Caro for Its Sustainable Investment Unit

| Por Alicia Miguel | 0 Comentarios

Santander Wealth Management has hired Laura Blanco to lead its ESG unit, which was created last year to support Grupo Santander’s efforts to combat climate change, protect human rights and promote good corporate governance.

Blanco, who has over 20 years of professional experience, directed Knowledge and Outreach for Impact Investment at Spain’s National Advisory Board since its creation in 2019. She began her career as an equities analyst at UBS before moving to Credit Suisse in 2003. She also worked at Lusight Research, Haitong Securities, Baring Asset Management and Nakatomi Capital.

To further strengthen the team, Blanco has also appointed Ana Rivero as sustainable investment director. She began career at Banif, before moving to Santander Investment Bolsa Sociedad De Valores and then to Santander Asset Management (SAM), where she held several senior roles, including head of Product and Market Intelligence and head of ESG.

Augusto Caro (CFA) joins Santander Asset Management as global head of ESG from Grupo Caixabank. He held a number of senior roles in the Investment team at Bankia AM (pensions, equities and balanced funds), where he also chaired its sustainability committee. He will report to José Mazoy, global CIO of Santander Asset Management.

“We are firmly committed to supporting the ecological transition and helping build a more sustainable world. These appointments will help strengthen our leadership in ESG in Europe and Latin America”, said Víctor Matarranz, head of WM&I, the bank’s asset management, private banking and insurance division.

WM&I aims to raise EUR 100 billion in sustainable funds by 2025. So far, it has raised EUR 27 billion across private banking and its fund manager. The target forms part of Santander’s push to raise or facilitate EUR 120bn in green finance by 2025 and EUR 220bn by 2030; cutting its worldwide exposure to thermal coal mining to zero by 2030; and reduce emissions relating to its power generation portfolio. Featured in the Dow Jones Sustainability Index 2021 for the 21st year in a row, with top marks in financial inclusion, environmental reporting, operational eco-efficiency and social reporting.

Banco Santander’s fund manager has its own ESG analysis team and SRI rating system. It became the first Spanish fund manager to join the global Net Zero Asset Managers initiative, which aims to achieve net-zero CO₂ emissions in all AUMs by 2050. Last November, it also announced its target to halve the net emissions stemming from its AUMs by 2030. The targets for net-zero AUMs (which are subject to emissions gauging and metrics) align with the Net Zero Asset Managers initiative. Santander Asset Management became the first Spanish multinational to join the Institutional Investors Group on Climate Change (IIGCC), a European body that promotes collaboration between investors on climate change matters and represents investors committed to a low-carbon future. It is also a signatory to the UN’s Principles for Responsible Investment (PRI).

Janus Henderson Announces Ali Dibadj as Next Chief Executive Officer

| Por Beatriz Zúñiga | 0 Comentarios

CEO JHG — Pixabay CC0 Public DomainJanus Henderson nombra a Ali Dibadj próximo consejero delegado . Janus Henderson nombra a Ali Dibadj próximo consejero delegado

Janus Henderson today announced that its Board of Directors has unanimously appointed Ali Dibadj as Chief Executive Officer of the Company effective no later than 27 June 2022.

Ali Dibadj succeeds Dick Weil, who, as previously announced, will retire as CEO and a member of the Board as of 31 March 2022. Effective 1 April 2022, the Board has appointed Roger Thompson, Chief Financial Officer, to serve as Interim CEO until Mr Dibadj joins JHG. To assist in an orderly transfer of responsibilities, Mr Weil will serve as an adviser to the Company through 30 June 2022.

Ali Dibadj joins the Company from AllianceBernstein Holding L.P. where he has served as CFO & Head of Strategy since February 2021 as well as Portfolio Manager for AB Equities since 2017.

Previously, he served as AB’s Head of Finance and Head of Strategy from April 2020 to February 2021. He co-led AB’s Strategy Committee in 2019 and served as a senior research analyst with Bernstein Research Services from 2006 to 2020, a period during which he was ranked as the number one analyst twelve times by Institutional Investor. Prior to joining AB, he spent almost a decade in management consulting, including at McKinsey & Company and Mercer. Mr Dibadj holds a Bachelor of Science in engineering sciences from Harvard College and a Juris Doctor from Harvard Law School.

Richard Gillingwater, Chairman of the Board of Directors, said, “We are pleased to appoint Ali Dibadj as the Company’s next CEO. As part of our CEO transition planning, we conducted an extensive internal and external search to identify an executive who both understands our business and has the necessary strategic expertise to help drive the firm’s next phase of growth for the benefit of our clients and shareholders. The Board is confident that Ali is the ideal choice to lead this great company into its next phase of growth and value creation.”

On the other hand, Ali Dibadj said, “I am delighted to join Janus Henderson and look forward to having the opportunity to lead such a talented group of professionals at an important time for the Company and the industry. I have long admired Janus Henderson’s commitment to deliver for its clients with investment and servicing excellence. The executive team, the Board, and I look forward to identifying, expediting, and capturing growth and innovation that creates value for our clients, employees, shareholders, communities, and all stakeholders.”

Jose Castellano Steps Away From the Day-To-Day Management of iM Global Partner and Jamie Hammond Takes Over as Head of International Distribution

| Por Beatriz Zúñiga | 0 Comentarios

IM NOMBRAMIENTOS CASTELLANO — Foto cedidaJosé Castellano dará el relevo a Jamie Hammond como responsable de Distribución Internacional de iM Global Partner.. José Castellano abandona su puesto como Deputy CEO y responsable de Distribución Internacional de iM Global Partner

José Castellano, until now Deputy CEO and Head of International Distribution at iM Global Partner, is leaving the firm. As of April 4^th, 2022, he will remain as Senior Advisor of the firm.

According to iM Global Partner’s statements to Funds Society, his mission will be to assist the firm in its future developments. Jamie Hammond will take over from Castellano as head of International Distribution.

“Jose has decided to distance himself from the intense daily management required by his role as ‘Deputy CEO, Head of International distribution’. From April 4th, 2022, he will become Senior Advisor of iM Global Partner with the main mission of helping the company in its future developments,” the company explains.

From the firm, they add: “We would like to strongly thank Jose for his very significant contribution within iM Global Partner in building its international distribution network. We are also happy that he has agreed to remain active on behalf of iM Global Partner.”.

Castellano said: “Obviously I also thank Philippe Couvrecelle for envisioning and leading very passionately and successfully this amazing company.”

Jamie Hammond will take over from Castellano as head of International Distribution. Hammond is a veteran and one of the best-known distribution executives in the business, with a great track record and experience, and who fully shares iM Global Partner’s vision and values. He currently heads the firm’s EMEA Distribution area and is Deputy CEO.

Extensive experience

Castellano joined the firm in March 2021 to support iM Global Partner’s development outside the United States. At that time, he joined directly for the dual role of Deputy CEO and Head of International Business Development. He has extensive experience in the sector, having spent 25 years in the distribution business in this industry.

Within his professional career, it is worth highlighting his time at Pioneer Investments, where he spent 17 years and was one of the main distribution executives for the Asia Pacific, Latin America, United States and Iberia regions. Under his leadership, these regions experienced the highest growth worldwide, making the fund manager one of the most important players in each of these markets. Prior to joining Pioneer Investments in January 2001, he was head of Morgan Stanley’s private equity group for two years and head of Wealth Management for another seven years at Morgan Stanley. José Castellano holds a degree in finance from Saint Louis University and several postgraduate degrees from Nebrija University and IE.

Hammond has more than thirty years of experience in the sector. Prior to joining iM Global Partner last summer, Hammond worked at AllianceBernstein Limited (UK) as Managing Director and Head of the EMEA Client Group. He joined AB in January 2016 as head of EMEA Sales, Marketing and Customer Service Functions. Prior to that, he spent 15 years at Franklin Templeton Investments, where his last positions were CEO of UK regulated entities and Managing Director for Europe. He joined Franklin Templeton in 2001 following the acquisition of Fiduciary Trust Company International, where he was Sales Director responsible for mutual fund development in Europe. Prior to that, Hammond held the position of Head of National Sales at Hill Samuel Asset Management, the asset management division of Lloyds TSB Group.

Allfunds Launches Nextportfolio3, The New Version of its ESG-focused Portfolio Management and Advisory Solution

| Por Beatriz Zúñiga | 0 Comentarios

desk-ged4a9a63c_1920 — Pixabay CC0 Public Domain. Allfunds lanza nextportfolio3, una nueva versión de su solución de asesoramiento y gestión de carteras orientas a la ESG

Allfunds launches nextportfolio3, a new version ready to meet the industry’s ESG challenges. The continued evolution of this tool reinforces Allfunds’ leading role in the digital transformation of the wealth management industry, the company said.

The third version of Allfunds’ nextportfolio tool, which offers advanced portfolio management solutions to more than 400 global institutions, responds to the high demand from financial institutions for ESG analysis and information. According to them, in this new version of nextportfolio3 users will now benefit from four major services such as ESG reports and filters at fund and portfolio level, so that clients can better direct their investments towards ESG-oriented funds, thus meeting the demand for more sustainable portfolios.

It will also feature a portfolio optimizer by asset allocation and fund selection, which allows firms to adjust their portfolios to achieve optimal allocation and efficiency in line with specific levels of risk; and an advanced risk and return attribution module that helps detect the specific contribution of holdings or assets, and provides information to determine the effectiveness of investment diversification. It also features a new end-client portal and mobile app that offers an excellent user experience with new investment analysis and tracking functionality.

“We are delighted to launch a new version of our nextportfolio solution, building on Allfunds’ 20 years of experience in developing technology products that support asset and wealth management with greater efficiency and agility in response to evolving market dynamics. We have leveraged Allfunds’ deep expertise and access to market data to achieve a stronger and more powerful portfolio analysis tool in nexportfolio3. Analysis and reporting tools have been incorporated with a clear focus on ESG management, helping distributors make the best decisions for their clients,” explained Salvador Mas, Global Head of Digital at Allfunds.

This tool is part of the set of digital solutions of the Allfunds platform available for fund managers and distributors. According to the company, the launch of this new version of nextportfolio proves its commitment to the constant development of its offering, introducing new leading solutions to offer efficiency and growth paths to companies in the midst of the transition to an increasingly digitized industry.

2022 Will Be a Pivotal Year for Active ETFs in the U.S. Market

| Por Beatriz Zúñiga | 0 Comentarios

usa-ge0c015151_1920_0 — Pixabay CC0 Public Domain. 2022 será un año crucial para los ETFs activos en el mercado estadounidense

2022 will be a transitional year for active exchange-traded funds (ETFs), according to Cerulli Associates. Its latest research U.S. Exchange-Traded Fund Markets 2021: Reaching a Growing Investor Base finds ETF industry participants are adamant that the active ETF opportunity is currently the most significant. In this context, as managers look to bring active product to market, they should continue monitoring the various approaches to launch and understand the tradeoffs associated with each.

The research asserts that the transparent active opportunity is most attractive relative to semi-transparent, strategic beta, and passive offerings. 70% of polled ETF issuers are either currently developing or planning to develop transparent active ETFs. With 266 billion dollars in assets encompassing multiple asset classes and a consistent growth trajectory, transparent active ETFs are already a well-built category and development has more recently been spurred by the ETF rule.

However, Cerulli notes that out of 104 billion dollars in active equity exposures, only a sliver is in true active equity products given that a significant portion is allocated to thematic and strategic-beta-like offerings.

The research points out that managers can also be successful with semi-transparent offerings. 50% of polled ETF issuers either are currently developing or planning to develop semi-transparent active ETFs. “Because holdings overlap and the number of holdings between the same product in two structures can vary significantly, this can lead to performance dispersion. This also complicates the cost-benefit analysis, requiring additional diligence from advisors and home offices”, Cerulli explains.

“Managers considering launching active ETFs should also keep an eye on the dual-share-class structure used by Vanguard, which comes off patent in 2023,” according to Daniil Shapiro, associate director. Previous Cerulli research finds that 38% of issuers are at least considering offering products via this structure. “Considering managers’ interest in offering products in a wrapper-agnostic manner, there is certainly some simplicity to be gained from having the same exposure available for sale via two structures—therein avoiding some of the previously referenced concerns about different exposures in what may be expected to be the same semi-transparent ETF,” adds Shapiro.

Cerulli believes that as issuers and legacy mutual fund managers seek to identify their market entry approach—whether via launching transparent or semi-transparent product, a conversion, or dual-share-class structure—many are still taking a wait-and-see approach to see which firms win out while others are placing bets.

“Ultimately, while the transparent active opportunity may be the most significant asset-gathering opportunity, managers can also be successful via semi-transparent ETFs with the right distribution approach. Conversions should be considered in unique circumstances, while developments regarding the dual-share-class structure should be monitored”, concludes Shapiro.

Dividend Party Returns: $1.52 Trillion Worldwide by 2022

| Por Beatriz Zúñiga | 0 Comentarios

carnival-g69da06da4_1920 — Pixabay CC0 Public Domain. Los dividendos mundiales alcanzaron la cifra récord de 1,47 billones de dólares en 2021

The year 2021 saw a strong recovery in global dividends that more than offset cuts made during the worst of the pandemic, according to the latest Janus Henderson Global Dividend Index. Global dividends soared 14.7% on an underlying basis to a new record high of $1.47 trillion.

According to data from the Janus Henderson index, records were broken in a number of countries, including the United States, Brazil, China and Sweden, although the fastest growth was recorded in those parts of the world that had experienced the largest declines in 2020, notably Europe, the United Kingdom and Australia. Overall rate growth was 16.8%, driven by record extraordinary dividends. In addition, 90% of companies raised or held dividends steady, indicating widespread growth.

“Against the backdrop of the spectacular rally seen in the banking sector and the exceptional cyclical upside in mining companies, it would be easy to overlook the encouraging dividend growth seen in sectors that have made steady rises in recent years, such as technology. We expect many of these habitual patterns to consolidate in 2022 and beyond. The big unknown for 2022 is what will happen in the mining sector, but it is reasonable to assume that dividends in this area will be lower than the record levels of 2021, in light of recent trends in the iron ore, other metals and coal markets. For the full year, we forecast global dividends to reach a new record high of $1.52 trillion, up 3.1% on an overall basis or 5.7% on an underlying basis,” the company’s analysis notes.

Upward revision of the forecast

The exceptionally strong fourth-quarter distributions figures, coupled with the improved outlook for 2022, have led Janus Henderson to upgrade its full-year forecast. In 2022, Janus Henderson expects global dividends to reach a new record of $1.52 trillion, an increase of 3.1% on an overall rate or 5.7% on an underlying basis.

As the report accompanying the release of this index indicates, banks and mining companies were responsible for 60% of the $212 billion increase in payouts in 2021.

Another 25% of the increase responded to the resumption of distributions that companies had halted in 2020. Most of it was due to banks, whose dividends soared 40%, or $50.5 billion, and distributions returned to 90% of their pre-pandemic highs in 2021. In this regard, the manager explains that dividends were boosted by the restoration of payouts to more normal levels, given that regulators had curbed distributions in many parts of the world in 2020.

“More than 25% of the $212 billion annual increase came from mining companies, which benefited from the stellar rise in commodity prices. Record dividends from mining companies reflect the strength of their earnings. The mining sector distributed $96.6 billion over the year, nearly double the previous record of 2019, and ten times more than during the trough of 2015-16. In addition, BHP became the company that distributed the most dividends in the world. However, as a highly cyclical sector, its distributions will return to more normal levels when the commodity cycle turns around,” it notes in its findings.

The global economic recovery allowed distributions from consumer discretionary and industrial companies to grow by 12.8% and 10.0%, respectively, in underlying terms, while healthcare and pharmaceutical groups increased their dividends by 8.5%. Meanwhile, technology companies, whose profits continued to grow relatively immune to the pandemic, added $17 billion in payouts, an increase of 8%. Interestingly, 25% of the increase was attributable to just nine companies, eight of which were banks or mining companies.

Rebound in the United Kingdom and Australia

Geographically, the most accelerated growth in dividends was recorded in the regions where, in 2020, the largest cuts took place, such as Europe, the United Kingdom and Australia.

According to the firm, distributions reached new records in several countries such as the United States, Australia, China and Sweden, although 33% of the upturn came from just two countries, Australia and the United Kingdom, where the combination of increased distributions from mining companies and the restoration of distributions from banks made the biggest contribution to shareholder remuneration growth.

“Much of the dividend recovery in 2021 came from a small number of companies and sectors in a few areas of the world. However, behind these excellent figures, there was widespread growth in distributions both geographically and by sector,” says Jane Shoemake, client portfolio manager in Janus Henderson’s Global Equity Income team.

As Shoemake explains, against the backdrop of the spectacular rally seen in the banking sector and the exceptional cyclical upside in mining companies, it would be easy to overlook the encouraging dividend growth seen in sectors that have made steady gains in recent years, such as technology. “The same goes for geographic trends. The United States, for example, is often ahead of other countries, but in 2021 it recorded slower dividend growth than the rest of the world. This was due to the resilience shown in 2020, so the scope for recovery was now more limited,” he adds.

On its outlook, the manager indicates that many of the long-term dividend growth trends observed since the index’s launch in 2009 will be consolidated in 2022 and beyond. “The big unknown for 2022 is what will happen in the mining sector, but it is reasonable to assume that dividends in this area will be lower than the record levels of 2021, in view of the significant correction in the price of iron ore,” he says.

Commenting on the report’s findings, Juan Fierro, director at Janus Henderson for Iberia, says: “Following the strong recovery in global dividends that we saw over the past year, our 2022 forecasts put payouts for listed companies at a new record of $1.52 trillion – an increase of 3.1% overall or 5.7% underlying. While 90% of companies globally raised or held their dividends stable in 2021, in Spain we have seen this percentage drop to 36%. Despite this, dividends in our country registered an underlying growth of 14.6%, in line with global growth but higher in general terms (+22.5%) thanks to extraordinary payments.”

Fierro believes that, in the current context, “with a turbulent start to the year due to geopolitical tensions and potential changes in central banks’ monetary policy, it will be key to rely on active management and maintain a global and diversified approach in portfolios”.

Robeco Appoints Ivo Frielink as Head of Strategic Product & Business Development and Member of the Executive Committee

| Por Beatriz Zúñiga | 0 Comentarios

Robeco nombramiento — Foto cedidaIvo Frielink, director de Desarrollo Estratégico de Producto y Negocio y miembro del Comité Ejecutivo de Robeco.. Robeco nombra a Ivo Frielink director de Desarrollo Estratégico de Producto y Negocio y miembro del Comité Ejecutivo

Robeco has announced the appointment of Ivo Frielink as Head of Strategic Product & Business Development and member of the Executive Committee (ExCo), effective 1 March.

Karin van Baardwijk, CEO Robeco, said: “We are very pleased to have Ivo joining the ExCo and taking on this strategic position for our clients and Robeco. It also makes me proud that we are able to fill this position from our own ranks, which underlines the strength of our organization. Having worked closely with Ivo in the past, I have full confidence that the experience and insights he has gained over his extensive career will be a great asset that we can all profit from.”

Mr. Frielink, currently Regional Business Manager APAC at Robeco Hong Kong, will in his new role be responsible for further aligning Robeco’s product offering with its key commercial priorities and focus, as well as adding capabilities that complement the company’s current offering and drive Robeco’s strategic agenda.

He started his career at Price Waterhouse Coopers in 2000 and moved to Robeco in 2005, where he held different roles including Corporate Development. At the end of 2017, he moved to NN Investment Partners, where he served as Head of Product Development & Market Intelligence. After just over two years, he returned to Robeco, where he was appointed Regional Business Manager for APAC at Robeco Hong Kong.

Ivo Frielink, Head of Strategic Product & Business Development: “Having spent the majority of my career at Robeco, I am honored to be taking on this important position and working together with the ExCo members and all the different teams within Robeco. I look forward to connecting with and supporting our clients to achieve their financial and sustainability goals by providing superior investment returns and solutions. With Sustainable Investing, Quant, Credits, Thematic and Emerging Market Equities we have a strong suite of capabilities, and I look forward to aligning this even further with what our clients are looking for and where we can add value to them.”

2022’s Value Rotation Provides Dividends with Opportunities to Reinvest for Growth

| Por Romina López | 0 Comentarios

spices-1914130_1920 — Pixabay CC0 Public Domain. 1

2021’s value rally was spurred by optimism over ‘re-opening’ but came to an abrupt halt with the arrival of the Omicron variant. NN Investment Partners believes that the value rotation in play since the start of 2022 should not only have more longevity, but is likely to be broader in scope. An environment of higher interest rates and inflation should favour new sectors such as financials, energy and materials rather than just the “COVID recovery” names. Dividend strategies should thrive in this climate, but investors should be wary of “bond proxies”.

“Last year’s value rally lifted ‘deep value’ stocks particularly in the more challenged sectors such as travel, airlines and leisure. But many do not pay dividends because of weak cash flows and pressured balance sheets. This year, as markets become more volatile and less directional, the dividend factor could become important once again. Over time in Europe, dividends have provided investors with around 40% of their total returns”, says Robert Davis, Senior Portfolio Manager in the European Equity team of NN IP.

Value versus growth

The asset manager’s latest analysis shows that value investing has been out of favour since the Financial Crisis of 2008 with low interest rates and the effects of quantitative easing driving high valuations for growth companies. However, as inflation and the prospect of higher interest rates weigh on investors’ decision-making, we may be at an inflection point.

After a false-start earlier in 2021, value strategies have now outpaced growth strategies since November last year, with the technology sector – and particularly the more speculative stocks within it – taking a tumble.

Historically, the dominance of one investment style over the other can last for many years before a reversal occurs. The famous value rally that started in the mid-70’s lasted almost two decades before growth took over in a run that ended with the “dotcom” boom and bust. The most recent growth cycle started with the resolution of the Financial Crisis as central banks used unconventional monetary policies to depress interest rates and attempt to kick-start economic recovery.

The result has been extreme dispersion between the valuations of growth and value stocks, surpassing the levels seen at the peak of the late-90’s technology bubble. These valuation extremes have made the style performances susceptible to a reversal, and the change of central bank policy in the face of growing risks from inflation has provided the catalyst for this to take place.

A different flavour

At NN IP they believe this year’s value rotation is likely to have a different flavour. In this sense, they point out that there have been two legs to the value rally. The first occurred after the success of the vaccination programmes as economies started to reopen. That particularly helped companies who had seen demand shut off, or had experienced severe disruption to supply chains. “We think this year’s rotation is different – we’re seeing the consequences of inflation and the winners and losers from this environment are a different set of stocks”, warns Davis.

“Financials, for example, will benefit from higher interest rates. With low, or even negative rates, it places a lower bound on the spread between the interest rates banks can charge and receive for lending and borrowing, and this has seen their profit margins under pressure. As rates rise, so should banks’ profitability. Energy and materials stocks have also been clear beneficiaries of strong demand for their underlying commodities”, he adds.

Together with the better performance from these sectors which traditionally pay higher dividends, NN IP highlights that dividend strategies should have other advantages in the current environment. For income-focused investors, there is a level of inflation protection built-in as dividends should rise with company earnings. And as markets become more volatile and less directional, the one element of total return for equities over which there is good visibility is the dividend payout. In a mature market like Europe, dividends comprise around 40% of total returns over the long run.

Dividend approach

However, the asset manager thinks that it is not enough to target high yielding stocks. “Bond proxies”, defined as companies in sectors characterised by steady but slow earnings growth and therefore stable dividends, may see their yield advantage eroded with inflation and higher interest rates. This may be holding back sectors such as healthcare, where drug pricing is fairly independent of economic trends with the risk that dividend growth lags increases in inflation. In other stocks, the highest dividend yields may be a sign of distress and are best avoided: an indication that the market thinks the company will be unable to sustain current levels of payout.

NN IP’s focus is on quality dividends paid by companies generating growing cash flows and with a track record of returning cash to shareholders, but also reinvesting for growth. Today, this also requires finding companies with strong pricing power that can pass on higher input costs to customers.

Davis reveals that within the consumer space, they’ve been increasing exposure to the luxury sector: “Whereas food producers may be struggling to pass on higher input costs like energy and agricultural commodities, luxury goods companies appear to have few problems increasing the price of a designer handbag or high-end watch by another 10%”.

This focus on quality also allows the fund to integrate environmental, social and governance metrics. ESG can be difficult for Value and Dividend funds which can be skewed towards “old economy” businesses. “We target a lower CO2 intensity than our benchmarks. By owning better ESG-rated and lower polluting companies in our strategies we can even run an overweight in sectors like energy while maintaining a lower CO2 footprint than the broad index”, he concludes.