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Healthy Cities

Jonathan Roger Blue City — Pixabay CC0 Public DomainJonathan Roger. Jonathan Roger

Smart cities aren’t just about robotics and futuristic design. To be truly smart, they also need to protect and promote the health of their inhabitants – a task that’s all the more pertinent in the wake of the Covid-19 pandemic, which saw busy, crowded metropolises reporting some of the highest rates of infection.

In all, a smart city can reduce the disease burden by up to 15 per cent and reduce greenhouse gas emissions by around 10 per cent, research from consultants McKinsey shows (1).

According to the Pictet-Smart City Advisory Board, it’s not just about healthcare but also about taking care of the population’s health even before they get sick. The aim is to create an environment that promotes healthy living. It’s a priority for planners and regulators, and an opportunity for businesses and investors, according to the Advisory Board members, who dialled in from cities across the globe.

Pollution is a major challenge. More than 80 per cent of city dwellers are exposed to air quality that breaches WHO’s limits, with the problem particularly acute in low- and middle-income countries (2). Air pollution, in turn, is a major cause of illnesses and diseases, accounting for some 4.2 million deaths a year (3).

A holistic approach is needed. That includes more parks and greener buildings – both figuratively, in terms of reduced emissions and improved efficiency, but also literally, using plants within construction projects.

Businesses are increasingly embracing the innovation challenge. The 51-storey Jian Mu Tower in Shenzhen, China, for example, will provide 10,000 square meters of space for aeroponic farming, growing everything from salad greens to fruit and providing enough sustainably-produced food for some 40,000 people. These plants will absorb 200,000 kg of CO2 a year, as well as helping to shade the building, thus improving its energy efficiency and reducing the need for air conditioning.

Another way to reduce pollution is to encourage people to use alternatives to petrol-guzzling cars. That could mean making better use of existing public transport infrastructure, including sensors and apps to encourage people to travel at quieter periods – something that may be increasingly possible thanks to the advent of flexible working. (Conventional trains in Europe, for example, run on average at 35 per cent of capacity (4). They may be full during rush hours, but there is plenty of room at other times.)

Micromobily – from bikes to scooters – not only reduces the need for cars but can also have health benefits for users. By 2030, the micromobility market could be worth up to USD500 billion, according to consultants McKinsey (5). The trend can be further accelerated with more infrastructure – like secure parking and charging points – as well as with better city design.

Waste management, clean water and sanitation are also key. As an island with limited freshwater resources and limited land, Singapore is one of the leading innovators, with initiatives such as a new deep tunnel sewage system and high-grade reclaimed water. NEWater, the name Singapore’s Public Utilities Board gives to its highly treated reclaimed wastewater, is purified through a multi-stage process – including microfiltration, reverse osmosis and ultraviolet disinfection – and used in industry and for air conditioning. During dry periods it is also added to reservoirs, where it is mixed with raw water, treated again and supplied to consumers’ taps.

Accommodating ageing

Covid-19 highlighted the need for healthcare infrastructure. This is a growing area of the economy – Singapore, for example, has doubled its healthcare spending over the past decade.

Cities need to provide easy access to everything from basic diagnostic centres and strengthened early-stage outpatient treatment capacity to acute hospitals and assisted living. Technology can help, bringing access to diagnostics via apps, enabling doctors to consult colleagues remotely or speeding up diagnosis and drug discovery with the help of machine learning. The growing telehealth universe includes companies such as Teladoc Health Inc, which diagnoses, recommends treatment, and prescribes medication for routine medical issues through phone and video consultations (6).

Care for the elderly is becoming increasingly important as populations age. Of the 238 million people aged 65 and over in OECD countries, some 43 per cent live in cities (7). A key focus is on assisting people to stay in their homes even when they can no longer be fully independent. Swiss non-profit Spitex, for example, provides millions of hours of home care and assistance each year, offering services which range from changing bandages and administering medicine to meal delivery and wheelchair hire.

Technology also helps the elderly stay healthy and independent for longer – something that Lucerne’s iHomeLab has focused on. Its CleverGuard, for example, uses non-intrusive appliance load monitoring (NIALM) technology to analyse current and voltage. It detects any unusual patterns in the use of electrical appliances, including any unexpected inactivity which could be a sign of help needed. The iSens light sensor, meanwhile, can be installed next to the bed and used to alert carers of any abnormality in movement.

Last but not least, city infrastructure needs to be able to cope with the next pandemic – including plans and facilities for quarantine accommodation, for the isolation for the mildly ill (to reduce pressure on hospital beds), for the rapid conversion to ICU beds and for centres to distribute masks and vaccines.

Sustainable cities are one of the UN’s Sustainable Development Goals, and health is a key part of that – from reducing the adverse environmental impact of cities to ensuring access to green spaces and sustainable transport systems. The Covid-19 pandemic has made these targets all the more urgent. Investors can help drive the change, embracing a growing number of opportunities and innovations.

Tribune written by Thematic Advisory Board.

Discover more about Pictet Asset Management’s expertise in thematic investing.

Notes:

(1) Theoretical improvements in key KPIs if a “smart city” concept is being applied. Source: McKinsey Global Institute analysis, 2018

(2) WHO, “Global Urban Ambient Air Report”, 2016

(3) “Global, regional, and national comparative risk assessment of 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks, 1990-2015: a systematic analysis for the Global Burden of Disease Study”, Forouzanfar et al.

(4) European Environment Agency, 2005

(5) McKnisey, “Micromobility’s 15,000-mile checkup”, 2019

(6) Teladoc Inc is part of the Pictet-Smart City portfolio

(7) OECD, “Ageing in cities”

Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.

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Brazil: Patria Investments Boosts its Alternatives Offering with a Growth Equity Strategy

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Patria Investments, leading alternative asset manager in Latin America, has recently announced the launch of a new growth equity strategy through a partnership with Kamaroopin, a private markets investment group previously affiliated with Tarpon Investments and led by Pedro Faria.

As reported by the Brazilian firm in a press release, the partnership is structured in two stages. First, establishing a minority stake during a joint fundraising campaign, and then a full business combination contingent on fundraising success and certain other requirements.

“Growth Equity is highly complementary to our flagship private equity business, and expands our product offering to meet a key area of investor demand. We are excited to partner with Pedro and the Kamaroopin team on this new initiative that will broaden Patria’s presence across the private markets value chain. Our investment philosophies are highly aligned with a sector-based focus, and a commitment to being not just investors, but company builders”, ” said Alexandre Saigh, Patria’s CEO.

With market size of more than 15 billion dollars in Latin America, Venture Capital and Growth Equity strategies are in high demand. Venture Capital transaction volume in Brazil has grown at a CAGR of more than 40% over the last decade, with transaction value reaching 6.6 billion dollars in 2021.

A new partner

Kamaroopin was created in 2018, and currently has three invested portfolio companies where they partner with great entrepreneurs as investor operators to drive growth through single minded consumer focus and tech-enabled business models. Their portfolio has generated a 2.7x gross multiple based on June 2021 valuations, led by their signature first investment in Petlove, the #1 digital Petcare platform in Brazil. Kamaroopin’s current portfolio amounts to nearly BRL 1 billion (or more than 175 million dollars) in assets under management, and they are profitable on a Fee Related Earnings basis at current size.

Faria, its founding partner, highlighted that Kamaroopin was founded within the SK Tarpon ecosystem, with the mission to be company builders, operating as true partners of entrepreneurs and teams. “We are taking a step further with the association with Patria, the leading alternative investment firm focused on Latin America. We are inspired by their team leadership and successful investment model. We will strengthen our ability to back many more companies and build consistent and lasting business legacies”, he added.

The details of the transaction

While detailed financial terms of the transaction have not been disclosed, the structure will comprise two stages. The first one includes an agreement to acquire a 40% minority stake in Kamaroopin’s existing business for cash consideration, which upon closing will launch a joint fundraising campaign for a new Growth Equity fund.

The second stage would trigger the acquisition of the remaining 60% stake for equity consideration, contingent on achieving pre-defined fundraising objectives, and fulfilling certain other requirements. Should the requirements for the second stage not be satisfied, both firms would have optionality to unwind the transaction.

Patria Investment believes that the agreement will have minimal impact on its near term Distributable Earnings, with the exception of an attractive performance fee opportunity on Petlove. As part of the partnership, it will be entitled to participate in the crystallization of Petlove´s eventual performance fee, in a structure that was designed to provide the best alignment of incentives among all parties.

Upon the closing of stage two of the transaction, Kamaroopin’s earnings would be fully consolidated, and including revenue from the new fund, the strategy is expected to be profitable on both a Fee Related Earnings and Distributable Earnings basis with significant room to scale moving forward.

Institutional Investors Expect Revenge Spending and Central Banks to Drive 2022 Markets

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crosswalk-g0e942e01f_1920 — Pixabay CC0 Public Domain. Los inversores institucionales esperan que el “gasto de venganza” y los bancos centrales impulsen los mercados en 2022

The world’s institutional investors are confidently heading into 2022 armed with tactical strategies to counter their expectations of rising inflation, interest rate hikes and higher stock, bond and currency volatility, according to a survey by Natixis Investment Managers.

The study shows that 62% of institutional investors expect pent-up demand for big-ticket items will be a significant driver of growth in 2022 – dubbed ‘revenge spending’. However, most believe that policy makers ultimately hold the keys to economic recovery and that those policies are behind the current imbalance in supply and demand, inflation, and distorted stock valuations. In this sense, nearly 68% believe that once central banks stop printing money, the long bull market will come to an end, but not in the year ahead.

This conclusions are based in the answers of 500 institutional investors who collectively manage more than $13.2 trillion in assets for pensions, insurers, sovereign wealth funds, foundations, and endowments around the world. Natixis IM has found that institutional investors plan to make few broad changes in their overall allocation to stocks (39%), bonds (37%), cash (5%) and alternatives or other (19%) in the year ahead. Instead, they are positioning themselves to make tactical moves.

Inflation, interest rates and the hunt for yield

Seven in ten investors say rising inflation is a top portfolio risk, though they are more likely to believe it is structural (55%), resulting from a combination of loose monetary policy and low interest rates, rather than cyclical (45%). The survey shows that inflation poses a number of long-range economic issues, but interest rate policy presents institutional teams with more immediate investment challenges, with 64% of respondents citing interest rates as a top portfolio risk.

“Over a decade of low rates, and some even sinking into negative territory during the pandemic, have sent institutions on a hunt for yield”, says Natixis IM. That’s why private assets and alternatives have been sought after in 2021 with 84% of institutional investors now investing in private equity, 81% private debt and 81% in infrastructure. For 2022, information technology (45%), healthcare (41%) and infrastructure (40%), followed by energy (34%) are the most attractive sectors.

However, 45% of respondents think private assets will offer a safe haven in the event of a market correction, as private markets continue to rise into record territory. Besides, 69% of those surveyed are concerned that institutions have taken on too much risk in their pursuit for yield.

The study reveals that high volatility and distorted valuations mean active management is the preferred strategy. “Active management will be central for institutional investors wanting to be selective in finding the best opportunities and to achieve better risk-adjusted returns. Three-quarters of those surveyed say their active investments outperformed the benchmarks over the past 12 months”, points out Natixis IM.

Lastly, institutional investors are also warming up to digital assets, with 28% already investing in cryptocurrencies, and four in 10 believe a digital asset to be a legitimate investment opportunity.

The re-opening of trade: winners and losers

As for the economic context, 56% see supply chain disruptions as the greatest risk to recovery. According to the study, central banks play an outsized role in market performance for institutions and 47% see less supportive policy as a risk; and “while traditional economic factors are the biggest risks right now, new variants, like the newly discovered Omicron variant, still rank number three on their list of economic risks”.

Despite this, 60% say they believe that life will return to pre-Covid normal after the pandemic, which is expected to be reflected in trading trends. Institutions are less focused on streaming and digital products, predicting instead that we will see in-person experiences, such as theatres, restaurants, and travel, outperforming at-home trade, such as online shopping and Netflix.

The asset manager highlights that 59% of institutions believe the energy sector will outperform in 2022 as economic recovery drives up demand. Nearly half (49%) see healthcare outperforming in response to the demand from Covid and subsequent vaccine drives around the world.

The pandemic also impacted the outlook for the information technology sector, which was thrown into sharp focus during lockdowns when working from home drove the need for home IT solutions. On the other hand, traditionally defensive markets are expected to be the biggest underperformers, with 35% of institutional investors predicting real estate will underperform and 27% utilities.

“Revenge spending will prove to be a real driver in 2022. There’s real pent-up demand from consumers who are in the market for big-ticket items, but we expect supply chain disruptions will continue to drive up prices. However, sustained economic growth is riding on central banks, which currently hold an outsized role in market performance. The majority of institutional investors see the long bull market coming to an end once central banks pull back on supportive measures”, commented Andrew Benton, Head of Northern Europe at Natixis IM.

He also pointed out that generally, institutions are looking into 2022 with optimism. “But high volatility across the stock market, rising inflation and interest rates are keeping investors on their toes, increasingly pushing them to allocate more tactically to navigate the current environment”, he added.

ADEPA Aims to Attract Chilean Funds with its Back Office Infrastructure and its Platform in Luxembourg

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Foto cedidaCarlos Alberto Morales, CEO de ADEPA. Carlos Alberto Morales, CEO de ADEPA

For ADEPA, European fund services firm, Latin America is at the heart of its internationalization strategy and the gateway is Chile, where it recently announced the purchase of services firm Planes.

Now, with one foot in Santiago, the firm’s CEO, Carlos Alberto Morales, reveals that ADEPA aims to conquer the mature local asset management industry with two businesses: back-office outsourcing and a platform that is able to launch its own vehicles in Luxembourg.

In an interview with Funds Society, the executive explains that they are currently in the process of integrating the structure of Planes with that of ADEPA at a global level -the firm has operations in Luxembourg, Spain and Italy- in order to launch what they call a NAV Center in Chile. This hub, he explains, will operate with the firm’s international standards and will be in charge of calculating the funds’ quota values. For the medium term, the star products will be its trading services and the international platform.

Two pillars

“We are talking about a dual strategy: giving local and also international support. That is our strategy for Chile,” says Morales. On the back-office services side, ADEPA’s CEO sees great potential for growth, considering that outsourcing this area is not a frequent practice in the Andean country.

Morales believes that the firm is distinguished by the fact that it offers a service that brings together all the functions -such as operations, reporting and calculation of quota value- which allows fund managers to concentrate on their core business: asset management. Along these lines, he assures that the benefits for fund managers include economy of scale, reduction of operating risks, improvement of corporate governance practices, and optimization and cost structure, converting a fixed cost into a variable cost.

On the international funds side, ADEPA offers investment managers to develop their European business, launching through the firm’s SICAV structure its own funds in Luxembourg, with the European firm taking care of the operational side, legal responsibility and representation before the funds’ regulators. In that sense, the company identifies the growing interest of Chilean investors in offshore products as a potential boost for the business. “We are seeing a continuous launch of European products, especially in Luxembourg, from AGFs in Chile, and our role is very important there,” says Morales.

Latin American expansion

“Latin America is a key part of our strategic development for the coming years,” says ADEPA’s CEO. For them, Chile is just the starting point, selected for the maturity of its fund industry. The European firm thinks that the attractiveness of the region comes from the evolution they are seeing in the region’s fund industries, at different levels. In addition to this, there is a growing interest in Luxembourg as an international platform, which is in line with ADEPA’s international experience.

Morales emphasizes that, in addition, this is a region in which the fund administration services industry, the niche in which they participate, is underdeveloped, especially by large international groups. Regarding the company’s next step in Latin America, he highlights that they are sounding out different markets, focusing mainly on the countries of the Pacific Alliance.

Although nothing has been defined, the CEO believes that the next destination could be Mexico. This country, he says, “has similar characteristics in terms of local fund industry and interest in international products”.

Business Opportunities, Asset Allocation and Inflation: Three Questions for Guillermo Vernet, Kandor Global CEO

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Captura de Pantalla 2021-12-07 a la(s) 14 — Foto cedidaGuillermo Vernet. ,,

After a year of its launch, Kandor Global, the Miami-based RIA serving ultra-high net worth clients worldwide, is strengthening its decentralized service model for increasingly globalized families as it plans to expand into Switzerland and seeks the best investment assets for its clients.

Based in Miami, the firm has already amassed over 500 million dollars in assets under management. On the occasion of its anniversary, Funds Society asked Guillermo Vernet, CEO and founder, three questions.

1. Where do you currently see the greatest potential for wealth management? What projects does Kandor Global have?

UHNWs (ultra high net worth individuals) are increasingly becoming global citizens and have families living in different countries. The freedom to live wherever they want comes with significant tax implications that can vary depending on the family member.

Most of Kandor Global’s clients are currently domiciled in the U.S. or in Latin American countries. In recent years, many of the Latin American clients have moved to the U.S. and established residency. Now there is a wave moving to Europe, especially Spain, where they have long-standing relationships, children going to college or simply because of their European origins.

We understand that our clients value a local point of contact and physical access to their preferred booking center. For this reason, Kandor Global has prioritized different locations around the world. We have established a presence in the U.S. as our base location, expanding into Latin America and Spain to offer accessibility to our customers.

We see our next expansion opportunity in Switzerland. For our clients’ profile, it’s a key financial epicenter. Many have well-established relationships with bankers that they wish to maintain. In addition, Swiss clients will find value in the sophisticated, holistic and independent service that Kandor Global offers.

In Switzerland, there is a consolidation of the wealth management industry. There is increasing pressure from Swiss regulators, as in the rest of the world, to ensure total independence to better serve clients. Firms have found themselves in need of reinventing themselves, expanding their services to offer more independent investment alternatives, as well as more customized and consolidated reporting than in the recent past. The move to Switzerland provides the best opportunity for Kandor Global to offer its services and it is already having conversations to acquire local companies underway.

2. When proposing products and strategies to clients, what assets are you prioritizing? What are clients asking for?

Our approach is to understand our clients’ needs and risk profile, and achieve a holistic view of their assets when designing an optimal investment strategy. We look for alternative investment options with the level of liquidity that can be assumed by the client.

When working with multigenerational clients, it is easier to develop a strong long-term view and many are willing to try new investment instruments. In working with Latin American clients who have sold their businesses, we found that they were used to regular, high returns. Now, when they invest the proceeds generated by the sale of the business, they are looking for a similar return while maintaining or even increasing their capital.

We have seen a strong appetite for private investments, with two out of three clients including private investments in their portfolios in varying degrees of weighting. Results to date demonstrate solid performance for the level of risk. We provide our clients with a rigorous plan with diversification by seniority, geographies and sectors, and then select funds with different investment sizes.

Some clients have shown interest and have been active in crypto investments. We offer support by selecting money managers that fit three criteria: deep experience in institutional investments in different asset classes, including Crypto; being multi-currency within Crypto; and acting as hedge funds so they can hedge risk and participate in other areas of blockchain applications.

3. What has changed in your portfolios with the fear of inflation?

Inflation has reduced the expected return of fixed income in the short term, making it difficult for the traditional 60/40 investment model to achieve expected returns. Some investors have managed the situation by investing in riskier assets, producing a disconnect from where they invest and their risk profile.

To help our clients protect themselves from inflation, we look for other investment options, such as real estate vehicles. Within fixed income we add assets, such as floating rate senior loans, which are less vulnerable to inflation. In conclusion, we evaluate underweight fixed income and overweight equities as conditions change.

Daniel Vegue, the Man Who Speaks of a Revolution

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Captura de Pantalla 2021-12-07 a la(s) 12 — Foto cedida. ,,

In 2021, the assets that grew the most globally were ESG investing and cryptocurrencies. But in Latin America the wealth management industry approaches the new world of decentralized finance with caution and some mistrust. That is why Daniel Vegue Domínguez, one of the founders of BlockAssetManagement.com and Estating.com, travels through the region explaining the revolution we have underway, as he did during an interview with Funds Society at the Sofitel Hotel in Montevideo.

The first thing is credentials, and both Vegue and the senior staff of Block Asset Management come from the world of finance, with eminent careers in Welath Management, Asset Management or the stock market. They came to the world of cryptocurrencies because they are convinced that, thanks to Blockchain technology, units of value can be expressed differently and in a totally reliable way.

“Soon we will be able to exchange Amazons, Free Markets or Apples because every company or collective will be able to issue their units of value without going through central banks, in a reliable digital system, which will give them independence and totally global investment capacity,” he explains. With cryptocurrencies, or decentralized finance (DEFI), there is a moment when the veil disappears and you start to have a clearer vision of what is happening and how to take advantage of the opportunities.

The first fund dedicated to blockchain and digital assets

Block AM”s first initiative came in 2017, with the creation of the first fund of funds dedicated to Blockchain and Digital Assets. It took them several months to register it in Luxembourg, explains Vegue, because it was a complete novelty.

The strategy belongs to the world of Alternatives and consists of investing in all the companies participating in that investment boom that is exploding on us in 2021, with a return of 300% this year, something that, according to Vegue “is the norm for the stage of maturity in which the selected companies are at.”

Undoubtedly, this ability to find the companies and managers in the sector, understand them and incorporate them, is the most valuable treasure of the fund, which has a low entry fee, as it accepts participants starting at $10,000. The strategy is aimed at sophisticated qualified investors, being an alternative fund.

“Investing in the digital/crypto asset market is a very specialized investment. A new, immature, unregulated in many regions, fast growing and high risk/reward asset class. However, it has evolved at an incredible pace since the emergence of Bitcoin in 2009. The market now consists of thousands of crypto assets and hundreds of digital asset funds. Navigating these selections is extremely challenging. How do investors manage risk? How do you conduct in-depth due diligence? How can you achieve diversification? Can you reduce volatility?” the firm’s website highlights.

At first glance, the offer seems perfect for the new generations, or for those clients who have made their wealth in the technology industry and are looking for a novel offer. But appearances can be deceiving, and investors over 60 are being very receptive to the offer: “They have already lived through a revolution, they know that everything can change, they understand what is happening,” explains Vegue.

Currently, most of the fund’s participants are in Latin America, but there is also a strong presence of British or European expatriates. Registered in one of the most prestigious jurisdictions, Luxembourg, it is an alternative product (AIF), audited and denominated in dollars and euros.

Estating, the first step towards a global real estate market

At the moment, Vegue’s main endeavor is a more recent initiative: Estating, the embryo of a global real estate exchange, fully decentralized. “Financial advisors and their clients are looking for reliable and easy-to-manage real estate products. And they are right, the biggest market in the world (bigger than fixed income and equities) is real estate, but we don’t know it because it is not banked,” explains the financier.

From this premise, the idea of creating a Real Estate Nasdaq was born, an idea that has a key player: Martin Halblaub, creator of the Swiss digital stock exchange (SDX) and one of the founders of Estating.

Estating, firm launched 20 months ago, aims to enable investment in apartments and houses in the luxury segment in various cities around the world. The client buys part or all of the unit, and the company takes care of the securitization, the conditions of the partnership when it is a shared property, the rental arrangements and the distribution of an annual coupon. Blockchain technology guarantees reliability and transparency.

Vegue thinks that the future lies in people being able to “save in a unit of Real Estate value”, worldwide, without obstacles. Currently, the entry is from 50,000 dollars, but Estating intends to democratize and gives an example: the firm recently made the smallest securitization in history, a garage, as a symbol of what starts small and becomes something big.

Natixis Investment Managers Appoints Emily Askham as Chief Marketing Officer, International

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Natixis marketing — Foto cedidaEmily Askham, Chief Marketing Officer, International en Natixis IM. . Natixis IM ficha a Emily Askham para el cargo de directora de Marketing Internacional

Natixis Investment Managers has appointed Emily Askham as Chief Marketing Officer, International. Based in London, she will start on January 12^thand will support Natixis IM’s strategic ambitions to become the most client centric asset manager globally.

In a press released, the asset manager has explained that Askham will work closely with Natixis IM’s distribution teams and affiliate managers driving marketing strategies that deliver engaging, relevant and differentiated campaigns for both existing clients and new customers.

She will join Natixis IM in an expanded role and will be responsible for both Institutional as well as wholesale & retail marketing. In addition, she will oversee digital, content & advertising, roadshows, events and the RFP team. Askham will report to Joseph Pinto, Head of Distribution for Europe, Latin America, Middle East and Asia Pacific.

On the client side she will translate the business strategy into appropriate marketing programs focusing on the customer throughout their investment journey, in close coordination with the Customer Experience team. She will also work with the product teams to help improve all areas of the clients pre-sales experience, accelerating the timeframe from initial sales concept to ‘go to market’ execution.

“To support Natixis IM’s objective of developing the business in a sustainable manner in all regions, Emily will streamline our marketing efforts across the board, accelerating our speed to market and supporting the needs of our clients as well as sales team. She will be responsible for expanding our digital presence enhancing our customer engagement. She has a strong track record in the industry and will play a key role in our ambition to become the most client centric asset and wealth manager and I am delighted to welcome her”, commented Pinto.

Askham brings more than 12 years of marketing expertise to her new role. She joins from AXA Investment Managers where she spent nearly 7 years, rising to the position of Global Head of Retail and Wholesale Marketing since 2019. She has been the recipient of a number of industry awards in marketing effectiveness and campaign innovation and most recently receiving a placement on the ‘High Performers Mentoring Program’ by the AXA IM Management Board. Prior to AXA IM, she worked for M&G Investments.

Segmentation, Internationalization and Technology: SURA AM’s Priorities as 2021 Draws To a Close

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Foto cedidaIgnacio Calle, CEO de SURA Asset Management. Ignacio Calle, CEO de SURA Asset Management

A few days away from closing the door on 2021, SURA Asset Management is happy with its results. Having 21 million clients throughout Latin America and the expectation of closing the year with an AUM growth of between 4% and 5% -which leaves them with close to 150 million dollars-, the firm describes this as “a good year”. Now, close to the arrival of 2022, the firm’s CEO, Ignacio Calle, comments in an interview with Funds Society on the plans and priorities of Grupo SURA’s asset management arm for the short term.

For the executive, this has been a year of “tremendous recovery” in the region in general, in a period where “people have realized the importance of saving”. Therefore, going forward, the Colombian firm is strengthening the offer for its different client segments, relying on tools such as advanced analytics to manage the process.

Latin American affluent

SURA AM’s targeted offering efforts are aimed at its three main client segments. While they have plans for the mass – which includes investors with less than $30,000 of investable wealth – and high net worth – where the most sophisticated capital tends to be – it is the middle group that most catches their attention at the moment.

In their own nomenclature, at SURA they call the group of clients with between $30,000 and $1 million “affluent”. “It is a very important segment for us,” Calle explains, adding that it is “the main segment” they are working on. That range of investors, he says, is one where they feel “very competitive” and where they are focusing their search with a reinforcement of analytics. The goal is to be able to carry out a multi-channel onboarding that allows the use of the infrastructure of SURA’s different platforms.

Offshore business

Internationalization is one of the main pillars of SURA’s growth plans. With its SICAV already installed in Luxembourg, the firm expects to migrate its main funds to the prestigious European market in the short term. “The idea is to start locating them between this quarter and the first quarter of next year,” describes the executive.

Initially, reveals Calle, the pioneering products will be Latin American fixed-income and equity funds, with a focus on the Pacific Alliance markets. In the future, they do not rule out the possibility of expanding this offer. On the international investments side, the firm’s top executive points out that they have almost doubled the AUM they had in offshore products on international platforms, such as Pershing.

“A part of the population that previously did not have access to the offshore market has been growing into that segment,” he says, and this increased diversification has been supported by more products with “adequate” costs for clients.

Other markets

Regarding the next steps in SURA AM’s internationalization, there are two countries that are drawing their attention, in particular: Brazil and the United States.

In the case of the Latin American country, the fund manager’s idea is to enter from the Investment Management business, where they concentrate their institutional business, offering Brazilian fixed income and equity products to complement their current offer, anchored in the Pacific Alliance.

As for the U.S., they are evaluating the opening of an office. Although it is an idea they are sounding out, and there are no definite formulas, the CEO explains that the idea is to have a registered advisor in the country.

A technological focus

An important part of SURA’s future plans is technology. Although the pandemic accelerated the company’s digitalization process, to the point that 97% of transactions are now carried out digitally, the fund manager plans to develop new tools. According to Calle, they are currently working on an investment platform based on robo-advisory technology. Through this tool, a robot would build and modify people’s portfolios to meet their financial goals over time, based on the onboarding process and the client’s profile.

“We have some levers for technology, which are advanced analytics, artificial intelligence, mobility, digitalization and robotics,” he highlights. Along these lines, SURA AM plans to make an investment of around 60 million dollars over the next five years. That is only the in-house investment, emphasizes the executive, which does not rule out that there may be growth on the inorganic side.

Looking at the opportunities offered by the fintech world, Calle assures that there is room to work with these technology companies, either through alliances or acquisitions.

Pictet Asset Management: No Reason for Pandemic Panic

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Luca Paolini, Pictet Asset Management. Luca Paolini, Pictet Asset Management

Riskier asset classes are trading at or close to all-time highs. There are good reasons for this.

Consumer and industrial demand is robust, supply bottlenecks look set to ease – potentially placing downward pressure on inflation – and corporate earnings and margins remain healthy.

This augurs well for equity markets over the near term.

And yet this positive picture needs to be balanced against the emergence of a new threat to the economy. Though it had fallen right down the list of investors’ worries, the recently identified Omicron variant of Covid shows the pandemic hasn’t faded away. While pandemic-related developments can no longer dictate the economic cycle, they can certainly influence it.

Markets were clearly spooked by the emergence of a new Covid variant classed as “very high” risk by the World Health Organization. While the unprecedented number of mutations in the strain suggests that the virus could evade current vaccines to some degree, this has yet to be established.

Also unclear is the severity of the disease the new strand causes, even if anecdotal evidence is encouraging.

For their part, governments aren’t taking risks. Many have imposed travel restrictions, perhaps learning lessons from the dithering they were guilty of during the spread of the Delta variant earlier in the year.

But the picture is not universally negative.

Although Covid has caused distortions and supply bottlenecks, economies have by and large adapted remarkably well to the vagaries of the pandemic and are now are better prepared to withstand its effects.

Also, it appears that the vaccines that have been rolled out globally can be modified to target the new variant.

At the same time, we see no signs of ‘froth’ in the shares of companies that would have benefited from a full re-opening of the economy. Valuations for Covid-sensitive stocks suggest investors had been largely sceptical of the prospect of a smooth, hiccup-free reopening of the economy.

So, despite the heightened uncertainty, we believe the direction of travel is still towards the reopening and near-normalisation of economies worldwide.

All of which leads us to maintain a neutral positioning on equities and remain negative on bonds.

Overall, our business cycle indicators show the economy continuing to recover from the pandemic. Notwithstanding concerns about short-term risks to European growth, largely related to fresh lockdowns and a new surge in Covid cases, we are more confident on how economic conditions are shaping up in the developed world.

US growth can be expected to remain very strong in both real and nominal terms (see Fig. 2). Worldwide, we expect services industries to gain momentum. Under normal conditions, services sectors would typically follow the lead of manufacturing – which has shown some softening lately. However we believe the next phase of the recovery will be powered by services as the reopening of economies should remains by and large on track (albeit with the added uncertainty due to the spread of the Omnicron variant).

We forecast a sequential re-acceleration in growth through to the first half of 2022. The pace of global economic expansion should remain above-trend for the foreseeable future – our forecast of 4.8 per cent GDP growth next year remains above consensus.

Our liquidity indicators show a significant contraction in credit supply this quarter, thanks to a sharp withdrawal of central bank stimulus. More positively, however, there are signs of credit supply growing in the private sector, particularly in the US, while the Chinese authorities are also starting to relax their stance.

The pickup in private borrowing has historically put upward pressure on interest rates, as it allows central banks to tighten even faster.

Our valuation indicators show that all major asset classes remain expensive by historical standards, with equities hovering at all-time highs. One exception is Latin America, whose equity markets are now cheap even in absolute terms. In relative terms, the UK is also good value.

US stocks are the most richly priced. And consumer discretionary stocks are beginning to look as expensive as technology shares. Meanwhile, cyclical stocks have outperformed their defensive counterparts as inflation expectations have increased; this has taken cyclical stocks’ premium over defensives back close to cycle highs of 16 per cent.

A decline in liquidity and upward pressure on real yields will reduce stocks’ price-earnings ratios, though about half the contraction we envisaged earlier this year has already occurred. Meanwhile, though the a surge in profit growth looks to be easing, we still expect corporate earnings to rise 16 per cent for the coming year.

Within fixed income, the signal on Chinese government bonds is neutral while US investment grade bonds appear expensive. Surging inflation has triggered a flight into US inflation-linked bonds, leaving them with yields below -1.0 per cent and the second most overbought asset class in our models.

Our technical indicators show that positive trends for global equities intensified, compensating for an absence of positive seasonal factors. Technical readings for bonds were negative although surveys show investor positioning in fixed income appears excessively bearish, which would normally be a ‘buy’ signal.

Opinion written by Luca Paolini, Pictet Asset Management’s Chief Strategist.

Discover Pictet Asset Management’s macro and asset allocation views.

Important notes

The information and data presented in this document are not to be considered as an offer or sollicitation to buy, sell or subscribe to any securities or financial instruments or services.

In Canada Pictet AM Inc is registered as Portfolio Manager authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA.

Allfunds Hires Sebastien Chaker as Head of Hong Kong

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Allfunds nombramiento — Foto cedidaSebastien Chaker, nuevo director de la oficina de Allfunds en Hong Kong.. Sebastien Chaker, nuevo director de la oficina de Allfunds en Hong Kong

Allfunds continues to strengthen its North-Asian reach with the appointment of Sebastien Chaker as Head of the Hong Kong office, which opened in early 2020. The B2B wealthtech and fund distribution platform is present in Asia since 2016.

In a press release, they explained that in his new role, Chaker will focus on managing the relationships with over 50 distributors Allfunds currently has across the region. He will also lead efforts to identify new opportunities to further develop their business in North Asia and complement the efforts of the commercial team in Singapore who currently works with top-tier clients in other countries in the region. All in all, he will report directly to David Pérez de Albéniz, Head of Asia at Allfunds, who is based in Singapore.

Chaker brings over 20 years’ experience to the role, having most recently served as an executive board member for Clearstream Fund Centre AG (Zurich), overseeing its regional Fund Centre sales efforts and promoting the entire Investment Fund Services product and service suite to local clients. He previously held senior roles at UBS, as well as Calastone, where he established and ran Asian operations upon relocating to Hong Kong with the firm in 2013.

“We are delighted to welcome Sebastien to Allfunds. His experience, deep market knowledge and leadership skills make him a perfect addition to our growing local team. Asia is a key market for Allfunds and we are committed to expand our reach an scope through key hires such as Sebastien, as well as by extending our activities further in the region”, said Juan Alcaraz, CEO of Allfunds.

Meanwhile, Pérez de Albéniz, Regional Manager Asia, commented that since opening the Hong Kong office, they have continued to see “strong demand” from the region’s distributors and fund managers for the services they provide. “We are well-positioned to support a growing client base in the region and are excited to welcome Sebastien to lead these efforts going forward”, he added.

In his view, Allfunds’ regional clients benefit from their team’s expert knowledge, and a technologically-advanced product suite available internationally: “We are proud that our sophisticated product offering has continued to evolve and meet the needs of fund managers and distributors. I look forward to working closely with Sebastien to continue optimising our service in North Asia.”

The Asia region remains a core strategic growth area for Allfunds with a current pipeline of strong AuA growth: since 2018 assets in Asia have grown from nearly zero to over USD 50bn. Recently Allfunds also received approval to operate a WOFE (Wholly Owned Foreign Enterprise) in Shanghai, which will allow the sale of its digital capabilities in Mainland China, boosting exposure outside of Hong Kong.