Another Good Month for Wall Street Despite the Banking Turmoil

  |   By  |  0 Comentarios

Pixabay CC0 Public Domain

Stocks moved slightly higher in April as better-than-expected Q1 earnings, despite a lower bar, helped temper recession fears for now. Consumers remained resilient notwithstanding persistent inflation and other economic headwinds. Some positive themes from Q1 earnings season included better-than-feared regional bank results, strong mega-cap tech results, as well as better trends around cost controls, inventories and supply chain.

While there was some stability seen during the month for regional banks, the month ended with regulators seizing First Republic Bank (FRC) and striking a deal to sell most of its operations to JPMorgan Chase & Co. (JPM). The failure of First Republic Bank was more of a delayed reaction to the turmoil caused in March rather than a new phase in the global banking crisis. Overall, First Republic Bank will now go down as the second largest U.S. bank (by assets) to collapse after Washington Mutual, which failed during the financial crisis of 2008.

The Federal Reserve made another 0.25% rate hike during the latest FOMC meeting on May 3rd. March’s economic data, which was reported in April, showed signs of inflation decelerating but remaining well above the Fed’s target. The minutes from the Fed’s last meeting suggested a “mild recession” was possible and that the Fed’s focus is on “unacceptably high inflation”. Paradoxically, First Republic’s collapse helped keep the Fed on track with its rate hike agenda in May.

M&A performance in April was mixed, as most deals progressed towards closing, while other deals experienced setbacks. Most notably, Activision’s $74 billion acquisition by Microsoft was rejected by the U.K. Competition and Markets Authority (CMA) which claimed the acquisition would give Microsoft a dominant position in the nascent cloud gaming market. Microsoft made numerous assurances to the CMA to assuage its concerns, including a commitment to make current and future Activision titles available on competing cloud gaming services. Microsoft and Activision are appealing the CMA’s decision. Despite this, other deals did close in April, including the $6 billion cash and stock acquisition of gold miner Yamana by Pan American Silver and Agnico Eagle Mines, as well as the $2 billion acquisition of diabetes drugmaker Provention Bio by Sanofi. New deals announced in April, include Emerson Electric’s acquisition of National Instruments for $60 cash per share, or $8 billion, and Merck’s acquisition of Prometheus Biosciences for $200 cash per share, or about $10 billion.

The convertible market declined slightly in April, as fears of a recession, continued rising interest rates and cautious guidance weighed on markets. Issuance continued to trickle in, but April is typically a slow month in the convertible primary market as companies announce earnings. We have continued to see companies buying back convertibles in a transaction that is accretive to earnings and positive for the credit. This dynamic has helped some convertible securities.

The current opportunity in convertibles continues to come from fixed income equivalent issues that are trading at attractive yields to maturity in excess of our long term expected return. These are often convertibles within a few years of maturity that we expect to accrete to par over that time. While this is not the profile we have focused on historically, we find it to be attractive for the fund in this environment. These convertibles should have limited downside from here and we expect them to outperform equities in a flat, down, or volatile market.

 

Franklin Templeton Establishes a Strategic Partnership with Power Corporation of Canada and Great-West Lifeco

  |   By  |  0 Comentarios

Franklin Resources, a global investment management organization operating as Franklin Templeton, announced a strategic partnership with Power Corporation of Canada and Great-West Lifeco.

The Power Group of Companies including Great-West and IGM Financial are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration of approximately $2.1 trillion.

Great-West includes Empower in the US as well as Canada Life in Canada and Irish Life in Europe. IGM encompasses subsidiaries Mackenzie Financial and IG Wealth Management and also has investments in Rockefeller Capital Management and China Asset Management Co.

As a foundation of the partnership, Franklin Templeton has entered into a definitive agreement to acquire Putnam Investments (“Putnam”) from Great-West for approximately $925 million of primarily equity consideration. Great-West will become a long-term strategic shareholder in Franklin Resources, Inc., with an approximate 6.2% stake, consistent with Great-West’s continuing commitment to asset management.

Great-West will provide an initial long-term asset allocation of $25 billion to Franklin Templeton’s specialist investment managers within 12 months of closing with that amount expected to increase over the next several years. The strategic partnership aligns with Franklin Templeton’s focus to further grow insurance client assets, and significantly broadens the relationship between Franklin Templeton and the Power Group of Companies in key areas of retirement, asset management and wealth management.

Founded in 1937, Putnam is a global asset management firm with $136 billion in AUM as of April 2023. Putnam has offices in Boston, London, Munich, Tokyo, Singapore and Sydney. Putnam’s complementary capabilities and track record of strong investment performance accelerates Franklin Templeton’s growth in the retirement markets by increasing its defined contribution AUM and expanding its insurance assets, while adding further scale and efficiency to Franklin Templeton’s mutual fund platform.

Consistent with Franklin Templeton’s previous acquisitions, the execution plan is designed to minimize disruption to Putnam’s investment teams and client relationships.

“This is a compelling transaction for Franklin Templeton, and we are excited about the numerous opportunities that will be unlocked by this long-term strategic partnership with the Power Group of Companies including Great-West,” said Jenny Johnson, President and CEO of Franklin Templeton. “Power and Great-West are global leaders across financial services, particularly in the wealth, insurance and retirement channels. With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM. We are pleased to welcome Great-West as a strategic investor, along with the impressive team at Putnam.”

“Franklin Templeton is a leading global asset management firm, whose business model is well-positioned to build upon the investment and distribution strengths of Putnam,” said R. Jeffrey Orr, Chair of Great-West, and President and CEO of Power. “We are pleased to enter a partnership with Franklin Templeton that will be mutually beneficial to clients and our respective businesses.”

“This transaction furthers Great-West’s strategy of building strategic partnerships with best-in-class asset managers to support our client’s retirement, insurance, and wealth management needs,” said Paul Mahon, President and CEO of Great-West. “Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors.”

“Critical to this transaction is the strong alignment between our organizations. We share a client-centric culture, a core belief in active management, a collaborative and research-based investment approach, and a long-held commitment to fundamental investment principles,” said Robert Reynolds, President and CEO of Putnam. “We look forward to joining Franklin Templeton in this next phase of our growth, as we come together to serve our clients, upholding our commitment to them and their needs.”

Advantages and disadvantages of creating an SPV

  |   By  |  0 Comentarios

LekoArts en Unsplash

Special Purpose Vehicles (SPVs) play a crucial role in the efficient functioning of the global financial market. The parent company creates them as a separate legal entity to transfer risks, acquire financing, or for any specific investment endeavor, as explained by FlexFunds in an analysis reproduced below:

What is a special purpose vehicle (SPV)?

Special purpose vehicles are entities that have specific purposes. An SPV is a legal entity with its assets and liabilities and has a distinct identity from its parent company. Parent companies legally separate the special purpose entity primarily to isolate the financial risk and ensure that it can meet its obligations even if the parent company declares bankruptcy.

A special purpose vehicle (SPV) is also a key channel for securitizing asset-based financial products. In addition to attracting equity and debt investors through securitization, being a separate legal entity, an SPV is also used to free up capital, transfer specific assets that are generally difficult to transfer, and mitigate concerted risk.

What are special purpose vehicles (SPVs) created for?

Risk transfer and risk isolation are among the most critical objectives for creating SPVs.

There are different reasons why companies decide to create an SPV:

  1. Risk sharing

SPVs allow the transfer and sharing of risk among investors.

  1. Securitization

SPVs are used for the securitization of multiples types of assets.

  1. Asset transfer

Assets that are difficult to transfer can be repackaged in an SPV, which saves costs and avoids problems during sales, mergers, or acquisitions.

  1. Tax optimization

SPVs are also used to reduce tax burdens, especially on property sales. SPVs are also created to raise capital at more favorable rates for future investments, projects, and joint ventures, among other purposes.

What can be a potential SPV structure?

SPVs can adopt various business structures, among which the following stand out:

1.-Joint project:

Companies seeking to collaborate on a project can form a special purpose vehicle such as a joint venture.

2.- Limited liability company:

The idea behind forming an SPV as a limited liability company is to create a separate legal entity with its identity, rights, obligations, and liabilities. In the event of insolvency or a lawsuit, the parent company may find it easier to protect its assets and liabilities from certain issues.

Similar to joint ventures, limited partnerships exist for short periods. Having an SPV as a limited partner streamlines the entire partnership process and operations.

3.- Public-Private Partnership:

SPVs are often used as an arm of a company seeking to participate in a government project.

4.- Structured investment vehicle:

Structured investment vehicles are specific SPVs created to earn returns between debt and equity in a company.

SPV vs. private equity funds

Timing and investment allocation are the main differences between SPVs and traditional venture capital funds.

Traditional venture capital funds are long-term investments. It can take up to 10 years before a venture capital firm exits all investments in a fund’s portfolio. In contrast, SPVs generally seek to return money to investors in a much shorter period because earning a return depends on only one company achieving an exit, such as an acquisition or IPO.

The number of investments, the most significant difference between an SPV and a traditional venture fund is that an SPV invests all of its capital in one company. Traditional venture capital funds, on the other hand, invest in many companies operating within stages and industries that fit the fund’s investment thesis.

As for the regulation of SPVs, the laws and regulations governing private funds in each jurisdiction where this entity is created apply.

FlexFunds’ asset securitization program can enable you to convert any asset into a bankable asset by creating an Irish SPV in half the time and cost of any other alternative in the market.

Advantages of using an SPV

  • Unique tax benefits: Some SPV assets are exempt from direct taxation if established in specific geographic locations.
  • Spread the risk among many investors: Assets held in an SPV are financed with debt and equity investments, spreading the risk of the assets among many investors, and limiting the risk for each investor.
  • Cost-efficient: It often requires a meager cost depending on where you created the SPV. In addition, little or no government authorization is needed to establish the entity.
  • Corporations can isolate risks from the parent company: Corporations benefit from isolating certain risks from the parent company. For example, if assets were to experience a substantial loss in value, it would not directly affect the parent company.

Disadvantages of SPVs

  • They can become complex: Some SPVs may have many layers of securitized assets. This complexity can make it challenging to monitor the level of risk involved.
  • Regulatory differences: Regulatory rules that apply to the parent do not necessarily apply to the assets held in the SPV, which may represent an indirect risk for the company and investors.
  • Does not entirely avoid reputational risk for the parent company: In cases where the performance of assets within the SPV is worse than expected.
  • Market-making ability: If the assets in the SPV do not perform well, it will be difficult for investors and the parent company to sell the assets back into the open market.

FlexFunds designs investment vehicles issued by Irish SPVs and backed by world-class service providers such as BNYM, Interactive Brokers, Apex, or Bloomberg. FlexFunds‘ solutions make it easy for clients to raise capital from international investors and access global private banking.

Recruiting, Support, and Succession Planning Are Top Priorities for Banks as They Look to Fend Off Increased Advisor Attrition

  |   By  |  0 Comentarios

As banks and credit unions face increased market uncertainty, many are placing greater importance on wealth management to generate diversified fee-based revenue and broaden client relationships beyond core banking services.

As such, banks need to better attract, develop, and retain financial advisors throughout their lifecycles, according to a new Cerulli/BISA white paper, Improving Recruitment and Retention Throughout Advisors’ Lifecycles.

Over the last five years, the bank broker/dealer (B/D) channel has grown AUMs at a compound annual growth rate (CAGR) of 11.7%, while relative advisor headcount has only grown 0.7% annually. While advisor headcount in the bank channel has remained relatively stable, as the average advisor continues to age, banks and credit unions need to prepare for potential challenges.

“Shifting market dynamics and competing advisory business models are putting significant pressure on banks’ and credit unions’ ability to attract and retain advisors,” says Chayce Horton, research analyst. “Banks need to be able to compete with other advisory channels, such as the registered investment advisor (RIA) channel, which has outpaced the broader wealth management industry in terms of AUM and advisor headcount growth,” he adds.

The paper finds that attrition risk presented by aging advisors is considered one of the greatest threats to bank wealth programs today. Bank advisors, on average, expect to retire at the age of 64 (four years earlier than peers in other channels); yet nearly one-third (29%) of bank advisors transitioning into retirement within the next 10 years are unsure of their succession plans.

Considering this reality, banks will need to develop a two-pronged approach to retain advisors at the later stages of their career while also finding and developing rookie talent. “Wealth and investment programs at banks and credit unions are at a critical juncture relative to growth and expansion,” says John Olerio, senior managing director, head of Webster Investments, and Chair of BISA Research Committee. “Establishing career-pathing options for advisors in the later stages of their career is crucial for banks, as it fosters greater satisfaction, retention, and long-term growth for both the advisor and firm,” says Horton.

Cerulli analyst Matthew Zampariolo adds that, “On the other hand, given that the process of hiring, licensing, and training junior advisors is costly, it is critical that banks investing in young talent retain them.”

In tandem with developing strategic hiring and retention plans, investments in technology and firm culture will pay dividends. According to the research, 52% of bank executives and advisors are dissatisfied with their firm’s technology. “Not only do outdated legacy systems make advisors’ jobs more onerous, but often these pain points are passed through to the clients,” says Horton. Worries about prioritization and culture at banks’ wealth management divisions are also top-of-mind among advisors and an area where improvement could lead to better retention and recruiting outcomes.
“Banks and credit unions must act proactively to stay ahead in an increasingly competitive environment. By focusing on attracting and developing young and mid-level talent and retaining senior advisors, banks can better navigate the many challenges they face and remain competitive in the wealth management industry,” concludes Horton.

Agri-Food Tech Series A Impact Startups Online Demo Day

  |   By  |  0 Comentarios

Agri-Food Tech U.S. & International Investor Readiness Program Online Demo Day for ACCREDITED INVESTORS ONLY

Sponsored by DLA Piper and Microsoft and hosted by Base Miami and Koi Group, at Mana Tech, we are thrilled to present our first Agri-Food Tech U.S. & International Investor Readiness Program Online Demo Day.

In this one-hour session, successful Series A Latin American Agri-Food Tech Impact companies will take the virtual stage to pitch their ventures and present their groundbreaking solutions as we wrap up our first Agri-Food Tech U.S. & International Investor Readiness Program.

We invite you to discover the future of agriculture and witness its transformative power firsthand. Let’s celebrate innovation and cultivate a brighter tomorrow together!

About Mana Tech

Based in Miami and powered by billionaire Moishe Mana, Mana Tech is establishing Miami’s ultimate international entrepreneurship hub where people and businesses can thrive. We create bridges between the best startup founders, world-class mentors, top-notch international experts, leading corporations, and savvy investors.

Who is presenting?

A tokenization platform that uses Blockchain technology to create stable coins backed by tangible underlying assets, focusing on Agriculture Commodities: Agrotoken

The first vertical farm company in Latin America that integrates and develops technology for a more sustainable production taking agriculture to locations where it doesn’t exist: Agro Urbana

An Argentinian Big Data company for agriculture that helps agronomists and farmers to adopt precision agriculture through an easy-to-use SaaS platform: Auravant

A Chilean nature-based solution for climate change dedicated to upcycling organic waste into high-value and sustainable food ingredients through technology: F4F

An AI-driven virtual crop advisor that helps farmers enhance yield while reducing CO2 emissions: Instacrops

A Brazilian Food-Tech company that innovated in producing plant-based dairy products: NoMoo

A Foodtech company that uses Data Science & Food Algorithms to create and launch, in record time, more nutritious, sustainable, and affordable products NutriCo.

An Agtech company based in Brazil that develops and sells solutions for improving the profitability and sustainability of livestock farming: Ponta

A company that develops 100% organic and residue-free technologies to help fruits achieve a 130% longer shelf life: SaveFruit

A Brazilian food-tech that innovates in the premium meat market, developing healthy and natural plant-based products to compete in a growing market with amazing taste and high levels of pea, lentil, and rice protein: The New

A platform that connects farmers and Agrifood/Forestry companies using Blockchain technology to streamline data collection and improve farming practices: Ucropit

A lending platform that provides access to capital for smallholder farmers, connecting them to all the players in the industry with cashless credits: Verqor

Emerging Market Debt Shines When The Dollar Loses Its Sheen

  |   By  |  0 Comentarios

Photo courtesy

Emerging market debt – both sovereign and corporate – should benefit as the dollar’s relentless advance of the past 15 years starts to run out of steam.

Aligning stars

The stars are aligning for emerging market (EM) debt. And according to our analysis, there are good reasons to believe these assets – both sovereign and corporate bonds – are on the cusp of an upswing that could last for years to come.

To begin with, there’s a shift in the direction of the US dollar. The signs are  that the currency’s relentless advance of the past decade is starting to run out of steam. US exceptionalism is being called into question: investors’ appetite for risk is steadily returning following the Covid pandemic, the initial shock caused by the Ukraine war and years of disinflation and distortive monetary policy.

And with the dollar playing a smaller role, other factors are likely to take over in driving EM fixed income.

One boost is likely to come from China’s dramatic volte-face on its Covid policy, dropping draconian lockdowns for complete reopening of its economy.

Then there’s EM economies’ deft handling of inflation. EM central banks acted early and decisively to contain inflationary pressures, leaving developing economies well placed to significantly outgrow their developed counterparts.

Together, these factors are bound up in what is arguably the most important source of EM fixed income performance: foreign exchange.

For EM fixed income, currency movements are consequential – not only for bonds issued in local currencies but also for those denominated in US dollars. Currency movements can create feedback effects that have a major bearing on a country’s overall finances. Similarly, they can have a critical role to play in EM corporate balance sheets.

For investors, this can result in substantial compounding effects – appreciating local currencies generate virtuous cycles that feed through to fixed income returns. This is apparent in the relationship between the dollar’s relative value and how global asset markets perform – a weaker dollar tend to be associated with relative strength in non-US assets and a strong dollar with stronger US assets.

 

Opinion written by Mary-Therese Barton, Head of Emerging Market Fixed Income of Pictet Asset Management, and Alain Nsiona Defise, Head of Emerging Markets – Corporate of Pictet Asset Management.

 

Discover what the dollar impact will be on emerging market bonds

 

Asset Managers Forge Ahead with ESG Product Development Despite Skepticism

  |   By  |  0 Comentarios

Asset owners and managers remain focused on ESG initiatives, despite heightened regulatory scrutiny surrounding “greenwashing” and negative investor perception, according to Cerulli’s latest white paper, Global State of ESG. Even as firms acknowledge and take measures to quell cynicism, few show signs of being deterred by skeptics or deviating from the courses that have been set.

Increased criticism over ESG has led governmental bodies around the globe to step up efforts to more clearly define and better regulate the ESG investment market. Investment funds that purport to be “green” or offer sustainability benefits without meeting any set categorization standards are rightfully being met with increasing scrutiny as the industry aims to sort out greenwashing.

Cerulli’s data shows both U.S. and international asset managers welcome the opportunity for clarity. The majority of U.S. asset managers polled by Cerulli believe the SEC should be responsible for setting standards around both public companies’ ESG disclosures (73%) and asset managers’ ESG standards and product definitions (58%). Meanwhile, 85% of European institutional investors are in favor of fining asset managers that engage in greenwashing practices and only 7% are not.

Additionally, fears of negative returns and the perception that performance may be sacrificed in the name of ESG/sustainability continue to be a major challenge to firms when it comes to marketing their strategies. Despite this, Cerulli observes managers forging ahead with product development, sales, and marketing of ESG products. In Europe, nearly half (49%) of asset managers consider ESG marketing a very important feature of their overall marketing efforts, and in the U.S., 58% of managers consider ESG a top product development initiative.

“Overall, Cerulli’s research reflects an industry largely unswayed by negative rhetoric surrounding the topics and concepts related to ESG investment,” says David Fletcher, associate director. “By and large, sustainability and the overarching themes of ESG investment are already ingrained in the asset management industry. The challenges firms face in implementing ESG investment initiatives are pain points that will likely be viewed in retrospect as necessary steps in the legitimization and long-term success of these goals.”

BNY Mellon Investment Management Launches the BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF

  |   By  |  0 Comentarios

BNY Mellon Investment Management announced the launch of BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF. Listed on Nasdaq, both ETFs are sub-advised by Newton Investment Management North America, LLC (Newton), a BNY Mellon investment firm and a leading equity and multi-asset manager.

“This addition to our growing suite of ETFs provides investors with access to Newton’s deep experience in thematic investing,” said David DiPetrillo, Head of North America Distribution at BNY Mellon Investment Management. “Through Newton’s multi-dimensional research platform combined with fundamental research and analysis, these ETFs will enable investors to potentially benefit from themes we believe will drive economic and societal growth and progression.”

BNY Mellon Women’s Opportunities ETF
The BNY Mellon Women’s Opportunities ETF invests principally in companies that incorporate gender equitable practices in the workplace or provide products or services that enhance the ability of women to meet their work or other personal life responsibilities and needs, such as those relating to household responsibilities, dependent and elder care responsibilities, and gender-specific healthcare. The Fund is co-managed by Newton’s Julianne McHugh and Miki Behr.

As part of BNY Mellon Investment Management‘s ongoing commitment to gender equality, the firm has partnered with Girls Inc., the non-profit organization that inspires all girls to be strong, smart, and bold through direct service and advocacy. In addition, BNY Mellon ETF Investment Adviser, LLC, the Fund’s investment adviser, will contribute at least 10% of the management fee to Girls Inc. The BNY Mellon Foundation will also provide grant funding to Girls Inc. and its New York affiliate, Girls Inc. of New York City, in recognition of their impactful work that equips girls and young women to reach their full potential.

“Gender gaps have economic impacts—if women and men participated equally in the economy a further US$28 trillion could be added to global annual gross domestic product by 20256,” said Ms. McHugh. “We believe that companies that support women, cultivate strong cultures, offer attractive benefit policies in the workplace, as well as deliver offerings which empower women, are positioned to better perform over time.”

BNY Mellon Innovators ETF
The BNY Mellon Innovators ETF invests in innovation-driven companies whose products and services seek to transform or disrupt the way we live and work. The Fund invests across all market capitalizations through a wide range of industries and sectors in seeking to capture transformational growth opportunities over a long-term horizon. The Fund is co-managed by Newton’s chief investment officer and head of equity, John Porter, and Edward Walter.

“Average company life spans have dropped sharply, with 52% of Fortune 500 companies having disappeared in the last 15 years7. Paired with COVID, which spurred innovation and disruption at an unprecedented rate, this provides many attractive investment possibilities in every corner of the economy,” said Mr. Porter. “Our broad interpretation of innovation, coupled with our institutional capabilities and deep experience of thematic investing, means we can look at emerging opportunities in the healthcare, information technology and consumer discretionary sectors among others.”

Alternative Fund Managers Optimistic About Fund Launches and Capital Raising, Research Shows

  |   By  |  0 Comentarios

Pixabay CC0 Public Domain

New research from Ocorian, a specialist provider of alternative fund services, shows alternative fund managers are optimistic about launches and fund raising over the next 18 months.

More than eight in ten (81%) say levels of fund raising will be higher over the next 18 months compared to the previous 18-month period. 69% of fund managers are cautiously optimistic stating they are expecting to see a slightly higher level of fundraising, whereas 12% believe it will be dramatically higher. Just 18% say it will be about the same and 1% say it will be lower.

These results are reflected in the confidence of fund managers to launch new funds.  Almost all (98%) are confident in the ability of alternative fund managers to successfully launch new funds in the next 18 months, with 52% being very confident and 46% being quite confident.

The research from the team at Ocorian Fund Services, which specialises in administrating alternative asset funds globally shows that 91% of alternative fund managers predict there will be more alternative asset fund launches this year compared to 2022. Of these, 28% predict there will be significantly more alternative asset fund launches while 63% predict launches will be slightly higher. Around one in 12 (8%) predict it will be about the same, and just 1% think it will be lower.

And it’s not just about a rise in confidence to successfully launch new funds, the statistics are reflected in the ability to raise capital with 96% predicting that more capital will be raised in 2023 compared to last year. Around two out of five (40%) of those surveyed think there will be over 25% more capital raised this year compared to last year, and a further 39% think there will be between 10% and 25% more.  Around 17% believe there will be up to 10% more.

When asked to pick the top five asset classes that alternative fund managers expect to benefit the most from fundraising over the next 18 months, 73% selected private equity, followed by infrastructure (68%), real estate (65%), private debt (59%), and hedge funds (49%).

When specifically asked how fund raising will change in the next 18 months for certain alternative asset classes when compared to the last 18 months, real estate, private equity and private debt are expected to increase the most.

Paul Spendiff, Head of Business Development, Fund Services at Ocorian, said: “2022 was a tough year for the fund management industry, with the number of funds launched and amount of capital raised hitting the lowest levels we’ve seen for many years. While it’s still a challenging economic environment and with a number of geopolitical issues making fund raising more difficult in some markets, it’s encouraging to see how positive alternative fund managers are feeling about the year ahead, predicting both higher levels of fund launches and more capital being raised overall. Despite not being out of the woods yet, we expect to see high performing fund managers with the right strategy, good governance and a transparent approach around ESG will benefit from the improving sentiment in the market.”

About Ocorian Fund Services

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. Its team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

US Public Sector Pension Plans Intend to Build on Inflation Hedging Succes

  |   By  |  0 Comentarios

US public sector pension plan managers are confident that their plans are well hedged against inflation but still have worries about possible risk scenarios, new research from Ortec Finance.

The study with senior US public sector pension plan professionals who collectively help manage over $1.315 trillion, found 86% say their plan is well hedged against inflation, more than a quarter (26%) believe their plan is ‘very well’ hedged.

The research from Ortec Finance, which has clients with over $15 trillion in assets under management and offices around the world including in New York, found just 12% believe the hedging at their plan is average. 

The confidence in inflation hedging is not leading to complacency – managers are still active in changing asset allocations to hedge against inflation. Around two in three (66%) think they will increase allocations to commodities to help with this, while 50% will boost allocation to infrastructure investing. Some 32% will increase allocations to inflation linked bonds and 38% will increase allocations to gold to hedge against inflation.

The survey shows public sector pension fund managers still have concerns about the risk of stagflation – the combination of low growth and high inflation – for their investment strategies.

Some 48% of those surveyed say they are very concerned while 50% say they are quite concerned. All those surveyed expect to see a change in actuarial assumptions on the expected inflation or discount rate.

Marnix Engels, Managing Director, Pension Strategy Ortec Finance said: “While public sector pension plan managers are generally confident that they have addressed inflation hedging on their funds, they aren’t getting complacent.  More work is being done in terms of asset allocations with commodities emerging as the clear favorite for increased exposure in the year ahead and there are some lingering worries that the US economy will not achieve the soft landing of lower inflation and rising growth.”

Ortec Finance models and maps the relevant uncertainties in order to help pension funds monitor their goals and decisions. It designs, builds, and delivers high-quality software models for asset-liability management, risk management, impact investment, portfolio construction, performance measurement and attribution and financial planning, he added.