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Allianz GI Appoints Virginie Maisonneuve as New Global CIO Equity

Virginie Maisonneuve 2-HR — Foto cedidaVirginie Maisonneuve, nueva directora global de inversiones de renta variable en Allianz GI.. Allianz GI nombra a Virginie Maisonneuve nueva directora global de inversiones de renta variable

Allianz Global Investors has appointed Virginie Maisonneuve as its new Global CIO Equity. She will succeed Steve Berexa who will retire at the end of 2021.

In a press release, the asset manager explained that Maisonneuve will join the team this week and will be based in London following a move back from Singapore in the Autumn. As the asset class lead and CIO for Equity, she will report to Deborah Zurkow, Global Head of Investments.

Allianz GI highlighted that she brings with her a 30 plus year track record of performance, team leadership and innovation in the field of investments. She has previously held portfolio management and CIO positions for companies including Eastspring, Pimco, Schroders, Clay Finlay, Batterymarch, State Street Research and Martin Currie in various parts of the world including Singapore, New York, Boston, San Francisco and London. During this time, she has pioneered investing in areas such as China, “Quanta-mental”, Thematics, ESG and Climate Change.

“Allianz GI has a broad and significant Equity platform, with recognised capabilities across investment styles and geographies. When it came to finding a successor to Steve, we sought someone of the highest calibre to ensure that our investment capability and offering develops ahead of the market. Virginie fits the bill perfectly: her breadth of experience, record of highly relevant innovation and global, forward looking outlook means she is strongly positioned to help us in the development of our client offering – in Equity but also as part of the leadership team of the firm”, commented Zurkow.

In this sense, Maisonneuve is succeeding Berexa, who has been Global CIO Equity since 2015. As part of the succession planning, he will remain at Allianz GI until the end of 2021, at which point he will retire following 24 years with the firm. Under Steve’s leadership, they have developed cutting edge collaboration tools for fundamental research as well as sponsoring the development of AI-based portfolio decision support.

Allianz GI manages 160 billion euros in Equity portfolios for retail and institutional clients around the world. Its Equity platform includes significant franchises in Global and European Growth; China Equities; Tech, including AI; Thematic Investing including a growing range of SDG-aligned funds; and very well-established systematic strategies. All investing is active, and all of it ESG risk assessed.

Equities Have Been Out of Sync with the Real Economy Since the Start of the Pandemic

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Almost half (45%) of the 6.000 members that CFA Institute has globally believe that equities in their respective markets have recovered too quickly and they expect a correction within the next one to three years. The survey “COVID-19, One Year Later – Capital Markets Entering Uncharted Waters” by the association follows the analysis of member sentiment reported in 2020.

The report shows that market volatility appears to be a lesser issue in 2021 compared to a year ago. While 26% of members surveyed reported that market volatility had forced their firm to reconsider asset allocation choices in April 2020, only 18% responded in the same way in March 2021.

“Respondents believe that equities have recovered too quickly, as it could show that CFA Institute members believe there is a disconnect between economic growth fundamentals and capital markets caused in part by monetary stimulus, which could be corrected in a not-too-distant future of less than three years. To me, it also indicates to authorities that monetary stimulus is not a simple or linear lever to pull given the complexity of the economic and financial ecosystem; there will be unintended consequences to consider in the future”, said Paul Andrews, Managing Director of Research, Advocacy and Standards at CFA Institute.

The proportion of respondents who believe that equities are fairly valued is low in all regions (between 2% and 16%). In North America (the United States, in particular), they are more worried about a correction than Europeans (50% vs 40%), which can be explained by the pace of equity markets’ recovery in both regions since March 2020.

Meanwhile, respondents in emerging markets appear more optimistic that equities in their own market and in global emerging markets will gradually stabilize in line with the real economy, which is not a view they share for developed market equities. The survey points out that many perceive that global developed market equities are more overvalued than those in global emerging markets, “likely due to the variations in monetary stimulus and government relief programs enacted in different parts of the world”.

Of the 6,040 global respondents, their position on volatility has changed markedly from a year ago, possibly attributable by CFA Institute to the decisive actions of authorities to tame potential market dislocation through policy intervention and monetary stimulus. In March 2021 28% of respondents were investigating the potential impact from market volatility, in comparison to 42% in April 2020. Meanwhile, 48% of respondents now think volatility did not have a material impact on their activity or that of their firm (32% in April 2020).

Lastly, the proportion of respondents who indicated that volatility has had a significant impact fell from 26% to 18% globally. Further analysis suggests that emerging markets across all regions have experienced the effects from market volatility more significantly, as they did not benefit from the same level of government support as seen in advanced economies. Respondents in Africa (37%), Latin America (29%), Middle East (38%), and South Asia (33%, including India and Pakistan) continue to show a more significant impact from volatility on their investment processes and asset allocation choices.

Allfunds and iCapital Network® Announce Strategic Partnership to Improve Global Access to Private Markets

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yes-3407433_1920 — Pixabay CC0 Public Domain. Allfunds y iCapital Network® firman una alianza estratégica para mejorar el acceso a la inversión alternativa en mercados privados

Allfunds has announced in a press release a strategic partnership with iCapital Network, which will now provide private market investment opportunities complementing the sub-advisory solutions currently available to the Allfunds global distributor network.

Through the partnership, Allfunds distributors and their individual investors, along with small institutional investors, will be able to leverage iCapital’s technology and fund solutions to access a broad range of private market funds from premier managers across geographies and strategies –including private equity, private debt, and real assets– with lower minimum investment levels. The private market funds will be available through Allfunds Connect to Allfunds distributors, including major commercial and private banks, from over 60 different countries.

Both firms have revealed that, in addition to its fund selection and structuring capabilities, iCapital will provide its digital technology solution that automates the subscription and client servicing processes of alternative investing during the entire investment lifecycle, eliminating the operational difficulties and manual, paper-based processes that advisors and their clients have historically faced when investing in private markets. iCapital’s technology will be integrated with Allfunds Connect, a digital ecosystem of tools and services across fund analysis, selection, and trading for distributors and investors.

Consequently, Allfunds distributors will benefit from the scale of its platform which provides unique and efficient access to products and solutions from private market managers which are otherwise very difficult to access. Besides, the integration of the iCapital technology “will provide distributors a seamless investment and selection experience and a true one-stop solution for their liquid and illiquid investment needs”, says the press release.

An innovative solution

“This partnership with iCapital is demonstrative of our commitment to expand our product offering into private markets with best-of-breed third-party solutions for our Allfunds Connect clients and to continue optimizing fund distribution. iCapital’s technology ensures a superior digital client experience when investing in this increasingly important asset class. iCapital is a global leader and a trusted name in alternative investing solutions and we are delighted to partner with them in bringing this innovative solution to our clients”, commented Juan Alcaraz, CEO of Allfunds.

Meanwhile, Lawrence Calcano, Chairman and CEO of iCapital Network claimed to be “enormously excited” to forge this partnership with Allfunds and support their efforts to be at the forefront of expanding access to private markets. “This partnership is emblematic of the great strides iCapital has made to provide better access, efficiency and transparency for the global wealth management industry which is increasingly seeking private market investing strategies for clients”, he added.

Lastly, Marco Bizzozero, Head of International at iCapital Network, highlighted that wealth creation is increasingly taking place outside the public market opportunities commonly available to most investors. “This unique partnership offers access to the growth and diversification opportunities the private markets can provide for banks and wealth managers to enhance client portfolios. This is a key milestone in our international expansion, and we are extremely pleased to partner with Allfunds, a recognized world leader in fund distribution, to facilitate access to a broader number of investors and advisors to private markets investment opportunities”, he concluded.

Allfunds is one of the world´s largest fund distribution platforms and wealthtech industry leaders and iCapital Network is the leading global financial technology platform driving access and efficiency in alternative investing for the asset and wealth management industries,

Schroders Unifies its Private Assets Capabilities under Schroders Capital Brand

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origami-6275164_1920 — Pixabay CC0 Public Domain. Schroders unifica sus capacidades en activos privados bajo la marca Schroders Capital

Schroders has decided to unify its specialist private assets investment capabilities under the newly launched Schroders Capital brand, created to deliver an “enhanced service” for their clients. In a press release, the asset manager has pointed out that growing its private assets capabilities continues to be “a key strategic focus” for the business.

This has been achieved so far through a combination of organic growth and specialist acquisitions. Schroders Capital will encompass the existing range of private equity, securitised products and asset-based finance, private debt, real estate, infrastructure, insurance-linked securities and BlueOrchard (impact specialist). In light of its significant role shaping the impact investing industry over the last 20 years, this last one will maintain its independent brand identity.

“Schroders is further delivering on its growth strategy with the launch of Schroders Capital, a new brand for all our private assets businesses. It will continue to provide clients with a local approach to investing across a diversified range of private asset strategies, supported by a global perspective and the long-established Schroders busines”, said Peter Harrison, Group Chief Executive.

Meanwhile, Georg Wunderlin, Global Head of Schroders Capital, commented that this unification will promote knowledge sharing and innovation across their private assets businesses and showcase a diversified range of investment strategies for investors. “The launch of Schroders Capital will increase the visibility and strengthen the position of our private assets offering while also underscoring our ambitions as a leading player in private markets”m he added.

Schroders Capital, which manages 65 billion dollars of assets on behalf of its clients, provides access to investment opportunities managed by teams with a long and consistent track record of robust investment performance. The asset manager highlighted that each asset class within Schroders Capital will continue to maintain a high level of autonomy, while also benefiting from enhanced knowledge-sharing and collaboration with the other asset classes within the new brand and across the Schroders Group.

François Pauly, Named CEO of the Edmond de Rothschild Group

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Following the Edmond de Rothschild Group’s Board meeting on June 4, François Pauly has been named Group CEO. He had previously served as a member of the boards of directors of Edmond de Rothschild (Suisse) and of its Luxembourg subsidiary. The composition of the Group’s Executive Committee remains the same.

In a press release, the company explained that the nomination of Pauly, a recognised financier with long experience at the head of major private banking firms, including at a global level, will ensure continuity in the Group’s strategy, as he has been involved in all strategic decisions for the past five years. This appointment was planned for and follows Vincent Taupin’s desire to retire.

Ariane de Rothschild, chairwoman of the Board of Edmond de Rothschild (Suisse), revealed that she wanted to call on Pauly as a successor because, in addition to his “remarkable talent” and professional experience, he has a “detailed knowledge” of the Group, its strategy and the challenges ahead. “I sincerely thank Vincent for the work he has done over the last few years to transform and develop the Group and to attract numerous talents. I am delighted that we can continue to benefit from his presence on the boards of Edmond de Rothschild (Europe) and of our private equity structure”, she added.

Pauly has spent his career in the financial sector, occupying various international and management positions. From 1987 to 2004, he occupied senior management positions within the Dexia banking group in Luxembourg, Italy, and Monaco. In 2004, he joined Bank Sal. Oppenheim jr. & Cie in Luxembourg as CEO and became General Manager of Sal. Oppenheim jr. & Cie. S.C.A. where he was appointed to the board of directors of the group’s subsidiaries in Switzerland, Austria, and Germany. In 2011, he joined Banque Internationale à Luxembourg (BIL) as CEO and then, as Chairman of the Board of Directors until 2016. Beyond his executive positions, François Pauly was also Vice-Chairman of the Board of Directors of Edmond de Rothschild (Europe) in Luxembourg and Chairman of the Audit and Risk Committee of Edmond de Rothschild (Suisse) since 2016.

Pictet Asset Management: A Little Less Growth, a Little More Inflation

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Inflation has become investors’ chief concern. Price pressures are clearly building – US core CPI in April hit 3.0 per cent year-on-year, its highest level since 1995. But what is less clear is whether the rise is transitory or points to a more fundamental change in economic conditions as the world recovers from the pandemic.

Our analysis paints a positive picture over the short term. Strip out Covid-sensitive items from price gauges and inflation looks modest, having barely picked up at all in April. (We remove prices for air fares, lodging, used cars, car rentals, tvs, toys and personal computers). Look ahead, however, and the potential for a build-up in price pressures is considerable. Even if there is little evidence of a rise in wages, US consumers have plenty of disposable income, having accumulated some USD 2 trillion in savings. Should as little as a third of that be spent on services – a bigger component of CPI than goods – it is possible to see core inflation hovering between 3.5 and 4 per cent in a years’ time.

While such a prospect is, in itself, a cause for some concern, what worries us more is the possibility of high inflation coinciding with a slowdown in economic and corporate profit growth. Our leading indicators point in that direction. Growth is already moderating appreciably in China and also easing a little in the US; the global three-month rate of expansion has recently halved to 7 per cent.

So with financial markets facing the possibility of persistent price pressures and weaker growth (see Fig. 2), we retain our neutral stance on stocks and shift to more defensive areas of the equity market.

Although economic conditions remain buoyant, our business cycle gauges suggest GDP growth will slow over the second half of the year; inflationary pressures, meanwhile, will linger. Signs of deceleration have multiplied in China, where recent data show that both industrial production and construction activity were below their normal levels for the month of April. Industrial profits for the month grew at a year-on-year rate of 57 per cent, down from 92 per cent the previous month. Elsewhere in emerging markets, price pressures have been building, with CPI having risen from below 2 per cent at the end of last year to above 3 per cent on average.

Japan is another weak spot. Our leading indicators point to a sharp decline in economic activity as Japanese authorities struggle to speed up vaccinations while trying to contain a fourth wave of the virus outbreak. Economic conditions in the US, meanwhile, are strong yet prospects remain hostage to potentially inflationary imbalances in demand and supply. While retail sales are booming – currently 18 per cent above pre-pandemic levels – industrial production is a lacklustre 3 per cent below normal.

Compared to the US, Europe is at the very early stages of a post-pandemic recovery. But with around 30 per cent of the population having received a first Covid vaccination and 10 per cent fully vaccinated, economic growth should begin to pick up rapidly over the summer.

The provision of monetary stimulus from central banks remains just about sufficient to underpin riskier asset classes, our liquidity indicators show. The volume of liquidity flowing into the financial system is growing at a much slower pace, currently only one standard deviation above the long-term trend rate, down from four standard deviations a few months ago. Nevertheless, that aggregate reading masks the growing prospect of a sharp drop in short term US interest rates, the possible result of commercial banks parking ever increasing amounts of surplus cash at the US Federal Reserve’s reverse repurchase facility.

Looking ahead, it is unclear how long markets will be able to count on support from central banks. The Peoples Bank of China has already tightened the monetary reins while the Fed, contending with a flood of fiscal stimulus, excess cash in the financial system and pent up consumer demand, will soon face a choice between withdrawing support early but modestly, or later this year/early 2022 but more aggressively. As things stand, it would seem policymakers prefer the latter.

Valuations indicate equities are expensive relative to bonds. The gap between equities’ earnings yield and bond yields is at its lowest level since 2008 while our ‘equity bubble’ index has now reached levels last seen in 1999 and 2007.

Our technical indicators paint a mixed picture. Seasonal trends favour bonds over equities. Nevertheless, the scope for a decline in stock markets remains limited as investor surveys show investors scaled back on their holdings of stocks.

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

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

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.

Important notes

This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation. Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.

For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.

Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in North America to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).

In Canada Pictet AM Inc is registered as Portfolio Managerr authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA. In the USA, Pictet AM Inc. is registered as an SEC Investment Adviser and its activities are conducted in full compliance with the SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref. 17CFR275.206(4)-3.

Fidelity Implements Permanent Flexible Working for its Employees Worldwide

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Fidelity NP — Foto cedidaAnne Richards, CEO de Fidelity International.. Fidelity implanta de forma permanente el trabajo flexible para sus empleados en todo el mundo

Fidelity International has decided to offer employees the opportunity to work more flexibly as part of a new ‘dynamic working’ policy, which comes into effect immediately. This new way of working will allow the majority of employees across more than 25 locations worldwide the opportunity to balance their work patterns, combining both home and office working in a way that suits their role and meets the needs of their colleagues and clients.

In a press release, the asset manager explained that their aim is to offer their people “a working environment which they enjoy and where they feel supported and valued“. They also pointed out that this is the latest addition to a suite of recently added employee benefits including Family Care leave and Enhanced Parental leave.

Their idea of dynamic working means that the majority of Fidelity employees will have flexibility in managing their own working pattern: where they work and when. Of course, Fidelity clarified that some roles are location dependent or require pre-defined hours, which are driven primarily by client needs, but this new way of working aims to give employees as much flexibility as possible. Meanwhile, their offices around the world will remain important centres of community, collaboration, creativity and learning.

“Over the course of the last year, many things have changed in our daily lives and one of those is the way we work. We have learned that we can adapt brilliantly as individuals and as teams and run our business in a way that we never imagined possible. Our employees have told us that they value having more choice and flexibility about where and when they work. They also want the opportunity to meet their colleagues, learn from their peers and be part of the buzz of the office. Based on this feedback, we will continue to evolve our office spaces to give all employees the chance to come together and to help foster creativity and collaboration”, said Anne Richards, CEO.

In this sense, she highlighted that having satisfied employees leads to satisfied clients so they believe this is a real and positive step change for their people, clients and business. “It is also an iterative process and we will continue to listen, learn and build on our experience from the last year”, she concluded.

Natixis Investment Managers Launches WCM Select Global Growth Equity Fund Internationally

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kite-1367186_1920_0 — Pixabay CC0 Public Domain. Natixis IM lanza el fondo WCM Select Global Growth Equity a escala internacional

Natixis Investment Managers has announced in a press release the launch of the WCM Select Global Growth Equity Fund from WCM Investment Management (WCM), its US-based affiliated manager. This Luxembourg-domiciled fund is actively managed, follows a bottom-up stock-picking process and seeks to hold a limited number of securities (around 40) with a long-term, buy-and-manage approach.

With this new vehicle, WCM seeks to identify companies with attractive fundamentals, such as long-term historical growth in revenue and earnings, strong balance sheets, low-or-no debt, and high or rising ROIC. The asset manager believes that these companies are generally industry leaders with strengthening competitive advantages that are aligned with strong, adaptable corporate cultures and long-term global tailwinds.

The fund will be co-managed by Sanjay Ayer and Mike Hayward, who between them have over 30 years of investment experience. They will be supported by a group of global generalists and a dedicated business culture analyst. Macro indicators, though not primary drivers when selecting securities, are also considered and include political risk, monetary policy risk, and regulatory risk.

The fund is open to both institutional and retail investors, is denominated in US dollars and uses the MSCI All Country World Index as its primary benchmark. It is currently registered for sale in Luxembourg, France, Belgium, Germany, Netherlands, the United Kingdom, Ireland, Italy and Spain.

“We are pleased to be able to offer an additional fund from WCM, an affiliated manager with a strong track record and proven investment process. As we start moving forward into the post-pandemic world, investors have become increasingly focused on companies with superior cultural attributes, and we believe this theme –which is at the heart of WCM’s investment process- will continue to resonate strongly with clients”, said Matt Shafer, International Head of Wholesale Distribution at Natixis Investment Managers.

This is the second WCM product launched internationally on the Natixis UCITS platform and will provide clients with easy access to the expertise of the West Coast investment manager.

Based in California with 85.7 billion dollars in assets under management, WCM formed a global distribution partnership with Natixis Investment Managers in April 2019 and holds a 24.9% equity stake in WCM.

DWS Hires Frank Engels as Global Head of Fixed Income

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Frank nombramiento DWS — Foto cedidaFrank Engels, nuevo responsable global de renta fija de DWS.. DWS ficha a Frank Engels para el cargo de responsable global de renta fija

DWS continues to strengthen its investment expertise. In a press release, the firm has announced that on October 1, Frank Engels will become Global Head of Fixed Income.

He joins from Union Investment, where he has led the portfolio management, with approximately 300 employees and over 300 billion euros in assets under management, as well as the Multi Asset division since January 2018. Engels also served as Chairman of the “Union Investment Committee”.

Meanwhile, Joern Wasmund, former Global Head of Fixed Income, will assume overall responsibility for the DWS investment platform in Europe as Regional Investment Head EMEA. In their roles, Engels and Wasmund will report to Stefan Kreuzkamp, Head of the Investment Division, Chief Investment Officer and Member of the Executive Board of DWS Group.

“I am very pleased that Joern Wasmund will assume overall responsibility for our investment platform in Europe. He is handing over a well-positioned fixed income group to Frank Engels – a challenging asset class for all fiduciary asset managers in the historically low interest rate environment we all currently face. With Engels, DWS gains a proven and respected investment and market expert; exactly the right person to help our clients achieve the best possible investment results,” Kreuzkamp commented.

Over 20 years of experience

Engels joined Union Investment in 2012 and has since held senior positions in fixed income portfolio management. Previously, he worked as Global Head of Asset Allocation Strategy and Co-Head of Research European Economics at Barclays Capital. As Head of Emerging Market Debt, Engels already worked at Union Investment from 2008 to 2010, in portfolio management. Previously, he served as an investment manager and Head of Strategy at Thames River Capital LLP starting in 2004. From 1999 to 2004, he worked as a senior economist at the European Central Bank (ECB) and as an economist at the International Monetary Fund (IMF). He began his career in 1998 at Swiss Re.

As for Wasmund, he had led the global fixed income team of DWS since 2014. He previously held various senior positions in fixed income EMEA and was responsible for the firm’s CDO business in Europe and Asia. Wasmund started his career as a portfolio manager for subordinated corporate bonds and CDOs. He joined DWS in 1999 and previously worked for four years at the Deutsche Forschungsgemeinschaft, DfG (German Research Foundation), on a project on the efficient design of financial markets.

DWS’s global fixed income business has over 290 billion euros in client assets and over 150 employees in Frankfurt, New York and Hong Kong.

Jason Brady (Thornburg IM): “Our Success is Predicated on a Commitment to the Tools, People, Solutions and Processes that Work”

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Jason Brady has been Thornburg Investment Management’s CEO since 2016. Funds Society interviews him to talk about Thornburg’s development, its business plan, how the Covid-19 crisis has been managed on behalf of their clients and employees and about its funds range, of course.

In the past years we have seen a rash of realignment in the asset management industry due to regulation (MiFID) and the low rate environment. Covid-19 has acted as a new catalyst, and thus we have recently seen a lot of restructuring. What is the right size for a business in the global asset management industry and why? What growth plans has Thornburg for the medium to long term?

Jason Brady: This is a very important question for a medium-sized manager like Thornburg. Several years ago, many industry observers recommended an entry into the passive business and a myopic focus on scale, with success measured simply in terms of AUM. We believed then, and continue to demonstrate, that a deliberate and differentiated approach to adding value for clients through active management is the right way to catalyze growth and central to our identity as a firm. I believe that by conflating AUM with success, many asset management firms neglect to serve their clients well, and worse, lose their identities in the process. There’s no denying that economies of scale attract attention, but I see a dramatic shift in the execution of achieving scale.

Thornburg is firing on all cylinders. During the Covid-19 pandemic, we prioritized our employees’ health and wellbeing; inflows into our strategies are leading the industry; and we are delivering on the promise of active management for our clients. Our success is predicated on a commitment to the tools, people, solutions and processes that work. We have also made major investments for long-term success in risk management, ESG integration, geographic expansion and our platform of strategies. Charting a course in a deliberate manner has been our approach for the past 40 years and will guide our legacy for the next four decades.

Thornburg has currently six UCITS products that provide a diversified exposure to the global listed security landscape. Which products are currently experiencing more demand from clients? Do you plan to introduce new UCITS strategies any time soon?

At Thornburg, we aim to uncover the best risk/return opportunities across global equity and fixed income markets. Our range of choices for investors, including our six UCITS funds, reflects our deep, longstanding, and ongoing commitment to advisors and institutions around the world.

It’s no surprise that changing market environments have prompted a realignment of investor preferences. As our clients’ investment objectives evolve, we seek to tailor appropriate solutions to meet their needs. For example, in 2020 as investors sought safety, we observed enormous demand for fixed income strategies across the yield spectrum. The quality and value of our investment process have often helped us see around corners, and despite the crisis, our actions fueled steady outperformance. As a result, investor interest and inflows followed.

Today, with hopefully the worst of the crisis behind us, investors are increasing their equity allocations. Correspondingly, investor demand for our global equity, emerging market and multi-asset strategies has taken off in recent months.

Creating a new investment strategy is deliberate, and there’s no need to break speed records. In fact, in our nearly 40 years as a company, Thornburg has incepted 20 investment strategies, most of them organically. The process to explore new strategy offerings predominately rests with a product management committee. Three tenets guide development:

New portfolios fit with our investment process. Strategies should benefit from our investment approach look across asset class, sector and geographic silos. This tends to mean that we are less interested in niche strategies.
New portfolios complement the products and capabilities of the firm, such that the whole continues to be greater than the sum of the parts.
New portfolios have long potential lives. They should serve the needs of our clients today and into the future.

Let’s talk about your leadership at Thornburg. What lessons have you learned by leading the company in the past few years?

I never stop learning. Throughout my life and career, including as CEO, I constantly take lessons away from client meetings and uncover new ideas from the Thornburg team.

No greater example of listening to clients and colleagues is in weathering the Covid-19 crisis. The cornerstone of Thornburg’s success is our collaborative, team-based approach. The pandemic reinforced the importance of employee health and safety. Every decision—from curbing non-essential business travel to remote work to in-office protocols—was born with continual input from our teams and even conversations with clients. A crisis often forces leadership to move quickly, so feedback was crucial to make an effective transition to a remote work environment, and it will be equally as vital as we return in greater numbers and frequency to the office.

Turning the clock back to my first couple of years as CEO, I worried that the industry, client needs, and markets outpaced Thornburg’s growth and evolution. I shifted the team into high gear and prioritized technology, ESG, risk management, and geographic diversity of our business. To my delight, we quickly jumped to light speed and today, our accomplishments across all of these areas are noteworthy. As the fog lifts on the Covid-19 crisis, investors see that Thornburg has jockeyed ahead of competitors while simultaneously remaining steadfast to our brand identity. Rooted in our energizing success is an iterative, always-questioning-always-learning philosophy.

In addition to being a CEO, you are a fixed income PM. What’s the future of FI as an asset class and where does it belong in a portfolio? Are you more in the 60/40 camp or the Buffet 90/10?

The central challenge for many investors has been the search for income without sparking a surge in volatility. I believe that after 40 years of ever-declining interest rates, bonds will play a different role in portfolios going forward. In previous market downturns, particularly over the last several decades, high-quality fixed income softened the landing while providing some modest—and dependable—real returns. Today, the real return on much of the fixed income universe is negative, and we’re seeing the insurance effect when bonds go up when stocks go down, get more complicated. In fact, on several occasions, the dominant growth equity stories in the market have been highly correlated with rates.

While many investors reconsider 60/40, I don’t think that 90/10 is appropriate for most portfolios. We should still depend on fixed income to help manage volatility. Moreover, a greater breadth of fixed income securities beyond the staple U.S. Treasurys provides an opportunity to deepen the diversification of the allocation.

More and more funds are being managed according to ESG principles What kind of changes are taking place at TIM to embrace improvements in environmental, social and governance practices in the business?

This is one of my favorite questions. At Thornburg, we are integrating ESG factors into the investment process for all of our strategies.

What investors often observe about ESG is that it’s is treated as a theme. However, our investment team looks at ESG considerations from a fundamental perspective. These factors are valuable, so we believe they should reside alongside other valuable factors that are going to impact our decision to invest or not invest in a security, have the right sell discipline, or have a stewardship plan.

The ESG integration journey started with a 2009 LEED Gold certification of our Santa Fe headquarters, and our more recent diversity, equity, and inclusion initiatives. ESG also extends to our governance, namely with a majority independent board of directors, including recent appointees Julia Sze, CFA, and Blair Naylor. So, when it comes to ensuring all members of our 40-person investment team are on board with the ESG integration journey, a strong, existing foundation propels the process forward in an organic manner. Obviously, integration within our strategies takes shape differently in equity portfolios than in fixed income—and even within the taxable and non-taxable strategies—but a culture in which every portfolio manager and analyst is able to challenge one another and contribute to each other’s deliberations produces balanced portfolios with stronger client outcomes.

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