Robert C. Serenbetz, analyst on the CIO Americas Team in Private Banking Americas at Credit Suisse, shares his outlook for Latin America, which continues to be negative as industrial production momentum falls.
Industrial production continues its declining trend likely leading to lower output and growth.
CDS spreads on Brazilian debt have risen considerably this year; however, the cost of protection has fallen recently as some steps have been taken to address economic reforms.
Rising inflation along with increasing unemployment and some painful tax hikes are placing a large portion of the Brazilian population in an increasingly disparate position. Simultaneously, these same factors are hurting corporate expectations.
According to the BofA Merrill Lynch Fund Manager Survey for December, a majority (58 percent) of global investors expect the U.S. Federal Reserve (Fed) to raise rates three times or more in the coming 12 months.
The survey where an overall total of 215 panelists with US$620 billion of assets under management participated in from December 4 to December 10, 2015 noted that:
More than half of the panel (53 percent) says long U.S. dollar is the “most crowded trade,” up from 32 percent in November.
Thirty-five percent say the end of the Fed hiking cycle is the event most likely to end the U.S. dollar bull market.
Risk-taking fell. Cash rose to 5.2 percent of portfolios from 4.9 percent last month.
A net 43 percent of regional fund managers expect China’s economy to weaken in 2016, up from a net 4 percent last month.
Weighted average GDP growth projections for China in 2018 have fallen to 5.5 percent from November’s 5.9 percent.
A net 29 percent of asset allocators are underweight commodities, up from a net 23 percent in November.
As investors increase U.S. equities underweights, Europe and Japan are most favored regions for overweights in 2016.
Investors emphasized a focus on quality, with a net 65 percent saying that high-quality earnings stocks will outperform low-quality earnings stocks in 2016.
“The strong dollar view is writ large across all asset, regional and sector allocations. It will take a very dovish Fed and weak U.S. earnings to reverse the strong dollar view in 2016,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“European equities remain in favor despite disappointment over the ECB decision,” said James Barty, head of European equity strategy.
A total of 175 managers, managing US$517 billion, participated in the global survey. A total of 106 managers, managing US$241 billion, participated in the regional surveys.
You can read the full results in the following link.
Following ECB regulatory approval, Franco-German financial services group Oddo&Cie is set to take over private banking and asset management group BHF Kleinwort Benson Group.
The ECB’s approval is conditional to the implementation by the Oddo Group of a capital increase of €100m and to the fact that the Group joins the German guarantee funds deposit.
The capital increase has already been approved by Oddo&Cie shareholders, the group is now awaiting the final confirmation from the German guarantee funds deposit (Prüfungsverband Deutscher Banken) is under process, as well as the approval of the prospectus by the Belgian Financial Services and Markets Authority (FSMA).
Philippe Oddo, managing-partner of Oddo & Cie, said: “The green light from the European Central Bank is an important milestone in our project of acquiring the BHF Kleinwort Benson Group and thus of giving rise to a unique Franco-German group.”
2015 has been a year of acquisitions for Oddo, starting with the takeover of Seydler in Janaury followed up by the acquisition of fomer BNY Mellon boutique Meriten.
The acquisition of BHF Kleinwort Benson, which currently manages about €58.5 billion in assets would provide a significant boost to the group’s assets under management.
Foto: Dennisilekeller, Flickr, Creative Commons. Julius Baer compra la entidad de banca privada de Commerzbank en Luxemburgo
Julius Baer has announced that it has agreed to acquire Commerzbank International SA Luxembourg, a well-established and fully-licensed private banking franchise with close to EUR 3 billion assets under management, from Commerzbank AG. This transaction will significantly strengthen Julius Baer’s position in the Luxembourg financial centre.
CISAL’s client assets are booked on a Temenos T24 banking platform. CISAL’s staff includes a highly experienced IT team with relevant expertise of the Temenos T24 technology. As announced earlier this year, Julius Baer has selected Temenos as its partner for the planning of its core banking platform renewal project. The total consideration is approximately EUR 68 million, assuming EUR 25 million of regulatory capital is transferred as part of the transaction. Total restructuring and integration costs are expected to amount to approximately EUR 20 million.
Closing of the transaction is expected to take place in the summer of 2016, subject to regulatory approvals and following the unbundling of the local IT platform. After closing, Julius Baer’s Luxembourg-based business will manage total assets of around CHF 5 billion on a pro forma basis. The transaction will be accretive to adjusted earnings immediately following closing.
Boris F.J. Collardi, CEO of Julius Baer, commented: “The acquisition of a fully-licensed bank in Luxembourg as well as the Temenos-based booking centre and the related IT expertise provide us with important strategic flexibility for our European businesses. Furthermore, it strengthens the implementation of our global banking platform project by aligning Europe with our Swiss and Asian platform strategy, thus reducing the execution risk.”
Gian A. Rossi, Region Head Northern, Central and Eastern Europe, added: “The acquired entity is a pure private banking business with a stable base of European clients and hence fits very well with Julius Baer’s business approach and strategy. We are pleased to add significant scale to our local franchise in the important international financial centre of Luxembourg and look forward to leveraging the business opportunities provided by the full bank licence.”
Foto: Neetalparekh. AXA IM lanza una SICAV en Luxemburgo para inversiones verdes
AXA Investment Managers (AXA IM) recently launched the AXA WF Planet Bonds fund, a green bonds fund that aims to support clients’ transition to a low carbon economy by providing investors with access to the growing global green bonds market.
Commenting on the launch, Andrea Rossi, CEO of AXA Investment Managers, said: “As long-term investors we recognize the threat of climate change and the need to mitigate the potential impact on the global economy… We are also able to support clients’ transition to a low carbon economy, for example, through offering investment in green bonds.”
The AXA WF Planet Bonds fund invests in both pure green bonds and bond issuers with a high environmental impact with the aim of ensuring sufficient diversification and liquidity. AXA IM’s Global Rates team in collaboration with the Responsible Investment (RI) team runs it.
Olivier Vietti, Lead Fund Manager of the AXA WF Planet Bonds fund, commented: “We feel the bond market is a natural vehicle to support energy efficiency, renewable energy and other projects related to climate change, as bonds can provide a direct and transparent way for investors to invest in low carbon solutions. This fund aims to offer an attractive yield meaning responsible investors do not have to ‘give up’ yield, relative to the wider fixed income universe, when investing to make a positive environmental impact.”
A key attribute of the Fund is its highly robust investment selection process, which is also flexible and unconstrained from a benchmark to avoid any bias from following an index. In the selection process issuers in the eligible investment universe are ranked according to AXA IM’s internal ESG (environment, social and governance) assessment process to determine which issuers have high environmental conviction and therefore present a solid case for green investment. The Fund aims to be well diversified and offer an attractive yield and risk vs return profile by focusing on yield enhancement and investing in investment grade and high yield issuers.
Matt Christensen, Head of Responsible Investment at AXA IM, commented: “This solution also offers the possibility for investors to be aware of the type of projects that will be financed through their investment, including wind farms, green commercial buildings, public transport solutions and waste water systems.”
Jerome Broustra, Head of Global Rates at AXA IM, added: “AXA IM has been active in the green bonds sector since 2012 and we have already invested EUR 1 billion globally in this market segment. Despite its massive growth over the last year, this market is still relatively small and we want to support its development.”
The AXA WF Planet Bonds fund is a Luxembourg-domiciled SICAV. The Fund has both retail and institutional share classes and is registered for distribution in France, the Netherlands, Sweden, Finland, Norway, Denmark, Austria, Belgium, Germany, Italy, Spain and the UK.
Schroders announced the launch of Schroder ISF EURO Credit Absolute Return, managed by Patrick Vogel and the European credit team. The fund aims to provide a positive annual return throughout the market cycle and uses the same investment process that has delivered first quartile performance across four credit strategies.
The strategy combines traditional top-downviews with the credit team’s innovative themes based credit process, which identifies global trends and applies in-depth business model analysis to determine which issuers will benefit and which are vulnerable to these trends.
The credit team currently manage EUR 8 billion on behalf of clients around the world and has delivered 5.1% per annum in the flagship investment grade strategy over 3 years. The fund managementteam are part of an integrated fixed income platform of over 100 investment specialists based across the globe.
EFAMA welcomes the debate on retail financial services launched by the European Commission’s Green Paper on retail financial services.
EFAMA believes it is crucial to continue working to rebuild confidence in financial markets. Investors’ interests must remain at the heart of the project for a Capital Market Union. Only with their confidence, is this or any project that seeks to deepen the single market for retail financial services likely to succeed.
EFAMA very much supports the promotion of financial literacy and investor educationat EU and national levels. Better informed and educated investors can better assess the choices and the products available to them.
EFAMA has strongly supported recent regulatory pieces such as MiFID II and PRIIPs as they go far in setting further transparency and strict disclosure rules. These are considerable improvements within the regulatory environment. In line with this, EFAMA fully agree that consumers need to be able to compare products to make an effective choice.
In the drive towards more single market, EFAMA fully backs the Commission in its much welcomed objective to facilitate the cross-border provision of retail financial services such as investment funds. Indeed, as the Green Paper points out, some remaining obstacles stem from an inconsistent enforcement of EU legislation across the EU. These gold plating practices at national level need to be addressed.
Finally, EFAMA wholeheartedly supports the creation of a single market for personal pensions, and the development of a Pan-European personal pension products (PEPP) in line with the ongoing work that EIOPA is undertaking and the objectives of the Commission in its CMU Action Plan. The current fragmentation of the market makes economies of scaleimpossible to achieve and limits the choice of pension products and pension providers. A Pan-European personal product would provide more options and better returns for savers and retail investors.
Ashburton Investments, the asset management business of FirstRand Group, is buying Atlantic Asset Management, a South African independent firm specialized in fixed income investments, according to information published by Investment Europe.
Effective 1 January 2016, the deal will add to Ashburton’s existing fixed income business, adding Atlantic’s expertise in social impact investments. The Atlantic fund range will be rebranded and incorporated into Ashburton Investments, but the mandates and teams will remain in place.
Atlantic CIO, Arno Lawrenz, will be appointed head of fixed income portfolio management at Ashburton. Heather Jackson, CEO of Atlantic Specialised Finance, will work with the alternatives experts within Ashburton.
Boshoff Grobler, CEO of Ashburton Investments, said: “Atlantic has some of South Africa’s best expertise in the traditional fixed income and money market space, as well as being pioneers in social impact investing. We believe their entrepreneurial spirit and their investment philosophy is a perfect match for ours and that our combined experience consolidates Ashburton’s ability to offer clients a stand apart fixed income offering.”
The acquisition will also help position Ashburton favorably in respect of what it sees as an ongoing shift in asset allocation by institutional investors. Grobler said that assets such as South African unlisted credit represent a high quality opportunity, in which institutional investors are under invested. Grobler added that Ashburton Investments was now very well placed for the ongoing shift in asset allocation by institutional investors.
Foto: Juergen Trautmann, Flickr, Creative Commons. Irlanda implementa ELTIF, la regulación europea de los fondos de largo plazo
Finance Minister Michael Noonan has announced that Ireland has adopted the Eltif regulation.
Eltif application forms are available from the Central Bank of Ireland and it has confirmed that it is ready to accept Eltif applications.
Commenting on European Long-term Investment Funds, Pat Lardner, Chief Executive of Irish Funds, said: “Eltifs represent a key component of the European Commission’s initiative on Capital Markets Union (CMU) and aim to promote cross-border long-term investment in projects such as infrastructure, sustainable energy and new technologies.
“As a leading centre for cross-border Alternative Investment Funds (AIFs), Ireland is well-positioned as a location to domicile, manage and service Eltifs. Ireland already has significant experience in the long-term investment space with a range of infrastructure, green and real asset investment funds established here.”
Irish Funds responded to the ESMA consultation on Regulatory Technical Standards for Eltifs in October and will propose enhancements to the Eltif framework in its submission to the European Commission Call for Evidence on the EU Regulatory Framework for Financial Services.
Irish Funds continues to engage with the Central Bank on matters relating to Eltif implementation and has a dedicated Eltif Working Group of industry experts.
Regulation (EU) 2015/760 on European long-term investment funds took effect on 9 December 2015.
Alternative Investment Fund Managers Directive (AIFMD) headaches are causing some non-EU fund managers to forgo European investors, according to the latest issue of The Cerulli Edge-Europe Edition.
Cerulli Associates, the global analytics firm, says the hurdles and uncertainty linked to the financial directive are proving too troublesome for some managers. The chief operating officer of one hedge fund told Cerulli that U.S. and Asian managers are ignoring Europe, concentrating greater marketing efforts instead on domestic investors.
“At the crux of the debate is the question of whether the financial rewards outweigh the compliance costs,” says Barbara Wall, Europe research director at Cerulli, noting that the cost of becoming AIFMD compliant is estimated at between US$300,000 (€278,000) and US$1 million.
The directive subjects fully compliant AIFMs to a number of obligations, most notably the appointment of a depositary bank, restrictions around remuneration and additional risk oversight requirements. In return, full-scope AIFMs can in theory distribute funds to institutional investors across the EU without impediment.
The situation for EU managers of non-EU funds and non-EU managers of non-EU funds is, however, more complicated. While Guernsey, Jersey and Switzerland have been cleared by the European Securities and Markets Authority (ESMA) to use the AIFMD passport, the U.S., Hong Kong and Singapore have been told that more analysis is needed before a ruling can be made. “The delay is cause for concern. A speedy decision is needed–however, we are not hopeful of one,” says Wall, noting that the huge regulatory divergences between the EU and the U.S., particularly around the definition of an accredited investor, is an obstacle to equivalence that will not be easily resolved.
David Walker, director of European institutional research at Cerulli, adds it is a cause for concern if Europe’s growing web of regulation affecting alternatives managers means U.S. and Asian managers simply ignore European investors. “European allocators could effectively be denied some very talented managers, and returns they badly need in Europe’s low-interest rate, low-returns environment,” says Walker.
Managers without passporting rights can use the National Private Placement Regimes (NPPR). However, a lack of uniformity across the EU with regard to interpretation of NPPR is creating confusion, points out Cerulli. It notes that differences between countries on AIFMD regulatory reporting rules have resulted in some non-EU managers marketing into just a handful of jurisdictions, while others are moving onshore or launching UCITS. Also, there is no certainty as to how long NPPR will exist.
“Alternatives managers depending on reverse solicitation rely on being ‘found’ and then pursued by prospective clients–a fairly tall order–whereas regulation-compliant rival managers will be able actively to promote the benefits of their strategies, which does seem a rather easier path to sales,” says Walker.
