Julius Baer, the leading Swiss private banking group, announced today that it has agreed to extend the partnership with FIA Formula E Championship until 2019. Moreover, Formula E announced that starting in 2016-17 an additional race will take place in Hong Kong – an important location in Julius Baer’s second home market Asia.
The FIA Formula E inaugural championship started in Beijing on 13 September 2014 and included 10 races in major cities around the globe including Buenos Aires, Berlin, Monte Carlo and London. The second Formula E Championship season 2015-16 will start in Beijing on 24 October 2015 with Paris as a new location on the race calendar. In 2016-17, Formula E will also arrive in Hong Kong, an important location for Julius Baer in its second home market Asia. Established by the International Automobile Federation FIA, the FIA Formula E Championship is the world’s first fully-electric racing series and represents a vision for the future of the motor industry. With its visionary approach and global reach Formula E is an ideal long-term sponsorship platform for Julius Baer.
Boris F.J. Collardi, chief executive officer of Julius Baer, commented on the extension of the partnership: “After the success of the inaugural championship, Julius Baer is very proud to extend its commitment to support the FIA Formula E Championship as the exclusive Global Partner until 2019. Since the beginning of the partnership, Julius Baer and Formula E have shared common values such as innovation, sustainability and pioneering spirit. We look forward to continuing to adhere to these values and to share a vision of a world with more sustainable means of transport.”
Kaven Leung, deputy region head Asia Pacific and CEO North Asia at Julius Baer, added: “It is wonderful to bring the Formula E Championship to Hong Kong in 2016, which really shows the attraction of this international city. Not only does the series’ pioneering spirit meet our business and brand needs in a key market like Hong Kong, it is also an effective platform for us to engage with the communities in which we operate.”
Alejandro Agag, CEO of Formula E, said: “I am delighted that Julius Baer remains the Global Partner of the FIA Formula E Championship until the end of season five in 2019. This long-term partnership highlights Julius Baer’s continuous support and commitment for the series and shows that we share common values of innovation and sustainable mobility.”
With the objective to promote innovation and sustainability, European Fund Administration (EFA)has recently upgraded its IT infrastructure to offer clients fund administration services powered by a state-of-the-art and green IT platform.
To guarantee best performance and permanent continuity of EFA’s services, the infrastructure, distributed across two IT rooms, individually sized to operate all production activities are now both hosted in certified Tier-IV data centers.
Jean-Marc Verdure, Director of IT, Organization & General Services says: “Our applications are running on mission critical computer systems hosted in award-winning Tier-IV data centers offering the highest level of availability with fully redundant subsystems, supervised and managed on a 24/7 basis. In the event of a technical incident or unavailability of a data center, a partial or overall take-over of our services and applications can be done instantaneously in a single data center”.
This upgrade has also enabled EFA to renew hardware and systems with sustainable and eco- friendly components and processes (materials, cooling systems, power consumption management, recycling…) to promote a better approach to Corporate Social Responsibility. To confirm its commitment in behaving responsibly by integrating environmental concerns into business operations, EFA was also recently awarded the EcoVadisCorporate Social Responsibility silver rating.
Multi-asset funds are set to stay at the top of European inflow tables, as the bond rout of the spring and August’s equities plunge serve as reminders of the dangers of being stuck in one asset class, according to the latest issue of The Cerulli Edge – Global Edition.
Cerulli Associates, a global analytics firm, believes there may yet be opportunities for asset managers to launch more multi-asset products, especially in the passive space. It notes that more advisors are recommending this funds, despite previous concerns that asset allocation products were usurping their role. Following the Retail Distribution Review (RDR) in the United Kingdom, many advisors are outsourcing asset allocation and find multi-asset products the best solution.
By highlighting the cost of advisors, the RDR may have also inadvertently boosted MA funds. Cerulli says that more investors, whether pension-oriented or not, are going down the direct-to-consumer route and MA funds offer cheap access to a range of asset classes, often through low-cost platforms.
“Asset management companies should not be reluctant to take risks and differentiate themselves from the crowd. For the best, the rewards can be significant, even with products that are largely fettered funds of funds,” says Brian Gorman, an analyst at Cerulli.
With investors abandoning low-yielding products in favor of better, but safe, returns, flows into multi-asset funds in the first half of 2015 alone, at €123.9 billion (US$137.5 billion), almost matched those for last year as a whole, and were about five times those of the 12 months of 2012. For established asset managers with expertise across asset classes, existing products can easily be leveraged to offer MA funds.
However, there is not universal enthusiasm. Several wealth managers have told Cerulli that they are not recommending MA funds, with some advisors preferring to retain control of the asset allocation process, despite the increased burdens of RDR. Another common complaint concerns the complexity of the product.
“Some investors, and even advisors, say MA funds are hard to understand,” says Barbara Wall, Europe research director at Cerulli. “If advisors do not know what is going on with a fund, it may conflict with the asset allocation they are trying to effect through other products they are recommending for their clients.”
There is some skepticism as to whether the U.K. pensions revolution introduced this year represents a bonanza for fund providers. Acknowledging that considerable scale may be required to realize a significant gain, Cerulli maintains that the downside is minimal, especially for firms that can set-up suitable low-cost products. It believes that the balance of probability is in favor of such funds offering sizeable opportunities for asset managers.
While the RDR driver for MA is not yet as strong in most of Continental Europe as it is in the United Kingdom, some asset managers say change is on its way. One told Cerulli it had already seen a trend of retail banks, aware the days of retrocessions are coming to an end, setting up their own MA products. They are also seeking firms to act for them as subadvisors.
Other Findings:
Increasing headcount is on the agenda in the United States as institutional sales managers at large and small asset managers respond to the changing needs and expectations of clients. Cerulli notes that increasing client-service roles is particularly important. Experts are required, as is greater collaboration between teams, says the global analytics firm.
In charting the fund-buying journey of more than 70,000 individuals in 11 jurisdictions across Asia, Cerulli has observed the importance of trust and the explosive growth of online direct-to-consumer platforms. Regular income/dividend payout is key for investors in the region. Cerulli notes that a clear and well-executed digital strategy is crucial for marketing success.
Regulatory risk is inhibiting asset managers in Europe and the United Kingdom, while potential disruptors are deterred by regulatory requirements and reputational damage, says Cerulli. It warns that asset managers slow to embrace mobile technology risk disruption from alternative distribution channels, where the emphasis is less on buying products–which the industry is comfortable with–and more on engaging and empowering customers.
Jeremy Lawson, Chief Economist, Standard Life Investments said at the publication of the Global Outlook from Standard Life Investments: “We continue to see a moderate global expansion into 2016, supporting modest corporate earnings growth outside the energy and materials sectors. Our view remains that a widespread or systemic emerging market financial crisis is unlikely, but the pressure on a number of large developing economies will not disappear quickly. Global GDP growth is expected to improve marginally but remain below trend.
“The implications for investors are considerable, as they need to consider throughout their strategic asset allocation process what the repercussions are of low returns on bond, cash and equity prices over the remaining part of this business cycle. Listed equities in particular are sensitive to developments in global activity, as they tend to have larger external exposures than do economies as a whole. Moving up the capital structure towards selected credit may have advantages in this environment.
“At the epicenter of the crisis, in China, a hard landing is not our central scenario as we expect extra fiscal stimulus, but the transition to a new growth model will remain bumpy and unfriendly for commodity producers. More deceleration in growth could lie ahead and the Chinese currency is likely to weaken moderately against the dollar.
“Our forecast assumes no further falls in commodity prices and stabilization in the recent levels of financial stress. If stress builds further then there is a large risk that growth will not rebound, through its effect on consumer and business sentiment, when monetary policy easing in the developed economies will quickly come back on to the agenda.”
Foto: Jimmy Baikovicius
. Terrapin une a banqueros privados y family offices en el Wealth Management Americas
For the past 8 years, Terrapinn has run two co-located Wealth Management events in Miami: Private Banking LatAm and Americas Family Office Forum. Since these 2 industries have converged, they have decided to rename the event Wealth Management Americas 2015.
Wealth Management Americas, to be held Nov. 17-18 at the Four Seasons Hotel in Miami, will bring together the most senior executives from US and LatAm Private Banks and Family Offices to discuss today’s latest investment opportunities across all asset classes, as well as the latest trends within family governance, wealth planning, and timely regulation topics around FATCA.
Global private equity fundraising saw a further slowdown through the third quarter of 2015. One hundred and seventy funds closed, down from 317 in Q2 2015 and 290 in the same period last year. The aggregate capital raised by funds closed in this quarter was $116.9bn, down from $129.3bn in the previous quarter. It was the third consecutive quarterly decline in fundraising, and represents a 29% decrease from the $164.9bn raised in Q4 2014, the most recent fundraising peak. In 2015 YTD, private equity funds have raised an aggregate $385.4bn, down from $388.1bn in the first three quarters of 2014.
“The global private equity fundraising market has continued to stall in the third quarter of 2015. The number of funds closed is the lowest of any quarter Preqin has on record, and aggregate fundraising totals declined for the third consecutive quarter. Despite recent turmoil in Asia, there has been an increase in fundraising for funds focused on the region, and on Rest of World. This, though, does not offset a lack of growth in the mature North American and European markets, as both the number of funds closed and aggregate capital figures continue to fall there.” Says Christopher Elvin – Head of Private Equity Products, Preqin.
Private equity funds closed so far in 2015 have taken an average of 16.3 months to reach a final close. This figure has risen slightly from Q2’s 16.2 months, but is still below the average 16.7 months that it took for funds closed in 2014 to fundraise.
Fundraising totals for venture capital, real estate, and funds of funds all decreased, while infrastructure fundraising rose from $4.4bn in Q2 to $13.1bn in Q3.
The number of private equity funds in market is currently at a record high. 2,348 funds are seeking a combined $831bn in commitments, up from 2,248 funds seeking $781bn at the end of last quarter. Dry powderlevels have not continued the rapid increase seen through H1 2015, and currently the overall figure stands at $1.35tn.
Foto: Alice Popkorn
. El número global de millonarios podría crecer un 46% en los próximos cinco años
The size and wealth of the middle class globally grew quickly before the financial crisis, but growth subsided after 2007 and rising inequality has squeezed its share of wealth in every region, according to the sixth annual Global Wealth Report, just released by The Credit Suisse Research Institute, which focuses on how the middle class has developed since the turn of the century.
The report shows that global wealth fell by USD 13 trillion from mid-2014 to mid-2015, due to dollar appreciation. If measured at constant exchange rates, global wealth would have risen by USD 13 trillion since last year. According to the company´s estimates global wealth could reach USD 345 trillion by mid-2020, 38% above its mid-2015 level, and the number of dollar millionaires worldwide could increase by 46% in the next five years, reaching 49.3 million by mid-2020.
The USA again led the world with a substantial rise in household wealth of USD 4.6 trillion. Meanwhile, China -also posted a large annual rise of USD 1.5 trillion- has the largest middle class with 109 million members, surpassing the USA with 92 million. And Switzerland again ranked highest in average wealth, but fell USD 24,800 to USD 567,100 per adult.
Wealth per adult fell by 6.2%to USD 52,400 and is now back below the level of 2013, -shows the report-, and a person needs just USD 3,210 (after debts) to be in the wealthiest half of the world.
In its analysis, the company has taken a new approach to defining the middle class category, using a wealth-based definition – versus an income-based one – that allows for adjustments over time to reflect inflation, and also varies across countries depending on local purchasing power.
Michael O’Sullivan, Chief Investment Officer for the UK & EEMEA, Private Banking and Wealth Management at Credit Suisse said, “We are clearly in a growth industry, with wealth set to continue its upward trajectory. By our estimates, wealth could grow at an annual rate of 6.6%, reaching USD 345 trillion in 2020. Furthermore, the number of dollar millionaires could exceed 49.3 million adults in 2020, a rise of more than 46.2%, with China likely to see the largest percentage increase, and Africa as the next performing region. Overall, emerging markets account for 6.5% of millionaires and will see their share rise to 7.4% by the end of the decade. High-income economies will still account for the bulk of new millionaires, with 14.0 million adults entering this category. Millionaire net wealth is likely to rise by 8.4% annually, as more people enter this segment. Emerging markets will likely account for 9.1% of millionaire wealth in 2020, 1% above current levels.”
Credit Suisse Research Institute’s Markus Stierli said: “From 2008 onwards, wealth growth has not allowed middle-class numbers to keep pace with population growth in the developing world. Furthermore, the distribution of wealth gains has shifted in favor of those at higher wealth levels. These two factors have combined to produce a decline in the share of middle-class wealth.”
Foto de William Warby
. La Fed subirá las tasas, pero no debe cundir el pánico
Eight years after the Federal Reserve (Fed) last hiked its target short-term rate, and over six years since it last touched it, the time has come for a new hike. Monetary policy shifts have always been impactful to the markets, and given the length and extent of global central banks’ interventions since the 2008 financial crisis, the impending rate hike will follow suit.
While rate hikes have often been a response to an overheating economy, this time around is decidedly different. The Fed is simply exiting emergency measures placed in 2008, in a move toward “normal” in a global economy that is inherently different than it was nearly half a generation ago. The Fed has also pledged rates increases will be measured and gradual, which should not derail the U.S. expansion in the long run.
But the changes to the investment backdrop don’t stop there. Looking beneath the surface reveals structural factors that are reshaping the economic, inflation and investment landscape. Understanding these influences is equally, if not more, important for investors developing long term strategies for the post-rate hike economy.
First among these structural factors? Technology and innovation. Essentially reducing total labor costs while simultaneously enhancing efficiencies, technological innovation has the potential to enable asset-lite business models and even act as a deflationary force. The effect is not always easy to measure, but various sectors are showing notable signs (for example the energy industry). Output is able to increase with limited incremental investment, resulting in what is called productive disinflation. So, while wage increases may be dulling despite the labor market tightness, net disposable income can increase because of the lack of inflation.
A second, equally important factor affecting the market outlook is world demographics. Considering that aging populations generally draw more from the economy than contribute to it, the current demographic shift in developed countries is believed to be contributing to the long-term downshift in economic growth. Beyond the long-term implications on economic growth, older demographics also tend to borrow less and exhibit a preference for fixed income, thus driving demand for longer-term bonds while holding yields down and affecting interest rates.
The prevailing impact of these technological and demographic trends will be felt in lower inflation than in the past and, to the chagrin of central banks’ attempts, will not be easily swayed by monetary policy. All of this indicates that global economies are likely to remain in a slow-growth, low-inflation low-rate cycle for some time beyond the first Fed rate hike.
Some Ideas to Fine Tune Your Portfolio
In this environment, being aware of duration risk is crucial. Given the current factors shaping the fixed income landscape, ultra short and long duration bonds in the US appear less vulnerable than medium-term maturities to a rate rise. Think of other fixed income assets for your income needs, for example Treasury Inflation Protected Securities (TIPS) and High Yield bonds, but don’t overreach for yield.
Foremost, remember the role of bonds in your portfolio. Whether you are looking for income or risk diversification, or are aiming to dilute the effects of interest rate, credit and inflation risk, be mindful of the motivations behind your bond strategy. Now is the opportunity to rethink your bond strategy and prepare your portfolio for performance in the impending new “normal” economy.
This material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds have not been registered with the securities regulator in any Latin American and Iberian country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein.
Venture capital investment, accelerator programmes and a proactive focus on the deployment of new technologies through allegiances with fintech companies should be priorities for banks as a multiplicity of new payment capabilities come to the fore, according to a new report by BNY Mellon.
The new report, Innovation in Payments: The Future is Fintech, follows on from Global Payments 2020: Transformation and Convergence and hones in on the growing influence of fintech in transaction banking. It assesses the direct and indirect impact of the new technology on payments and the way in which it is moulding client behaviour and fuelling expectations for better, faster and more innovative solutions across the payments spectrum.
Cutting-edge technology holds great potential to transform how consumers and clients initiate and process transactions. It’s no longer just a case of new currencies or faster payment methods, but an entire rethinking of how transfers of any “value” might be undertaken. More fintechs are graduating from the ranks of start-ups to multi-billion dollar listed companies: at least 4,000 fintech start-ups are active and global investment in fintech ventures tripled in 2014 to $12 billion.
“The fintech era is upon us and banks shouldn’t merely be mindful of this; they should also have a clear strategy in place in order to adapt to and benefit from fintech-fuelled changes,” said Ian Stewart, Chief Executive Officer of BNY Mellon’s Treasury Services business. “While the banking industry is traditionally conservative about change, any hesitation or ambivalence here could be costly. In order to position themselves at the centre of the payments industry of tomorrow, banks must act today to understand, interact with, and cherry-pick from the full smorgasbord of fintech developments.”
“BNY Mellon is immersed in the fintech sector,” adds Stewart. “We are focusing on and investing a great deal of time in exploring the opportunities it has to offer the global payments arena in areas such as the potential to reengineer payments, including blockchain and big data technology. We are also working closely with fintech firms to explore the use of new technology capabilities.”
“As a major provider of wholesale banking services to client banks, we’re committed to staying current on evolving conditions in the banking industry, and liaise with our client banks about how the changing landscape is likely to impact their business strategies,” said Anthony Brady, Global Head of Business Strategy & Market Solutions for Treasury Services at BNY Mellon. “Our research into the changing transaction banking ecosystem has important implications for us as a business, and we’re eager to discuss with client banks how our investments in technology are positioning us to be an even better provider of support to them as they align their business plans with the emerging future state of our industry.”
While regulation has put pressure on bank resources, banks must prioritise technology-focused strategies. The financial services industry has one of the highest ratios of IT spend as a proportion of revenue, with levels expected to reach US$197 billion in 2015. That said, over three quarters of this is estimated to be in maintenance rather than new services, so banks need to redress this imbalance. The report examines what strategies banks should adopt in order to understand and access these exciting fintech-fuelled developments, and thereby future-proof their long-held position at the heart of global payments.
To view the report, Innovation in Payments: The Future is Fintech, please click here.
Investors are expressing growing skepticism that the U.S. Federal Reserve (Fed) will raise rates this year amid fragility in the global economy and earnings, according to the BofA Merrill Lynch Fund Manager Survey for October.
Fewer than half (47%) of investors believe the Fed will raise rates in 2015, down from 58% in September.
A net 19% of the panel says global fiscal policy is too restrictive.
Cash balances fell to 5.1% of portfolios, down from 5.5% last month, but remain above historic average levels.
A growing majority of investors (net 26%) say that corporate operating margins will decrease in the coming year, up from a net 18%.
Short Emerging Market Equities was named the most crowded trade in October by 23 percent of the panel, up from 20%.
China is seen as the greatest “tail risk” by 39% of the panel, down from 54% in September, while pessimism over Chinese equities eased.
“As investors debate the timing of a rate hike, they should be anticipating a massive policy shift in the U.S., Europe and Japan from QE to fiscal stimulus in 2016,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
