Rotterdam-headquartered asset manager Robeco has announced the launch of a multi-factor credit fund, aimed at offering investors access to a factor-based investment strategy.
The fund will be managed by Robeco’s Credit Team, with Patrick Houweling as portfolio manager. Houweling joined Robeco in 2003 and has also been managing Robeco’s conservative credits strategy since 2012, which exploits the low-risk anomaly in credit markets.
The fund will have 150 to 200 names in its portfolio. Although it mainly consists of investment grade credits, it can hold a maximum of 10 percent in BB in order to benefit from the attractive characteristics of fallen angels and rising stars.
Patrick Houweling comments on the launch: “At Robeco, we have been closely studying the possibilities of bringing our factor investing offering beyond the traditional equity markets. I am delighted that we have put theory into practice by introducing this factor investing fund to credit investors. This fund is driven by our proprietary quantitative multi-factor model, which offers balanced exposure to the low-risk, value and momentum factors.”
It seems the jury is still out over the future direction of the US equity market. Not even a month ago the S&P 500 index flirted with all time-highs, prompting the bulls to wonder if investors really could be the beneficiaries of a seventh successive year of share price gains. Up until then the bears appeared to have had the upper hand – cue recent downward revisions to Q1 GDP numbers, softer than expected retail sales in April and the havoc wrought on company results from a stronger dollar.
I’d counter this pessimistic sentiment. While exporters were hit in the Q1 results season (and yes 45% of S&P companies are overseas earners) domestic companies fared relatively well. Regarding softening GDP numbers, we bulls prefer not to talk about output but national aggregate income which, for the first quarter, registered 1.4% annualised growth. Economists still think there’s no reason for the US not to register 2.5%-3.0% growth in the second quarter annualised.
For me it seems as though we are still in the sweet spot of equity investing. The risk of the US Federal Reserve tightening has been kicked a little bit further into the long grass and, if the IMF has its way, is likely to stay there for some time to come. Yet raising rates is a sign that the economy is not only off life-support but recovering well in the process.
So let’s focus on what we know so far. Knock-out non-farm payroll numbers for May aside, if ever there was a sign of confidence returning to the US economy it’s in the escalating value of M&A deals. In May alone these totalled a staggering US$ 243bn, which if this rate continues could well top 2007’s record. If management didn’t believe the economy was stable they wouldn’t be committing such large amounts of cash to buying other businesses, surely?
And corporates are right to be optimistic. The US economy is one of just three to experience self-sustaining growth in 2014 – the other two being India and the UK. Corporate margins are nearing 50 year highs and, unlike many, I see no reason for them to revert to the mean given the double tailwinds of a fall in oil prices and advances in technology. So while optimistic on the economy, my only real concern is that the rate of corporate investment spend needs to increase. Companies are still in the ‘let’s return cash to shareholders’ mind-set, rather than ‘let’s invest in plant and machinery mentality.’
Unsurprisingly, given the concerted actions of central bankers to drive down bond yields and whip up demand for equities, risk appetite has increased substantially from its October 2014 lows, with investors favouring growth stocks over value. Although, as most US equity investors will know from bitter experience the rotation from growth to value styles and back to growth could change anytime soon.
The recent correction in global bond markets suggests that point may not be too far away. While style volatility has been less pronounced in the US than Europe that’s not to say it doesn’t exist. Watch this space. The trick is, as ever, to keep alpha returns diversified.
Ian Heslop, Head of Global Equities and Manager, Old Mutual North American Equity Fund.
Foto del Annual Investment Management Summit 2014 - foto cedida. Gestionar el riesgo y generar retorno en mercados complejos
The 6th Annual Investment Management Summit: Managing Risk and Generating Return in Complex Market Environments will bring together leading investors, financial advisors and market experts to discuss the recent developments and evolving trends that are shaping the industry.
Against the backdrop of a strengthening US economy and a slowdown in the pace of growth abroad, the summit will provide a comprehensive overview of today’s global economic climate and explore the various factors influencing investment strategy as investors adjust to the end of zero interest rates in the US. Attendants are welcome to participate in lively discussions to better inform asset allocation and risk management decisions.
The Summit will also highlight new trends in investment management and implications for the industry as a whole. From new entrants offering automated online investment advice to increased investor appetite for smart beta and liquid alternatives, the traditional asset management industry is facing a multitude of headwinds that are sure to challenge the status quo. Attend to hear senior industry leaders discuss the changing landscape and offer guidance for the road ahead.
Global investors have moved out of equities into cash ahead of an expected U.S. Fed rate hike, according to June’s BofA Merrill Lynch Fund Manager Survey (FMS). Investors have also shown concern about a Greek default and a possible bubble in Chinese equities as they have scaled back risk.
Cash levels rise to 4.9 percent of portfolios, up from 4.5 percent in May; proportion of investors overweight equities falls to net 38 percent from 47 percent.
Expectations of higher rates are the highest since May 2011, with a net 80 percent of the panel forecasting a rise in short-term rates.
The majority of the FMS panel sees a negative resolution of Greece talks: 15 percent predict Grexit, and 42 percent predict default without exit.
China worries: seven out of 10 investors say China’s equity market is in a “bubble.” A net 50 percent see China economy weakening.
The proportion of investors expecting to underweight global emerging markets surges to a net 21 percent from net 6 percent in May.
Corporate operating margins will fall in the coming 12 months, say a net 17 percent of investors – up from net 5 percent in May.
The U.S. dollar is the most crowded trade as Fed tightening looms; 72 percent predict the euro will weaken vs. the dollar in coming year.
“Higher cash levels show how caution is in the air, with 65 trading days until we expect the Fed to tighten,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“Investors remain bullish on European equities but are increasingly concerned about Greece and higher yields,” said James Barty, head of European equity strategy.
Photo: Otto Nassar
. Pension Plans, Local Managers and Regulation, Topics of the 2nd Annual Private Equity Andean Forum
Markets Group will present Latin America’s most exciting PE meeting, The 2nd Annual Private Equity Andean Forum this August 13th at the W Hotel in Bogotá. Similar but different; Colombia, Peru and Chile offer some of South America’s best prospects for PE investment. Speakers from their respective countries will provide inside perspective on how to successfully navigate PE within each region, and will highlight the extensive opportunities in this key economic bloc.
The forum is an investor focused platform that will bring together 200+ institutional investors, funds and advisors for a full day of informative discussion. Speakers will include: Jorge Rosenblut, Enersis (Chile); Omar Rueda Galvis, AFP Protection (Colombia); Juan Carlos Felix, The Carlyle Group (Brazil); Richard Rincon, University of Texas Investment Management Company (US); Sergio Vargas, Provenir (Colombia); Jorge Espada, Profuturo (Peru) among others. Networking offers local firms access to the global private equity industry and serves as the perfect cornerstone to any international due diligence trip to the region.
Key discussion topics include: Andean Pension Funds: What can local and international private equity strategies add to increasingly sophisticated portfolios?; Global institutions and local managers: How can international investors’ best seek returns from a rapidly growing selection of emerging local managers?; and Navigating regulations for allocation. What changes might affect investors and managers active in the region?
For interest in joining the speaker faculty or attending, please use this link
A new Fitch Ratings study of corporate bond liquidity takes a different approach to the topic by focusing on the characteristics of corporate bonds pledged as collateral in the tri-party repo market. The analysis identifies key features of a sample of bond collateral that could contribute to the risk of fire sales, or forced selling of collateral in a repo funding squeeze.
Corporate bond collateral characteristics such as long-dated maturities, low trading frequency and industry concentration (‘wrong way’ risk) could raise risks of a forced unwinding of repo-funded trades in a scenario where risk aversion increases sharply. Such risk aversion could limit the ability of dealers to finance securities in the repo market. Cash investors such as MMFs could also be forced to sell collateral in the event of a dealer default.
Maturity mismatches between short-term repos and the long-term corporate bond collateral they finance could exacerbate fire sale risk if repo trades are unwound quickly. Over 90% of the bonds in Fitch Rating’s collateral sample have maturities of one year or more. These bonds carry greater interest rate risk, and could be more difficult to sell in a period of market dislocation.
Fed officials have highlighted the risk that fire sales of securities could amplify price dislocation in a period of market turmoil. New York Fed researchers have estimated that up to $250 million per day in corporate bonds can be liquidated without negatively affecting bond prices. Total corporate bond tri-party repo collateral averaged approximately $75 billion in 2014. Forced selling of even a small fraction of that amount could accelerate price pressure during periods of market stress.
The Fitch study is based on a broad survey of corporate bonds pledged as collateral by dealers in the tri-party repo market as of Dec. 31, 2014. Data was reported by prime money market funds in their monthly N-MFP filings made with the SEC.
Foto: Dan Taylr
. Cuatro de cada cinco Limited Partners han participado en la reestructuración de fondos de private equity desde la crisis
Eighty percent of private equity investors have been approached with fund restructuring proposals since the onset of the financial crisis, according to Coller Capital’s latest Global Equity Private Barometer. One fifth of LPs having received more than five such proposals. Approximately the same proportion of LPs have actually participated in fund restructurings over the same period.
Three quarter of North American LPs, and almost half (45%) of European LPs, have committed to debut funds from new GPs since the financial crisis. This trend has been encouraged by strong results: 91% of LPs say these debut funds have equalled or outperformed the rest of their private equity portfolios.
Private equity has continued to deliver strong returns for LPs, with four fifths of all private equity portfolios having delivered annual net returns of over 11% across their lifetimes. Nearly half of LPs have achieved net annual returns from North American buyouts of greater than 16%.
“Creative destruction is the name of the game in private equity today,” said Jeremy Coller, CIO of Coller Capital. “Investors are accelerating the natural pace of change in private equity through hyperactive buying and selling in the secondaries market, a demonstrable willingness to support newly-formed GP franchises, and decisions to exit or stay invested in restructured funds.”
Areas of investor focus
Limited Partners have a more positive view of private equity in the Asia-Pacific region than they did three years ago. They see an improved risk/reward profile in India, Taiwan, Japan, Korea and Australia; and fewer of them now harbour doubts about Indonesia’s and Malaysia’s private equity prospects. However, investors are less positive about the risk-reward profile for China than they were three years ago – one third of LPs believe it has deteriorated in the intervening period.
Almost half of North American LPs intend to commit to oil and gas-focused private equity funds in the next three years, following the recent fall in in oil prices.
Co-investments are viewed as an established part of the private equity landscape – most LPs think co-investment opportunities will stay plentiful, despite the growing size of private equity funds.
Investors are split over the attractiveness of ‘longer life’ funds (i.e. private equity funds with lives intended to be significantly longer than ten years). Around half of them see longer life funds as a potentially valuable option for investors, whereas the other half think private equity’s model is not suited to funds with much longer lives.
Fundraising environment
Both the medium-term and short-term prospects for private equity fundraising look healthy. Over half of LPs believe private equity’s share in balanced investment portfolios will increase over the next 3-5 years. And for the shorter term, half of European investors and one third of North American investors have commitments below their target allocations to the asset class.
Investor demand for ‘in favour’ GPs is very strong. Two out of three LPs say they have failed to receive their full requested commitment to new funds in the last 12 months, with two in five LPs reporting that this has happened to them a few times in the last year.
‘Early bird’ discounts remain a common feature of the fundraising market. Over four fifths of LPs have been offered ‘early birds’ in the last two years – and two thirds of LPs have taken advantage of them.
Investor views of private equity fees are interestingly divided by geography. Over half of LPs in North America and the Asia-Pacific say that current fee levels are acceptable as long as fees are transparent and fund performance is strong. However, only 30% of European LPs take this view – with most saying fees are too high even if there is transparency and returns are good. Fewer than half of LP (45%) are under significant pressure to reduce fees from senior levels within their organisations.
Credit markets
LP appetite for private debt remains high,with 53% of LPs either having recently committed to private debt funds or expecting to do so soon.
Interestingly, over half (56%) of private equity investors believe credit markets are now in danger of being over-regulated (although one fifth of LPs believe more still needs to be done by regulators). However, only one in five LPs believe the SEC’s recent guidelines limiting debt multiples in buyouts will adversely affect private equity’s risk/return profile in the medium to long-term.
In recent months, the IRS has opened its information reporting portal and non-U.S. jurisdictions heavily affected by FATCA (e.g., Cayman Islands and British Virgin Islands) have issued official guidance to implement FATCA compliance for financial institutions in their respective jurisdictions.
The following list outlines upcoming FATCA compliance deadlines in 2015, as outlined by Kate Forde, Compliance Officer at Apex Fund Services :
*Deadlines for Cayman and BVI Financial Institutions
May 29, 2015: Cayman Islands Local Registration Deadline Each Reporting Cayman Islands Financial Institution must register electronically with, and provide certain information to, the Cayman Islands Department for International Tax Cooperation (the “DITC”).
June 26, 2015: Cayman Islands 2014 FATCA Reporting Deadline Each Reporting Cayman Islands Financial Institution must file a 2014 information return with the DITC.
Before June 30, 2015: BVI Local Registration Deadline Each Reporting BVI Financial Institution that is required to file a 2014 FATCA report must register with the BVI Financial Account Reporting System, and such registration must be approved by the BVI International Tax Authority, before such Reporting BVI Financial Institution can submit its 2014 report (which must be done by June 30, 2015, see below).
July 31, 2015: BVI 2014 FATCA Reporting Deadline
*Deadlines for Reporting Financial Institutions in Model 1 Jurisdictions (other than Cayman/BVI)
May 31/June 30, 2015: 2014 FATCA Reporting Deadline
Generally Reporting Financial Institutions in other Model 1 jurisdictions must file any required 2014 FATCA reports with the relevant Tax Authorities by one of these dates.
July/August 2015: 2014 FATCA Reporting Deadline
Financial Institutions in Australia and Mauritius must file any required 2014 FATCA reports by 31 July 2015 and Bahamian Financial Institutions must file by 17 August 2015.
Have your loved ones, friends or colleagues ever confessed to being workaholics? Perhaps, but I doubt it was viewed as a real addiction; at least, compared to a drug addiction that would warrant an intervention. Yet now that I have faced my demons, I have a completely different perspective on the matter.
We are trained to communicate openly regarding just about everything except our excesses in the workplace. The Japanese are one of few cultures that seem to address the problem of overworking head-on. In Japan, a salaryman, an office warrior, is praised for his achievements but also told to be careful. Working too hard can lead to Karōshi, which in Japanese literally translates to death from overwork.
How do you discuss the topic without getting defensive? How do we know if this is a real problem? Perhaps you are questioning yourself about your work habits while reading this. From personal experience, here are the main areas that have helped me transition into a balanced work style over the past six months, without losing any productivity.
1. Moderate, Don’t Quit
Out of all of the addictions you could potentially have, this may be one you can enjoy with moderation. As a workaholic, chances are you are a top producer at your company. The problem solver, the yes man, the hero in the conference room. Just remember, being proud of your workaholism also means understanding there is a problem. That is the first step in the recovery process.
2. Don’t Isolate Yourself
Talk to your friends, family, and loved ones about all aspects of your job. Understand that it is quite hard for them to understand the day-to-day process and the dedication you have to give to your work, especially if you are a CEO or entrepreneur and the buck stops with you. Communication can help everyone around you understand why you have to stay at the office past nine PM and why sometimes there are last minute deals or negotiations that come up.
3. Enjoy your downtime
Figure out where you can spare an hour or two from work from time to time and dedicate it to a hobby or simply spend that time with friends and family. Do anything but take on a new task at work just to be ahead of schedule.
4. Enjoy your worktime
When there is work to do, put your best effort into it. We all have tough days filled with extra work, and in those you should not have to feel bad about changing plans, about staying late at the office, about having to explain to people why you work so hard. If you have been communicating with everyone around you effectively and you have learned to share your downtime, they will understand when it is worktime.
5. Get to know your work self
Closing new business, pushing deals through gives me a rush and sense of satisfaction. Seeking these amazing feelings at times results in taking on more projects than I can deal with. I have learned to recognize when I am taking on too much at work and discuss it with co-workers and business partners. You have to find the line between success and excess and seek the perfect medium.
6. Get where you want to go
More important than any list, have a vision. Find something that drives you not only at work, but also outside during beautiful day-to-day living. For me right now this means not showing up late to my squash games, spending holidays with my family, and attending birthdays and weddings of loved ones, but at the same time not feeling bad if I have to miss one because a real work emergency comes up.
In the future I hope not to be late when picking up one of my children from school, and I hope to be part of a family whose love and support make us a team.
I love my job but know that Karōshi, won’t serve me, my job, or the people in my life. The Japanese also have a word for those who are able to escape the workaholic world – datsurara. This word used to mean dropout, but today when technology makes it all but impossible to unplug and reconnect to the world, datsura describes a healthy new lifestyle that incorporates both entrepreneurship and balance.
BNY Mellon announced that Alan Flanagan has been appointed to the new role of Global Head of Private Equity and Real Estate (PE&RE) Fund Services. Flanagan will continue to be based in Dublin and report to Frank La Salla, CEO of BNY Mellon’s Alternative Investment Services (AIS) business, in New York.
As a new unit within AIS, PE&RE Fund Services will comprise more than $100 billion in assets under administration and over 150 employees worldwide. Flanagan will be responsible for overseeing global business and driving growth in an area that has seen large recent deals. In February, BNY Mellon and Deutsche Asset & Wealth Management (AWM) announced an agreement where Deutsche will outsource its real estate and infrastructure fund accounting and parts of its reporting functions to BNY Mellon covering more than $45 billion in AUA.
Most recently, Flanagan was global head of product management for Alternative Investment Services. He will be succeeded in that role by Robert Chambers, who joins BNY Mellon from Balestra Capital, where he was managing director, portfolio manager, and member of the operating committee.
“We’re seeing vibrant growth opportunities in this space as investors pursue new strategies and increase allocations to private equity and real estate,” said La Salla. “Alan was instrumental in orchestrating our signature agreement with Deutsche AWM. During his tenure as head of product he led many projects to better serve our hedge fund and PE clients, and I have every confidence he’ll do an outstanding job in this new role.
“Rob Chambers brings a multi-faceted skillset in finance, investment strategy and the alternatives market. I look forward to working closely with him in building out the global capabilities for our alternative manager client base,” La Salla added.
Flanagan serves on a number of executive committees at BNY Mellon, including its European operating committee, Asset Servicing global business risk committee, and is a director of BNY Mellon Trust Company (Ireland). He joined BNY Mellon in 2007 from UBS Fund Services (Cayman) Ltd., where he was head of business development-Americas. Flanagan is a Fellow of the Institute of Chartered Accountants in Ireland.
