Uncertainty about the timing of a U.S. Federal Reserve rate hike continues to intensify. But, warns a leading global analyst at one of the world’s largest financial advisory organizations, investors should start preparing now for when the inevitable rise comes – and there are three key approaches to consider.
The warning from Tom Elliott, International Investment Strategist at deVere Group, follows Minneapolis Fed PresidentNarayana Kocherlakotaon Tuesday setting out his case for waiting until the second half of 2016 to start raising interest rates. This is contrary to the opinion of most Fed Policymakers, including the Fed Chair Janet Yellen, who believes that rates will need to start rising this year.
Mr Elliott explains: “Currently, the situation regarding when the Fed might move away from its zero rates policy of the last six years, is as clear as mud. However, when, finally, the Fed does start to raise interest rates the impact on capital markets could be severe. Therefore, investors who are, understandably, uncertain, should start preparing for this. I would advise investors to consider three steps.”
He continues: “First,find a multi-asset benchmark that you trust will deliver solid risk-adjusted returns throughout the business cycle. It maybe a 60 per cent global equity, 40 per cent global fixed income portfolio or a variation of that. Having such a benchmark should be a part of your long-term investment strategy.”
“Second,refuse to take active positions in what looks like a difficult investment environment. Hog the benchmark. Sitting on the fence is better than being caught on the wrong side of a central bank decision. Rebalance quarterly, forcing yourself to cash in winners and to buy losers. This discipline will protect you from rash decision making during periods of market volatility.
“Third, wait until the Fed has begun tightening monetary policy before returning to active bets.”
Mr Elliott adds: “Finally, if the need to take active positions is too strong to resist, I do think that Europe, excluding the UK, and Japan will continue to outperform. Europe, because of improved economic growth and the weak euro; and Japan because of rapidly improving corporate governance that is resulting in dividend and return on equity growth. It could be worth considering balancing this position with an underweight in U.S. large cap and emerging equities.”
CC-BY-SA-2.0, FlickrFoto: Moyan Brenn. Amanda Augustine se incorpora al equipo de análisis de BBVA Compass
Amanda Augustine has joined the BBVA Compass economic research team, led by the chief economist Nathaniel Karp. The bank’s six-member research team analyzes the U.S.economy and Federal Reserve monetary policy. The economic research team also follows a variety of issues that affect the Sunbelt states where BBVA Compass operates.
Before joining the bank, Augustine worked as a project manager at consulting firm American World Services Corp. in Washington, D.C., focusing on the health care sector.
“We are pleased to have Amanda join us as her expertise on health care will add depth on a topic that’s so important to our economy,” said Nathaniel Karp, chief economist for BBVA Compass.
Augustine earned her MBA from the IESE Business School in Barcelona, Spain, and a bachelor’s degree in business administration and Spanish from American University in Washington, D.C.
Carlos Fuenmayor - Foto cedida. BancTrust abre mesa de trading en Reino Unido
BancTrust has annunced that its London-based subsidiary, BancTrust Securities (Europe), has received a Variation of Permissions notice from the Financial Conduct Authority to enable it to commence secondary trading. The firm will now be dealing as principal for Asset Managers and Financial Institutions mainly based in Europe and the Middle East interested in investing in Emerging Markets Fixed Income.
Carlos Fuenmayor, CEO of BancTrust & Co., stated: “I’m honored to say that our London office has now been granted permission to operate its trading desk and offer true market color as well as execution. Our specialists in Emerging Markets provide unequaled coverage as well as exceptional investment opportunities.”
Foto: Kevin Doyle. Mercer Appoints David Anderson President of Growth Markets
Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE:MMC), today announced the appointment of David Anderson to President, Growth Markets region including Latin America, Asia, Middle East and Africa. He will report to President and Chief Executive Officer, Julio A. Portalatin, and will relocate to New York. Previously Anderson was Managing Director and Market Leader for Mercer in the Pacific region based in Sydney, Australia.
“Our Growth Markets region is a strategic driver as increased global growth comes from these economically important countries,” said Mr. Portalatin. “Mercer’s capability to meet the needs of local, regional and multinational clients is a key element of our value. David brings proven expertise in leveraging marketplace shifts that impact our clients and their employees — such as increased individual accountability in investments, retirement and health care decisions – and that leadership helps us create sustainable business advantage.”
“This opportunity comes at a critical time when we can learn from the innovation in emerging markets across the globe,” said Mr. Anderson. “The ability to bring the depth of our local and regional insights to our powerful global reach allows us to create better health, wealth and careers for individuals as well as the organizations they power.”
Mr. Anderson has more than 25 years of experience working in the financial services and insurance industries in Australia, New Zealand, the South Pacific, Asia and Africa. He has advised multinational companies and governments on investment and retirement savings strategies and has been with Mercer since 1998. Mr. Anderson will continue to hold a directorship role with Alexander Forbes in South Africa, of which Mercer became a key strategic shareholder in 2014.
Ben Walsh will move into the Managing Director and Pacific Market Leader role for Mercer. Mr. Walsh currently leads Mercer’s financial services business in Australia and New Zealand and has more than 20 years of experience at Mercer/MMC providing superannuation investment, administration, insurance and member services to more than 1.2 million customers leading a team of nearly 1,400 colleagues.
Mr. Anderson succeeds Gaurav D. Garg who is pursuing other interests outside of Mercer. Mr. Walsh will remain in Melbourne and report to Simon O’Regan, President of Mercer’s EuroPac region which includes Europe, Australia and New Zealand. Both appointments are effective immediately.
Photo: Diego Torres Silvestre. Paulo Sampaio Named Head of Latin America Southern Cone for S&P DJI
In support of its role as a leading index provider in Latin America, S&P Dow Jones Indices has today announced that it has named Paulo Sampaio as head of Latin American Southern Cone. Mr. Sampaio will be based out of S&P DJI’s newly opened office in Sao Paulo, Brazil.
Over the past six months, S&P DJI has announced several landmark exchange relationships within the Southern Cone of Latin America – in particular with the BM&FBOVESPA – that have led to the development of a wide range of new and representative benchmarks, as well as greater index based investment solutions for investors inside and out of Latin America. Mr. Sampaio will primarily focus on advancing S&P DJI’s business in the region and strengthening its local, strategic relationships.
Mr. Sampaio has over 22 years of experience (15 as Managing Director) leading one of Brazil’s largest financial associations, ANDIMA (National Association of Financial Institutions). Here he focused on developing ANDIMA’s strategic direction within Brazil as well as its product development. Mr. Sampaio comes to S&P DJI with significant experience managing institutional relationships, particularly at the government level. He began his career as an Economic Research Manager in 1989, and has a B.A. in Economic Sciences from Catholic Pontifícil University of Rio de Janeiro.
“We are very excited to bring someone with such a high level of industry expertise and proven success to the S&P DJI Latin America team,” says Antonio De Azpiazu, Head of Latin America for S&P DJI. “Paulo comes to our organization with a myriad of skills, particularly at the institutional level, that will allow S&P DJI to not only further its existing strategic exchange relationships within the Southern Cone of Latin America, but allow it to bring its world-class indexing capabilities to more investors and markets within South America.”
Coupling the appointment of Mr. Sampaio as head of Latin America Southern Cone with last year’s selection of Mexico-based Manuel Gonzalez as head of Latin America North Cone, S&P DJI now has complete Latin America coverage. Both Messrs. Sampaio and Gonzalez report into Antonio De Azpiazu, Head of Latin America for S&P DJI.
The Dreyfus Corporation, the mutual fund arm of BNY Mellon Investment Management, and CenterSquare Investment Management have launched the Dreyfus Global Infrastructure Fund which provides individual investors with the opportunity to invest in the growth potential of infrastructure assets that connect people, resources, trade, goods and services and information around the world.
With developed nations looking to improve or replace aging infrastructure assets, and many emerging markets countries building out their infrastructure to grow their economies, the World Economic Forum estimates that $100 trillion will be invested in global infrastructure between 2010 and 2031. Traditionally, most infrastructure projects have been financed by the public sector. However, with public debt historically high versus GDP, more private capital will be required to fund future investment, giving investors increasing opportunities to benefit from an infrastructure allocation in their portfolios.
CenterSquare Investment Management, the sub-adviser for the fund, is a BNY Mellon Investment Management boutique specializing in real asset investing. CenterSquare cites a number of factors driving the need for infrastructure investment globally, including new sources of renewable energy, the discovery and utilization of new oil and gas deposits, and technological advances in communications, among others. Underpinning the demand for these assets is a growing and increasingly urban population and an expanding middle class, adding more consumers and increasing world trade.
Todd Briddell, chief executive officer and chief investment officer for CenterSquare, said, “We expect that there will be tremendous global demand for infrastructure assets over the next few decades. Companies that build and operate infrastructure assets are likely to see a significant benefit from the economic and secular trends to rehabilitate aging infrastructure and create new infrastructure to meet growing demand. As a result, listed infrastructure companies will increasingly take on a more significant role in the development and ownership of these assets.”
Briddell added, “Our investment focus will be on companies managing real assets with strong cash flow visibility, low direct commodity exposure, long duration contracts, and a steady long-term demand outlook. The Dreyfus Global Infrastructure Fund will give investors exposure to this dynamic and expanding sector, while seeking to provide a growth alternative which may complement other equity asset classes.”
Managing an infrastructure strategy is a natural extension of CenterSquare’s expertise in listed real estate and real assets, said Briddell, who added, “As in listed real estate, the return and risk characteristics of global infrastructure securities are based on the underlying real assets.”
The launch of the Dreyfus Global Infrastructure Fund follows the December 2014 launch of CenterSquare’s infrastructure strategy for institutional investors.
The primary portfolio managers for the fund are Maneesh Chhabria, who was instrumental in the development of CenterSquare’s global real estate investment trust (REIT) platform in 2006, and Joshua B. Kohn, a real assets investment specialist with more than 13 years of investment experience.
Photo: Ricardo Mogrovejo. Ricardo Mogrovejo Is the New Head of Alternative Investments at HMC ITAJUBA
Following his departure from AFP Capital, the pension fund management firm from Grupo SURA in Chile a few months ago, economist and MBA Ricardo Mogrovejo has now joined HMC ITAJUBA, a Latin America financial services and advisory firm born in a partnership between HMC and Itajuba.
Mogrovejo, as CIO of AFP Capital, led the team responsible for the pension funds with 37 Billion USD of assets under management.
Partner Ricardo Morales told that the choice of Mogrovejo has to do with his knowledge and experience on fund management and portfolio construction. “The key to success is selecting the best managers but also those that are willing to commit time and resources to the region. We have a regional approach and we have learn that to have a leadership position we need to attract the best talent, we need to understand that each country is constantly developing new trends and developments and that each client segment requires different type of information. HMC ITAJUBA has developed long term relations with the institutional market on the region, and we reinforce this commitment by the recruitment of Mogrovejo, who will help us to bring the best alternative products to our clients and to develop a business strategy for them adapted to each country.”
Partner Leonardo Camozzato adds “Mogrovejo will add significant experience to our platform and we are proud to attract the second former CIO of a large Pension Fund in the region in the last 24 months. The first one was Daniel Dancourt, previously CIO of Integra in Peru. Together, they managed approximately USD 50 bn of AUM, roughly 50% in Latam assets and 50% in international instruments, including alternative investments”.
Ricardo Mogrovejo will start in April, 2015 and be based at HMC ITAJUBA office in Santiago, Chile.
Foto: daliphoto
. Mercado inmobiliario español: explosión, suelo y futuro
Under the title Spanish Real Estate: Burst, Bottom and Future, a session on Spanish Real Estate has been organized by Arcano USA at Columbia University (NY) on April 14th, 2015 at 7 p.m.
The panelist include: Sonny Kalsi, Founder and Partner at GreenOak Real Estate; José María de Arcas, Managing Partner at Alpha Moonlight; Ignacio Iturriaga, Founding Partner at IREA and Guillermo Fernández, Real Estate Director at AXIARE. Mónica Vidal, Managing Director at Arcano Group will moderate the round table.
If there has been one market that has captured real estate investors’ imagination more than any other in 2014 it has been Spain. As big capital continues to pour into the country, the session wants to help investors to find the value opportunities in 2015.
The Master of Science in Real Estate Development at Columbia University in the City of New York will hold this monographic session on Spanish Real Estate Investment. The event will go into how Spain got to a real estate collapse like the one lived in 2008, why it bottomed and where it is now. The panelists will discuss about their experiences investing and advising on recent transactions with the new institutional stakeholders: SAREB, SOCIMIs and foreign private equity funds.
The year 2015 could be a mirror image of the year 1981, when highly restrictive policies by the U.S. Federal Reserve ended a prolonged uptrend in inflation, according to BNY Mellon Chief Economist Richard Hoey. Hoey made the comments in his March 25 commentary, State of the Debate.
Yields peaked in 1981 when anti-inflationary policy under Paul Volcker, then the chairman of the Federal Reserve, was aggressive enough to halt the uptrend in inflation. Hoey believes that today’s anti-deflationary policies by central banks will prove aggressive enough to overcome today’s risks of deflation, disinflation and lowflation. He believes that this means that the year 2015 is likely to mark both a bottom in inflation and the end of the long secular decline in bond yields. This may result in a transition from the “coupon plus” bond market of current yield plus capital gains on bonds over much of the last three decades to a “coupon minus” bond market.
This is an echo of his Forbes magazine column in 1981 titled Last Chance This Century, in which he stated, “I personally believe that the peak in long-term interest rates reached during 1981 is likely to stand for at least the next century.” Hoey describes a likely mirror image opposite pattern in 2015 as bottoming inflation and bond yields as a “reverse Last Chance This Century.”
“The central banks have placed such a priority on fighting deflation risks that they are accepting the risk of asset bubbles in order to generate an upward shift in current spending,” Hoey said. “Given the intensity of the banks’ anti-deflationary policies, higher inflation should return, although not for a while.” Overall, Hoey said he expects a gradual normalization of inflation rather than upsurge to excessive inflation.
The legacy of excess capacity in many countries that resulted from the Great Recession is a key reason for the low inflation today, despite the low interest rates and quantitative easing, the report said. The report notes that it has taken time to work off this capacity. In addition increased financial regulations that were motivated by the recession have slowed the response to monetary policy, the report said.
Hoey is optimistic about the prospects for a long expansion in the world economy, although he said that he expects gross domestic product growth to be on a lower path than before the recession. “This expectation results from a one-time downshift in growth from the effect of the Great Recession plus deteriorating demographics that reflect a decelerating growth rate for the working-age population in many countries,” he said. “Also, we’re seeing suboptimal economic policies in many countries.”
Foto: Michael Dorausch. Sotheby's International Realty entra en el mercado brasileño
Sotheby’s International Realty announced that Brezilian Imobiliaria Bossa Nova has joined the brand and will now do business as Bossa Nova Sotheby’s International Realty. The firm, led by owners Luciano Amado as president and Marcello Romero as vice president, is located at Alameda Gabriel Monteiro da Silva 2027, Pinheiros, Sao Paulo.
“Sao Paulo andRio de Janeiro are exciting markets that encompass extraordinary properties in a broadly diverse destination, and provide a highly influential source of avid real estate buyers,” said Philip White, president and chief executive officer, Sotheby’s International Realty Affiliates. “We are pleased to welcome Luciano, Marcello and their team to our global network.”
According to Romero, the new affiliation with the brand represents the opportunity for them to expand and grow. “The support of this brand will allow us to supply our team with new technologies, training and market intelligence, combined with an extraordinary inventory in Sao Paulo, Rio de Janeiro and top beach and countryside locations,” said Amado. “Thanks to this affiliation, we now have direct access to a global market through the brand’s 760 offices worldwide.”
The brand´s network has currently more than 16,500 sales associates located in approximately 760 offices in 60 countries and territories worldwide. Bossa Nova Sotheby’s International Realty listings are marketed on the global website. In addition to the referral opportunities and widened exposure generated from this source, the firm’s brokers and their clients will benefit from an association with the Sotheby’s auction house and worldwide marketing programs of the Real Estate Business. Each office is independently owned and operated.
