Foto: Nepenthes. Arabia Saudita – Arenas de cambio
Tom Nelson, portfolio manager for the Global Energy Equity strategy at Investec AM, took a research trip took to Oman, Dubai, Abu Dhabi and Saudi Arabia last March comprising fifteen company meetings and four visits to production facilities. His main goal was to learn more about the reservoir performance and supply outlook in the world’s dominant petroleum province, as well as the social and political climate within the region. Some of the notes of his journey follow:
“In this note I intend to focus on Saudi Arabia, as the major OPEC oil producer (9.5 million barrels/day), but also as a country undergoing profound socio-economic change.
The Kingdom of Saudi Arabia has the 20th largest economy in the world by GDP, larger than South Africa or Taiwan, making it by far the biggest economy in the MENA region (excluding Turkey). It has the largest proven oil reserves of any country (260 billion barrels), and is rightly considered the central bank of crude oil, as the only producing country with significant (1 million barrels/day+) spare capacity. Saudi Aramco is by my calculations the most profitable enterprise on the planet: 9.5 million barrels/day of production of crude oil, which trades for $100 and costs them $4-8 to extract. This translates into $350 billion revenue per year, with a 90%+ profit margin. Not surprisingly, the Saudi Arabian Monetary Authority (SAMA) has $550-600 billion in net foreign assets, making it the fourth largest sovereign wealth fund. These numbers will be familiar to many readers, who associate the Kingdom most immediately with oil wealth.
More striking is the social and demographic picture: 28 million people living in the 13th largest country in the world. 51% of the population are under the age of 25, and there is a 30% unemployment rate in the 20-25 year old bracket. The exciting perspective of Saudi Arabia is not the legacy wealth under the desert, but the implications for the young population living above it.
Local employment targets have been ratcheted significantly higher since the Arab Spring – not just in Saudi Arabia but across the region – and this was clear from all of our meetings with major Western oil companies. BP, Total, Occidental, Schlumberger, and Halliburton all talked about elevated targets for local employment and training. The most striking comment came from Schlumberger’s country manager for Saudi Arabia, a Lebanese national trained in 12 countries and 4 continents over a 28-year career at Schlumberger (including a Mechanical Engineering degree, an MBA at Insead, and a year at MIT). He assured us that Schlumberger in Saudi Arabia would soon be 60% staffed by local people and that in the event of turmoil in the Kingdom and an exodus of expats the company could continue to function effectively. Similarly, Occidental Petroleum in Oman is now the country’s third largest employer, with 82% of employees being Omani nationals.
I found myself rapidly becoming optimistic for the future of this young, primarily urban population as the extensive social program became clear. Increased diversification away from the core oil wealth (still 80% of budget revenues and 90% of export earnings) into banking, construction, and chemicals, should be facilitated by a huge free education program, unlimited free healthcare, and rising infrastructure spending.
Naturally, challenges persist: labor productivity ranks towards the bottom of the range, with the Arab Labor Organization estimating worker productivity in Saudi Arabia to be only 17% of the US industrial worker. Women have only been empowered to vote since 2011, and make up only 15% of the workforce. And despite the build- out of new roads, the safety on them is very poor. By deaths per 100,000 of population it is the most dangerous country in the world for drivers.”
Interested in Saudi Arabia? You can read the full report through this link.
Chris Edge liderará el negocio en el Ducado para impulsar el crecimiento internacional de la entidad. Allfunds elige a Chris Edge para dirigir su negocio en Luxemburgo e impulsar su expansión internacional
Allfunds Bank has appointed former JP Morgan Luxembourg managing director Chris Edge to head its business in the Grand Duchy to help drive the firm’s international expansion.
Chris is a highly respected and well-known industry figure in the European Investment Fund sector and has a wealth of experience in running a regulated bank in Luxembourg and in growing businesses. He is a twenty-year veteran of JP Morgan, covering a wide variety of senior roles for the bank across the UK, South Africa and Luxembourg during two stints, in between which he built a financial service distribution business in the UK and a mobile transactions business in East Africa.
Allfunds Bank’s Chief Executive Juan Alcaraz, said: “I am delighted to welcome Chris to Allfunds at a time when we are extending our European operations. We are strongly committed with Luxembourg, as one of the most important financial centre at the heart of Europe, is a natural and logical evolution as Allfunds becomes ever more successful in following and supporting our clients and providers in their international expansion.
Chris said: “I am really excited to have this opportunity to build upon my long career in European Investment Funds and apply that experience in a major fund distribution business. Regulatory change and advisor remuneration rules are creating the catalyst to transform channels and investor access over the next decade and Allfunds is very well positioned to support its clients through this transformation. I look forward to ensuring the investment in the Luxembourg hub will realize the growth potential this offers to Allfunds and its clients and partners”.
Allfunds Bank is a leading European Mutual Fund platform aimed exclusively towards institutional clients, offering integrated fund solutions (operational, analysis and information). Created in 2000 and owned in equal parts by the Santander and Intesa Sanpaolo groups, today Allfunds Bank has more than €121bn assets under administration and offers close to 40,000 funds from 450 fund managers. Allfunds Bank has a local presence in Spain, Italy, UK, Chile, UAE, Switzerland and Luxembourg and has more than 400 institutional clients, including major commercial banks, private banks, insurance companies, fund managers, financial supermarkets, international brokers, and specialist firms from 28 different countries.
Foto: Markchdwickart, Flickr, Creative Commons.. Acceder a todos los universos: inversiones multiestrategia
New research from ING Investment Management (ING IM) amongst pension funds reveals that 42% believe institutional investors have increased their exposure to senior bank loans over the past six months, whilst only 2% felt it had fallen. Indeed, ING IM is announcing that it has seen assets under management in its senior bank loan strategies increase by 46% over the past 12 months, from $13 billion to $19 billion.
Growing demand for this asset class is expected to continue as the research reveals that four out of ten (40%) pension funds expect institutional investors to increase their exposure over the next 12 months, compared to 8% who think it will fall ‘slightly’.
Senior bank loans are extensions of credit made to non-investment grade corporations. They are private issues traded directly among banks and institutional investors in a private secondary market and not on a public exchange. They are generally secured by a borrower’s assets pursuant to a first priority or “senior” lien, and they are first in priority in receiving payments when a borrower is servicing its debts. They can also be called “floating rate loans” because the interest paid on such loans changes as certain market interest rates change.
The interest rate reset period varies from loan to loan, but a large, diversified portfolio of senior loans can be expected to have a weighted average interest rate reset period of 60 days or less. As a result, the income earned from a senior loan portfolio is generally very responsive to changes in short-term interest rates. Because the price of senior loans is less sensitive to market interest rates than bonds, they provide a high degree of diversification to a fixed income portfolio. The asset class saw huge inflows in 2013 because of its strong performance – they currently provide typical yields of up to 5% – in a difficult market. ING IM’s Senior Loans strategy portfolio has delivered an annualised return of 5.28% over the past three years (0.47% above the S&P/LSTA Leveraged Loan Index Hedged to Euro).
When asked what the main benefit of investing in senior bank loans is, 29% of pension funds said diversification of a fixed income portfolio, followed by 19% who said attractive risk adjusted returns. One in seven (14%) said it was because the default risk is low.
Most attractive benefit of investing in Senior Bank Loans
Percentage of pension funds who think this
Diversification of fixed income portfolio
29%
Attractive risk adjusted returns
19%
Default risk is low
14%
Protection against a rise in interest rates
10%
Correlation with other asset classes is comparatively low
3%
Transparent and easy to analyse performance
2%
Secured by collateral
2%
Don’t know
21%
Dan Norman, Managing Director and Group Head of ING IM’s Senior Bank Loan’s team said: “In today’s environment, investors are on the hunt for attractive sources of yield. Senior bank loans offer an excellent balance of income and security, and these characteristics have fuelled strong demand for this asset class over the last couple of years. We believe that this will continue. The potential for the fund management industry here is strong because there are still institutional investors who want and need a better understanding of the benefits of senior loans and what they offer to a diversified fixed income portfolio.”
Foto: Copley, Flickr, Creative Commons. Gestionando con el nuevo oro de la inversión: ¿criptodivisas?
The Startup Stock Exchange (SSX), a regulated global marketplace for startup investing and funding, has become the first investment platform to allow investors of any size to purchase publicly trading shares in Startups using Bitcoins.
Owners of Bitcoins can fund their SSX Investor Account using the GoCoin payment processor and then buy shares in Startups offered through the Startup Stock Exchange. Recent investment opportunities include a Latin American online insurance company, an ecommerce site for beauty products, and the NXTP Labs portfolio of companies.
“SSX provides investors of all levels access to investment opportunities in global Startups. The addition of Bitcoin as a funding method makes it easier for these investors to participate on our global market and invest in our public Startups,” said Ian Haet, CEO and Co‐Founder of the Startup Stock Exchange. “Starting today investors can take their Bitcoins, convert them to US Dollars, fund their Trading Account and invest in the listed Startups, all on the SSX website.”
Funding by Bitcoin was adopted due to the crypto‐currency’s tremendous growth and international interest. SSX is focused on global Startup investments and adding Bitcoin as a funding option supports SSX’s mission. SSX has clients in over 100 countries and Bitcoin provides a secure and cost effective mechanism for transferring funds internationally, including countries such as Argentina, Singapore, Venezuela, South Africa and Morocco.
“We are thrilled that the Startup Stock Exchange has selected GoCoin as their solution for accepting digital currency. It further validates that disruptive technologies like Bitcoin and crypto‐currency is reverberating more and more with corporations, small businesses and consumers” said Steve Beauregard, Founder and CEO at GoCoin.
All Bitcoin transfers completed by SSX Investors are reviewed according to strict Anti‐Money Laundering (AML/CTF) procedures. As a regulated global marketplace for Startup investing and funding, this review process is an important factor in adhering to global best practices regarding the prevention of Money Laundering and maintaining the security of investing via SSX.
Emmanuel Geiser, managing director and branch manager at Oppenheimer in Geneva. . Oppenheimer Europe Opens a Branch Office in Geneva, Switzerland
Oppenheimer Europe Ltd., a subsidiary of Oppenheimer Holdings Inc., a financial entity offering global investment banking services has opened a new office in Geneva as part of the firm’s continued international expansion. The Geneva office will be led by Emmanuel Geiser, who, along with a team of seasoned professionals, has a long and established track record serving institutional clients in Switzerland, France and Benelux markets.
The new office, which will focus on Institutional Sales across Europe, will strengthen Oppenheimer Europe’s institutional client coverage, access to middle market clients across Continental Europe, and ability to place securities into European institutional buyers. This will be the Firm’s second European office in addition to its London headquarters. In March 2012, Oppenheimer Europe opened an office in Jersey, Channel Islands.
Max Lami, Chief Executive Officer of Oppenheimer Europe, said: “Despite difficult market conditions the Company has performed exceptionally well and our expansion into Switzerland offers a tremendous opportunity for us to continue to build our presence in the European market. While many other firms are scaling back, we believe now is the time to grow.”
Emmanuel Geiser joins Oppenheimer Europe as a Managing Director and Branch Manager from National Bank of Canada, where he was the General Manager of their Swiss subsidiary, NBF International SA. Emmanuel worked for National Bank of Canada for 23 years.
Julie Chirouze joins Oppenheimer Europe as an Executive Director from National Bank of Canada, where she was a Vice President of Institutional Sales.
Florian Parvulesco joins Oppenheimer Europe as an Executive Director from National Bank of Canada, where he was a Director of Institutional Sales for 13 years.
Luisa Puglia Giongo joins Oppenheimer Europe as an Executive Director from National Bank of Canada, where she was Middle Office Manager.
Philippa Parisi, Co-Head of Institutional Equities in Europe commented: “Emmanuel and the team have an incredible network of relationships across institutional clients in Europe, both in the tier 1 and middle market segments, and will be a terrific complement to our Firm.”
John Hellier, Head of Global Equities at Oppenheimer & Co. Inc., added: “We are very pleased to have Emmanuel, Julie, Florian and Luisa join the Oppenheimer platform in Europe. Our already strong presence in Europe is significantly bolstered by this capability to service the needs of institutional clients throughout Switzerland, France and the Benelux countries.”
“We see competitors scaling back in Europe, including those that have been very successful in the past, so what we are doing may be seen as standing apart and moving in a different direction. Larger international banks do have a similar global footprint to us, but they really only mobilise that infrastructure and resource for the very largest institutional clients,” added Max Lami.
Foto: Affisch. GenSpring sigue creciendo en EE.UU. con nuevas contrataciones en la región sur
GenSpring Family Offices, a leading wealth management firm for ultra-high net worth families, is pleased to announce the addition of two Managing Directors of Client Development in the firm’s South Region. John Frazer joins GenSpring to lead client development efforts in Georgia, Tennessee, and the Carolinas. Dale Sands joins to lead client development efforts focused on business owners and executives.
These key additions follow recent announcements GenSpring has made of expansions in the firm’s Western Region, with a family office establishment in Los Angeles and a significant expansion in San Francisco.
In addition, GenSpring has named Chris Trokey as Managing Director of Client Service for the South Region. Trokey, a 10-year GenSpring veteran who previously served as Family Investment Officer, leads a team of more than 30 family office professionals and is responsible for overseeing all aspects of the client experience across the firm’s Atlanta, Charlotte and Nashville family offices.
“I am thrilled to promote Chris to lead our client service efforts in the South Region,” said Chief Executive Officer Thomas M. Carroll. “Over the last 10 years, he has contributed greatly to our firm and to the lives of the families that he advises. Chris’ leadership coupled with the experience and insight of John and Dale give me great confidence that we will continue to deliver on our purpose of sustaining and enhancing family wealth and helping to ensure it has a positive impact on those who receive it.”
Mr. Frazer brings extensive wealth management experience to his new position at GenSpring. Prior to joining the firm, he spent 25 years with SunTrust Bank, most recently as Executive Vice President, Private Wealth Management Division for all of Georgia and North Florida. During his tenure, Mr. Frazer served as President and Chief Executive Officer of SunTrust Bank, Memphis Region and as Executive Vice President and head of the Memphis Region’s Private Wealth Management Line of Business. He is a graduate of The Citadel and The Graduate School of Banking of the South at Louisiana State University.
Mr. Sands, an Atlanta native, joins GenSpring with more than 17 years of Investment Banking experience specializing in advising ultra-high net worth families, young entrepreneurs, closely-held businesses and corporations in a variety of corporate finance capacities. In this new role, he will work in close partnership with SunTrust Robinson Humphrey, the full service corporate and investment banking arm of SunTrust Banks, Inc. with more than 1000 public and private clients across the country ranging from emerging growth companies to the Fortune 500. Mr. Sands, who started his career with Salmon Smith Barney in New York, has advised clients on numerous public equity, private equity, merger and acquisition and corporate divestiture transactions totaling billions of dollars. Most recently, Mr. Sands served as a senior member of SunTrust Robinson Humphrey’s Merger and Acquisition Group. He holds an MBA from the University of North Carolina, Chapel Hill, and an undergraduate degree from Vanderbilt University.
Mr. Trokey joined GenSpring in 2004 as a Family Investment Officer in the Atlanta family office. Previously, he served as vice president of Tower Hill LLC. He also served in the Private Wealth Management division of Goldman, Sachs & Co., and began his career at KPMG LLP where he managed audit and consulting service teams. Mr. Trokey earned a Bachelor of Science degree in Accounting from Indiana University and a Masters of Business Administration in Finance from Washington University in St. Louis. He is a Chartered Financial Analyst, holds the Chartered Alternative Investment Analyst designation, and has also passed the Certified Public Accountancy examination.
Photo: Alvesgaspar. “We Have Decided to Halve our Overweight to Equities and Move to a Neutral Position in Cash”
Global equity markets experienced volatile trading but moved higher overall during March. Key influences included the crisis in the Ukraine and Russia’s annexation of Crimea, concern over China’s economic and financial prospects, and the outlook for monetary policy in the US. Tensions between Russia and the West over the Ukraine rose ahead of a referendum in which Crimea voted to re-join Russia, but subsequently eased. Disappointing economic figures from China included an unexpectedly large fall in exports of 18% in February, dashing hopes that foreign trade will drive the slowing economy. The first Chinese domestic bond default, which took place in early March, also hurt investor sentiment. However, sentiment toward China recovered late in the month when Premier Li Keqiang said that Beijing was ready to boost the economy.
In fixed income markets, the yield on the 10-year treasury ended March at 2.72% compared to the 2.67% level seen at the end of February. However, yields experienced considerable volatility over the period, reflecting the crisis in the Ukraine, concerns over China’s economic outlook and jitters over US monetary policy. The latter followed remarks by Janet Yellen, the new head of the Federal Reserve, indicating that US interest rates would rise sooner than expected. However, markets subsequently regained their composure. On the other side of the Atlantic, Portugal’s 10-year yields slipped below the 4% mark for the first time in four years towards the end of March. Spanish and Italian bond yields also touched multi-year lows after investors interpreted remarks by a European Central Bank official as indicating that the bank would consider adopting quantitative easing to relieve the eurozone’s problems. Spanish 10-year bonds fell to 3.23% on the final day of trading in March, while the yield on comparable Italian bonds declined to 3.29%.
Meanwhile sentiment towards emerging markets in general has improved. The J.P. Morgan EMBI+ Index (on a total-return basis) delivered a positive return of 1.37% over the month and 3.45% over the quarter, while emerging market equities have also rebounded. The MSCI Emerging Markets Index (total return, local currency) gained nearly 2% in March, although it remains slightly down over the quarter. However, we are concerned about the outlook for China. In the past few years the country has seen an explosion in credit, facilitated by the shadow banking system as retail investors have been enticed into an array of savings products, where the underlying investments are often opaque, promising heady returns. It is clear that the authorities are now concerned about this situation and investors are surely going to see an increasing number of these funds being declared bankrupt. The growth in credit in China has been very rapid and it is difficult to find examples of such occurrences ending well. At best we are likely to see a material reduction in China’s growth rate, but the outcome could be far worse. Clearly the prolonged underperformance in Chinese equities has discounted some of these concerns, and valuations are low relative to other markets. However, the unwinding of the Chinese credit bubble could severely test China’s financial system, and unnerve investors more generally.
Consequently we have decided to halve our overweight to equities and move to a neutral position in cash. We will remain overweight in equities as valuations are largely reasonable, although less compelling than was once the case. We have also decided to increase our underweight to Asian equities on the concerns over China, and increase our overweightto Japan in the belief that the impact of the consumption tax will be less damaging than is feared. Although we remain overweight in equities, it would be fair to say we are less optimistic than we have been. Within fixed income, core yields are going to grind higher, and there is much less value in credit given how far spreads have tightened. Only emerging markets appear to offer any real value, but given the risks in terms of China, geopolitics and the macroeconomy, we are wary of increasing our weighting at present. The good news is that this environment is likely to continue to provide opportunities for stock pickers, which we should be able to exploit.
Monthly investment comment by Mark Burgess, CIO at Threadneedle
Activity in the Spanish real estate market over the last few months has shone an increasingly bright light on the opportunities for international private equity players searching for yield, with deals involving Apollo and Santander, Kennedy Wilson-Värde Partners and Popular, TPG Capital and Caixa, HIG Capital and Sareb, Intu and CPPIB, Cerberus and Bankia and a host of others. Investor appetite –Blackstone, Centerbridge, Fortress, Goldman Sachs, KKR, Lone Star, Northwood, Pimco, Soros, Starwood, WL Ross, etc. are also actively seeking and/ or executing deals – is undoubtedly ramping up, as is the industry’s penchant for innovation, as evidenced in recent moves to transpose successful single-family rental home strategies from the United States to the Spanish market.
Information Management Network and Planner Exhibitions present the inaugural Private Equity Fund Forum on Spanish Real Estate taking place this May 28-29 in Madrid. The Forum brings together local financial institutions, developers, workout and restructuring specialists, legal experts, regional and national government authorities as well as leading international investments funds to analyze all of the opportunities presented by Spain’s nascent real estate recovery, while frankly assessing the challenges that lay ahead for a full-blown recovery to take shape. As ever, there will also be plenty of networking events, al- lowing participants from both sides of deal teams to make connections and develop relationships.
The event will take place inthe South Convention Center of Feria de Madrid (Recinto Ferial Juan Carlos I, Madrid, Spain). For the most up-to-date list of speakers please visit http://www.imn.org/spain.
The economic overview: Why is the Spanish Economy Attractive to Foreign Real Estate Investors?; Becoming Familiar With Government Incentives Designed to Facilitate Investment in the Spanish Real Estate Sector; Understanding the SAREB Asset Mix and Deal Making Process; Opportunities on the Open Market by Asset Class, Sector, and Geography; Examining the Lender Landscape: Interest Rates, Risk Factors, and Major Credit Providers… are some of the topics to be discussed. For the most up-to-date agenda please visit http://www.imn.org/spain or the attached document.
To register, use the following phones: + 1 212 224 3428 (US) or + 44 (0) 207 779 8999 2 (UK); or hotline@imn.org 3.
Wikimedia CommonsPhoto: Rabensteiner - Bearbeitet von Rainer Z. Asset Growth vs Alpha Generation: the Capacity Management Conundrum
Success in asset management leads to a well-known conundrum: how to best manage increases in assets under management (AUM) while continuing to generate value-added alpha for clients.
A growth in AUM may make it more difficult to implement a strategy by imposing certain costs and impediments, such as liquidity constraints, potentially higher transaction costs and client-servicing requirements, as well as the need to ensure adherence to the strategy. Business diversification across multiple strategies and investment teams is another important consideration when evaluating the capacity of individual investment strategies. According to a new research published by MFS, this is key to ensuring a sustainable business model, which in turn impacts individual product performance.
Capacity can be managed in various ways, including with the implementation of product closures, which are designed to protect the interests of existing clients by limiting further inflows. In this case, MFS refers to both clients in the strategy of interest as well as clients more broadly in strategies that may overlap with the product in question. Preserving alpha-generating capability for existing clients is paramount in their view, and is at the heart of capacity management. It is in this context that capacity management is viewed as an integral component of risk management at MFS.
While there is general agreement among asset managers and their clients that products need to be closed for capacity reasons, there is little consensus on how capacity should be measured. Various academic and industry studies have offered a number of quantitative tools to help determine product capacity; however, these approaches are sensitive to the underlying assumptions made and none is definitive. Not only is capacity hard to measure, it is also a function of current market conditions and the characteristics of a given strategy.
Certain asset classes are inherently more capacity constrained than others. Portfolios invested in large-cap US equities have significantly more capacity than portfolios invested in either small-cap or emerging market equities. Highly concentrated portfolios (e.g., 20-stock portfolios) generally have less capacity than more diversified portfolios, depending on the liquidity of stocks included in the portfolio. Portfolios with high turnover require greater market liquidity and therefore have less capacity than portfolios with lower turnover that can patiently trade over longer holding periods. According to the whitepaper, one should bear in mind that all these parameters interact with one another and market conditions change over time, so portfolio characteristics must be fully examined before applying generalizations about capacity.
In this white paper, MFS outlines its approach to managing capacity in equity portfolios in some detail to illustrate the firm’s philosophy and considered methodology. They also provide information on the product restriction decisions made with regards to the Global Equity strategy as a case study. The way capacity is considered from a fixed-income portfolio perspective is also addressed.
BNY Mellon Investment Management announced today that Ryland Pruett has been named national sales manager for The Dreyfus Corporation and its mutual fund complex, with responsibility for leading the sales effort through broker dealers. Ryland brings over 22 years of field sales and leadership experience to the Dreyfus organization and is charged with building out the newly expanded sales force and to create efficiencies in total distribution.
In this newly created position, Pruett reports to Andrew Provencher, BNY Mellon executive vice president and head of U.S. retail sales.
“Ryland has a strong track record in building momentum for mutual fund strategies through broker dealers,” said Provencher. “He has led programs that significantly grew fund sales while diversifying distribution channels and products. He also has demonstrated an ability to identify new business opportunities and take advantage of them.”
Provencher added, “Ryland has an acute sense for driving better client interactions and promoting sales efficiencies through the extensive use of data, customer segmentation, predictive analytics, and other ‘intelligent distribution’ tools and techniques.”
Pruett joins BNY Mellon from Neuberger Berman, where he was national sales manager for the wire house channel. While at Neuberger, he played a key role in building the sales force through two major expansions as well as raising and diversifying revenues within broker dealer distribution. Prior to joining Neuberger Berman, he held field sales and leadership roles at Invesco.
Pruett received his bachelor’s degree in finance from Georgia State University.
