Philip Apel, Head of Fixed Income at Henderson. Short Term Squalls But Long-Term Outlook Still Fair
It was unlikely that the relative calm that had characterised markets in the latter part of 2013 was going to last. Most notable has been the correction in equities, with the bullish tone punctured, perhaps only temporarily, by the US Federal Reserve pursuing its tapering of asset purchases and fresh fears about the strength of emerging markets.
Citi’s widely-followed US economic surprise index has dipped slightly but its still elevated level betrays the fact that the media have been quick to promote negative stories and linger on earnings disappointments even when much of the hard economic and earnings data remains positive. This is not too surprising given that a change in tone is eminently more readable than a continuation of yesterday’s news.
In our view, little has fundamentally changed. Our key strategic themes remain as previously. We continue to expect the global recovery to strengthen, led by the US, Japan and the UK. Europe should be better in 2014 than last year albeit still facing the headwinds of a banking system that needs to shrink and the ongoing requirement to implement structural reforms to improve fiscal sustainability.
Whilst core government bond yields pulled back in January, they are likely to resume their rising trend if, as expected, the US economy continues to improve and tapering is completed by the end of the year. That said, we are closely watching inflation, which is forecast to remain at low levels, particularly if disinflationary forces emanate from emerging market economies.
The current environment lends itself to some key themes within our portfolios. Core European bonds are expected to outperform US bonds given the divergent growth and monetary policies of the two regions – Europe is at an earlier stage to the economic cycle than the US and this gives the European Central Bank greater capacity for further monetary policy accommodation. We expect higher yields in the long end of the UK rates markets. We also expect a steeper European yield curve (rates lower for longer at the short end but longer maturity bonds underperforming) versus a flatter yield curve in the US where we expect the 5-year part of the curve to come under pressure as an improving economy puts upwards pressure on rates.
In emerging markets, we have been relatively cautious on local debt markets in general, although expressing bullish views in Mexico. We started to acquire some short maturity bonds in selected emerging markets that are offering value i.e. where we do not expect the degree of rate hikes currently priced in to be delivered, for example in South Africa. We may have been a little early, given the broader emerging market sell-off but we have kept some powder dry because of just such a possibility.
At the currency level our preference is to be long the US dollar, whilst short the Australian dollar, Euro and yen.
Within credit markets, the longer-term theme of low interest rates and improving economic data continues to lead demand for higher-yielding corporate securities, particularly in Europe. With low default incidence and good corporate liquidity, that should sustain the popularity of lower-rated corporate bonds over 2014. We are, however, aware that credit markets have been more resilient than equities in the latest shake-out so there is some near term vulnerability for credit should the ‘risk-off’ phase be prolonged.
In our Euro credit strategy, we are continuing to favour subordinated bonds, BBB-rated bonds and high yield because these sectors of the market have a higher spread and lower interest rate sensitivity. Investment-grade non-financial sector valuations are less compelling than a year ago and consequently we are more cautious about these sectors, particularly the cyclicals. Another aspect of non-financials is the degree of potential event risk from merger and acquisition activity and re-leveraging, especially in the telecoms sector. This may offer some upside in the high yield market but in investment grade the key will be to avoid the poor performers rather than picking winners.
Looking ahead, with duration the bigger threat to bond returns than defaults, floating rate and multi-asset credit strategies are likely to remain in vogue given their lower rates sensitivity and attractive yield.
Fred Thompson, David and Julia Koch. Top 10 Wealthiest Individuals in America’s Oil and Gas Sector
Charles y David Koch of Kansas are the wealthiest individuals in America’s oil and gas sector, with a combined net worth of US$83 billion, according to a Wealth-X Top 10 list that includes billionaires from Texas, New York and Oklahoma.
Charles, Koch Industries’ chairman and CEO, and David, executive vice president, are the principal owners of the Wichita-based company founded by their father Fred in 1940. Charles and David Koch each own 42% of Koch Industries, which is involved in the manufacturing, refining and distribution of petroleum, chemicals, polymer and other materials.
Four billionaires from Texas appear on the list: Milane Frantz (one of two females on the list), Ray Hunt, Jeffrey Hildebrand and William Hunt. Kansas is home to three oil and gas billionaires, the two Koch brothers as well as Elaine Tettemer Marshall, who inherited her fortune from her late husband, Everett Pierce Marshall, (who had holdings in Koch Industries).
Photo: Daniel Christensen. Mauricio Sanchez Mendez Named Complex Manager At Wells Fargo Advisors, Miami
The International Private Clients Services Group of Wells Fargo Advisors has announced that Mauricio Sanchez has joined the Miami International Office as Complex Manager. Mauricio will be responsable for day-to-day operations of the Miami International Complex and its 71 Financial Advisors.
“We are delighted to have Mauricio Sanchez joininig the International Private Clients Service team. He is a seasoned executive who knows and understands the needs of our internatinal clientes; his experience is also fundamental to continue supporting our Financial Advisors covering the Latin American region”, said Alberto Gonzalez Saint Geours, Managing Director of the International Private Client Services Group.
Prior to joinin Wells Fargo Advisors, Mauricio served as a Private Wealth Management Sales Manager, Domestic and International at Morgan Stanley, New York Branch. He has over 25 years experience in the financial services industry. Mauricio held different management positions at Merrill Lynch Wealth Management in Geneva, Montevideo, Buenos Aires and Santiago de Chile.
Mauricio Sanchez holds a bachelor Degree in Accounting from Universidad de la República de Uruguay. Mauricio is relocating from New York to Miami.
Wells Fargo & Company is a financial services company with $1,4 trillion in assets.
París. Foto: zoetnet, Flickr, Creative Commons.. La Française y Forum Partners dan paso a la plataforma LFF Real Estate Partners
Following their recently established strategic partnership and formation of a European direct real estate investment joint-venture, La Française and Forum Partners have announced their acquisition of Cushman & Wakefield Investors (CWI), the investment management business of Cushman & Wakefield (C&W). This acquisition, subject to regulatory approval, will be jointly owned by La Française and Forum, 66.6% and 33.3% respectively, and will operate under the brand La Française Forum Real Estate Partners (“LFF Real Estate Partners”).
CWI executives David Rendall (CEO) and Jens Göttler (Managing Director), together with their current team, will continue to manage the business and investments. All existing service arrangements between Cushman & Wakefield and CWI will be transferred to LFF Real Estate.
CWI provides a complete investment management service in both direct and indirect commercial property investments for a wide range of international clients across the UK, continental Europe and in Korea. CWI is a recognized specialist in core and core plus real estate investment strategies throughout Europe, most notably the French, German, UK and Swedish markets. Building on over 30 years of investment management experience, CWI has over $1.2 billion of assets under management from separate accounts and the PURetail Fund, in a joint-venture with Scottish Widows Investment Partnership (SWIP). PURetail is a closed-ended pan-European (France, Germany and Sweden) real estate fund focused on urban retail assets. Existing local teams will remain in place and will continue to operate out of Paris, London and Frankfurt.
Just four months ago, La Française and Forum Partners announced their partnership and aspiration to become a leading European real estate investment manager and advisor. The acquisition of CWI enables La Française and Forum Partners to provide a variety of solutions for investors seeking European core real estate exposure.
Patrick Rivière, Managing Director of La Française, commented: “When screening partners, we are extremely sensitive to their corporate culture. La Française is what it is today because employees and directors have a vested interest in customer satisfaction, which in the end determines our success. That same dedication to service and quality emanated from CWI and its people. It was a natural fit. As a real estate investment manager focused predominantly on France, we now possess a demonstrated and recognized pan European direct real estate expertise.”
Russell Platt, CEO of Forum Partners, commented: “We are thrilled to welcome David Rendall, Jens Göttler and their team as senior management of our new direct real estate venture with La Française. Their impeccable credentials, market knowledge and pan-European resources will bring immediate benefits to both firms and accelerate the development of our collaborative efforts.”
Commenting on the sale of CWI, Carlo Sant’Albano, CEO Cushman & Wakefield, EMEA said: “At Cushman & Wakefield we remain focused on executing our plan which is critical to growing our business and for delivering high quality, value-added services to our clients. With a number of high priority strategic growth initiatives underway at present it is not the right time to invest substantially in building out the CWI platform. In the best interests of the existing CWI client base, we are pleased to have reached an agreement to sell the business to LFF Real Estate Partners which is looking to increase its European exposure and can provide CWI’s clients with access to a larger investment management entity and importantly, continuity of service.”
As a result of this acquisition, La Française and Forum Partners can now offer a complete range of bespoke Pan European real estate investment solutions (direct real estate, listed and unlisted real estate investment funds, private and public equity and debt) to retail and institutional investors worldwide. The new combined platform will have total assets under management amounting to close to $20 billion, of which $14 billion are direct core European real estate investments.
Chile. Foto: @Doug88888, Flickr, Creative Commons.. Las clases medias en América Latina suman dos décadas de crecimiento, pero los retos continúan
The Credit Suisse Research Institute this week released a report entitled Latin America: The long road. The report looks at the growth trajectory of Latin American economies, explores their challenges and strengths on the road ahead, and outlines investment opportunities in the region.
The report highlights that over the last two decades, Latin American economies have significantly narrowed the economic and social gap with more advanced economies. The region has come a long way from the recurrent financial crisis, rampant inflation, stagnation and persistent impoverishment that in the past characterized many Latin American countries.
Along with the strengthening of the manufacturing and services sectors, which are creating domestic opportunities, a primary driver of the region’s economic growth has been the rise of the middle-income class. The middle class in Latin America grew by 50% between 2003 and 2009, from 103 million to 152 million people, or 30% of the population. This has profound implications for the economy as well as the investment environment.
The report provides context for the current macroeconomic situation in the region and outlines investment opportunities across sectors, including e-commerce, retailers, financial services, and energy. By evaluating the structural changes in Latin America and how each country stands relative to the developed world, the countries’ potential for growth is revealed – allowing for the identification of sectors that are likely to offer the greatest opportunities.
“The report outlines the long-term outlook for the region by taking an in-depth look at demographics, infrastructure, intangible infrastructure, employment, and macro conditions,” says Stefano Natella, Co-Head of Securities Research & Analytics. “While the region as a whole is in a much better position to absorb a serious shock, Latin American governments and societies still face considerable challenges.”
The report concludes that underinvestment in infrastructure, low savings ratios, a growing income distribution gap and education are some of the key challenges affecting the growth outlook for the region. The next ten years will be crucial to consolidate the gains that have been made over the past two decades.
Foto: Tommy.chang, Flickr, Creative Commons. Los fondos estadounidenses crecieron un 20% en 2013, la mayor cifra en cuatro años
In 2013, total US mutual fund assets grew by nearly 20%, largely due to substantial asset growth in passively managed products. Across the board, equity products dominated the mutual fund landscape in 2013, capturing flows of greater than $232 billion year-to-date.
Total ETF assets expanded by 1.9% in December, ending the year with nearly $1.7 billion. ETF equity strategies also grew substantially in 2013, averaging net flows of $17.9 billion per month.
In the January 2014 issue of The Cerulli Edge – U.S. Monthly Product Trends, Cerulli explores vehicle use, including advisor adoption of exchange-traded funds (ETFs). January’s Monthly Spotlight reviews the best-selling mutual funds, ETFs, and Morningstar categories of 2013.
Managers wrestle with meaningful advantages and disadvantages tied to different MLP fund structures more than other investment strategies. Assets in excess of $8 billion are spread across different vehicles, including CEFs (37%), mutual funds (27%), ETFs (19%), and ETNs (17%), with some structured as C corporations and others as registered investment companies (RICs).
Trends in fees
According to the report, a barbell trend emerged in 2013. On one hand, hands-off passive management among indexed products fueled a fee race to the bottom. On the other, investors paid a premium to glean more specialized exposures, including short-duration and unconstrained fixed income.
Wikimedia CommonsLoretta H. Cockrum, fundadora, presidenta y CEO de Foram Group . Loretta Cockrum se suma al Consejo Asesor de Miami Finance Forum
The Miami Finance Forum (MFF), South Florida’s leading financial services networking organization, has announced that Loretta H. Cockrum, Founder, Chairman and CEO of Foram Group, has been elected to join the Advisory Board effective immediately.
An accomplished businesswoman and native Miamian, Loretta Cockrum has over 30 years of experience in the Real Estate industry. Ms. Cockrum transitioned from her duties as a broker to a trustee through her constant commitment to maintain and enhance the affluence of her clients and their future generations. She founded the Foram Group in 1978 to manage and develop Real Estate investment portfolios for families who have a multi-generational wealth preservation strategy.
“The Miami Finance Forum is honored to have Loretta join our advisory board,” said MFF Board Chairman Carlos Deupi. “She is a true visionary whose experience in the real estate industry and her commitment to our mission will be an incredible asset to our efforts of establishing South Florida as a focal point of global finance.”
“The Miami Finance Forum provides tremendous benefits to banking, finance and investment professionals seeking to do business in South Florida,” said Loretta Cockrum. Ms. Cockrum and her team developed 600 Brickell, a visionary office project, as it is the only high-rise building in the state that was awarded the first Platinum LEED ratings by the U.S. Green Building Council. Located in the heart of Miami’s financial district, it aims to revolutionize communication access and green development, as well as to serve as a model to exceed all expectations in technological and sustainable design.
Cockrum founded Foram Group in Atlanta in 1978 as one of the few woman-owned agricultural real estate companies in the U.S. She also founded the Foram Group Charitable Foundation to research sustainable methods of food production and nutrition education. Ms. Cockrum was also President of the Brickell Area Association and World Trade Center Miami, as well as a trustee member of the Greater Miami Chamber of Commerce.
Jesús Olmos, responsable de las operaciones para España de KKR. La firma de capital riesgo KKR abre oficina en Madrid
Leading global investment firm Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, “KKR”) today announced KKR has opened an office in Madrid, Spain.
Johannes Huth, head of KKR Europe, said: “We have built our investment track record in Europe by combining local knowledge with our global industry expertise and relationship network. The opening of our Madrid office builds further on this way of operating. The office will serve the executives from the KKR investment and operational teams, who evaluate investment opportunities and support investments in Spain.”
Jesus Olmos, head of KKR’s Spanish operations and head of KKR’s infrastructure team for EMEA, said: “I am delighted to announce the opening of KKR’s office in Spain in my hometown of Madrid. We have been investing in Spain since 2010 and our new local office will support our goal of offering our partnership, long-term capital and global industrial expertise to Spanish companies.”
Over the past three years, KKR has invested in excess of $1.2 billion in Spain. The company’s most recent Spanish investments include Inaer, the onshore helicopter service, Saba Infrastructuras, a leading operator of car parks and logistics parks, Uralita, the building materials company, and PortAventura, the amusement park and tourist resort. Of KKR’s more than 80 private equity portfolio companies, 18 have operations in Spain, employing over 7,000 people. KKR’s Spanish portfolio companies operate across a number of industry sectors, such as IT, energy, chemicals, bio-medics, pharmaceutical, education and intellectual property.
KKR has offices in 19 cities across the globe, including New York, London, São Paulo, Hong Kong and Mumbai.
In an exclusive interview with the newspaper, El Financiero, picked up by Funds Society, Ignacio Saldaña Paz, CIO of Afore XXI Banorte, confirmed that they are preparing to award Schroders and BlackRock with two mandates worth almost 9,632 million pesos.
Last summer the afore launched two calls: one for equity and one for commodities. The decision was not an easy one for the afore’s financial director. “All the bids were highly competitive and it was very difficult to make a final decision, but ultimately, the determination was reached based on size, global relation, and experience.”
Saldaña explained that these management companies shall receive 1.75% of the assets under management, which according to Consar’s December figures amount to 9.632 million pesos ($ 725 million). As for the election process, the executive concluded that they decided to concentrate on two management companies, two contracts, and start off from there.
Meanwhile, and after hearing the news, Javier Orvañanos, CIO of Afore Banamex, which was the first afore to award mandates, told Funds Society that “Schroders and BlackRock are good managers. Workers affiliated to Afore Banamex have been successful investing through these industry leaders.” In this regard, BlackRock‘s Samantha Ricciardi pointed out to Funds Society “We are very excited to have participated in another afore’s selection process.”
Analyzing the Calls in Commodities
With the equity mandates already awarded, the afore is now analyzing the calls for commodities and in March they will disclose the names of the winning bidders, who will receive up to 3% of assets, which amounts to 16,513 million pesos (about 1,242 million dollars).
Saldaña added that Afore XXI Banorte must now continue with the regulatory process to finalize the contracts and accomplish their funding. The executive expects to deliver the resources by midyear.
In turn, Consar’s president, Carlos Ramírez Fuentes, referred to the mandates awarded as a positive step because it “allows the afores greater diversification for workers’ savings, and naturally, in an environment like the current financial market, diversification is absolutely necessary, and this is the vehicle which will help to make this happen. We already have the experience of the first mandate, which I believe has had favorable results in terms of diversification. I welcome the fact that other afores are looking to use this vehicle.”
Meanwhile, Javier Orvañanos, CIO for Afore Banamex, the only Afore which has funded a mandate, points out that it is their pleasure to have led the way to a method which will benefit workers by allowing “the access by affiliated workers in Mexico to specialized fund management firms which will improve the risk-return ratio on investments abroad.”
Photo: Daniel Schwen. Fabiano Cintra Is Appointed Head of Itaú’s ETF Distribution
Itaú Asset Management has decided to entrust the commercial distribution of its family of ETFs, called It Now, as well as other index products, on a single professional. The new head of distribution is Fabiano Cintra, who, according to Institutional Investor, will work on the distribution of these products from now on, both for the institutional segment and for the retail sector.
This is a newly created position, as to date these functions in Itaú were divided between the coordinator of indexed products, Tatiana Grecco, and the institutional business manager, Labate Cosmo.
Cintra, a trained engineer, joined Itaú in 2010 to initially operate the assets’ internationalization Project. Within the bank, Cintra has worked in the areas of offshore product development and corporate distribution.
He specialized in Finance at the London School of Economics and Political Science and has also acquired consulting experience working for Camfed, an English consultancy firm.
