Generali Investments Europe has appointed Wilfrid Pham as Head of Equity department and Vivek Tawadey as Head of Credit Research. Both will focus on supporting the company’s investment team, that globally manages more than €320 billion, and ensuring a strong alignment between analyst and portfolio managers.
In his position Pham will strengthen the current Equity team organization based on more than 20 people in Paris and in other European locations of Generali Investments Europe. Vivek Tawadey will consolidate the strong credit research capability of Generali Investments Europe, that globally manages in excess of €300 billion of fixed-income assets, with a specialist team dedicated to credit (more than €100 billion in this asset class).
“Wilfrid and Vivek are outstanding asset management professionals, enabling us to strengthen our team significantly”, said Santo Borsellino, CEO of Generali Investments Europe. “Our aim is to make Generali Investments Europe a more international and pure play asset management Company, increasingly focused on new product development to meet the needs of our insurance and third-party clients”.
Foto: Artyominc. La apuesta a contracorriente por Brasil
Brazilian equities have suddenly outperformed after trailing for a large part of the year. Since the end of August Brazil’s stock market has outperformed all other countries in the Latin America universe and has also widely outperformed the broader global and emerging market (EM) equity indices.
Three main drivers have contributed to the strong performance of emerging market assets and Brazilian equities. First, the US Federal Reserve’s (Fed) decision to postpone their planned ‘tapering’ of quantitative easing has ended speculation about a stronger US dollar and weaker EM currencies and bonds. This has led to strong rallies in local currencies and the stock markets of emerging market countries such as Brazil, India and Turkey that had suffered during the market sell-off earlier this year. The Brazilian Real was further supported by the central bank stepping in and intervening in the currency market. Second, Chinese economic data started to improve and countries with good export links to China have performed well. Finally, the Brazilian economy has started to show early signs of stabilisation – recent retail sales numbers have shown improvement and higher iron ore prices have boosted commodity-related industries.
The headwinds for this Latin American country are all well-known by investors – the economy has been growing below trend in recent years and the government remains stubbornly interventionist. It should be highlighted, however, that two of the three factors supporting Brazil in recent months are likely to remain in the near future i.e. the Fed further delaying tapering and stronger Chinese data. Furthermore, investor positioning in Brazil remains light and any marginal improvement in market sentiment is likely to lead to strong movements in equity prices. We believe that the contrarian case for Brazil remains based on its comparatively low equity valuations and sensitivity to any cyclical upturn in the fortunes of its main trading partners such as China and the US.
Opinion column by Christopher Palmer, Director of Global Emerging Markets at Henderson Global Investors.
Pershing released a white paper on the pending regulatory changes for fiduciaries and the potential impact on how advisors manage IRA rollovers. The white paper, “Pursuing Rollovers in an Evolving Regulatory Landscape” provides insight into the anticipated regulatory changes that will modify the definition of a fiduciary. Pershing has released this white paper to help guide advisors on how they can accommodate these rules as it pertains to IRA rollovers and continue to deliver services to their clients.
IRA Rollovers are a critical client need as well as an important part of the advisory business. As the “Baby Boomer” generation retires, advisors will need to help manage the transition of billions of dollars from retirement plans into rollover IRAs. At the same time, retirement plan distributions and IRA rollovers are becoming more regulated by the Department of Labor (DOL) which will require advisors to be knowledgeable about the regulatory changes to come.
“It is important for advisors to understand the complexities of the regulatory environment,” says Robert Cirrotti, director of retirement solutions at Pershing. “Being knowledgeable of the current and pending regulations that will affect the definition of a fiduciary is essential for advisors. These new definitions require advisors to understand when they are considered a fiduciary and when they are not.”
As the DOL works on regulation to expand the definition of fiduciary advice, more advisors could be subject to regulation by the Employee Retirement Income Security Act (ERISA). According to the paper, advisors who are not fiduciaries can help participants with distributions and rollovers. For those who are fiduciaries, or who become fiduciaries under the expanded definition, the DOL interpretations mean that advisors should consider a prudent approach for assisting clients with rollovers, including:
Clearly defining the fiduciary services provided to a plan so as not to include rollovers
Ensuring that the decision to take a distribution and to rollover an IRA is the participant’s decision
Offering clients unbiased educational materials regarding distribution alternatives and rollover services
Providing written disclosure of fees and expenses for the IRA and its investments, as well as the advisor’s compensation
If regulations change to expand the fiduciary definition, it will focus more attention on an advisor’s fiduciary status with regard to a plan or participant. Because it is not possible to predict what the rules will be once they are finalized, advisors should always consider their current practices based on the current regulatory environment until pending changes are clear.
Pershing partnered with Fred Reish, a nationally recognized ERISA attorney and retirement plan expert, to develop the white paper. To obtain a copy of the white paper, “Pursuing Rollovers in an Evolving Regulatory Landscape”, you may visit www.pershing.com.
Fred Reish and Bruce Ashton also authored a White Paper for J.P. Morgan Asset Management titled“Fiduciary implications: Using re-enrollment to improve target date fund adoption”to provide advice and to give an opinion regarding the ERISA fiduciary implications of using a re-enrollment strategy when adding target date funds to an investment line up, which is accesible in pdf file through this link.
Getting back to nature and helping sea turtles has been a Banamex tradition for eight years and such a popular one that 1,000 employees applied to volunteer at this summer’s Sea Turtle Conservation & Community Development program. Over the years, the program has been developed in partnership with the Mexican government and local communities where the sea turtles come ashore to lay their eggs.
Mexico is home to seven of the world’s eight species of sea turtles, which makes preserving these animals a key priority for our country. In a scant eight years, 513 Mexican and U.S. volunteers have donated 34,880 hours of service to set up 13 sea turtle camps across Mexico, preserved and protected 16,241 sea turtle eggs and released 34,764 baby turtles into the sea.
That’s eight generations of turtles that have been launched into the ocean! This year, Banamex began a two-year commitment at the Chenkan camp in Campeche, which is on the Gulf of Mexico. Eighty-two employees volunteered 9,700 hours placing the eggs in artificial nests and released 1,200 newly-hatched baby turtles into the sea.
What’s it like to volunteer at a Sea Turtle Conservation camp?
During the day, volunteers work to improve the observation station of the CONANP (National Commission for Protected Natural Areas), the government entity in charge of protecting sea turtles. This is where the scientists and volunteers, from Mexico and around the world, live during the project.
Activities include:
Construction work to maintain the turtles’ nesting areas to ensure the rescued eggs are protected from predators. In addition, they make new artificial nests and level the sand so turtles have a clear path to lay their eggs.
At night, volunteers divide into groups and patrol more than 15 miles of beaches, watching for the turtles to emerge from the sea and lay their eggs.
Volunteers must be very quiet and wait for the turtles to finish and go back to the sea before carefully placing the eggs in coolers and carrying them to artificial nests in the camp. They finish at 3:00 or 4:00 a.m., exhausted but happy!
Field trips into the sea to count, measure, and weigh young turtles that live in water near the shore. Volunteers also installed GPS trackers and barcodes to monitor turtles’ routes in the ocean over the course of their lives.
“We are so pleased with the Banamex volunteers who have supported the conservation program. Their commitment, passion and energy inspire us to continue our efforts,” said Adriana Laura Sarti, Sea Turtle National Conservation of the Mexican government
Other team successes this year:
For the first time, the program was linked to Citi’s Green Team and has been recognized by the Secretary of Environment in Mexico, who is laddering our efforts up to national and international impact, with the inclusion of Banamex Citi Volunteer program in the United Nations Development Program (UNDP).
Measuring carbon emissions of the program in an effort to minimize our carbon footprint.
Created 164 community development activities – raising awareness about sea turtle conservation and giving local residents the opportunity to be involved in the study of the species, including workshops offering financial and environmental education.
There are a total of 500 camps all over Mexico and Banamex’ long-term goal is to positively impact each.
JP Morgan Chase announced today that Michael Boardman will join the firm as CEO of Chase Wealth Management. Chase Wealth Management (CWM) today manages $179 billion of assets and has more than 3,000 advisors. In this role, he will help grow Chase Private Client and Chase Investments across CWM, working very closely with the firm’s partners in the Private Bank at J.P. Morgan. He will report to Barry Sommers, CEO of the Consumer Bank, and be based in New York.
Mr. Boardman joins the firm from U.S. Bancorp where he was President of the Private Client Reserve. He has held a distinguished 25-year career in wealth management. He previously worked at US Trust where he was most recently Head of the Midwest Region, and earlier at Charles Schwab as Vice President in Business Strategy. Michael originally began his career at Chemical Bank in the credit training program. He worked at JPMorgan Chase and its predecessor firms 14 years across Global Asset Management, Private Wealth Management and Corporate Strategy.
“We couldn’t be more excited to have someone of Michael’s caliber join our team,” said Barry Sommers, CEO of the Consumer Bank. “Michael is an A-player and can build on the terrific success we’ve had at Chase Wealth Management.”
Mr. Boardman joins Chase Wealth Management at a time of strong growth. Client investment assets grew 16% in the third quarter 2013 over a year earlier to an all-time high, and investment sales were up 30% YOY. Chase Private Client offices are now in more than 2,000 branches, touching every market in the Chase footprint.
Mr. Boardman graduated from Middlebury College and received his M.B.A. from Columbia University.
CC-BY-SA-2.0, FlickrFoto: Zeusandhera. Los activos cíclicos cuentan con el apoyo del crecimiento empresarial
The growth of corporate earnings has been slower than in past recoveries but has been more stable than macroeconomic variables and financial markets. This resilience looks all the more remarkable, when set against the backdrop of recurrent crises, mostly regional but with possible global implications.
Cost savings still accounting for most corporate earnings
Cost-cutting has accounted for much of earningsgrowth deep into this moderate recovery, as most companies still refrain from bold expansion plans and see cash flows as the main defense against any downturn. In an uncertain environment, sales revenues have only at times replaced cost-cutting as the main source of profits.
Based upon a very long period of observations, when above-trend operating earnings come along with below-trend inflation expectations, growth-sensitive assets (equities and corporate bonds alike) have provided the best returns over a 12-month horizon. Risk factors may lead to a more defensive allocation, implying less exposure to risky assets for tactical purposes. The downgrade of corporate bonds was a case in point of late.
Alternative Case
The headwinds to global earnings growth include: a disorderly exit from quantitative easing due to mounting inflation expectations and the elusive political solution to the euro debt crisis. Pioneer Investments is mindful of these risks but not overly concerned for their base case.
Photo: Daniel Ahlqvist. What Returns can Investors Expect Over the Next Five Years?
The world economy will strengthen over the next five years, but the average investment returns won’t.
“Nevertheless financial markets still offer investors enough opportunities to make money”, Robeco’s Artino Janssen says.
Returning to normality
These are the key predictions in Robeco’s latest five-year outlook, which aims to advise institutional investors on what to expect from now until 2018.
It is now five years since the financial crisis brought turbulent markets, bank bailouts, recession and austerity. The next five years should not be as dramatic – but what should investors expect?
First, the good news. “In our baseline scenario for the next five years, we expect a generally strengthening of the world economy,” says Janssen, Executive Vice President for Investment Solutions & Research.
“We see inflationary risks, but we doubt whether they will come through significantly, and whether that would be within five years.” Inflation was not significantly impacted by trillion-dollar quantitative easing (QE) programs, and is expected to remain below 2% once they begin to unravel.
“We expect a strengthening of the world economy”
The end of easy money
The end of QE will also signal the end of easy money, as market interest rates – and eventually, official base rates – begin to rise from their currently historically low levels.
“We expect 10-year bonds yields to rise gradually in the years ahead, with a 10-year German bund yield of around 3% at the end of 2018, a bit ahead of the forward curve,” says Janssen, co-author of Expected Returns, 2014-2018.
As yields rise however, bond values (which move inversely to yields) will fall, reducing overall returns for fixed income investors. The five-year outlook predicts an overall average annual return of about 0.5% for high-quality government bonds, below the expected rates of inflation, which would imply negative real returns for the first time since the financial crisis.
Corporate and high-yield bonds, along with emerging market debt, are more attractive because of their risk premium over government bonds, as the table below shows.
Stocks also impacted by higher rates
The picture is different for stocks, where Robeco sees higher average returns of 6.75% over the next five years. Global equities have had a good run so far this year and are currently slightly overvalued by 13-15% depending on which indicator you use, Janssen says. As with fixed income, higher returns are available in emerging markets, but with higher risk.
“Over the last 30 years all asset classes, including equities, have benefited from the strong tailwind of declining bond yields. This year we have seen this tailwind turn into a mild headwind,” he says.
“Further multiples expansion for equities will be difficult in an environment where central banks firstly reduce QE, followed by the gradual disappearance of artificially low interest rates. Earnings growth will be the key driver but further expansion of profit margins will be difficult.”
“Further multiples expansion for equities will be difficult”
Real estate and shale gas overblown
Other assets popular with investors include real estate and commodities, with huge interest in the consequences of the US shale gas revolution – but Janssen feels both sectors are currently overblown.
“We believe global real estate to be overvalued compared to stocks. The current valuation is likely to generate a headwind in the next couple of years as real estate tends to be more interest rate-sensitive than equities,” he says.
“And although the impact of the shale gas revolution will eventually be felt across regions and energy markets, we hold the view that for the next five years, shale gas will remain a largely US phenomenon.”
Lower portfolio returns on balance
While we expect lower average investment returns for 2014 -2018, financial markets still offer investors enough opportunities to make money, Janssen says. This can be achieved by deviating from the traditional market portfolio in which government bonds have a high weight, by allocating to asset classes that offer attractive risk premiums, such as equities or high yield.
“On balance, we expect returns that are below our prior long-term estimates for 2013-2017, though we believe risk premiums relative to safer assets remain very attractive over the next five years,” he says.
The table below shows how Robeco’s Expected Returns this year compare with the forecasts of the previous year’s report.
BNY Mellon has added the Liquidity Aggregator to its risk and collateral management-related services. The tool is available through the company’s Liquidity DIRECT portal.
“As Markets expand globally, the need to analyze and quantify your portfolio return and liquidity risk is paramount. The Liquidity Aggregator offers clients a deeper view of exposure and risk, which is essential to managing their investments,” saidKurt Woetzel, CEO of BNY Mellon’s Global Collateral Services (GCS) business.
“Nearly all financial transactions and commitments have liquidity implications,” said Jonathan Spirgel, EVP and head of GCS sales and relationship management at BNY Mellon. “To be highly effective, liquidity risk management requires insights, tools, products and services that support a client’s ability to both maximize liquidity and analyze investment exposure.”
The Liquidity Aggregator was created to help clients gain a new level of insight into their investments, across all US and Non-US Domiciled Funds in their portfolios. The system is designed to help clients actively monitor and help to control liquidity risk exposures and manage funding needs, taking into account security types; country and region of exposure; country and region of risk; weighted average yields and maturities. Clients can leverage the new dashboard across their entire investment portfolio to view:
Exposure across all funds with positions;
Money market mutual fund full holdings in a single place;
Largest holdings in the portfolio by security type and issuer across multiple funds, with the ability to determine shared securities; and
Trends and reporting for month-end and at 6-month intervals for money market mutual funds daily yields, WAM and holdings.
Wikimedia CommonsBanco Sabadell's Branch in London. Moor Park Capital Sells Banco Sabadell's Branch Portfolio to Mexican Group Backed by Moises El-Mann
Moor Park Capital, a London based specialist in European corporate finance led net lease real estate transactions for institutional and retail investors, today announced that a group of Mexican investors led by Moisés El-Mann through the Mexican investment vehicle Branch Management, have acquired 100% of the share capital of the Spanish company ISC Fresh Water Investment, S.L.U., owner of 253 bank branches in Spain, for a consideration of approx. EUR 290 million.
These bank branches, located throughout Spain with particular presence in Madrid and Barcelona, are let to Banco de Sabadell and represent one of the largest investments in the Spanish real estate market ever conducted by Mexican investors.
The bank branches have the benefit of a long term lease agreement with Banco Sabadell for an initial term of 25 years, put in place at the time the initial acquisition was closed by Moor Park Capital in April 2010, when 378 bank branches were acquired from Banco Sabadell. Since that time 125 bank branches have been successfully sold by Moor Park Capital to individual investors and the sale of the shares in ISC Freshwater completes the disposal process. Moor Park Capital have been retained by Branch Management as exclusive asset managers for the acquired bank branch portfolio. Clifford Chance (real estate and corporate/M&A), Garrigues (tax) and CBRE Spain advised Moor Park Capital on the sale and Banco Santander acted as financial advisors to the investors and Uría Menéndez advised the investors in relation to taxation and legal issues.
This transaction represents the first investment of a major acquisition plan for real estate investments to be undertaken by the Mexican group in Europe.
The investors plan to continue their real estate investments in Spain and Europe to convert Branch Management into a SOCIMI, the Spanish legal entity equivalent to a REIT (Real Estate Investment Trust) in the near future.
In March 2011, the Mexican developer Mosies El-Mann, his brother André and other partners, launched the first real estate investment fund quoted in the Mexican Stock Market, Fibra Uno.
Marielena Villamil. BBVA Compass Appoints Marielena Villamil to its South Florida Advisory Board
Civic leader and business executive Marielena Villamil has joined BBVA Compass‘ South Florida advisory board, adding a sixth voice to the panel as the bank builds its presence in the market.
Villamil is the cofounder and president of Coral Gables, Fla.-based The Washington Economics Group Inc., an economics consulting firm. Villamil, who serves on several community boards, earned her master’s degree from Vermont’s Middlebury College and her bachelor’s degree from St. Mary’s Dominican College in New Orleans.
“We are proud to have local market experts like Marielena on our board,” said BBVA Compass South Florida Market President Roberto R. Munoz.
Villamil is the sixth member of the board formed last year after BBVA Compass opened a loan production office in Miami. She joins Jeb Bush Jr., managing partner of Jeb Bush & Associates LLC and president of Bush Realty LLC; Mike Valdes-Fauli, president of JeffreyGroup; Alberto I. de Cardenas, executive vice president, general counsel and secretary of Mastec Inc.; Hank Klein, vice chairman of Blanca Commercial Real Estate; and Raoul R. Thomas, group chief executive officer of CGI Merchant Group.
