Wikimedia CommonsThomas Nast . Most Millionaires do not Consider Themselves Wealthy
Wealth is defined as being able to live one’s life with no financial constraints, rather than reaching a specific asset level, but investors feel that it would take at least USD 5 million to be considered wealthy, according to UBS Wealth Management Americas’ fourth UBS Investor Watch.
In addition, of those who have adult children, 80% are providing financial support for adult children, grandchildren or ageing parents. This support ranges from funding education (42%), sharing their home (18%), helping them borrow (20%) and paying for large purchases (18%).
A cash cushion of more than 20% goes beyond providing cash for emergency needs and seems to give investors permission to invest other assets more aggressively. This level of cash has been consistent for three years, despite significant equity market gains during that time.
The survey of high net worth (HNW) and affluent investors found that nearly 70% of investors with more than one million in investable assets do not consider themselves wealthy. Investors define wealth as having no financial constraints (50%), as opposed to never having to work again (10%) or being able to afford a luxurious lifestyle (9%). Investors feel that it would take at least USD 5 million in personal wealth for them to be considered wealthy.
While the ability to afford healthcare and long-term care remains the top personal concern (27%) for investors, their children’s and grandchildren’s financial situations rank second (20%), trumping the ability to afford retirement (14%) and the potential to outlive one’s assets (14%).
Investors continue to hold high levels of cash (23%), and with large cash holdings use them as a way to reduce their overall risk level. Investors find it important to have cash because they know they are extremely unlikely to lose it and generally find peace of mind in holding a lot of cash.
Banorte Managers and BMV in the "bell" at the BMV on Tuesday. “Banorte Does Well When Mexico is Doing Well”
On Tuesday, Guillermo Ortiz, chairman of the Board of Directors of Grupo Financiero Banorte, stressed Mexico’s position and the strength of its macroeconomic indicators, as well as the country’s ongoing reform process, while also stressing that the company is optimistic about Mexico’s performance in the short and medium term.
The executive was speaking after the bell-ringing ceremony to commemorate the Grupo Financiero Banorte’s stock tender offer on the Mexican Stock Exchange (BMV). Ortiz explained that IPOs in emerging markets, which are lower in Mexico than in other emerging markets, are the result of the global recovery “which will revert to normal” following “the distortions in the global economy” as a result of the ample liquidity available and consequent massive capital inflows into emerging markets.
Likewise, the executive pointed out Banorte’s confidence in Mexico in the short and medium term, which is evident in investors’ response to its placement. Meanwhile, Alejandro Valenzuela, Banorte CEO, commented that this is the beginning of an additional commitment to strengthen the financial industry. “Banorte does well when Mexico is doing well,” he said.
For his part, Luis Tellez, president of BMV, the world’s second fastest Stock Exchange after Switzerland, said that since 2005, they experienced an increase from 75,000 to over 8 million operations, and mentioned the financial reform, which according to Tellez “opens exciting possibilities for medium companies” before congratulating the group for the placement of “one of the most dynamic shares in the BMV”.
Banorte obtained about 2,540 million dollars from its July 16th placement, with an overall demand of 3.5 times the offer. Its resources will be channeled to acquire the 4.5% stake which IFC, the World Bank’s financial arm, has on the Mexican bank, to pay off a syndicated loan of $800 million arising from the purchase of Afore Bancomer, and to settle $ 778 million for the consolidation of 100% of the capital of Seguros Banorte Generali, and Banorte Generali Pensions.
CC-BY-SA-2.0, FlickrFoto: Medill DC. El mejor banquero central de la historia
According to a new survey by TradeKing Group, investors are split three ways on whether Chairman of the Federal Reserve Ben Bernanke should continue in his role past January 2014: just 30 percent say they prefer to see him stay, 34 percent say they’d like him to go, and 36 percent are undecided.
The in-house survey of 230 independent investors was conducted July 11-18, 2013 by TradeKing Group.
Weighing-in further on Mr. Bernanke’s tenure, some investors shared these opinions:
“He was responsible for the reaction and he should see it through till there is steady growth should the plan not work as advertised.”
“He’s out of bullets.”
“Although good for markets, Bernanke is…only concerned with re-inflating a bubble that will absolutely devastate the economy when it is burst.”
“I think some of his policies are politically motivated…but change in this area adds to instability.”
“The next one might be even worse.”
Bullish Sentiment Bounces Up from April
While not quite returning to the high of TradeKing’s January 2013 survey, “bullish” sentiment among investors surveyed increased five points over April, reaching 42 percent and pulling closer to matching “neutral” sentiment, which is 47 percent. Sixty-five percent of respondents said they believe the market will end up by 5-10 percent for the year. Slightly more investors share this opinion now than in April (65% in July vs. 60% in April).
It’s All About Interest Rates
Interest rates shot to the top of investors’ trading triggers, receiving 55 percent of responses, up 15 points since April. It was followed by quarterly earnings with 39 percent and U.S. housing at 31 percent of responses.
As to when they expect interest rates to increase, most investors indicated they expect to see meaningful increases within the next 18 months. Twenty-five percent are bracing for changes “in the second half of 2013,” 30 percent believe rates will hold steady until “the first half of 2014,” and 20 percent indicate rates won’t meaningfully rise until “the second half of 2014.”
In addition, when asked: “What do you think is more likely in 2014, inflation or deflation?” an overwhelming 75 percent chose inflation.
TradeKing Group consists of companies that provide online brokerage services, social communities for investors, investor education and more. Its subsidiary, TradeKing, is a nationally licensed online broker/dealer dedicated to empowering the independent, self- directed investor. The platform features powerful online equity, options, ETF, mutual fund and fixed-income trading tools accompanied by a rich set of news, research and analysis capabilities.
The equity risk premium, or ERP, can be defined as the return paid to equity investors in excess of the long-term risk-free rate. It is a key metric for investors looking to set portfolio return expectations and take strategic asset allocation decisions.
It also happens to be one of the most widely discussed issues in portfolio management, filling academic literature with lively debate on whether the ERP is positive, negative, or non- existent.
To complicate matters further, there are multiple ways to calculate the equity risk premium, and each methodology provides a different answer to the fundamental question: what level of excess returns should investors expect from their equity holdings in the future?
In this piece, AXA Investment Managers examines three ways to determine the equity risk premium (ERP), namely the ex- post ERP, the required ERP and the expected ERP, assessing their strengths and flaws.
That these approaches, which rely on different sets of measures, do not produce the same result should not come as a surprise. Yet, in a steady state environment it would be reasonable to expect these values to converge within a narrow range, if not on a single figure.
The average expected ERP over the past decade is roughly 3.5% for US equities as well as for other developed market equities, and 4% for emerging market equities.
The asset manager proposes a synthetic approach, reconciling the three measures by focusing on the long-term equilibrium.
An ERP of 3.5% is consistent with the decomposition of what a steady-state equity return should be.
NASA. RBC WM nombra a Juan Pablo Cortés director del equipo de las Américas
RBC Wealth Management, part of Royal Bank of Canada, has appointed Juan Pablo Cortes as a director, Americas in its London-based UK private client wealth management team.
In this role, Cortes will collaborate with internal teams and work with external advisers to provide wealth management services to Latin American and Iberian high net worth and ultra high net worth clients resident in the UK or overseas. He will report to Martin Heale, head of Americas, private client wealth management.
Cortes has over 16 years of international experience in wealth management, retail and commercial banking in Colombia, Panama, the US and the UK. Prior to joining RBC Wealth Management, he spent two years with UBS Wealth Management where he worked as a client advisor in the Latin America & Caribbean team. He previously spent over three years at Barclays Wealth, first as a business manager and then private banker for the Iberian team, as reported Wealth Adviser.
Philip Harris, head, private client wealth management, UK, says: “As the Latin American market continues to grow and wealth is created, there is increasingly demand among high net worth individuals to partner with wealth managers that understand and can cater to their needs. Juan Pablo’s local knowledge and professional experience make him a valuable asset to our London team as we continue to expand our footprint.
Photo: BenAveling . ¿A Sunny Summer or an Overcast One?
We have enjoyed a sunny stock market climate so far, but we may probably see some clouds within the next few days. The question is whether these will be just passing clouds or will remain throughout the summer.
Stock indices continue to show strength, especially in the USA where they’ve once again set new highs. In Europe, led by the German Dax, indices bounce back trying to reach yearly highs. Following the rises recorded in July, a “small, healthy” correction would be logical, but what levels should indices maintain in order to stay bullish? From a technical point of view, to maintain the bullish structure which began on the summer solstice, we believe that rates should not fall below the 8,000 point levels for the German DAX30, 2,630 points for the EUROSTOXX50, and 1,640 points in the case of SP500. If they don’t fall below these levels, the summer is likely to be hot with widespread temperature rises. Should there be sharper falls, however, it would announce the arrival of considerable storm.
In 1998 we had a bumpy summer. The stock market had been bullish for several consecutive months, until there was an abrupt halt in April. Until a small correction was made which ended in mid-June, coinciding with the expiration of futures (just like this year!) The markets once again recovered until late July, setting new highs by a few points. Further down, you may see the DJ Industrial Average in the summer of ‘98 on the left, and next to it the same American index today. The green line is the 200 session average. The fall of 1998 began on Monday, July 20th, and its equivalent would be today Monday 22nd! Will history repeat itself?
Foto cedidaJohn Bowman. La "crisis de confianza" en el sector financiero lleva a CFA Institute a crear Claritas
Just as the Claritas® Investment Certificate pilot’s results are published John Bowman, CFA, managing director and co-lead of Education at CFA Institute, talks with Funds Society about why they decided to launch the program, their expectations and lessons learned.
Mr. Bowman comments that they had two main reasons for launching the Claritas program; the first came about after a 2-3 year journey talking with industry participants. Realizing organizations were increasingly concerned about their raising risk profiles given inconsistent levels of knowledge between divisions, that “cost them more and more anxiety,” they decided to create a benchmark to establish a basic level of industry knowledge. On the other hand, the fallout of the financial crisis as well the public’s poor perception of the financial industry “which is in a current crisis of trust” made them decide to launch the program. CFA Institute, an organization focused on raising ethical standards, levels of integrity and education for the industry, believe “The Claritas Investment Certificate is one tool that will contribute to restoring trust to the industry.”
The idea behind the Claritas program is to have a single, two-hour, multiple-choice examination where successful participants will understand how the financial industry works, how to navigate it, and will be able to communicate better with the investment professionals they work with.
One week away from the first official examination, Bowman mentions that the pilot had a 82% pass rate but considering its demographics -with average age of 35 and considerable work and education experience– “”the pass rate shouldn’t be considered as completely representative of the future given the average age and experience is likely to decline””.
He comments that from the pilot they learned –and are very proud of- that 85% of candidates would recommend the program to their colleagues, that 76% believed the number one benefit was increased knowledge of the industry, helping them understand how themselves, and their company, fits in the environment, and that 64% said that the program helped them to better understand their ethical obligations within the financial services industry.
Mr. Bowman added that for every investment professional there are 9 individuals working in financial organizations that are not, “so if we, as leaders of the industry, are able to reach and raise standards within this 90 % of the industry we can look at our mission and feel really proud about the progress we are making.”
The Claritas Investment Certificate is for all professional disciplines in the financial services industry outside of investment roles, from client services to compliance; from human resources to IT and operations; from marketing and sales to legal. It is designed for the many different people in the financial services industry who are not directly involved in analysing or making investment decisions.
Mike Valdes-Fauli. Foto cedida por BBVA Compass. BBVA Compass incorpora a Mike Valdés-Fauli a su Junta Asesora del Sur de Florida
Marketing expert Mike Valdes-Faulihas joined BBVA Compass’ South Florida advisory board, adding a fifth voice to the panel as the bank builds its presence in the area, said the bank in a press release.
A Tulane University graduate, Valdes-Fauli is president of Miami-based JeffreyGroup, an independent marketing agency with six offices in the Americas that focuses on Hispanic audiences. His comments on Hispanic issues have appeared in various national news outlets, including the Wall Street Journal and the Miami Herald.
Valdes-Fauli is the fifth member of the board formed last year after BBVA Compass opened a loan production office in Miami. He joins Jeb Bush Jr., managing partner of Jeb Bush & Associates LLC and president of Bush Realty LLC; 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.
“As we continue to build our presence in South Florida, our board is growing,” said BBVA Compass South Florida Market President Roberto R. Munoz. “We’re pleased to have Mike join the board because he has more than a decade of Latino marketing and public relations experience and he knows the Miami market well.”
Foto: Myrabella . WE Family Offices Celebrates its Six-Month Anniversary as it Passes the USD 2 Billion Mark
WE Family Offices celebrates its six-month anniversary as it passes the $2 billion mark in assets under advisement. The firm, operating since 2000 through predecessor companies, recently reclaimed its independence in January 2013 as Maria Elena Lagomasino, Santiago Ulloa and Michael Zeuner came together to form the executive leadership team. On a mission to serve families, the three have set out to once again change the face of the wealth management industry, said the firm in a press release.
“We founded WE Family Offices because we believe in independent advice uncolored by an interest in sales-based fees and commissions,” says Chief Executive Maria Elena Lagomasino. “We believe families have a right to expect their financial adviser to be focused solely on their best interests at all times. We believe in serving client families the way that benefits them the most. And we believe that, at this point in time, that kind of adviser is hard for clients to find.”
The global firm, with offices in New York and Miami, currently serves more than 60 clients from the US and other countries. “Why WE?” Managing PartnerSantiago Ulloaasks. “WE stands for Wealth Enterprise – family members managing their wealth as they would a business. A successful business has a mission statement, financial statements, a clear decision-making framework, reporting capabilities… why shouldn’t a family operate their wealth in the same way?”
“We believe clients should stay in control – always engaged, making critical decisions around their wealth,” says Michael Zeuner, managing partner at WE. “We respect the service provider relationships clients have, but as an independent adviser, we try to make sure clients know what they need to know to keep their costs down and make sure the providers are focused on the client’s best interests.”
With offices in New York and Miami, “WE Family Offices is a different kind of family office for the ultra-high net worth client”. Working with clients to help them enhance their wealth enterprises, WE Family Offices believes families should stay in control of their wealth, constantly learning and always engaged so that they are able to make the critical decisions necessary to manage their wealth. WE is not affiliated with any financial service company and is compensated only with client fees. As a result, WE’s advisors are free to offer their clients only independent advice and to work as the clients’ advocate, focused on their best interests. WE was most recently ranked by Investment News as the number one RIA in Florida, by assets under advisement.
Foto: ESO/Y. Beletsky . Morgan Stanley lanza un fondo UCITS con exposición long/short a Asia
Morgan Stanley announced the launch of a new fund, the MS Dalton Asia Pacific UCITS Fund, under its FundLogic Alternatives umbrella. The Fund provides exposure to Dalton’s Asian equity capabilities and will invest across the Asia Pacific region in a long/short format. The FundLogic platform currently has more than $1bn in assets under management and, with this latest addition, now offers UCITS investors a diversified range of 20 funds. Longchamp Asset Management has been appointed as the sole distributor of the Fund.
“We are excited to provide UCITS investors access to Dalton’s expertise in Asian equities. Dalton complements our existing offering by extending our coverage of the Asia Pacific Region”, said Stephane Berthet, Head of the FundLogic Alternatives Platform, at Morgan Stanley. Dalton Investments LLC was established by James Rosenwald and is a recognised authority in Pacific Rim investing, with over 30 years of investment experience. It currently has over $1.2bn in assets under management within Asia.
James Rosenwald commented: “The FundLogic Platform aligns with Dalton’s interests – providing a first class service with its stringent risk management and operational expertise. We are delighted by this opportunity to partner with Morgan Stanley, in launching the MS Dalton Asia Pacific UCITS Fund.”
FundLogic is the brand name for Morgan Stanley’s fund solutions platform launched in 2006. It offers both UCITS and non-UCITS funds. The platform delivers fund solutions to clients by combining the financial expertise, innovation and resources of Morgan Stanley, and offers a range of products including passive index funds, structured funds and the more recently launched third party manager- UCITS funds.
