Wikimedia CommonsFoto: U.S. Coast Guard Petty Officer 3rd Class Elizabeth H. Bordelon. La OCDE publica un estudio sobre el precio del crudo: el barril de Brent puede subir a 190 dólares en 2020
Following a sharp drop amidst the global economic crisis and a subsequent recovery, the spot price of crude oil has been broadly stable for the past couple of years. This paper discusses the factors that drive oil demand and supply and, hence, the price of the resource. A set of oil demand equations is estimated for OECD and non-OECD countries, which is then combined with assumptions about the behavior of supply to analyze the impact of a range of macroeconomic and policy scenarios on the future oil price path. The scenario analysis suggests that a return of world growth to slightly below pre-crisis rates would be consistent with an increase in the price of Brent crude to far above early-2012 levels by 2020. This increase would be mostly driven by higher demand from non-OECD economies– in particular China and India. The expected rise in the oil price is unlikely to be smooth. Sudden changes in the supply or demand of oil can have very large effects on the price in the short run.
Access to the OECD Paper: Fournier, J. et al.(2013), “The Price of Oil – Will it Start Rising Again?”, OECD Economics Department Working Papers, No. 1031, OECD Publishing.
Wikimedia Commons. Neuberger Berman recauda 1.100 millones para su II Global Private Equity Co-Investment Fund
Neuberger Berman Group LLC, one of the world’s leading employee-controlled money managers, is pleased to announce the final close of NB Strategic Co-Investment Partners Fund II LP (“NBCIP II”), Neuberger Berman’s second global private equity co-investment fund. NBCIP II was oversubscribed, closing on $1.1 billion and surpassing its target of $750 million.
NBCIP II seeks to achieve superior risk-adjusted returns by investing directly into attractive deals alongside premier private equity firms in their core areas of expertise. It seeks to build a high-quality, diversified portfolio of strategic co-investments primarily in buyouts and growth financings on a global basis across multiple industries. NBCIP II has made nine investments to date for approximately $185 million and continues to experience strong deal flow.
NBCIP II is managed by six senior professionals with significant experience and a proven track record in private equity as co-investors. The Neuberger Berman team also manages NB Strategic Co-Investment Partners Fund I LP (“NBCIP I”), which closed in 2006 with $1.6 billion of investor commitments. The investment team leverages a large pool of talent within Neuberger Berman’s private equity group, which includes approximately 60 investment professionals in the U.S., Europe and Asia, and 115 investor services professionals.
NBCIP II’s global investor base of more than 25 institutional clients includes public pension plans, global asset managers, endowments and foundations, corporate pension plans, and insurance companies. Investors are based globally, including Asia, Europe, Latin America and North America. A substantial number of these clients previously invested in NBCIP I.
“We are delighted with client response to NB Strategic Co-Investment Partners Fund II LP and their support for our investment approach of serving as a strategic partner to lead private equity firms,” said David Stonberg , managing director and co-head of the team managing NBCIP I and II. “We estimate Fund II will have in excess of 30 portfolio company investments across multiple industries, geographies, enterprise value sizes, transaction types, vintage years and premier lead managers,” added David Morse , managing director and co-head of the team.
BNY Mellon announced that effective 20 February 2013, the WestLB Mellon Compass Fund, an umbrella fund providing investors a range of equity and bonds sub-funds, has been renamed BNY Mellon Compass Fund. With this move, the fund’s name now reflects the change in shareholder structure of the former WestLB Mellon Asset Management, which was fully acquired by BNY Mellon in October 2012.
The management company of the BNY Mellon Compass Fund has been operating under the name of BNY Mellon Fund Management (Luxembourg) S.A. since last November.
Launched in 1998, the BNY Mellon Compass Fund is a Luxembourg-domiciled SICAV with EUR 2.1 billion in assets under management. Through its 13 sub-funds, investors can build a diversified portfolio that meets a range of risk / return profiles. The BNY Mellon Compass Fund aims to offer investors core portfolio products such as global or corporate bond funds as well as ways to diversify their asset allocation through small caps, high yield or emerging markets funds. The sub-funds are managed by Meriten Investment Management GMBH (formerly WestLB Mellon Asset Management KAG) and other BNY Mellon Investment Management boutiques.
PeterPaul Pardi, Global Head of Distribution for BNY Mellon Investment Management, commented on the name change: “The BNY Mellon Compass Fund has in the past enjoyed investor interest from both inside and outside of Germany. As part of BNY Mellon’s multi-boutique investment management model, the Luxembourg-domiciled fund is a premier example of the rich array of complementary strategies available to investors. With this name change to better reflect BNY Mellon’s robust global reach, we intend to deepen and broaden our international footprint.”
BNY Mellon Investment Management has $1.4 trillion in assets under management. It encompasses BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies.
Wikimedia Commons. Market Vectors Emerging Markets Local Currency Bond ETF supera los 1.500 millones de dólares
Market Vectors Emerging Markets Local Currency Bond ETF (NYSE Arca: EMLC), has surpassed $1.5 billion in assets under management (AUM). EMLC has seen an increase of more than $500 million in AUM in the last three months.
“Many local currency-denominated emerging market bonds are currently delivering more attractive yields than traditional fixed income investments, while at the same time offering currency and credit fundamentals that appear to be on more solid footing than fixed income investments denominated in U.S. Dollars, Euros or the Yen,” said Fran Rodilosso, fixed income portfolio manager at Market Vectors ETFs and one of two EMLC portfolio managers. “EMLC offers an excellent way to gain exposure to this space and the list of constituent countries in the Fund’s underlying index has been growing, with Romania and Nigeria having been recently added.”
When EMLC was brought to market in 2010, it was the first U.S.-listed exchange-traded fund designed to provide investors with exposure to an index that tracks a basket of bonds issued in local currencies by emerging market governments. The Fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of J.P. Morgan GBI-EMG Core Index. As of March 1, 2013, the Index tracked a selection of bonds issued in local currencies by 16 emerging market countries: Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Nigeria, Peru, Philippines, Poland, Romania, Russia, South Africa, Thailand and Turkey.
Guggenheim Partners announced the expansion of its real estate and infrastructure investment platform with the addition of a dedicated North American infrastructure investment team. Leading the initiative for the firm is Henry Silverman, who was appointed global head of real estate and infrastructure.
In the newly created role of global head of real estate and infrastructure, Silverman is responsible for managing and coordinating activity for all of Guggenheim’s real estate businesses, including Guggenheim Real Estate, Guggenheim Commercial Real Estate Finance, Pillar Financial, Generation Mortgage, and Guggenheim Retail Real Estate Partners.
Silverman joined the firm in early 2012 as vice chairman of Guggenheim Investments. Previously, he served as a director and vice chairman of the board and member of the executive committee of Apollo Global Management, and as its chief operating officer from 2009 to 2011.
The infrastructure investment team is led by William Reid, senior managing director, and includes Michael Madia, managing director and operating partner; Justine Gordon, managing director and head of acquisitions; Vince White, vice president, due diligence and asset management; and James Gabriel, vice president, acquisitions.
The infrastructure investment team will invest across the capital structure, including equity, structured equity and debt-related products, with an initial focus on core energy infrastructure assets, specifically power generation, midstream infrastructure, and electricity transmission, in the United States, Canada, Mexico, and the Caribbean.
Reid, Madia, Gordon, White and Gabriel have collectively participated in more than 30 transactions. Reid previously served as a managing director of North American energy infrastructure efforts at RREEF Infrastructure (RREEF).
Madia was formerly RREEF’s operating partner of infrastructure. Gordon previously served as a director responsible for business development and execution of energy investments at RREEF. White previously held project development, asset assessment and asset management roles for RREEF Infrastructure, International Power, GPU International and Con Edison Development. Gabriel previously served as an assistant vice president at RREEF responsible for identifying and executing investment opportunities.
Foto: Jnn13. The American Dream Goes International
As of June 30, 2012, 20% of total residential purchases in Florida were made by foreign buyers. They spent U$10.71 billion dollars according to a study by Florida Realtors. The City of Miami and its beautiful surrounding beaches remain the hot spot for international buyers, representing 31.3% of total sales. Buyers from Latin America and the Caribbean together made for 35% of all foreign purchases leading Western Europeans which represented 22%. Approximately, 82% of foreign sales were all cash in contrast to 87% of US buyers used mortgage financing [1].
In summary, foreign ownership of U.S. real estate has increased significantly in the last years because of the decline in US property values thus creating a lucrative investment opportunity for foreign investors. While many HNW foreign clients are tapping into these opportunities, are they fully aware of the tax implications made with these recent purchases?
When planning to acquire a U.S. based real estate, foreign individuals need to be aware that if purchased directly it is classified as “real property” and it is subject to U.S. Estate Tax and that as foreigners they are limited to a $60,000 tax exemption. Typical scenario – Brazilian national is seeking to purchase a $2,000,000 condominium on South Beach. Pressured by the Realtor he purchases in his/her own name and figures they can do the tax planning later. In doing so, the Brazilian would have an Estate Tax exposure of $679,000. If we advise the Client correctly and follow proper planning protocol this situation could easily be mitigated.
The Foreigner can consider various alternatives in planning for the purchase and how title should be held which may include:
Direct Ownership with Life Insurance funding the possible Estate Tax Implication: a common, low cost mechanism which is commonly utilized when clients prefer to purchase directly or those clients that may have purchased properties in the past.
Purchase via U.S. L.L.C. (Limited Liability Company): limits liability exposure to the individual but still bears the same U.S. income and estate tax burden.
Purchase via Foreign Corporation: Capital gain Tax rate could be jeopardized but individual will not be subject U.S. Estate Tax
Purchase via a combination of U.S. L.L.C tiered with a Foreign Corporation: The two – tiered approach is commonly utilized and can be very effective in limiting liability and tax exposure for the individual. The alternatives listed have advantages and disadvantages, but understanding the foreign investor’s wealth transfer planning goals, financial objectives and tax exposure will set the foundation to implement the optimal solution for the particular individual. The solution should not be standardized as we commonly witness in this area. The Wealth Protection Advisory team is equipped to provide both Clients whom have already purchased property and those considering the opportunity with a simple and cost effective solution that can avoid turning the American dream into a nightmare.
1. Miami Herald 8/27/12
If you want moreinformation about Mary Oliva Wealth Protection Advisory click here.
Wikimedia CommonsFoto: NASA/Crew of Expedition 22. Tapering
Morningstar, today published its first Global Fund Flows Trend Report. The research report examines the trends that drove 2012 mutual fund asset flows in five key markets—Australia, Canada, Europe, Japan, and the United States—and provides a worldwide overview that includes these regions as well as other markets in which Morningstar tracks fund performance and assets.
“Despite ongoing worldwide economic uncertainty, the global fund management industry grew at a 3.9 percent organic growth rate in 2012. Excluding money market funds, USD 565 billion flowed into mutual funds during the year. These massive inflows, though, fell short of 2009 and 2010, which saw inflows of USD 746 billion and USD 672 billion, respectively. Moreover, the average management fee that the industry gathers from investors has fallen dramatically since 2007 due to the cyclical shift to fixed-income products and a secular inclination toward less expensive funds,” Syl Flood, product manager, investment research for Morningstar, said. “The prevailing global trend in 2012 was investors’ hunger for yield and quest for the perceived safety of fixed-income funds. Worldwide, fixed-income funds gathered USD 535 billion in 2012, or nearly 95 percent of long-term net inflows.”
Highlights from Morningstar’s Global Fund Flows Trend Report include:
U.S. fixed income, which houses the intermediate-term bond category and American heavyweights PIMCO Total Return and DoubleLine Total Return, is by far the largest long-term global category, with nearly USD 2 trillion in assets under management (AUM). U.S. investors contributed USD 199 billion of the category’s USD 227 billion total inflow in 2012. The PIMCO fund is by far the world’s largest actively managed strategy, with USD 442 billion in assets (including assets managed for institutional clients).
In 2012, interest from cross-border investors propelled funds in the U.S. fixed-income category to a 47 percent organic growth rate. Many of the most popular offerings are tended by U.S.-based managers, including AllianceBernstein, Muzinich, Neuberger Berman, and PIMCO.
While 78 percent of worldwide mutual fund and exchange-traded fund (ETF) AUM still resides in actively managed funds, passive products captured 41 percent of estimated net flows—USD 355 billion—in 2012. With the exception of Australia and New Zealand, index funds grew faster than actively managed funds in every geographic region during the year, and the United States is leading the way in its appetite for low-cost, passive strategies.
Newer funds—those without a three-year track record—captured 87 percent of worldwide inflows in 2012.
The nation’s largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and are collectively in a much stronger capital position than before the financial crisis, according to the summary results of bank stress tests announced by the Federal Reserve on Thursday.
Reflecting the severity of the stress scenario–which includes a peak unemployment rate of 12.1 percent, a drop in equity prices of more than 50 percent, a decline in housing prices of more than 20 percent, and a sharp market shock for the largest trading firms–projected losses at the 18 bank holding companies would total $462 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 in the hypothetical stress scenario.
“Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty.”
The Federal Reserve’s stress scenario estimates are the outcome of deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or expected outcomes.
Despite the large hypothetical declines, the aggregate post-stress capital ratio exceeds the actual aggregate tier 1 common ratio for the 18 firms of approximately 5.6 percent at the end of 2008, prior to the government stress tests conducted in the midst of the financial crisis in early 2009. This is the third round of stress tests led by the Federal Reserve since the tests in 2009, but is the first year that the Federal Reserve has conducted stress tests pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Reserve’s implementing regulations.
“The stress tests are a tool to gauge the resiliency of the financial sector,” Federal Reserve Governor Daniel K. Tarullo said. “Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty.”
You may access the complete report (pdf file) on this link.
London and New York remain the top destinations for the world’s ultra-high net worth individuals to live and invest in but Asian cities are fast catching up, says Knight Frank’s seventh annual Wealth Report
Key Findings
The global number of High-Net-Worth Individuals (HNWIs is defined as someone with $30 million or more in net assets) increased by almost 8,700, or 5%, in 2012
Their number is set to increase by another 50% in the coming decade, according to forecasts prepared for Knight Frank’s Wealth Report
Fastest growth in wealth creation will be in Asia and Latin America over the next 10 years
London and New York are the top destinations in the world for wealthy individuals and will remain so until 2023, according Knight Frank’s survey of wealth advisors, whose 15,000 clients have assets worth US $1 trillion.
The 2012 results of Knight Frank’s index which tracks the performance of luxury property prices across 80 global destinations shows Jakarta and Bali recorded the highest growth
Monaco remains the most expensive location to buy prime residential property: a luxury home can range in value from $5,350 to $5,920 per square foot.
Classic cars have enjoyed the biggest uplift in value over last 10 years (395%), measured against other key collectable assets, such as fine wine and art, inKnight Frank’s Luxury Investment Index.
The total number of super-rich individuals increased globally by 5% in 2012, pushing an extra 8,700 people into the ultra-high net worth bracket, according to the seventh edition of The Wealth Report, produced by Knight Frank, a leading global property company.
The total wealth of HNWIs – those with net assets of US $30m or more – increased by $566bn to $26 trillion, an increase of 2% year- on-year, according to data produced exclusively for Knight Frank’s Wealth Report by Wealth X, a wealth intelligence firm. Over the next ten years another 95,000 individuals are set to break the $30m barrier in terms of personal wealth, and while Asia and Latin America will see the largest growth in the number of ultra-wealthy individuals, North America will still have the highest total number of HNWIs in 2022.
Inthis regard,the report notes thatin LatinAmericatheultrarich15,230recorded in2012toreach26,628, representingan increase of 88%,the same as inthe case ofthe asians ultra-rich, risingfromrecordedmore than 43,000last yeartomore than82,300in ten years.
Liam Bailey, Global Head of Residential Research at Knight Frank, said: “The largest concentration of wealth is currently based in the established centres of North America and Europe, but there is set to be rapid growth in Asia, Latin America and the Middle East. In the next decade we will see the biggest increase in ultra-wealthy individuals in cities such as Sao Paulo, Beijing, and Mumbai.”
“According to a survey of advisors with 15,000 ultra-wealthy clients, London and New York are still the most important destinations in the world. In ten years’ time they will still lead the way, but key Asian cities will have moved further up the list.”
The growing influence of Asian wealth creation is shown in the results of The Wealth Report’s Prime International Residential Index (PIRI) which tracks the value of luxury residential prices in 80 prime global locations in 2012. Price growth was strongest in Jakarta and Bali, with luxury property values rising by 38% and 20% respectively, boosted by a growing middle class in Indonesia.
The Chinese cities of Guangzhou and Shanghai also saw double-digit growth in the value of prime property, while the sheer weight of Chinese wealth pouring into Hong Kong resulted in an annual price increase of 8.7%, despite the Government cooling measures which limited the potential for similar increases in Beijing.
“Wealth creation has not been dented by the global economy slowing, nor has this affected the demand for prime property as the search for safe haven investments has continued,” Liam Bailey explained. “These factors will likely drive prime values higher in the short to medium term as HNWIs look to invest in tangible assets such as a prime property in the major global cities. But the results of our survey of advisers to the ultra-wealthy around the world shows that the appetite for some level of risk is returning, which in turn is opening up some property markets which have been moribund for several years.”
The super-wealthy, especially those in China, are also set to step up their interest this year in “investments of passion” such as art, fine wine, classic cars, coins and watches. Knight Frank’s Luxury Investment Index shows that classic cars have seen the largest appreciation in value over the last decade, with an average uplift in price of 395%.
The basket of collectable assets such as art, fine wine, classic cars, coins and watches within the overall luxury index has accrued cumulative gains of 175% over 10 years (with a 6% uplift in 2012 alone). The ultra-wealthy also increased their spending on philanthropic activities in 2012 compared to 2011, with the most significant increase in expenditure among those in Asia and Russia and CIS.
Christopher Palmer, Director de Mercados Emergentes Globales en Henderson Global Investors. What next for Venezuela?
Venezuelan president Hugo Chavez passed away on Tuesday, 5 March, at the age of 58, following a protracted period of illness. One of the world’s most influential socialist leaders, Chavez leaves behind a complex legacy that is certain to polarise opinion, and his death raises considerable questions about what the future holds for the oil-rich Latin American state.
Chavez took strongly nationalistic measures to redistribute wealth and improve living standards for the poor. From 2002 and 2010, poverty in Venezuela fell from 48.6% to 27.8% (Source: United Nations Economic Commission for Latin America), improving financial conditions for a fifth of the population. This came at a cost, however, with unaccountable centralised government control eroding democracy and freedom of speech.
Chavez was also instrumental in increasing Venezuela’s reliance on oil revenues. In 1998, the year before Chavez took power, oil represented 77% of the country’s total annual exports (ABC News, January 2013). The other 23% came from a range of goods and services, half of which was privately owned. By 2011, oil made up 96% of exports – meaning thatthe Venezuelan economy was almost entirely reliant on the price of oil and the generation of oil revenues to support government spending.
While Venezuela has the world’s largest proven oil reserves (around 296.5 billion barrels), the economy, characterised by excessive inflation, an overvalued currency, a high deficit and rising debt levels, badly needs rebalancing. But this is not something that will be corrected easily. Chavez’s policy of repatriation of foreign-owned assets ensured domestic support, but alienated investors and led to protracted compensation disputes. The move to expropriate oil company assets included major industry players Exxon Mobil and ConocoPhillips, which lost controlling interests in significant oil fields in the Orinoco Basin.
Although this ensured that primary control of Venezuela’s natural resources was returned to the state, through Petroleos de Venezuela (PDVSA) – the national oil company – it removed access to the technology, machinery, equipment and expertise that was vital to developing Venezuela’s oil reserves. Consequently, there has been no significant foreign investment in the oil sector in recent years, and oil output remains well below its peak in 1997.
Hugo Chavez’s death is unlikely to result in quick changes, but it could ultimately result in a political shift that would reopen the country’s energy industry to foreign investment. As heir-apparent to Chavez, Vice President Nicolas Maduro, who has the support of the country’s military, will look to tap into a strong following wind of socialist popularity, both domestically and elsewhere in Latin America, Eastern Europe and the Middle East. Chavez’s death could, alternatively, pave the way for the opposition, led by Henrique Capriles (who lost to Chavez in the presidential electionin October 2012), to win power and introduce more market-friendly policies.
Should Maduro win it seems likely that he will maintain Chavez’s popular stance against the US and its allies, continuing to offer Cuba oil at preferential prices (Venezuela currently fulfils approximately half of Cuba’s demand for petrol). He will also need to provide reassurances to China, which has developed a strong relationship with Venezuela in recent years, making loans to the government in return for oil.
PDVSA has, as yet, given no indication of any plans to open its doors to foreign investment – no surprise given the lack of clear instruction over future policy. It will take years to increase production and exports, but whichever party manages to establish a new government it will have a powerful economic incentive to make it a high priority.
What does this mean for our funds? We have taken care over the years to control exposure to economic hot spots (such as Venezuela and Argentina). As expected, due to the uncertain nature of the country’s stockmarket we have no direct holdings in Venezuela stocks and we have also been careful to ensure that indirect exposure remains very limited. High risk of currency devaluation, continuing fiscal imbalances, a legacy of nationalisation of private assets, and a lack of currency convertibility will persist as long as Venezuela’s leaders are committed to maintaining the unorthodox economic policies of former President Chavez.
