The U.S. Securities and Exchange Commission (SEC) has announced that eToro USA LLC has agreed to pay $1.5 million to settle charges related to its online trading platform for operating as an unregistered broker and clearing agency. “eToro has agreed to cease and desist from violating applicable federal securities laws and will limit the crypto assets available for trading,” the U.S. authority stated in its release.
The SEC’s order states that, since at least 2020, eToro operated as a broker and clearing agency by providing U.S. customers with the ability, through its online trading platform, to trade crypto assets that were offered and sold as securities. However, “eToro did not comply with the registration provisions of federal securities laws.”
“By removing tokens offered as investment contracts from its platform, eToro has chosen to comply and operate within our established regulatory framework. This resolution not only enhances investor protection but also provides a path forward for other crypto intermediaries. The $1.5 million penalty reflects eToro’s agreement to cease violations of applicable federal securities laws while continuing its operations in the U.S.,” explained Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
As a result, eToro announced that, from now on and subject to the provisions of the SEC’s order, the only crypto assets U.S. customers will be able to trade on the company’s platform are Bitcoin, Bitcoin Cash, and Ether. eToro publicly stated that it will provide its customers the ability to sell all other crypto assets only for 180 days following the issuance of the SEC’s order.
“This agreement allows us to move forward and focus on delivering innovative and relevant products across our diversified U.S. business. U.S. users can continue trading and investing in stocks, ETFs, options, and the three largest crypto assets,” said Yoni Assia, co-founder and CEO of eToro.
According to the firm’s CEO, the terms of the agreement will have minimal impact on their global business: “Outside of the U.S., eToro users will continue to have access to over 100 crypto assets. As a global, multi-asset trading and investment platform, we continue to see strong growth and remain committed to becoming a public company in the future.”
Assia emphasized that complying with regulations is important for the company, and they work closely with regulators worldwide. “We understand the importance of regulation to protect consumers. We now have a clear regulatory framework for crypto assets in key markets like the UK and Europe, and we believe something similar will soon be established in the U.S. Once that is in place, we will seek to enable the trading of crypto assets that comply with that framework,” the CEO concluded.
BlackRock has announced the launch of the BGF Euro High Yield Fixed Maturity Bond Fund 2027, a fixed maturity bond fund. According to the asset manager, the fund is designed to take advantage of currently elevated yield levels, offering investors a combination of income distribution and capital appreciation. “In the current macroeconomic environment, fixed maturity bond funds can be an option for investors seeking some level of cash flow predictability or looking to stagger their interest rate exposure,” they explain.
The BGF Euro High Yield Fixed Maturity Bond Fund 2027 offers a carefully selected portfolio aimed at providing income and preserving capital until the strategy’s maturity date, which is three years from now. It primarily invests in two types of bonds: high-yield bonds, which the investment team believes will generate income, and high-quality government bonds for risk management. The fund aims to provide income through the European high-yield market, avoiding credit risks over a three-year investment horizon. Its strategy seeks to deliver income and preserve capital for investors holding their units until the Fund’s maturity date.
The asset manager explains that the investment process follows a barbell structure, incorporating high-quality government bonds and carefully selected high-yield bonds (at least 50%). The investment team believes this approach offers the best risk/reward trade-offs within the European sub-investment-grade bond universe. The bond mix is built to optimize yield while minimizing defaults, leveraging the team’s fundamental high-yield research. This investment process seeks to maintain an aggregate BB+ rating and optimize the tax efficiency of any coupon or capital gain, while aiming to sustain a high level of income for investors.
The fund, managed by José Aguilar, Head of European High Yield and Long Short Credit Strategies, is part of BlackRock’s active fixed income platform, which includes $1.1 trillion in assets under management. “As yields remain elevated, the opportunity cost of staying in cash is increasing. In this scenario, fixed maturity bond funds not only offer some visibility in income distribution but also provide investors with the chance to lock in attractive current yields. Moreover, the rise in dispersion in the high-yield bond market may create more opportunities for investors to generate alpha,” noted James Turner, Co-Head of European Fundamental Fixed Income at BlackRock.
Credicorp, a financial services holding company, released the fourth edition of its Financial Inclusion Index (FII), revealing a positive trend for the region. The study highlighted Chile as the leading country in financial inclusion, surpassing Panama for the first time.
According to the company’s press release, the report showed that 28% of the Latin American adult population achieved an advanced level of financial inclusion, a significant increase compared to 25% in 2023 and 16% in 2021.
The study, commissioned by Ipsos Peru, gathered data from eight countries: Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Panama, and Peru. The index is built upon three key dimensions: access, usage, and perceived quality of the financial system. More than 13,000 individuals over the age of 18 were interviewed for the report.
In this edition, Chile topped the regional rankings with a score of 58.3 on a 0 to 100 scale, where a higher score indicates a greater level of financial inclusion. This is the first time Chile has outperformed Panama in this measurement.
The FII’s latest results also revealed that 47% of Chileans have achieved an advanced level of financial inclusion, compared to 38% in 2023. Additionally, 40% of the population is still progressing towards better financial inclusion.
“Over the past four years, the FII has become a key tool in understanding the challenges countries face in terms of financial inclusion. The results highlight the role of digitalization and the urgent need to strengthen initiatives that decentralize formal financial services,” said Gianfranco Ferrari, CEO of Credicorp, in the press release.
Chile’s Case
While Chile has consistently ranked among the highest in the region since 2021, its financial inclusion level had not significantly increased since the COVID-19 pandemic. However, this year, there were notable improvements in access, usage, and perceived quality of financial products and services.
Several indicators have improved steadily since 2021, particularly in the awareness and perception of financial products and services. Chile excels in the indicator measuring the “monthly frequency of use of financial products and services,” with the average Chilean using them 21 times per month, compared to the regional average of eight times.
Regarding access, there has been a reduction in barriers to using financial infrastructure and an increase in credit productownership within the financial system. Furthermore, the proportion of Chileans reporting savings has grown from 30% in 2023 to 41% in 2024.
Chile stands out as one of the best users of the financial system in Latin America and, unlike the rest of the region, has found an alternative to digital wallets: debit cards. Digital wallet ownership remains low at 20%, the same as last year, compared to the Latin American average of 36%. However, 77% of the population uses debit cards to pay for everyday products and services (household items, cleaning supplies, food, etc.).
This is notable because debit card usage for purchasing goods and services surpasses cash usage in Chile, a trend not seen in other countries, according to Credicorp. Only 7% of Chileans report receiving their income in cash.
Mexico City surpassed São Paulo this year as the largest tech talent market in Latin America, according to CBRE’s annual report on these markets in the Americas.
The report analyzes Latin America’s tech talent markets based on total employment in the sector, five-year tech job growth, average salary growth in the sector, total numbers of tech graduates, and five-year growth in the number of tech graduates.
Mexico City has the largest tech workforce in the region, with 300,000 tech specialists. São Paulo, last year’s top-ranked market, has 240,227 professionals.
“Mexico City continues to grow as a tech hub, with a large number of tech graduates from the city’s top universities and affordable labor and real estate costs compared to many North American markets,” said Yazmín Ramírez, Senior Director of Labor Analytics and Client Consulting at CBRE Latam. “The city’s growing pool of tech labor continues to attract manufacturers, engineering firms, and other companies looking to bring operations back to Latin America from overseas,” she added.
CBRE’s 11th “Scoring Tech Talent” report ranks 75 cities in the U.S. and Canada based on multiple factors, including tech job growth, tech degree completions, labor and real estate costs, and millennial population, among others. The San Francisco Bay Area tops this year’s rankings, followed by Seattle and Toronto.
This is the fifth year CBRE has ranked Latin American markets in this report. The rankings are based solely on the size of each city’s tech talent workforce. The report also examines the average tech salary in each market and its five-year growth, the average office rent and its five-year growth, and the completion of tech degrees.
“The relevance of Latin America as a talent source in the Americas has expanded due to its proximity to the United States and Canada, the growing pool of tech talent, the cost-benefit ratio, the time zone, infrastructure, and tax benefits,” said the executive. “As a result, the region is now considered a well-established location that hosts a significant number of multinational tech companies,” she added.
Mexico City stood out in several other key areas in CBRE’s report:
– It produced more tech degree graduates in 2023 (24,050) than any other of the top 11 markets. The next closest was São Paulo with 15,972.
– The tech salary growth rate in the city over the past five years was 42%, higher than the average increase across the 11 markets (36%) and the U.S. (18%).
– It saw a 32% increase in software developer salaries since 2018, reaching $47,938 in 2023, surpassing Latin America’s growth rate (28%) over the same period.
CBRE Group, Inc. (NYSE: CBRE) is a Fortune 500 and S&P 500 company headquartered in Dallas. It is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has over 130,000 employees (including Turner & Townsend staff) and serves clients in more than 100 countries. CBRE provides a wide range of services, including facilities, transaction, and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services; and development services.
AFP Planvital has a new leader at the helm, as announced to the market on Thursday. José Joaquín Prat Errázuriz, who previously served as General Manager of the pension fund administrator, has been appointed as the new CEO.
The company’s board made the decision during an extraordinary meeting on Wednesday afternoon, as disclosed in an essential statement to the Financial Market Commission (CMF). This marks the end of Andrea Battini’s five-year tenure as CEO.
According to his professional LinkedIn profile, Prat has 18 years of experience in the Chilean pension system. He joined Planvital in 2006 and has held various leadership roles in different corporate areas, including legal, compliance, and risk management. He assumed the role of General Manager in August 2019.
In addition to his law degree, Prat holds a master’s degree in corporate law from the University of the Andes.
Battini will remain with the company for the next few months. According to the letter sent by AFP Planvital to the regulator, he will continue providing services until November 30 of this year, acting as an advisor to the board and senior management to support the leadership transition.
The board of Planvital praised the “high professionalism, commitment, and track record” of the outgoing CEO during his time with the company.
Founded in 1981, at the dawn of Chile’s individual capitalization pension system, the company closed August of this year with an AUM (Assets Under Management) of $10.986 billion, according to information from the Superintendence of Pensions. This gave it a market share of 5.6% at that time.
BBVA Group has taken a significant step by opening a new office in Houston, with the primary goal of leading the financing of the energy transition in the United States. This move aligns with BBVA’s growth plans in the U.S. and is integrated into its U.S. Corporate & Investment Banking (CIB) operations.
The Spanish bank made the announcement during the inaugural edition of Houston Energy & Climate Week, an event sponsored by BBVA in Texas.
“America has a unique opportunity to lead the transition to a more sustainable global economy. Complementing and closely integrated with our operations in New York, the Houston representative office— the world’s energy transition capital—will play a key role in our sustainability strategy,” said Álvaro Aguilar, BBVA’s head of strategic projects in the U.S.
BBVA’s sustainability strategy in the U.S. focuses on supporting companies in the energy sector and those promoting sustainable development. This includes traditional renewable technologies, such as wind and solar, as well as emerging cleantech solutions. The strategy also involves assisting companies in transforming their business models toward more sustainable alternatives through financing and advisory solutions.
These initiatives will contribute to BBVA’s global goal of mobilizing $331.8 billion in sustainable business between 2018 and 2025, of which $278.7 billion had already been mobilized by June 2024.
The new BBVA office in Houston joins the bank’s existing teams specializing in cleantech financing, which are based in New York, London, and Madrid.
With its historic leadership in the energy sector, and home to over 4,700 energy-related companies, Houston is positioning itself as the global capital of the energy transition. The city is a leading hub for companies pioneering decarbonization solutions.
Additionally, Houston was recently selected as the base for BBVA Mexico’s nearshoring unit, and BBVA Mexico’s U.S. branch is already operating from Houston. By the end of 2025, BBVA’s Houston office is expected to employ approximately 100 people, making it a key growth center for the bank.
BNY has announced Alts BridgeSM, a comprehensive data, software, and services solution built to meet the growing demand from wealth intermediaries looking to access alternative and private market investment products, through a simplified end-to-end investment experience.
Designed to deeply integrate into intermediaries’ existing desktops, beginning with BNY Pershing X’s Wove advisory platform and NetX360+, with cutting-edge AI and analytics tools that are designed to reduce manual processing and error rates, Alts Bridge creates a powerful solution for investors, advisors, and the home office, the firm says.
The platform will provide access to alternative and private market asset managers from around the world, the selection including 26 North, AB CarVal, Alternatives by Franklin Templeton, Apollo, Atalaya, Aviva Investors, Blue Owl Capital, Carlyle, CIFC, Coller Capital, Crescent Capital, Eisler Capital, Generali, GoldenTree, Goldman Sachs, Hunter Point Capital, Invesco, KKR, Lexington Partners a Franklin Templeton Company, Lunate, Marathon Asset Management, Partners Group, Polen Capital, RCP Advisors, and Stormfield Capital.
“Powered by BNY’s data and technology, Alts Bridge will connect clients across the wealth ecosystem and alternative markets in a unique and more seamless way. As a firm that supports more than $2.6 trillion of wealth assets1 and has relationships with more than 500 leading alternative managers, we believe we are uniquely positioned to unlock this market,” said Akash Shah, Chief Growth Officer and Head of Growth Ventures at BNY. “We’re combining the breadth and depth of BNY’s distribution team with our expertise across investment management, advisory, securities services, wealth technology, and wealth custody and clearing, enabling Alts Bridge to provide a comprehensive solution to find, access, and custody alternative and private market assets.”
The platform will offer features across the pre-, at- and post-trade processes, including an advisor education and fund discovery center, home office and asset manager tools, product overviews, automated document preparation, simplified order entry, and integrated reporting and investment management capabilities, BNY adds.
While 90% of advisors are targeting a 10-15% average portfolio weighting to alternative and private market investments, actual allocations remain in the low single digits. Global alternative assets under management are expected to reach $24.5 trillions in 2028, representing a forecast annualized growth rate of 8.4% from 2022 to 2028.
The platform is expected to be available to U.S. Registered Investment Advisors (RIAs) and Independent Broker-Dealers (IBDs) in fall 2024. The initial platform will be available to clients of BNY Pershing.
Pixabay CC0 Public Domaintop10-casinosites from Pixabay
In the world of investing, fixed income has traditionally been associated with stability and income generation. This role has been uniquely challenged since the spring of 2022, when the Federal Reserve (the Fed) embarked on a series of massive rate hikes – at one point, four 75 basis points hikes in a row – which the markets had not experienced in a generation. Not surprisingly, many fixed income strategies and indices posted the worst total returns in their history. Naturally, many investors flocked to the front end of the curve, taking advantage of elevated yields. However, the tide is turning, with the Federal Reserve expected to cut rates multiple times over the next year.
Let’s begin by discussing the post-pandemic interest rate environment, specifically the implications of the Fed’s hiking cycle. The Fed and other central banks used their policy rates as tools to bring exceedingly elevated levels of inflation back towards what they deem to be “normal” or within their respective target ranges. Risky asset markets rallied in response to the improvement in inflation data in the absence (so far) of a U.S. recession. Further, the hiking cycle led to attractive yield generation in short-term instruments like Treasury bills, money market funds, and certificates of deposit (CDs). As of mid-summer 2023, the 6-month Treasury bill yielded nearly 5.5%, the highest level since 2000. As yields rose, the money followed, with prime and taxable money market funds taking in a combined $965 billion in flows for the calendar year 2023, per Morningstar. Contrast this to the active taxable bond space, which has experienced a net inflow of just $33 billion over the same period.
Rising rates had the effect of increasing the coupons paid on new fixed income securities, which should support forward looking returns. But perhaps more importantly, the rate sell-off decreased the dollar price of bonds already in existence, many of which are government or investment-grade corporate bonds with low credit risk. As a result, the bond market is priced at a discount even though fixed income securities, with the exception of a default event, mature at “par” or $100. It is this “pull to par” that should drive attractive returns going forward as rates potentially fall in response to a Fed policy pivot.
The term “pull-to-par” refers to the tendency of fixed income securities to move towards their face value (par value, or $100) as they approach maturity. Bonds priced at a discount will see their prices rise as they get closer to maturity, while bonds trading at a premium (that is, above $100) will see their values fall to par over time. In today’s environment, with the Fed near the beginning of rate cuts (as of this writing), fixed income securities with prices below their par value have potential for meaningful price appreciation. That appreciation, in addition to regular coupon payments, leads to larger total returns for investors. We believe this total return likely eclipses the yields that may be earned on short-end instruments going forward.
To illustrate how unique the current fixed income environment is, let’s examine historical price data for various fixed income indices over the last 10 years. The chart below shows the average price for the Bloomberg U.S. Universal Index. For the vast majority of the 10-year period, the average price for the index was either near or above par, with the mean dollar price at about $100.50. Rising rates drove the average dollar prices of the index, and active portfolios as well, down to near unprecedented levels, below $92 as of July 31st, 2024. Given the quality of the constituents of the index, it is reasonable for an investor to believe that these bonds will pull back to par as they get closer to maturity, thereby providing investors with an additional boost to performance over and above just clipping coupon payments.
Another lens to look at the relative value of owning fixed income versus cash instruments can be seen in historical data on how both have performed in an environment similar to the present one, that is, with the Fed pivoting to rate cuts. We looked at data for the last four Fed tightening cycles going back to the mid-1990s to see how both cash and fixed income performed both prior to and when the Fed began cutting interest rates. We used the ICE BofA U.S. Treasury Bill Index as a proxy for short-term instruments and selected four Bloomberg indices representing both above and below investment-grade securities for fixed income. As the table shows, the subsequent two-year returns produced, in most cases, better economic outcomes when owning fixed income as opposed to staying invested in Treasury bills. These results are consistent when cash was deployed at the end of the hiking cycles or the beginning of cuts, though investors did better by not waiting for the Fed to deliver cuts first. In the current environment with the Fed posed to ease, and with an elevated chance of economic weakness going into 2025, fixed income has a similar potential to outperform cash instruments this time around.
By combining the return generators of coupons and the “pull-to-par” effect as rates potentially fall, investors may outperform Treasury bills, CDs, and money market funds in the months and years ahead. We believe active management remains valuable for capturing these excess returns and potentially adding alpha over benchmark indices. Many fixed income securities with attractive risk and reward characteristics, such as shorter-dated, investment-grade rated bonds within the asset-backed securities and residential mortgage space, sit outside of benchmarks and represent some of today’s most compelling opportunities.
The concept of earning coupon plus the pull-to-par represents a valuable opportunity for fixed income investors as the Fed considers rate cuts. By understanding how this phenomenon impacts fixed income securities’ total return, investors can capitalize on the current opportunity it presents. When combined with effective active management strategies, the pull-to-par effect may serve as a powerful tool to achieve outperformance and enhance overall returns. But timing is of the essence. Yields today still look to be interesting even in a high-quality portfolio. So now is the time to make those moves, not to wait until yields fall further
Opinion article by Rob Costello, client portfolio manager in Thornburg Investment Management.
The European Fund and Asset Management Association (Efama) highlights in its document “The EU Must Adopt a New Deal to Mobilize EU Savings” that, according to the European Commission, more than €600 billion must be invested annually to achieve a successful green transition, as well as additional billions to support the digital transition. In light of this reality, Efama calls for the creation of the necessary investment conditions to address these challenges.
What exactly do these measures to create the “necessary investment conditions” entail? According to Bernard Delbecque, Senior Director at Efama, “a decisive shift in EU policies is needed, particularly in competition and industrial policies, to improve investment opportunities, boost the valuation of Europe-based companies in global stock indices, and increase investments from asset owners into EU companies. Once asset owners see more promising prospects in the EU, they will increase their investments in the region, thereby supporting the financing of the green and digital transitions.”
The report prepared by Efama states that to unlock private investment and finance the EU’s capital needs, it is crucial to leverage the potential of the Single Market and develop an effective Capital Markets Union (CMU) that offers more opportunities and better outcomes for European companies and savers. Additionally, it is imperative to redirect the European Commission’s Retail Investment Strategy to encourage EU citizens to invest more in capital market instruments and promote retirement savings, thereby increasing the pool of available savings to support the EU’s ambitions.
Impact on UCITS Funds
Efama sees addressing these challenges as urgent, as its report demonstrates that this situation is impacting the growing allocation of UCITS assets to U.S. equities, attributing this trend to the superior performance of U.S. stock markets. “By the end of 2023, 44.6% of UCITS equity portfolios were invested in U.S. assets, compared to 19.2% in 2012. The high exposure of European UCITS equity funds to foreign assets is specific to Europe, according to the study. In 2023, equity funds domiciled in the EU and the UK had 27% and 29% of their portfolios invested in local stocks, respectively, compared to 78% and 84% for equity funds in the U.S. and the Asia-Pacific region,” the report argues.
The document outlines several factors that may explain the lower domestic bias among European investors, such as the benefits of cross-border investments, the role of financial advisors, the development of fund platforms facilitating investments in funds tracking global indices, the relatively small size of EU stock markets, and the enthusiasm for leading U.S. tech companies.
“The strong performance of U.S. markets, which led to an increased allocation of equity assets to U.S. stocks, reflects a combination of factors and policies, including robust population growth, higher spending on research and development, substantial fiscal stimulus, and lower energy prices,” the report explains.
A Matter of Competitiveness
Efama’s main conclusion is that, to compete effectively on the global stage and foster the emergence of industrial leaders based in Europe, the EU must embark on a transformative path to boost economic growth, improve investment opportunities, generate higher investment returns, and increase the market capitalization of European companies. In their view, these are necessary conditions to attract more investment capital to the EU and ensure that European companies have access to financing throughout their development.
“This, in turn, could initiate a virtuous circle where higher economic growth strengthens asset owners’ confidence in the EU economy, thereby bolstering the ability of asset managers to provide a critical source of stable, long-term financing for European governments, companies, and infrastructure projects,” Efama concludes.
The Brazilian investment fund industry closed August with positive net inflows of 11.7 billion reais (more than 2 billion dollars), according to data from the Brazilian Association of Financial and Capital Market Entities. Cumulatively in 2024, financing has already reached 286.2 billion reais (more than 50 billion dollars), with a strong focus on fixed income funds, which continue to lead resource inflows.
In August, the fixed income class saw a 64.2% increase compared to the same period last year. Pedro Rudge, director of Anbima, attributed this performance to the prospects of maintaining the Selic rate at high levels, which benefits funds in this category. “With the current trajectory of the Selic, fixed income funds should maintain their appeal in the coming months, which is likely to bolster resource flows into this class and sustain the positive performance of the industry,” he stated.
Among fixed income funds, those classified as Low Duration Fixed Income with Investment Grade stood out the most. These funds focus on assets with low credit risk and an average duration of less than 21 business days, primarily investing in federal government bonds.
In addition to fixed income, Credit Rights Investment Funds (FIDC) also performed well, followed by pension funds and Private Equity Investment Funds (FIP).
On the other hand, the multi-market and equity classes showed a negative balance in August. ETFs (Exchange Traded Funds) also recorded a negative balance.
In terms of net assets, the fund industry reached 9.3 trillion reais in August, a 15% increase compared to the same month in 2023.
