Citi Private Bank Continues to Build out Latin American Team - courtesy photo. Citi Private Bank Continues to Build out Latin American Team
Citi Private Bank announced that Nicolas Schmidt-Urzua has joined as a Managing Director and Head of the Multi-Asset Trading & Advisory team for Latin America. Mr. Schmidt-Urzua will be based in New York and report to Lisandro Chanlatte, Head of Investment Counselors for Latin America; and Adam Gross, Head of Multi-Asset Trading & Advisory for the Americas. In this capacity Mr. Schmidt-Urzua will be responsible providing complex trading solutions to the firm’s most sophisticated Capital Markets clients, including Active Traders and continuing to segment the bank’s client coverage model. “Nicolas has over 15 years of trading expertise, working with clients in Latin America and Europe. Acquiring the best talent to provide top tier coverage, content and execution underscores our commitment to our clients in the Latin American region,” said Mr. Chanlatte.
Mr. Schmidt-Urzua previously served as Head of the Global Investment Opportunities (GIO) for Latin America (excluding Brazil) at J.P. Morgan Private Bank. Prior to his GIO role in Latin America, Mr. Schmidt-Urzua held a similar position as the GIO Head in Geneva where he was responsible for building a $40 million revenue business for clients. Prior to J.P. Morgan he worked as an Investment Advisor with Credit Suisse in New York and Miami. Mr. Schmidt-Urzua holds an MBA from the Thunderbird School of Global Management, a B.S. in Business Engineering from the Universidad de Chile, as well as a Diploma in International Trade & Commerce from the University of California, Berkeley.
“Citi Private Bank is strongly committed to Latin America. This coupled with Citi’s institutional capabilities and open architecture investment platform, enables Citi to remain at the forefront as the key partner of choice for the most sophisticated families in the region,” said Mr. Schmidt-Urzua.
With $374 billion in global assets under management, Citi Private Bank includes 49 offices in 15 countries, serving clients across 139 countries.
CC-BY-SA-2.0, FlickrPhoto: Bob B. Brown
. Cybersecurity Takes Center Stage at CELAES 2016
FIBA will host its 31st Annual Financial Security Conference in Miami on October 3 and 4, 2016. In partnership with FELABAN (Federación Latinoamericana de Bancos), the conference attracts more than 600 industry leaders from 45 countries, facilitating knowledge exchange through targeted panel discussions, break-out sessions, live simulations and continuing education credits. Industry’s senior security professionals will educate participants on emerging threats and best practices to proactively defend against increasingly sophisticated adversaries.
“The staggering increase in information security breaches today is consequently putting our economy at risk of permanent damage,” said FIBA CEO, David Schwartz. “It’s no longer enough for organizations to solely rely on the traditional defensive approach. Instead, companies need to strategize offensively, getting out in front of this rising problem, strengthening their cybersecurity posture.”
Former New York City Mayor, Rudolph W. Giuliani, joins this year’s CELAES conference as a keynote speaker. Serving as Global Chair of Greenberg Traurig Cybersecurity, Privacy and Crisis Management Practice and Founder of security consulting company, Giuliani Partners LLC, Giuliani brings decades of experience and expert knowledge of the cybersecurity space to this year’s event. During the general session on Monday, October 3, he will kick off discussions around why the financial services industry has become one of the preferred targets of cybercrime. Specifically, he will focus on the preventative measures that can be taken to control access to systems, protect data on those systems, and educate employees on sound cybersecurity practices.
In addition to Giuliani as well as representatives from leading Fortune 500 companies like Visa Inc., Barclays, Bank of America, IBM and Microsoft, the following industry icons will be in attendance, providing insights on a variety of topics:
David Stelzl – Speaker, author, coach, High Tech Sales & Marketing Strategy, CISSP- will dive deep into his latest book, “Digital Money, The Executive’s Guide to Stopping the Greatest Transfer of Wealth in History – Your Data,” sharing the most common mistakes made by companies in regards to data security.
Andrés Gil – Partner, Cyber Risk Services, Enterprise Risk Services, Deloitte & Co S.A.- will explore how digitization is reshaping the concept of security and privacy in the 24/7 connected world in which we live.
Sergio Piñon – Senior VP, Director of Security, Ocean Bank- will discuss the vulnerabilities of mobile phones, highlighting the role they play in bank’s transactional channels; detection and containment of threats and tools and processes to mitigate the risk.
CC-BY-SA-2.0, FlickrPhoto: 2Tales
. SS&C Acquires Wells Fargo's Global Fund Services Business
Wells Fargo Securities, the investment banking and capital markets business of Wells Fargo & Company, announced that SS&C Technologies Holdings, a global provider of financial services software and software-enabled services, has agreed to acquire its fund administration business, Wells Fargo Global Fund Services (GFS). Pending regulatory approvals, the transaction is expected to close in the fourth quarter. The terms of the transaction were not disclosed.
GFS administers more than $42 billion in alternative assets, covering a wide range of complex strategies traded by global portfolio managers including fixed income, credit, distressed, structured credit, macro, equity, commodities, CDO, CLO, private equity, private debt, real estate and hybrid structures. Wells Fargo’s fund administration business services its clients through its global network of offices in, Hong Kong, London, New York, Minneapolis and Singapore.
“We believe GFS clients will benefit from SS&C’s industry-leading position, proprietary technology and depth of expertise in fund administration,” said Dan Thomas, head of Institutional Investor Services at Wells Fargo Securities. “Wells Fargo Securities will continue to provide financial solutions to our alternative asset manager clients in core areas such as Prime Services, Futures and OTC Clearing and Futures Execution.”
As part of the acquisition, SS&C will acquire GFS’ operations and team members in New York, Minneapolis, Singapore, Hong Kong and the United Kingdom. Wells Fargo will work closely with SS&C to provide GFS clients a seamless experience and continuity of services. Additionally, Wells Fargo will continue to provide access to its suite of financial products and services to GFS clients after closing.
“Wells Fargo’s Global Fund Services is well known for its expertise in administering real estate equity and credit strategies. The acquisition of GFS will create a compelling advantage for our customers as they access and manage sophisticated asset classes,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies. “This transaction will expand our capabilities in the global fund market, reinforcing SS&C at the forefront among fund administration and extending our strong cloud-based platform for future growth.”
“Joining with SS&C will allow us to dramatically accelerate our global growth plans and pace of innovation,” said Chris Kundro, head of GFS. “SS&C’s innovations in cloud, mobility and fund technology are transforming investment management. This acquisition will create even more value for our customers and will benefit employees as they become part of one of the largest and most reputable fund administrators.”
CC-BY-SA-2.0, FlickrPhoto: Images Money
. Standard Life Investments to Reopen the Suspended UK Real Estate Fund
Standard Life Investments has announced its intention to reopen the suspended UK Real Estate Fund (and associated feeder funds) from 12.00 noon on Monday 17 October 2016.
The SLI UK Real Estate Fund was one of a number of funds to suspend trading on 4 July 2016. This decision was taken in order to protect the interests of all investors in the Fund following an unprecedented level of redemptions.
They subsequently implemented a controlled and structured asset disposal programme in order to raise sufficient liquidity to meet future redemptions and work is ongoing to ensure the Fund is well positioned for markets in the long-term. “We now believe the commercial real estate market has stabilised and that the adequate level of liquidity achieved will allow the suspension to be lifted.” Standard Life stated on a press release.
By lifting the suspension, dealing in the Fund and Feeder Funds, purchases and redemptions of shares, will return to normal on 17 October 2016, with the first valuation point being 12.00 noon on that date. Dealing instructions to purchase or redeem shares will be accepted from Wednesday 28 September 2016, in a written or faxed format only, ahead of the fund re-opening.
Providing advanced notice will enable investors in the fund to make any preparations required ahead of the re-opening.
David Paine, Head of Real Estate at Standard Life investments said: “In the immediate aftermath of the EU referendum result redemptions from retail investor property funds increased dramatically whilst property transactions reduced significantly. During the period of suspension the fund has been able to restore liquidity through an orderly disposal of assets. We are pleased with the progress made and the removal of the Market Value Adjustment, and able to announce the reopening of the fund next month. The Standard Life Investments UK Real Estate Fund invests in a diverse mix of prime commercial property. Its lower risk positioning should therefore be beneficial for performance at times of market stress and uncertainty and continues to offer a stable and secure income, with a distribution yield of 4.04%*. In our opinion, as the search for yield intensifies within a world of low interest rates and nominal growth, the outlook for UK commercial real estate returns and income remains attractive.”
CAIA Miami Event- Courtesy photo. Photos of the Successful CAIA Miami Event
Last Thursday, September 22, the CAIA Miami Chapter hosted its fall networking event at Novecento in Brickell. Executive Committee members Karim Aryeh, Eddy Augsten and Gabriel Freund welcomed CAIA Charterholders (Chartered Alternative Investment Analyst) in the Miami area as well as CAIA Candidates and guests from the Alternative Investment industry.
At the start of the evening, Eddy Augsten -from Vega & Oprandi Wealth Partners- spoke to the group about the activities of the Miami Chapter. “Our role in the AI community is to encourage networking and growth through events like this and to stimulate thought leadership through our educational events. Our next event will in November covering Private Debt and the investment opportunities in that space.”
The CAIA Miami event included participants from Hedge Funds, Private Equity firms, Family Offices, Private Banks, Asset Managers and other investment firms. “We are creating a platform for individuals in Miami and Latin-American to meet and share ideas regarding innovative investments strategies” said Karim Aryeh, who recently left Santander Private Bank and is starting up a Registered Investment Advisor (RIA) focusing on Alternative Investments.
“The event was a success. We had to close registration due to the number of attendees, and that validates the increased interest in the CAIA certification from all sectors of the investment community. From students to junior analysts to seasoned professionals” said Gabriel Freund.
You can see the pictures of the event following this link.
With central banks across the world attempting to hit their inflation targets, the Bank of Japan (BoJ) has adopted a new policy framework named “QQE with yield curve control”.
There are two elements to the new policy. Firstly, instead of the traditional central bank model of setting the short-term rate, the Bank of Japan will now seek to set the rate on the longer-term 10-year part of the curve too (they will target a yield of around 0% at the front-end initially, close to current levels). Secondly, the central bank has committed to keeping the policy in place until inflation has overshot the inflation target of 2%. It has abandoned the explicit target of expanding the monetary base by ¥80 trillion each year, but instead says it will adopt a flexible approach.
The policy is designed to shift inflation expectations, keep banks profitable via a steeper yield curve and seek to address the issue of Japanese government bond scarcity. While Governor Haruhiko Kuroda has delivered a policy that helps banks, we doubt it is going to lead to a rapid adjustment in inflation expectations – it is more a case of adopting a policy that enables the BoJ to stay in the game for longer as it hopes the policy will require fewer bond purchases. The central bank itself admits that “a further rise in inflationary expectations is uncertain”.
The BoJ is trying to keep policy loose while mitigating the negative side effects of excessive asset purchases.
What does this mean?
This is tapering but with asset purchases no longer the independent variable in the policy mix. The global pool of liquidity is unlikely to keep on increasing at the current pace so the ‘hunt for yield’ trade looks less attractive. The BoJ announcement that it will target the 10-year should suppress local yield curve volatility, but could lead to volatility in other markets and asset classes.
The yen Japanese banks finished up over 7%, while the yen is 0.4% weaker vs. the US dollar (it had been 1% weaker)*. Moves in other bond markets have been muted.
Nicholas Wall is co-manager of Old Mutual Global Strategic Bond Fund.
CC-BY-SA-2.0, FlickrPhoto: John Bennett, Head of European Equities. John Bennett: No Ordinary Cycle in Europe
In this interview, John Bennett, portfolio manager of Henderson European Absolute Return Fund and Head of the European Equities, explains his view about european equities and the influence of the central banks policies in the stocks markets.
Do European equities offer value?
I’ve always been wary of the value versus growth thing. I think these are convenient labels. Value is in the eye of the beholder. For me, value is about the price you pay for cash flow. What I would say about value is that the old definition of value and growth no longer applies, because this is no ordinary cycle. This has not been an ordinary cycle since the financial crisis. It cannot be an ordinary cycle because of the debt mountain that built up. We are still dealing with the threat of debt deflation – that is really what central bankers are fighting.
In the old days of buying value, you might have looked at cement, banks, steel, cars or aluminium – traditional value sectors. This is not a good idea now, because of deflationary risks, and because of central banks’ response to deflationary risks, namely the QE experiment. You have overcapacity in so many industries that you used to call value. Until we get a change in the inflation dynamic, this probably won’t change.
Are European banks rightly unloved?
Banks have been the poster children of the value trap. Value is never in a ratio. Fund managers have become inured to the many calls from strategists on the sell side who have suggested that it is time to buy the banks. It has been a spectacularly wrong since 2008 because the banking model has been severely disrupted, if not broken, by QE.
What are your post-Brexit concerns for Europe?
I have been less worried about the FTSE 100 and the UK economy than the European periphery in the immediate aftermath of Brexit; because of course Britain flexed its currency, devaluing sterling significantly. I worried about the effects of that more on the European periphery, an already fairly uncompetitive area, where the euro has arguably been too strong since it was launched.
The euro in my view has been too weak for Germany and too strong for everyone else. I thought it was wrong that people were panicking on UK house builders, for example. I haven’t said ‘panic about the periphery’, rather ‘worry about the periphery’. I think it’s a patient that is still healing. Recent GDP numbers from Italy hasn’t been that good, which threatens Italian Prime Minster Matteo Renzi in the upcoming referendum – yet another noisy political event in Europe. I doubt I’ll ever stop worrying about the economies in the periphery.
How is the healthcare sector performing?
Pharma hasn’t really participated in the defensives rally. At best pharma has been dull; in some cases worse than dull. I went into 2016 thinking that this was a year for stocks, not markets. I was trying to say I’m not convinced that this would be an ‘up’ year for market indices. So far, unless you have been based in sterling, you haven’t had an up year in European equities. I would extend that to say even stocks not sectors (from stocks not markets). So, we have nuanced our pharmaceuticals view to say it is not just so much about buying the whole sector. You are now seeing clear stock dispersion within pharma, with pricing pressure in some clinical areas in the US.
Look at the news from Sanofi on its diabetes insulin product. And look at the news from Novo Nordisk. Yes; pricing is beginning to be a problem in the US – a headwind for some pharmaceutical companies, but not all. Where I take an issue with the ‘one size fits all’ approach was that, if you have innovative medicine meeting unmet clinical needs, you will have pricing power. This is why our names are big names in pharma like Roche and Novartis, and also Fresenius in healthcare. I think stock dispersion is back, even within sectors.
CC-BY-SA-2.0, FlickrPhoto: Martin Fish. Investment Fund Assets Worldwide See 4% Increase in Q2 2016
The European Fund and Asset Management Association (EFAMA) has recently published its latest International Statistical Release, which describes the developments in the worldwide investment fund industry during the second quarter of 2016.
The main developments in Q2 2016 can be summarized as follows:
Investment fund assets worldwide increased by 4 percent in the second quarter of 2016. In U.S. dollar terms, worldwide investment fund assets increased by 1.4 percent to stand at USD 42.3 trillion at end Q2 2016.
Worldwide net cash inflows increased to EUR 206 billion, up from EUR 154 billion in the first quarter of 2016.
Long-term funds (all funds excluding money market funds) recorded net inflows of EUR 217 billion, compared to EUR 192 billion in the first quarter of 2016.
Equity funds recorded net outflows of EUR 17 billion, against net inflows of EUR 50 billion in the previous quarter.
Bond funds posted net inflows of EUR 130 billion, up from net inflows of EUR 72 billion in the first quarter of 2016.
Balanced/mixed funds registered net inflows of EUR 58 billion, up from net inflows of EUR 35 billion in the previous quarter.
Money market funds continued to register net outflows in Q2 2016 (EUR 11 billion), compared to net outflows of EUR 38 billion in Q1 2016.
At the end of the second quarter of the year, assets of equity funds represented 39 percent and bond funds represented 22 percent of all investment fund assets worldwide. Of the remaining assets, money market funds represented 12 percent and the asset share of balanced/mixed funds was 18 percent.
The market share of the ten largest countries/regions in the world market were the United States (47.1%), Europe (33.8%), Australia (3.8%), Brazil (3.6%), Japan (3.5%), Canada (3.1%), China (2.7%), Rep. of Korea (0.9%), South Africa (0.4%) and India (0.4%).
CC-BY-SA-2.0, FlickrPhoto: Wansan Son
. Department of Labor Conflict of Interest Rule Expected to Boost Advisors' Allocation to ETFs by 65%
Financial advisors are likely to recommend that their clients increase allocations to exchange-traded funds (ETFs) by 65 percent as a result of the recent Department of Labor (DOL) Conflict of Interest Rule, according to a white paper by BNY Mellon.
The survey results indicated that advisors in the study currently have 23 percent of their assets under management in ETFs, and they plan to boost that allocation to 38 percent over the next two years as assets are transitioned to ETFs from other products. That would increase the percentage of assets allocated to ETFs by 65.2 percent. Approximately 55 percent of the 170 advisors polled by BNY Mellon said they plan to increase their investments to ETFs because of the rule, which becomes effective in April 2017.
“The rule requires financial advisers to recommend investments that are in the best interests of their clients when they offer guidance on 401(k) plan assets, individual retirement accounts or other qualified monies saved for retirement,” said Frank La Salla, chief executive officer of BNY Mellon’s Global Structured Products and Alternative Investment Services business. “This includes emphasizing financial services products such as ETFs that tend to have lower fees than other types of investments.”
The advisors said they will increase their use of both actively managed ETFs and passively managed ETFs. They also said they expect to increase their use of separately managed accounts and decrease their use of unit investment trusts and annuities. Funding for the growing products is likely to come at least in part from the declining products, according to the survey.
La Salla noted that cost will not be the only factor determining the types of assets that advisors recommend. “The advisor and the client might be looking to fill a need in an investment portfolio, such as obtaining exposure to a particular asset class or country,” he said. “The best product might be an ETF, or it might be a mutual fund or some other financial product.”
While the respondents indicated they expect continuing rapid growth of ETF assets, they said that changes in three areas are needed to facilitate this growth. First, the majority of defined contribution programs will need to upgrade their technology to trade ETFs, as many do not have this capability. The DOL rule could accelerate the introduction of the necessary technology as plan sponsors and advisors will be more motivated to offer these products.
The other two areas are education and information access.
“The ETF industry will need to accelerate the educational efforts about ETFs and the DOL rule among industry participants to smooth the way for projected growth,” said Steve Cook, managing director and business executive for BNY Mellon’s Structured Product Services. “As to accessing information, ETF-oriented advisors tend to favor accessing research in small bites rather in long documents. They prefer to learn about new offerings via virtual webcasts rather than attending conferences or attending sales meetings.”
LaSalla concludes that registered investment advisors (RIAs), like brokers, are likely to give ETFs serious consideration. “Given the fee-based nature of RIAs, their level of sophistication and willingness to adopt new strategies to help their investors to optimize their investments, it would seem natural for them to embrace ETFs even more.”
The white paper, Accelerating Growth: The Department of Labor Conflict of Interest Rule and its Impact on the ETF Industry, produced by BNY Mellon in association with ETF Trends, can be read here.
CC-BY-SA-2.0, FlickrPhoto: ecosistema urbano
. J.P. Morgan Launches First Active ETF
J.P. Morgan Asset Management recently launched its first alternative and actively managed ETF, the JPMorgan Diversified Alternatives ETF (JPHF). The ETF provides investors with diversified exposure to hedge funds strategies including equity long/short, event driven and global macro strategies.
JPHF was designed and is managed by Yazann Romahi, CIO of Quantitative Beta Strategies at J.P. Morgan Asset Management. A pioneer in hedge fund beta investing, Romahi created the ETF with the support of a team of 17 investment specialists who have been focused on beta philosophy research and development for more than a decade. In addition, the team manages over $3.5bn of assets in alternative beta with this ETF being the latest extension of their offering.
JPHF aims to democratize hedge fund investing by providing investors with institutional quality hedge fund strategy in a cost efficient, tradeable ETF wrapper. The ETF can serve as a core component of a portfolio’s alternatives allocation. The bottom-up approach results in a purer capture of the hedge fund exposure and better diversification than traditional hedge fund replication strategies, as it employs strategies that have true low correlation to traditional markets.
“In the past, alternative investments have been an exclusive option only accessible by a small portion of investors; however, JPHF now makes these investment vehicles available to a wider array of investors,” said Robert Deutsch, Head of ETFs for J.P. Morgan Asset Management. “Alternative beta strategies provide investors with true diversification with attractive liquidity, transparency and cost.”
With the launch of JPHF, J.P. Morgan Asset Management’s Diversified Return ETF suite features nine product offerings. J.P. Morgan manages more than $120bn in alternatives globally.
