François Pienaar, the South African Rugby Legend and World Cup Champion, talks about leadership at Investec’s Inspirational Event in Miami

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Honoring its South African origins, Investec Asset Management invited François Pienaar, the South African Rugby Legend and World Cup Champion, to speak about leadership at their second “Investec Inspirational Event”, celebrated at the InterContinental hotel, in Miami, last June 5th.

Investec Asset Management business in the Americas region has grown exponentially since they opened their first office in New York, back in 2006. They started with 100 million dollars in asset under management, and now they are managing around 22 billion dollars. A “great journey” that according to Richard Garland, Managing Director of the firm, it’s worth celebrating. That’s the reason why Investec Asset Management brought together over one hundred investment professionals from the Latin American and US Offshore business to participate in an “out of the ordinary” inspirational talk.

Last year, they had the presence of Robert O’Neill, the Navy Seal who shot Bin Laden in May 2011, and this year, they invited François Pienaar, the South African Rugby player who was the captain of the Springboks from 1993 until 1996, who is best known for leading the South African team to a victory in the 1995 Rugby World Cup. An unexpected win that was later narrated on John Carlin’s book “Playing the Enemy: Nelson Mandela and the Game that Made a Nation” and then turned into the film “Invictus”, directed by Clint Eastwood.  

A national hero

François Pienaar was born on the 2nd of January of 1967 into a bad time in South Africa, in which the basic human rights of ordinary South Africans were brutally violated. He grew up in Vereeniging, a small town close to Johannesburg. As a kid, he went to school with white children and never really interacted with black people, except for the lady that normally came his house to do some of the cleaning.

“The kids were not allowed to sit at the table with the adults. So, whenever the adults got together, the kids were going away to play, and we played in the garden with folks that were seated there and would talk about two things, sports and politics. And when it came to politics, Nelson Mandela’s name came up regularly, followed by the word terrorism, and comments about his coming out of jail as a disaster for the country. There was no debate. Very sadly, everyone agreed on that view and no one, me included, said anything or questioned”, explained Pienaar.

From an early age, sports played an important role in his life. It was through rugby that he earned an athletic scholarship to study Law at the Rand Afrikaans University. “My family did not have much money. Sometimes I could not go to play rugby because my parents could not afford it. Sports were my way to getting out of the industrial belt where I grew up. I did well at rugby and I got a scholarship to study law at the University of Johannesburg. There I met people very different from what it was my own world:  people that did not believe in god, that had a different religion, people that spoke different languages, and that had strong views about politics”, he continued.

Pienaar attended the University in the late 80s, but there were already rumors that Mr. Mandela was going to be released out of Victor Verster Prison soon. And he was finally released in February of 1990. The negotiations to end Apartheid also had a direct impact on sports, national teams were allowed again to come back to the international arena. In 1992, the Springboks, who had been excluded from the first two world cups in 1987 and 1991, were then readmitted by the International Rugby Football Board (now, World Rugby), to international championship. One year later, the new South African team was announced on television, on the main news, the names scrolled down the screen and Pienaar’s name appeared, he would be the captain of the team.  

In 1994, Mr. Mandela is elected the first black President of South Africa. In that moment, he pronounces an unforgettable speech: “The time for the healing of wounds has come. The moment to bridge the chasms that divide us has come. The time to build is upon us […]. Never, never, and never again shall it be that this beautiful land will again experience the oppression of one by another and suffer the indignity of being the skunk of the world. Let freedom rein. The sun shall never set on so glorious a human achievement! God bless Africa”. At that moment, he made a promise to the nation and he delivered on his promise.

Meeting Mr. Mandela

A couple of months later, knowing that South Africa was set to host the 1995 Rugby World Cup, the first major sport event held in the country since the end of Apartheid, Mr. Mandela wanted to use the power that sport has to inspire and awaken hope to unite the nation. So, he asked his personal secretary to schedule a meeting with François Pienaar. When they finally met, they talked for an hour in which Mr. Mandela asked him about his family, the rugby sport and the Olympic Games in Barcelona. He also spoke about his imprisonment in Robben Island. Once the conversation ended Pienaar knew that the country was in the hands of a very wise leader and that he felt safe.  

Before the opening match against the Australia’s Wallabies, a team undefeated in the previous twelve months and the favorites to win the game. Mr. Mandela went to see the Springboks at the end of the training. His helicopter flew and landed on a field not far from where the team was playing. He went one by one greeting every member of the team. One of the players gave him his cap, and he immediately put the cap on. He wished them good luck, went back to the helicopter and left.  

When the first match was about to start, Mr. Mandela appeared in the stadium wearing the Springboks rugby cap, a symbol of the white elite that was detested by the black majority; he got booed by the crowds, but he answered: “This is our team. These are our boys that are playing for us”.

According to Pienaar, that was an incredible moment that boosted the morale of the team. They were able to win the match comfortably, with a phenomenal performance that drove them to the final of the Rugby World Cup.

The final

At the Ellis Park Stadium, the Springboks would have to play against one of the best rugby teams that the world has ever seen, the New Zealand’s All Blacks. This team had the first rugby global superstar and arguably the sport’s biggest name playing for them, Jonah Lomu, “120 kilograms of muscles that ran 100 meters in 11 seconds”, according to Pienaar.      

The support for the Springboks had grown during the championship. All the people in the country, independently of their race, were cheering for their rugby team. “The day before the final, there was a group of black kids that saw us, and they started chanting the names of the players, something that they would never have known before the World Cup. They started running next to us with their beautiful smiles”, said Pienaar. “We were receiving messages from kids all over the country, and the kids had pour their hearts on them and they were beautiful to read”, he added.   

On that Thursday night, their coach, Kitch Christie, walked to every room and he put a little piece of paper under each door, a poem written by Theodore Roosevelt that said: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat”.

The following day, hours before the World Cup final, there were thousands of people waiting to cheer them around the bus that would drive them to the stadium. “There were about 50 motorcycles waiting to escort the bus to the final, and what it strucked me was how clean the motor cycles were. They must have been cleaned by the children the day before”, said Pienaar.  

The captain had a personal conversation with everyone in the team, asking them about their worries and how he could help to solve them. “Their rhetorical thinking led them to start wondering: What if I make a mistake? What if we miss a tackle? And my counter speech was: What if we don’t take our chances? What if we don’t give up our hope? What if we just play and come back without regrets?

Mr. Mandela came into the changing room with his Springboks’ cap and jersey on. With a beautiful smile he said to us: “Thank you for what you are doing for your country. Good luck”, and when he turned around, he was wearing my number on his back”, narrated Pienaar.

The team learnt to sing the national anthem together, understanding its lyrics, expressed in five languages: Africans, English, Xhosa, Zulu, and Sotho, to represent “one team, one country”, a chance to bridge the cultures and extend hands across a divided society. 

The final was an epic match. The Springboks missed their first tackle, but they got better and better, and the game went to the extra time. Pienaar reached the final minutes of the game with a calf strain that prevented him from running, but the coach insisted that he must stay on the field. “At the stadium, the people, mostly white South Africans, were chanting an African tribe song that means move forward. When I started hearing that song, I said to the team: “Live for your country, back each other, and we will be fine. This is the strategy to follow, let´s execute it”, and so we did”.

A drop goal from Joel Stransky led them to a three-point victory over the All Blacks. At the stadium everybody was chanting. At the streets everybody was celebrating and dancing. “I feel incredible blessed to have had the opportunity to experience how powerful sport is. When we won a reporter stuck a microphone next to my face and asked me: “François, tell us what was like to win in front of 65.000 people”, to what I replied: “We did not win in front of 65.000 people, we won for 43 million people. And the reason why I gave that reply was because we had already the feeling that the whole country was supporting the team. The gentleman who served us breakfast at the hotel was a Zulu, and he was concerned on whether we had eaten enough breakfast for the match. The lady who cleaned our room, was a Xhosa, and she asked if we needed extra pillows, so we could sleep better and rest. The trophy could never just be for the lucky few that got ticket to come to the game. As a team, we did win, because we wanted to make our country proud”, said Pienaar.  

“Mr. Mandela was one of the greatest politicians of his time, but he was also one of the greatest sportsman, in the sense that he gave us so much joy, which is the main power of a sportsman. He gave me a very clear instruction: “I want you to show love and passion”. When he passed away in December of 2013, the whole world stopped, he was in every newspaper. On the next 18th of July, it would had been his centenary. And we miss him. But we now have a new leader, Cyril Ramaphosa, who was one the one who held Nelson Mandela’s microphone when he was released from prison in Cape Town. He is now following Mandela’s footsteps. He is an extremely successful businessman who does not need to get involved in politics, he is doing it because he wants a better country”, he concluded.  

Aberdeen Standard Investment Is Celebrating its 20th Anniversary in the Latin American Institutional Business

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20 years have passed since Aberdeen Standard Investments (ASI) landed in the Latin American Institutional business. Back then, the asset management firm started visiting Chile to register their funds with the Chilean Superintendency of Pensions (SP) and made them available for Pension Fund Administrators (AFP) to invest. In those days, the team was formed by Bev Hendry, Chairman of Americas for Aberdeen Standard Investments, Silvana Barrenechea, currently relocated to the UK office and Linda Cartusciello, Senior Institutional Business Development Manager for the Latin American business.

In 2010, ASI established a partnership with Celfin Capital, a Chilean investment bank and asset manager with an important market share on the institutional distribution business for international asset managers. In 2013, Celfin Capital was acquired by BTG Pactual. However, in 2015, the original partners and executives that were in charge of the distribution business decided to continue working independently in a new firm named Excel Capital, which has maintained its relationship with ASI until today.  

In 2013, during the emerging market bull cycle, Aberdeen Standard Investments’ expertise in that asset class led to a peak of 6 billion dollars in assets under management, involving several pure equity and emerging market strategies for institutional clients in Chile, Colombia and Peru, always counting on Excel Capital International as their local distribution branch for the institutional business. Nowadays, ASI’s Latin American business totals 5 billion dollars in assets under management, belonging two third of the assets to the institutional business and one third to the wealth management business.

Aberdeen Standard Investments’ presence in the Americas region

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Seated, from left to right: Rocío Hernández, Client Manager, Linda Cartusciello, Senior Institutional Business Development Manager, Erika Gucfa, Investment Manager & Private Markets. Standing, from left to right: Bev Hendry, Chairman of the Americas, Jeff Klepacki, Head of Distribution, David Blackwood, Business Management. (All of them, from Aberdeen Standard Investments).

In August 2017, the merger between Standard Life and Aberdeen Asset Management was completed. The group’s combined investment business, Aberdeen Standard Investments, with over 1.000 investment professionals, and 778 billion dollars in combined assets under management as December 2017, is now one of the largest asset management firms globally.

Campbell Fleming, Global Head of Distribution, leads the Asia-Pacific, EMEA-UK and Americas regions, and Jeff Klepacki, Head of Distribution of Americas, supervises the Canadian, the US and Latin American markets. In Canada, ASI has an office in Toronto, where they hold a sales team, a distribution team and a compliance team. In the US, they have offices in Philadelphia, Boston, New York, Stanford, Los Angeles and Miami, where Menno de Vreeze, Head of Business Development for the US offshore Business, will be soon relocating to cover Latin American retail business. Whereas, in the domestic Latin America-ex-Brazil region, Linda Cartusciello covers the institutional business, the Pension funds, AGFs & State Entities and the partnership with Excel Capital International in the Andean region, Rocio Hernandez is in charge of the Client Service from the Madrid office, and George Kerr, director of Aberdeen Standard Investments’ Brazil office, covers the distribution business for pension funds, wealth management firms and family offices within Brazil.

In terms of assets under managements, the Americas region represents 80 billion dollars, most of this volume is the institutional business of United States and Canada, but they also hold around 15 billion dollars in domestic mutual funds (40 Act) and for the Latin American business, including institutional and offshore business, about 5 billion dollars.

“The merger has given us scale, now we are the second largest asset management in Europe and one of the largest in the world. It is also giving us a more diverse range of products. To be fair, Aberdeen Asset Management, and mostly in Latin America, was best known for its pure equity strategies, investing either on emerging or Asian-Pacific markets, but now, Aberdeen Standards Investments can offer a full range of investment strategies, including alternative investment products,” said Bev Hendry.   

“What may work in Europe, may not work for Latin American investors, especially in those countries in where there are very high interest rates. In developed economies, interest rates are next to nothing and investors are in a constant search for yield. On the other hand, investors from Brazil or Argentina may not be searching as much for yield, but for diversification. In Brazil, we have set out a couple of local products. Right now, they are small in volume, but we are seeing a good improvement in the economy and we trust that the country will recover from the crisis. So, we are expecting good results in Brazil on the next year. We have two interesting things going on, firstly, the external investors are looking to invest in Latin America and secondly, Latin American investors have now the confidence to invest in their own region,” he added.  

“The Latin American business was not particularly affected by the merger because Standard Life did not have a distribution plan in place yet. They have registered about 15 to 20 mutual funds in Luxembourg, but they did not have a designated distribution team, something that has worked great for us, as the Latin American distribution team now has more product to distribute,” continued Jeff Klepacki.  

“We try to listen to our clients first, and really get an understanding of what their needs are for investing. As they become older and more reliant on their pensions, they do get more conservative, with a longer term in their investment approach. That is why we are having success with products like frontier bonds or Indian fixed income strategies, because the offer an attractive yield. We have also seen a restored appetite for China A Shares, Japanese and Latin American equities. We like to make sure we understand what the Latin American Institutional clients’ needs are, and we do that by working with Excel Capital, as they provide us a good handle on the market. We also want to educate clients on our new firm and what new capabilities we are gaining. For pension plans, we will hold the institutional conference in London, in November, and as always, we will invite some of our clients from Latin America. There, they will get to meet our portfolio managers and get to hear our outlook around the world. It is a good chance to stay connected to our clients in Latin America, because their risk appetite is very different, we have to make sure we have the right products to suit their needs,” he said.

“Although 95% of the assets that we manage for Latin American institutional investors are invested in equity strategies, Aberdeen Standard Investments’ equity franchise is opened to do new things, with structural changes and re-evaluating new opportunities. For example, before we did not invest directly in China, only through Hong Kong listed companies,  today we have  significant investments in China A shares.  Additionally, our exposure to sectors, which used to be a direct consequence of our bottom-up investment approach, now we have a dedicated research that provides macroeconomic insights and its outlook by sectors, like Technology” commented Linda Cartusciello.  

Alternative investments

Aberdeen Standard Investments has capabilities in quantitative investment and smart beta strategies. They can apply different factors to indices, depending on investors’ concern about volatility, dividend yield or price momentum, putting all these factors into an investment strategy they are developing a retail smart beta strategy, aiming to outperform the market.  They also use ESG factors embedded in their investment process to measure companies’ carbon footprint and have a carbon fund strategy to help with the environment. 

But, their most recent development in alternative investments is the strategic partnership that a couple of years ago was formed between Aberdeen Standard Investments’ Infrastructure team and a Colombian boutique advisory company, LQA Funds SAS. Together they have launched a first fund of 250 million dollars that are hoping to invest over the next 3 or 4 years, in about 10 to 12 projects in Chile, Colombia, Mexico, Peru and Uruguay. 

“We are currently fund raising now for an Andean Infrastructure project that invest in public and private placements. We would partner with a local government as an outside investor to help to build for a hospital or schools. The product is managed from Bogota, Colombia, where we partner with a local fund called LQA Funds. They are the local real estate experts, they find the projects and help on the due diligence to determine whether we want to bid for the project or not and we do the fund raising and the portfolio management,” explained Mr. Klepacki.

New opportunities in Mexico

Regarding the recent change in the Mexican pension funds regulation, which will allow Afores to invest in international mutual funds, Linda Cartusciello commented that they are speaking directly with the CONSAR (the Mexican National Commission for the Retirement Savings System).

“We are thrilled to launch a successful institutional business in Mexico. Throughout these 20 years of developing business in the region, we count with a deeper knowledge and wider experience, we are better organized working with our colleagues based in Luxembourg, Singapore, London and USA offices. We have selected the right people with the right training. All of us are highly committed to serve the Latin American market. I am very proud of our achievements and very grateful with the unconditional support from the Management Team in our group”, concluded Ms. Cartusciello.

Sembrar en primavera: ¿La rosa pierde su atractivo?

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Spring Planting: Bloom Off The Rose?
Foto: Pxhere CC0. Sembrar en primavera: ¿La rosa pierde su atractivo?

Las condiciones económicas que han apoyado a los mercados en el último año siguen floreciendo, pero este año ha visto una variedad de factores que pesan sobre el sentimiento de los inversores. Las preocupaciones sobre el aumento de las tasas de interés, las valoraciones de las acciones (a pesar de sólidos resultados empresariales), así como las posibles interrupciones en relaciones comerciales y las nuevas regulaciones tecnológicas, han conducido a una mayor volatilidad en 2018. Aún así, existen oportunidades en este mercado para aquellos con enfoque y disciplina.

Sigue tu camino

La Reserva Federal (Fed) continúa su camino de alzas de las tasas de interés este año. Aún así, y aunque las condiciones financieras se han ajustado moderadamente, siguen siendo relativamente laxas, al menos según estándares históricos. En este entorno, es particularmente interesante monitorear el sector financiero. Las perspectivas podrían mejorar si la curva de rendimiento, que se ha aplanado desde el comienzo del año, se inclina. En ese caso, la mejor ofensa es una buena defensa. La volatilidad ha subido más, pero en una era de tasas crecientes, lo que constituye una cobertura efectiva para la cartera está cambiando. En lugar de  usar «proxies de bonos» con altos dividendos, que podrían hacer más daño que bien en una era de mayores tasas e inflación en los EE. UU., defenderíamos una asignación a empresas de calidad.

En un contexto de condiciones financieras moderadamente más estrictas, pero todavía relativamente laxas según los estándares históricos, seguimos prefiriendo los sectores de crecimiento, es decir, la tecnología y las compañías financieras, así como el factor de impulso. Para lograr esto, un inversor puede considerar utilizar ETFs como el iShares U.S. Financial Services ETF (IYG), el iShares North American Tech ETF (IGM) y / o el iShares Edge MSCI USA Momentum Factor ETF (MTUM).

Dado el contexto económico actual, también seguimos favoreciendo el factor impulso, que podría ser apreciado por el iShares Edge MSCI USA Momentum Factor ETF (MTUM). Sin embargo, los inversores también pueden considerar una asignación al factor de calidad con el iShares Edge MSCI USA Quality Factor ETF (QUAL).

Mercados emergentes: actualización con la inclusión de las acciones clase-A de China

Este junio, se produce un importante evento en el mercado: MSCI comenzará a incluir acciones Clase-A de China, cotizadas en Shanghái, en sus índices clave, lo que amplificará la importancia de China en los puntos de referencia clave. Las perspectivas económicas y de reformas nos tienen constructivos respecto a las acciones chinas, pero la entrada al MSCI tiene implicaciones importantes para los inversores y la forma en que piensan sobre los mercados emergentes.

La inclusión de las acciones Clase A Chinas ocurre en un momento en que somos constructivos en las acciones chinas. Consideramos que las amenazas proteccionistas de EE.UU. son tácticas de negociación en gran medida, mientras que las reformas chinas, un entorno de crecimiento estable y una sólida perspectiva de ganancias empresariales pueden respaldar a las acciones. Esto se refleja en ETFs como el iShares MSCI China ETF (MCHI), el iShares MSCI China A ETF (CNYA), el iShares MSCI China LargeCap ETF (FXI) y/o el iShares MSCI China SmallCap ETF (ECNS).

Oportunidades dentro de los bonos de grado de inversión

Aunque estamos infraponderados en renta fija y dentro de la clase de activo, neutrales en bonos de grado de inversión, los diferenciales se han ampliado y los niveles actuales presentan un valor razonable desde una perspectiva de diversificación general de la cartera. Consideraríamos las oportunidades en notas a tipo variable, exposición a tasa fija de vencimiento más corto o posiciones con cobertura de tasa de interés.

Es un entorno difícil para los bonos, pero creemos que el crédito con grado de inversión ahora puede ofrecer un valor razonable en el contexto general de la diversificación de la cartera. Una forma de lograrlo sería usar ETFs como el iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), el iShares 1-3 Year Credit Bond ETF (CSJ), el iShares Floating Rate Bond ETF (FLOT) y / o el iShares 0-5 Year Investment Grade Corporate Bond ETF (SLQD).

El rally de los commodities o productos básicos

Las materias primas han tenido un fuerte comienzo de año, superando al índice S&P500 en casi un 10%. En este punto, las acciones energéticas pueden tener más espacio para operar que los productos básicos en el corto plazo, pero los inversionistas que buscan diversificar el riesgo o protegerse contra la inflación podrían considerar la exposición a los productos básicos.
Históricamente, los productos básicos han ofrecido cierta protección contra la inflación y brindado beneficios de diversificación. Si se busca incluir o aumentar la exposición a productos básicos, se podría considerar el iShares U.S. Energy ETF (IYE).

Puede encontrar más información en el comentario de primavera de iShares por BlackRock.

Build on Insight, de BlackRock, escrito por Chris Dhanraj

Gershon Cohen (Aberdeen Standard Investment): “Right Now, One of the Best Places to Invest in Infrastructure Projects is the Andean Region”

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Over the last two decades the ASI Infrastructure Platform has only ever invested in social and economic infrastructure projects. From their London and Edinburgh offices, in UK, they invested in government concessions, called Public Private Partnerships, which offer investors attractive risk-adjusted returns with a low correlation to economic cycles and other asset classes.

The Infrastructure Investment Team built a successful franchise that was then exported to Europe, opening offices in Paris and Madrid to cover all the Euro zone. Later, the team decided to expand to Asia, installing an office in Sydney, from where they invest in Australia, New Zealand and United States in funds that are targeted at US and Australian dollars. Last year, they decided to tap into the Andean region and the Latin American market, launching a fund targeting Social and Economic infrastructure projects in the Andean region.  

According to Gershon Cohen, Global Head of Infrastructure Funds, his team tend to work closely with global contractors and operators in infrastructure, organizations that they consider their industrial partners, some of them are renown companies like the Spanish construction company Grupo Ferrovial or the French firm Bouygues, who specializes in developing, building and operating infrastructure projects around the world.  

“We work with our industrial partners in bidding for concessions and the opportunity to invest in infrastructure through these concessions. We are backed by some of the worlds’ leading investors in infrastructure. Investors that, for the last 20 years, have pioneered in infrastructure investments, like the large Dutch sovereign wealth fund, as well as the South Korean and some of the Chinese funds, and some of the very large private equity groups, like Partners Group. These groups have supported us on our journey”, said Mr. Cohen.

“When we invest in infrastructure and concessions, we are always looking for a degree of political, fiscal and economic stability, as well as legal certainty. All these characteristics are relative, because they have a different mix and degree depending on which part of the world you are investing. However, we try to marry the opportunity to invest with the needs of our investors and with a degree of stability. In that sense, UK and US are a very stable place, Europe is fairly stable and Australia a very good place to invest. But, we also look for governments that are wanting to bring forward a large pipeline of investment opportunities, and right now, one of the best places that has all these ingredients is the Andean region in Latin America. Argentina and Brazil also present many opportunities, but currently Chile, Colombia, Mexico, Peru and Uruguay offer more economic and political stability, in our view. Especially now that Colombia has just became a member of the OECD and Peru is on its journey to become a member of this organization”, he added.

The Latin American footprint

The Infrastructure Investment Team always thinks on a long term basis, elucidating which economies will look more stable from a political perspective and which ones will want to bring forward infrastructure projects to support their growth. In the specific case of Latin America, they invest in infrastructure projects that build roads, rails, schools, hospitals or water treatment plants. Even today, a high proportion of the population in Peru does not have access to clean drinking water, therefore, there is a big need to invest in projects that can treat water and convert it into potable water. Health, education and transportation are big issues as well.       

“We are genuinely the only social infrastructure fund focused on the Andean region. There is no other competitor that are active and have offices on the ground or have capital dedicated to the region. Many of our peers are investing from their global vehicles, flying in and out, but giving the institutional way into our commitment to the region for a very long time, we have invested in developing a partnership with people on the ground, to gain a first movement advantage in the region, because we are honestly excited about building a team in Latin America”, said Ivan Wong, Deputy Head of Primary and Secondary Funds’ Investments and Asset Management at Aberdeen Standard Investments.      

A couple of years ago, the ASI Infrastructure team team formed a strategic partnership with a Colombian based organization, a boutique advisory company – LQA Funds SAS that has a long track record in raising capital for infrastructure projects with both the government and the private sector; and was looking to become more of a fund manager. Last year, they launched a first fund of 250 million dollars that are hoping to invest over the next 3 to 4 years, in about 10 to 12 projects in Chile, Colombia, Mexico, Peru and Uruguay.

“We team up with our industrial partners to bid for contracts. Hopefully, if we are successful and the investors supporting us are pleased with the results, maybe in 2 or 3 year-time, we would do another fund, and maybe after that, another one. That is our strategy: to create a long-term presence in Latin America’s infrastructure environment. Later, on, we could bring up alternative or private equity strategies.

In mature economies, infrastructure has become so well understood that there is an oversupply of capital and less supply of projects, causing returns to decrease. However, the slightly more emerging economies -with relative political and economic stability- offer a similar risk profile and infrastructure projects yield mid-teens returns. If we stayed in Europe now, we will not be able to achieve that type of returns. That is why we are making a strong commitment to the region, we have an office in Colombia with seven people from the strategic partner, some more people will join our local partner from our teams in Madrid and Australia”, explained Mr. Cohen.   

“As we become more familiar and successful within the region, and there is more economic stability in other parts of Latin America, we could look to broaden our scope to Argentina or Brazil, but we are very cautious. For 20 years, we have been gradually growing our platform and it makes sense to be cautious when you are entering in a new part of the world. We often say we are not very exciting, but in a world of volatility, long-term institutional investors are delighted to trust their pension funds money to us, because we have a very long term outlook and a track record that supports this”, added Mr. Wong.

The challenges of the region

Latin America’s economies are not simple, Colombia has just finished a long-term conflict and they still have some issues pending and Peru is going through a change of president, which is normally not easy. But, because ASI Infrastructure Team has presence on the ground, they can explain their investors in a transparent manner the complexities of the region. “Latin America’s investors are predominantly American leading investors that have already been invested in the region for many decades, so they actually appreciate the understanding that we have gained, and they recognize the challenges of the region. Nowadays, the US has more economic ties with Latin America than ever before, mainly due to political and macroeconomic issues. It is being an interest journey for us. We are delighted to be doing what we are doing and it is going very well”, concluded Mr. Cohen.

Mexico is Under Pressure to Raise Rates as the Mexican Peso Loses its Shine

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On June 21 the Board of Governors of the Central Bank of Mexico will meet to decide the fate of the policy rate, we now expect them to hike +25 bps. In our view, the balance of risks to inflation deteriorated from the last meeting, pressuring Banxico to increase the policy rate to 7.75%, as MXN has been losing its shine. Last Friday we learned from the CME that the long peso non-commercial positions change to negative after peaking this year on April at 18 pesos per dollar (see Chart 1).

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The right policy tool is a hike in rates compared to an outright intervention in the FX market. We judged that the current level of the MXN at 20.7 is fully explained by the general depreciation of emerging market currencies, and the increase in the size of the deviation between MXN and its peers relates to the recent rise in NAFTA and trade tariffs jitters (see Chart 2). In this context, an FX intervention will only be warranted if MXN level was out of context with current risks due to a speculative attack which is not the case.
 

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The recent rout in emerging market currencies has proven to be more aggressive (and less temporary than previously thought) with those currencies perceived as their Central Banks being behind the curve. Standing out the Turkish Lira and the Argentine Peso, where their Central Banks were forced to hike since May to date 900 and 975 bps respectively. Also, India, Indonesia, and Philippines have hiked 25, 50 and 25 bps respectively. The market could well be starting to re-price the beginning of the year scenario of balance global growth benefiting emerging markets, to one where only the US growth is standing out. If this is the case, Mexico’s recent weak industrial production performance puts us at a disadvantage.

Even though we have argued that if something Banxico has been ahead of the curve, they will not want to miss an opportunity like this one to reaffirm their position. This is specially true when other risks particular to Mexico have increased, including the likelihood of the next administration negotiating NAFTA, the recently imposed tariffs on Steel and Aluminum, and the threat of the trade war escalating with direct consequences to inflation.

We believe Banxico will not miss this opportunity to reaffirm its ahead of the curve stance when the market is already pricing in the TIIE curve with more than 90% probability a 25 bps move in June. Also, the market is pricing +38 bps by August. With a +25 bps hike in June, Banxico will put itself in a better position to cover the new risks and the ones they have been more worried about related to a post-electoral dispute in case of a close outcome.

Column by Finamex, written by Guillermo Aboumrad, Chief Economist

Durante mayo, los precios de los acuerdos en fusiones y adquisiciones a nivel mundial tocaron nuevo récord

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During May, Worldwide Deal Making Values Spiked to a New Record
Foto: David Buchi. Durante mayo, los precios de los acuerdos en fusiones y adquisiciones a nivel mundial tocaron nuevo récord

El mercado de valores de EE.UU. tuvo un excelente mayo, con el mejor rendimiento desde enero y el mejor desde mayo de 2009. Las incertidumbres políticas en Europa están aumentando a medida que se forma un gobierno euroescéptico en Italia y un gobierno recién elegido toma el control en España. La Reserva Federal de Atlanta elevó sus perspectivas de crecimiento económico de Estados Unidos en el segundo trimestre a un 4,7% a fines de mes, frente al 4% anterior. La economía robusta está estrechando el mercado de trabajo y los salarios y la inflación son el centro de atención.

Mientras tanto, la Administración de Trump ha impuesto aranceles a las importaciones de aluminio y acero de Europa, Canadá y México y está avanzando con acciones proteccionistas en China. Estos movimientos se basan en la idea de que las guerras comerciales pueden ganarse ya que las economías extranjeras dependen de los compradores de Estados Unidos. El estilo impredecible de comunicación y toma de decisiones del presidente Trump ha agregado una nueva variable a la recopilación de datos y al análisis de inversiones. Un nuevo ítem de la agenda en proceso ahora incluye la posibilidad de una guerra comercial de múltiples frentes, y movimientos de represalia pueden estar en camino.

Los beneficios corporativas registraron fuertes ganancias en el primer trimestre en conjunto, pero hasta ahora esto no se ha reflejado en un alza proporcional de los precios de las acciones. Además, una determinada Reserva Federal se mantiene en camino a normalizar las tasas de interés con continuos aumentos de las tasas de política y un balance general decreciente durante 2018 y hasta 2019.

La actividad de fusiones y adquisiciones se aceleró mucho más el ‘Lunes de Fusiones’ del 21 de mayo, ya que los acuerdos anunciados aumentaron los precios de los acuerdos anunciados hasta un nuevo récord por encima de los 2 billones de dólares (trillions en inglés). Los registros anteriores para los mismos marcos de tiempo se establecieron en 2007 y 2000, con 1,8 y 1,5 billones respectivamente. Los diferenciales de los acuerdos sujetos a revisiones chinas se confirmaron en mayo, incluido Cavium (CAVM -NASDAQ), que está siendo adquirido por Marvell Technology; Rockwell Collins (COL-NYSE), que está siendo adquirida por United Technologies; y, la compra por Qualcomm de NXP Semiconductor (NXPI-NASDAQ). Además:

  • El 15 de mayo, Microchip Technology anunció que recibió la aprobación antimonopolio en China para la adquisición de Microsemi Corp. (MSCC-NASDAQ), una buena noticia dada la reciente desaceleración de las revisiones chinas. El acuerdo se completó posteriormente el 29 de mayo.
  • Las acciones de Monsanto (MON-NYSE) cotizaban al alza luego de que Bayer llegó a un acuerdo con el Departamento de Justicia de los EE.UU. (DOJ) para vender activos a BASF que satisfacían las preocupaciones del Departamento de Justicia. En mayo de 2016, Monsanto aceptó ser adquirida por Bayer por 128 dólares en efectivo por acción, o alrededor de 66.000 millones. La transacción se cerró recientemente.
  • El desarrollador biofarmacéutico Avexis (AVXS-NASDAQ) fue adquirido por Novartis el 15 de mayo por 218 dólares en efectivo por acción, o alrededor de 8.000 millones de dólares.

Mayo fue otro mes activo para fusiones y adquisiciones con nuevas ofertas que incluyeron:

  • Shire plc (SHPG-Nasdaq), una compañía biofarmacéutica centrada en tratamientos para enfermedades raras, aceptó ser adquirida por Takeda Pharmaceutical Co. por 30,33 dólares en efectivo y 0,839 acciones ordinarias de Takeda por cada acción de Shire, o alrededor de 80.000 millones de dólares.
  • Grammercy Property Trust (GPT-NYSE), un REIT enfocado en la administración de bienes raíces comerciales, acordó ser adquirido por Blackstone por 27,50 dólares en efectivo por acción, o alrededor de 7.000 millones.
  • KLX Inc. (KLXI-NASDAQ) anunció que escindiría sus negocios de servicios de energía y vendería su negocio de distribución y servicios aeroespaciales a Boeing por 63 dólares en efectivo por acción. La transacción valora a KLX en aproximadamente 5.000 millones de dólares.

Seguimos estando bien posicionados para aprovechar las oportunidades continuas que estamos viendo en el mercado.

Columna de Gabelli Funds, escrita por Michael Gabelli

Para acceder nuestra metodología de inversión y cartera de arbitraje de fusión dedicada, ofrecemos los siguientes fondos UCITS en cada disciplina:

GAMCO ARBITRAJE DE FUSIÓN

GAMCO Merger Arbitrage UCITS Fund, lanzado en octubre de 2011, es un fondo abierto incorporado en Luxemburgo y que cumple con la regulación UCITS. El equipo, la estrategia dedicada y el registro datan de 1985. El objetivo del Fondo de Arbitraje de Fusión GAMCO es lograr un crecimiento de capital a largo plazo invirtiendo principalmente en transacciones anunciadas de fusiones y adquisiciones de acciones manteniendo una cartera diversificada. El Fondo utiliza un enfoque de inversión altamente especializado diseñado principalmente para beneficiarse de la finalización con éxito de las fusiones, adquisiciones, ofertas públicas, adquisiciones apalancadas y otros tipos de reorganizaciones corporativas propuestas. Analiza y supervisa continuamente cada transacción pendiente por posibles riesgos, incluidos: reglamentación, términos, financiación y aprobación de los accionistas.

Las inversiones de fusión son una alternativa altamente líquida, no correlacionada con el mercado, probada y consistente con los valores de renta fija y de renta variable tradicionales. Los retornos de fusión dependen de los diferenciales de oferta. Los diferenciales de oferta son una función del tiempo, la prima de riesgo de transacción y las tasas de interés. Por lo tanto, los rendimientos están correlacionados con los cambios en las tasas de interés a mediano plazo y no con el mercado de valores en general. La perspectiva de un aumento de las tasas implicaría un mayor rendimiento de las fusiones a medida que los diferenciales se amplíen para compensar a los arbitrajistas. A medida que disminuyen los mercados de bonos (aumentan las tasas de interés), los rendimientos de las fusiones deberían mejorar a medida que las decisiones de asignación de capital se ajustan a los cambios en los costos del capital.

La volatilidad del amplio mercado puede conducir a la ampliación de los diferenciales en las posiciones de fusión, que, junto con nuestras carteras de fusiones bien documentadas, ofrecen el potencial de TIR mejoradas. Las fluctuaciones diarias de la volatilidad de los precios junto con un capital menos propietario (la regla de Volcker) en los Estados Unidos han contribuido a mejorar los diferenciales de las fusiones y, por lo tanto, los rendimientos generales. Por lo tanto, nuestro fondo está bien posicionado como alternativa de sustitución de efectivo o renta fija.

Nuestros objetivos son acumular y preservar la riqueza a lo largo del tiempo, sin dejar de estar correlacionados con los amplios mercados globales. Creamos nuestro primer fondo de fusión dedicado hace 32 años. Desde entonces, nuestro rendimiento de fusión ha aumentado los activos de los clientes a una tasa anual de aproximadamente 10,7% bruto y 7,6% neto desde 1985. Actualmente, administramos activos en nombre de clientes institucionales y de alto patrimonio global en una variedad de estructuras de fondos y mandatos.

Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476

GAMCO ALL CAP VALUE

El Fondo UCITS GAMCO All Cap Value, lanzado en mayo de 2015, utiliza el PMV patentado de Gabelli con una metodología de inversión Catalyst ™, que funciona desde 1977. El Fondo busca rendimientos absolutos a través de la inversión de valores impulsada por eventos. Nuestra metodología se centra en la inversión con un enfoque fundamental y  bien investigado para conseguir las mejores oportunidades, con un enfoque en valores de activos, flujos de efectivo y catalizadores identificables para maximizar los rendimientos independientemente de la dirección del mercado. El fondo se basa en la experiencia de su equipo de cartera global y más de 35 analistas value.

GAMCO es un inversor activo de valores con enfoque bottom-up que busca lograr una apreciación real del capital (en relación con la inflación) a largo plazo, independientemente de los ciclos del mercado. Nuestro proceso de selección de valores orientado al valor se basa en los principios fundamentales de inversión articulados en 1934 por Graham y Dodd, los fundadores del análisis moderno, y aumentados por Mario Gabelli en 1977 con su introducción de los conceptos de Private Market Value (PMV ) con un Catalyst ™ en el análisis de la renta variable. PMV con Catalyst ™ es nuestra metodología de investigación única que se enfoca en la selección de acciones individuales identificando empresas que se venden por debajo del valor intrínseco con una probabilidad razonable de realizar sus PMV, que definimos como el precio que un comprador estratégico o financiero estaría dispuesto a pagar por la totalidad empresa. Los factores de valoración fundamentales es utilizada para evaluar valores antes de la inclusión / exclusión en la cartera, nuestro enfoque, impulsado por la investigación, considera el análisis fundamental como un enfoque de tres frentes: flujo de efectivo libre (ganancias antes de intereses, impuestos, depreciación y amortización, o EBITDA, menos los gastos de capital necesarios para crecer / mantener el negocio); tendencias de ganancias por acción; y el valor de mercado privado (PMV), que abarca los activos y pasivos dentro y fuera del balance. Nuestro equipo llega a una valoración PMV mediante una evaluación rigurosa de los fundamentales de la información disponible al público y el juicio obtenido de la gestión de reuniones, que abarca empresas de todos los tamaños a nivel mundial y nuestro amplio conocimiento acumulado de una variedad de sectores. Luego identificamos negocios para la cartera con un margen adecuado de seguridad y respaldado por nuestra investigación profunda.

Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155

Armistead Nash (Morgan Stanley Investment Management): “We Try to Invest in Those Companies that Are Exposed to Minimal Disruption Risk”

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This year, Morgan Stanley Investment Management is celebrating the 20th anniversary of the Growth Team. The team’s strategies emphasize long-term concentration of capital in what the team believes to be high quality companies with sustainable competitive advantages and an attractive free cash flow profile: MSIF Growth Portfolio, MSIF Advantage Portfolio and MSIF Global Advantage Portfolio.    

To commemorate this milestone, Morgan Stanley’s distribution team for the Latin American and US Offshore business, led by Carlos Andrade, invited more than 80 investment professionals, including fund selectors, portfolio managers, CIOs and top producing offshore financial advisors, to the EAST Hotelin Miami to participate in a discussion about disruption and permanence and how both concepts are incorporated into portfolios. Leading the debate, three members of the Growth Team: Stan DeLaney, Managing Director and disruptive change researcher, Armistead Nash, Managing Director and an investor on the team, and Mary Sue Marshall, Managing Director and portfolio specialist; who shared their views on secular trends and big changes coming from disruption on technology and disruption in business models. 

The disruption landscapes

According to the Growth Team, disruptive changes play a very important role in their research process. As long-term investors, they focus on companies they believe to have a sustainable competitive advantage. To separate the wheat from the chaff, they need to have a good handle on the competitive environment that these companies face and the tech disruptive forces that may impact them over time.

From their experience, they state that disruption almost always fits into one of two types of paradigms: bottom-up disruption or top-down disruption. The first one, would represent those products or services that are not that good, but are so much cheaper than anything else in the market. Over time, people adopt them, the products or services improve, and the adjustable markets expands. The second type, a top-down disruption, would consist of those products or services that have a premium performance and price comparing to existing offer in the markets. As the technology improves, their cost declines and their markets expand.

 “Back in 2004, we started working on the digitalization of advertising. At that time, executive directors and media had already realized that online advertising was a completely different animal, mainly because of its measurability. Our hypothesis was that, over time, companies will eventually migrate their ads from traditional media into internet. Fourteen years ago, 20% of the media time was spent on the internet, but only 4% of the advertising dollars were spent there. The relationship between advertising dollars and GDP has always being about 2% to 3%, and we do not think that will change. Today over 35% of advertising dollars are spent online, being online roughly internet and mobile, and over 50% are media that have transferred to online”, said Stan DeLaney.  

Optimizing for the minimal disruption risk

Additionally, Armistead Nash believes that it is necessary that investors have a view on disruption and the competitive landscape the companies they invest in are facing. Especially nowadays, in a world where disruption is happening faster than ever before, driven by several different forces. 

“One important factor of disruption is certainly the internet software space. The price of computing power has come down significantly with the advent of large cloud infrastructure players. Small businesses now have the capacity to outlay less capital investment upfront for their technology infrastructure. They can just rely on the computing power provided by these large cloud infrastructure players, and consequently, there are more start-ups coming to the internet and software space. We also feel that, with the advent of the internet and global funds, companies can have a broad distribution and approach to services like never before at a much lower cost. All these factors are driving an accelerated pace of innovation and change and starting out some new competition. It is precisely in this environment when it is more important to have a handle on the competitive landscape and to have a view out for the next three to five years, to invest in those companies that are exposed to minimal disruption risk”.

Considering its relation to disruptive change, Nash differentiates four groups of stocks: “First, we try to invest in companies that offer a product or service with very few or no substitutes. Second, we invest in companies that have an innovative culture, that despite incurring into failures, continue to invest a significant amount of capital back into new product launches. The third type of stock that we include in our portfolios are those that have the willingness to alter their product or business model based on the consumer preferences or the market demand. And, finally, the fourth type of company we invest in, are those companies that are not over-earning or over-charging relatively to the value that they provide to customers, avoiding creating an environment in which other enterprises can generate disruption in terms of pricing.

At a portfolio level, we intend to mitigate the impact of disruptive change from a risk manager perspective. First and foremost, we make sure we are using conservative assumptions in our financial projections for the companies that we invest in. Next, we avoid those businesses in which we do not have an edge on or we do not feel we have a competitive advantage”, he explained.  

Sandra Crowl (Carmignac Gestion): “We Are in the Start of a Structural Dollar Depreciation Tendency”

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For more than ten years, Sandra Crowl has been both Member of the Investment Committee and a Portfolio Advisor at Carmignac Gestion, the European leading asset management firm that was founded in 1989 by Édouard Carmignac and Eric Helderlé. Ms Crowl, who holds a bachelor’s degree in Economics and French from the University of Melbourne and, since 2007, is also a Chartered Alternative Investment Analyst (CAIA). She started her career at Bankers Trust Australia in 1987, before transferring to Paris in 1991. Two years later, she became Managing Director and Head of European Foreign Exchange in London. In 2003, she returned to Paris and specialized in fund management seeding at New Alpha Advisers, a subsidiary of ADI. Four years later, she joined Carmignac Gestion.

Latin American investors be aware

Ms. Crowl believes that the tightening of Central Bank’s liquidity is going to create a great deal of volatility in fixed income markets, therefore, investors -particularly Latin American investors who traditionally have a fixed income bias-, should change their focus away from passive management towards active management. “We are seeing a great deal of interest in our unconstrained global bond strategy, a strategy that provides the flexibility necessary in a rising interest rate environment. It is a non-benchmark strategy able to invest across sovereign and corporate debt, both in developed and emerging markets. Considering our commitment to investors, we want to make sure that we provide an appropriate risk framework for them. We do contain some of the risks by having internal limits on some sub-classes of bonds, like the contingent convertible bonds or structured credit. We have four fixed income strategies and all them, at the aggregate part of their portfolio, must have an average credit rating of investment, they will not ever become high yield strategies,” she said.  

On the bond side, Ms. Crowl suggests a very diversified bond portfolio that is still concentrated on sovereign issuers that are providing high real yields today. That would be the case of the sovereign debt in Greece, Mexico or Brazil. “Sovereign bonds with good real yields will act as a cushion for future volatility. Using our expertise for identifying value opportunities, we could also invest in cheap corporate bonds that are perhaps being sold off indiscriminately by the market. We also want to build up our portfolios in structured credit strategies based on floating rates, a suitable asset class in a rising interest rate environment,” she added.  

Carmignac’s unconstrained global bond strategy aims to protect investors in a bond bear market. As is clear in the Funds prospectus, the strategy has the capacity to actively manage modified duration, ranging from -4% to 15% and it can take short and long positions in currencies. “If we are invested in a country where there is short term volatility, we may want to hedge the currency for short periods but stay invested in the local debt of the country. That is the case of Brazil today, while we are very confident about their macroeconomic recovery and improved current account , we are less sure of the political outcome of elections later this year. Whereas in Mexico, we have chosen not to hedge the currency, that is to stay invested in local currency debt.”     

Uncertainty in Latin American

Ms. Crowl states that, despite the short-term risk that Argentina is currently experiencing, Carmignac Gestion is very positive about the fundamental improvements through economic reforms achieved since Mr. Macri became president. “Recently investors lost confidence in the independence of the central bank, inflation was accelerating, but Mr. Macri has always delivered on budget reform. He has recently promised even more constraint with will sooth credit agencies nerves. And we expect inflation to drop back in the second half of the year. Some large international money managers have already bought back into the asset class just one week after the Central Bank of the Republic of Argentina raised rates and Macri asked the IMF for a credit line. The announcement of the assurance by IMF to provide funding necessary for future months will be considered as a positive catalyst. Also, they could obtain support albeit smaller from the Bank of International Settlements.”      

Regarding Mexico, this year elections have added uncertainty to the ongoing renegotiation process of the NAFTA agreement. “It appears that Mr. López Obrador will lead the incoming government. This provides a bit of challenge going forward should the NAFTA agreement be decided before US mid-term elections. We believe the new government may create some difficulties with whatis has been previously signed under Peña Nieto’s term. There is a small degree of risk premium built into Mexican assets today, the election risk is being correctly priced by markets. We believe Mexican assets will be positively revalued as soon as a relatively friendly NAFTA agreement can be discerned,” she added.    

A not so positive view on the US or the dollar?

For 2018, the market consensus is expecting a 2.8% of GDP growth in the US, but Carmignac Gestion is expecting a slightly less, something around a 2.2% for the end of the year. “We do not anticipate the investment cycle to be as robust as it has been in last years. We do not think that corporate firms will be able to use the fiscal reform to create jobs or to implement strong capital expenditures programs, but rather to paid down debt or buy back stock. We are not seeing the strength in the order books of cyclically oriented companies that perhaps growth-oriented companies have. But we are invested in the US, in an overweight nature if we compared to the benchmark and are positive about the country’s economy. Particularly in equity, we are invested in some of the very strong secular growth themes: in the disruption created by e-commerce, the change in spending patterns, the digitalization of the economy, the increase of energy efficiency, the improvement of connectivity and cloud usage. All these themes provide strong secular earnings, generating very good returns on equities. We are investing on technological multinationals, but we are also focusing on companies that offer specific services to US corporations that need to improve their capacity. And we are bearish on the companies that are challenged by this new digitalized environment. In some strategies, we have the capacity to sell against a corporation that we have in effect a long-term position and that we have identified that would be challenged. This is part of how the portfolio is constructed to compose the winners and losers of this digital era”.    

On the dollar, Carmignac Gestion believes a structural dollar depreciation tendency is about to start, despite the dollar has strengthen a little bit lately in the face of raising short-term interest rates. The new issuances made by the US administration to finance part of the tax fiscal stimulus created some pressure on the short end of the interest curve, but there are some medium-term influences that will determine the dollar value. “In the US, current account and budget deficits are deteriorating. The budget deficit would be hitting towards a 6% of GDP. Also, the implementation of tariffs and trade barriers can affect the current account. Initially, imported goods subjet to tariffs will be costlier for the US to import. And, historically, in the periods in which the US is maintaining a loan with the rest of the world, the US economy needs to be ahead in the economic cycle for the US dollar to remain strong. But, today we have a synchronized global recovery, and that usually reflects in a dollar bearish period that may last for 5 or 6 years. That is how cycles have behaved since World War II,” she explained.       

A deceleration in Europe?  

According to Ms. Crowl, Germany is signaling small a slowdown, but it will not probably be reflected on the economy for as long as the European Central Bank continues with its Quantitative Easing program. Since the global financial crisis, the world economy has experienced mini-cycles that have lasted around 18 months or 2 years, there have not been 5 or 6 years boom and bust cycles due to Central Banks’ intervention in the markets, which created a distortion in prices. Now, the liquidity retraction started by Central Banks could lead into another shallow dip recession. 

“The interest rates in Germany are still around 60 basis points for the ten-year bond, when they have an over 2.5% GDP growth rate and a 2% inflation rate. It makes no sense; interest rates need to be normalized. For this year, the growth rate may still be above 2% because the ECB will continue to purchase 30 billion euros worth of European bonds on monthly basis to the end of the year. However, 2019 will be quite challenging year for European bonds. In the meantime, bond curve has started to price in Quantitative Easing tapering and we are positioned rather tactically to pick up performance. We intend to benefit from rising interest rates by having short positions in German bonds, actively managing duration, a feature that fixed income investors would need to consider”.

Serie de tasas crecientes: Los altibajos de las escalas de bonos

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Rising Rates Series: The Ups and Downs of Bond Ladders
Photo: zaimoku_woodpile. Serie de tasas crecientes: Los altibajos de las escalas de bonos

Los ETFs de madurez definida pueden hacer que la escala sea más simple y más diversificada. Por ejemplo, en lugar de comprar un único bono de cinco años y mantenerlo hasta su vencimiento, podrías construir una escala de cinco años con bonos que venzan cada junio durante los próximos cinco años. Cuando un bono se venza, puedes comprar un nuevo bono de cinco años con los ingresos (mira la ilustración). El atractivo para los inversores es que proporciona un flujo de caja estable: cada año, tienes dinero nuevo para reinvertir a partir de un bono en vencimiento, así como los pagos de cupones semestrales de los bonos.

La capacidad de gestionar las exposiciones de forma anual puede ser especialmente beneficiosa en un entorno de tasas crecientes. A medida que las tasas de interés cambian durante el período, cada bono en la escala tendrá un rendimiento total similar al rendimiento promedio en el momento de la compra. Al bloquear un rendimiento al principio, la escala ayuda a aislar al comprador de bonos de las pérdidas de precios si el inversor lo mantiene hasta su vencimiento.
 

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Gráfico solo con fines ilustrativos.

Como con muchas cosas, sin embargo, esta estrategia es simple en teoría, pero más complicada en la práctica. Para muchas personas, administrar una cartera de bonos individuales no es fácil.

Pequeños peces en un gran mar

El primer desafío es seleccionar los bonos. ¿Deberías ir solo a un emisor que conoces? ¿El bono de mayor rendimiento? ¿O el que tiene la mejor calificación crediticia?  Investigar la calidad crediticia del emisor requiere acceso a la información y los conocimientos técnicos para evaluar el valor relativo entre los bonos. Incluso para inversores con experiencia, esto puede ser desalentador.

Una vez que hayas decidido comprar un bono, los costos de transacción pueden ser altos. El inversor minorista promedio paga aproximadamente 0,90 % en el diferencial de oferta y demanda en bonos municipales y 0,64 % en bonos corporativos, de acuerdo con S&P1. Muchos bonos tienen tamaños mínimos de bonos para comprar y comerciar. Si no tienes una gran cantidad de dinero para invertir, la capacidad de diversificar y distribuir el riesgo de crédito entre múltiples emisores puede ser difícil. Como resultado, puedes terminar con una cartera concentrada de solo un puñado de emisores de bonos.

Finalmente, la liquidez, o la capacidad de convertir el bono en efectivo, puede ser un desafío para valores individuales. Si deseas vender un bono antes de su vencimiento, deberás buscar otro comprador en el mercado de bonos extrabursátiles, lo que puede llevar tiempo. Y si tu bono tiene una función de demanda, puedes recibir el reembolso anticipado si el emisor decide refinanciar su deuda. En ese caso, enfrentas una reinversión a menores rendimientos.

Escalamiento con ETFs con vencimiento definido

Muchos inversores utilizan fondos mutuos y fondos cotizados (ETF) para superar algunos de estos obstáculos. Los fondos tradicionales generalmente tienen una cartera diversificada de bonos y tienen un administrador de cartera que supervisa y administra el fondo. El único inconveniente es que debido a que los fondos tradicionales no tienen fechas de vencimiento, el inversor tendría que vender una parte del fondo si quieren sacar dinero de la estrategia.

Explore el escalamiento con la iBonds Ladder Tool.

Los ETF de bonos con vencimiento definido, como iShares iBonds, pueden ayudar a construir escalas de bonos eficientes combinando el control de la reinversión de los bonos individuales con la conveniencia de un ETF. En una sola transacción, los inversores obtienen acceso a:

  • Un vencimiento conocido: Todos los bonos vencen durante el año calendario a nombre del fondo. Por ejemplo, los bonos en iShares iBonds Dic 2021 Término corporativo ETF (IBDM) vencen entre el 1 de enero y el 1 de diciembre de 2021. Cuando vence el último bono, el fondo devuelve su valor liquidativo final a los accionistas en efectivo.
  • Distribuciones mensuales: Los fondos de bonos con vencimiento definido hacen distribuciones mensuales de ingresos, que pueden ser más suaves que los pagos a granel de cupones de una escala de bonos. Las distribuciones mensuales pueden ser variables dependiendo de los cambios en los rendimientos del mercado y los activos del fondo.
  • Diversificación: Cada ETF posee cientos de bonos de grado de inversión.
  • Capacidad de comercialización: Mientras que los bonos individuales se negocian en el mercado de bonos extrabursátiles, los ETF de vencimiento definido se pueden negociar a lo largo del día en la bolsa a un precio conocido.
  • Bajo costo: Los ETF pueden ser más rentables que comprar una cartera de bonos de venta libre. Por ejemplo, iShares iBonds municipales y corporativos tienen comisiones de administración de 0,18 % y 0,10 %, respectivamente.

Volviendo a nuestro ejemplo de la escala de bonos a cinco años, un inversor podría comprar solo cinco ETF de vencimiento definido y obtener exposición a cientos de bonos subyacentes con fechas de vencimiento conocidas, un flujo de ingresos mensuales, y una experiencia global que es mucho más simple que hacerlo por si mismo.

Build on Insight, de BlackRock escrito por Karen Schenone, CFA

1: Fuente: Unveiling the Hidden Costs of Retail Bond Buying & Selling.  S&P Dow Jones, marzo de 2018.
Invertir implica riesgos, incluida la posible pérdida del capital.
Antes de invertir, considere detenidamente los objetivos, factores de riesgo, cargos y gastos de la inversión. Esta y otra información se pueden encontrar en los prospectos de los Fondos o, si están disponibles, en los prospectos resumidos, que se pueden obtener visitando iShares.com o www.blackrock.com. Lee el prospecto detenidamente antes de invertir. Invertir implica riesgos, incluida la posible pérdida del capital.
Los riesgos de renta fija incluyen las tasas de interés y el riesgo de crédito. Normalmente, cuando los tipos de interés suben, hay una correspondiente disminución en los valores de los bonos. El riesgo de crédito se refiere a la posibilidad de que el emisor del bono no pueda realizar los pagos de capital e intereses.
Al comparar acciones o bonos e iShares Funds, debe recordarse que los honorarios de gestión asociados con las inversiones de los fondos, como iShares Funds, no son asumidos por los inversores en acciones o bonos individuales. La compra y venta de acciones de iShares Funds generará comisiones de corretaje.
Es posible que haya menos información sobre la situación financiera de los emisores municipales que para las corporaciones públicas. El mercado de bonos municipales puede ser menos líquido que el de los bonos gravables. Algunos inversionistas pueden estar sujetos al impuesto federal o estatal sobre la renta o al Impuesto Mínimo Alternativo (Alternative Minimum Tax, AMT). Las distribuciones de ganancias de capital, si las hay, están sujetas a impuestos.
iShares® iBonds® terminará en marzo, septiembre o diciembre del año a nombre de cada Fondo. No se garantiza una inversión en iShares® iBonds® ETF («Fondos»), y un inversor puede experimentar pérdidas, incluso cerca o en la fecha de finalización. A diferencia de una inversión directa en un bono que tiene un pago de cupón nivelado y un pago fijo al vencimiento, el/los Fondo(s) realizarán distribuciones de ingresos que varían a lo largo del tiempo. En los últimos meses de la operación de cada Fondo, a medida que los bonos se mantengan maduros, su cartera pasará a efectivo e instrumentos similares a efectivo. Como resultado, su rendimiento tenderá a moverse hacia las tasas prevalecientes del mercado monetario (o, en el caso de los iBonds municipales, tasas del mercado monetario exentas de impuestos) y puede ser menor que los rendimientos de los bonos anteriormente mantenidos por el Fondo y menor que los rendimientos prevalecientes en el mercado de bonos.
Después de la fecha de finalización del Fondo, el Fondo distribuirá sustancialmente todos sus activos netos, después de la deducción de cualquier pasivo, a los inversores en ese momento sin previo aviso y ya no se cotizarán o negociarán. Los ingresos de liquidación y distribución de los Fondos no son predecibles en el momento de la inversión y los Fondos no buscan devolver una cantidad predeterminada.
La tasa de pagos de distribución del Fondo puede afectar negativamente la caracterización fiscal de los rendimientos de un inversor a partir de una inversión en el Fondo en relación con una inversión directa en bonos. Si la cantidad que un inversionista recibe como producto de la liquidación a la terminación del Fondo es mayor o menor que la base del costo del inversor, el inversor puede experimentar una ganancia o pérdida a efectos fiscales.
La inversión en iShares® iBonds® Corporate ETFs está sujeta a los riesgos de los otros fondos y ETFs (fondos subyacentes) en los que invierte. Los iShares® iBonds® Corporate ETFs incurrirán en honorarios de fondos adquiridos y gastos asociados con sus inversiones en los fondos subyacentes y cargos adicionales asociados con la rotación en los fondos subyacentes que no están incluidos en los honorarios y gastos del fondo adquirido.
Es posible que la diversificación y la asignación de activos no protejan completamente ante los riesgos del mercado o la pérdida de capital.
No existe ninguna garantía de que se desarrollará o mantendrá un mercado de negociación activo para las acciones de un ETF.
Los fondos son distribuidos por BlackRock Investments, LLC (junto con sus afiliadas, “BlackRock”).
Este material no debería ser interpretado como un pronóstico, investigación o consejo de inversión y no es una recomendación, oferta o solicitud de compra o venta de cualquier título o de adopción de cualquier estrategia de inversión. Las opiniones expresadas son válidas a partir de mayo de 2018 y pueden cambiar si las condiciones subsiguientes lo hacen. La información y las opiniones que se incluyen en este material derivan de fuentes privadas y públicas que, a criterio de BlackRock, son confiables, no son necesariamente globales y no cuentan con veracidad garantizada. Por lo tanto, no existe ninguna garantía de veracidad o fiabilidad, ni se acepta responsabilidad alguna que derive de cualquier modo de errores u omisiones (incluida la responsabilidad ante cualquier persona a causa de negligencia) por parte de BlackRock, sus ejecutivos, sus empleados o sus agentes. Este material podría contener información prospectiva que no sea puramente histórica por naturaleza. Tal información podría incluir, entre otras cosas, proyecciones y predicciones. No existe ninguna garantía de que las proyecciones expresadas se cumplan. La confianza en la información en esta publicación queda bajo la exclusiva discreción del lector. El rendimiento pasado no es garantía de resultados futuros. La rentabilidad del índice se presenta solo con fines ilustrativos. No puede invertir directamente en un índice.
©2018 BlackRock. iSHARES y BLACKROCK son marcas comerciales registradas de BlackRock. Todas las demás marcas pertenecen a sus respectivos propietarios.

 

Jean Raby, CEO of Natixis IM: “I Would Be Very Surprised if We Do Not Announce One or Two More Acquisitions by the End of the Year”

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Jean Raby, Chief Executive Officer of Natixis Investment Managers (Natixis IM) and a member of the senior management committee of Natixis, joined the firm sixteen months ago. Since February 2017, he oversees Natixis IM’s Asset Management, Private Banking and Private Equity business lines. Of French-Canadian origin, Mr. Raby began his career in 1989 as a corporate lawyer with Sullivan & Cromwell in New York, where he worked in corporate finances projects based in Argentina, Chile and Mexico. Later, in 1992, he got transferred to the Paris office.

After four years, he joined Goldman Sachs’ investment banking division, where he worked for sixteen years in corporate finance, M&A, restructuring and capital markets, as well as he worked occasionally in asset management projects. He became a Partner of the firm in 2004, he served as CEO of the division for France, Belgium and Luxembourg and head of the firm’s Paris office in 2006 before becoming co-CEO of Goldman Sachs in Russia in 2011. Then in 2013, he served as Executive Vice President and Chief Financial and Legal Officer for Alcatel-Lucent, the global telecom equipment manufacturer, at a time when the company was on the verge of bankruptcy. A year and a half later, they were able to sell the company to Nokia for 15 billion euros. He subsequently served as Chief Financial Officer of SFR, an integrated media operator in France. But, he missed the hectic and fast pace environment of the asset management industry, so he decided to sign with Natixis.

The value proposal

Mr. Raby firmly believes that Natixis IM offers an attractive value proposition to those asset managers that want to expand their business but feel they have hit a glass ceiling in their growth. “You would be surprised by how many asset managers want to enlarge their business but, either because the pressure of the regulation or their need for investing in technology, they do not have the time or find it difficult to go through the effort of distributing their products outside their niche markets. That’s when they come to us. We want them to do what they do best, which is to manage money, and we take care of everything else, preserving the autonomy of the investment process. On the other hand, in Europe, and to a lesser extent in the US and Canada, sizable asset managers are owned by a financial institution. Their DNA is to stick with the footprint of the financial institution to which they belong to, and there is very little momentum or incentive to do something different than that of their parent company. In our case, we have the strength and solidity of a large banking group, but we are not constrained.  In fact, we benefit substantially from the stability of the structure and the financial support. However, we are able to act nimbly and demonstrate the entrepreneurship of a third-party business. We manage very little of our own money, and that is a unique feature, you will not find many asset managers of our size owned by financial institutions that are so focused on third-party’s money. We are the only one, and that is an additional value-add to these partnerships, to offer the stability of a long-term shareholder,” he said.

In September of 2017, the firm made its most recent transaction. Natixis IM, which has a network of 26 autonomous asset managers affiliates, acquired a majority stake in Investors Mutual Limited, an Australian fund management company, as part of its plans to expand in the Asian region. “I would be very surprised if we do not announce one or two more acquisitions by the end of the year. It is about adding entrepreneurial teams joining us; we seek asset managers that have a strong track record of generating performance and that have a brand. That will be right set up for us, either because we bring a solution to them and the support of a long-term shareholder, or because they bring something new to us, like a platform that our other affiliates can use or a strategy or investment category that supplements our offering. We want to do business with management teams that we consider our partners,” he added.     

Natixis seeks the growth of their affiliates’ business. For this, they offer a centralized distribution throughout the world. “In our business model, we respect the autonomy of our asset managers in their investment process and allow them to upgrade their business. For example, in 2015, we welcomed DNCA Finance into the group, a value equity France-based asset manager. At that time the firm had 14 billion euros of asset under management. Today, the firm has more than 25 billion euros. We accomplished that figure in only three years and with tremendous pressure on fee rates. We can maintain pricing because our clients see value -we do not sell expertise cheap-, and because there is a central management of distribution, creating a healthy discipline. We are also trying to mutualize investments on technology, finding the right balance between the investment autonomy of the affiliates and the benefits of sharing technological developments. The group is defining its digital roadmap, and we are going to add more joined development of technological innovations that hopefully will benefit everyone.”

Active vs passive asset management

Although Mr. Raby acknowledges that passive asset managers have dominated the market narrative in the latest years, the return of volatility may, in his opinion, turn the tables. “Passive investment is here to stay, but we are not going to participate in that business and we are not going to change our strategy. Volatility has returned, we may be at the end of a 35-year bond bull market and at the end of a 10-year equity market. In a more volatile and uncorrelated environment, an active approach to managing risks and chasing opportunities may make more sense. Individual investors will have a rough wake up call when they realize that with greater transparency and disclosure on fees, passive investment is not as cheap as it seems. People will hopefully start looking beyond the low fees and study the actual performance deliverance after fees, which is what really matters. When that happens, I am confident the value proposition of active management will be recognized.”  

Long-term savings

In Europe, long-term savings have not been privatized, by contrast, that has been the case in the US, Canada, UK and Australia, thus funding the savings for retirement. These countries are the fourth largest asset managers markets in the world, being China the fifth largest market, and that is mainly because they have a population 1.6 billion of people. There is a big question mark on whether, in ten to twenty-year time, those people who relied on defined contribution plans, abandoning defined benefits plans, will have enough savings for retirement. According to Mr. Ruby, experience demonstrates that people with the right incentives for long-term savings will save enough for retirement, without having to depend on the government. “At the end of the day, if it materializes that the privately arranged retirement systems are no sufficient to fulfill the needs of the population the government will have to chip in. I would hope for a bigger debate on the privatization of long-term savings in Europe. There should be greater tax incentives for people to save and a strive for the right balance. In Canada, there is a mix of both systems, people are encouraged to save through tax incentives and yet, they also have the promise of a basic retirement savings for everybody. Even the US created the 401k plans, with lots of tax incentive to do so, with does encourage people to be prepared, and I think that is the way to go. In UK, the debate is also out in the street, but unfortunately there is no enough discussion in Europe right now. In France, we are having the debate on pensions and insurance policies, trying to get some more flexibility, but I wish we could go further and discuss about private pension funds.”

The growth opportunities

Natixis IM has a history of 25 years of presence in Europe and the Americas. Their arrival in Latin America is more recent but is a key piece in their growth plans: “When I arrived last year, one of the first conversations that I had with Sophie Del Campo, -Executive Managing Director, Head of Iberia, Latin America, and US Offshore, at ‎Natixis Investment Managers, was about the opportunity in Latin America. Obviously, we want to be careful, invest for the long term and with a steady approach. On the other hand, we think that the region is an opportunity for us to locally manufacture products, but again we need to find the right partner in the region with four characteristics: entrepreneurial character, a good brand, a good performance track record and that we can bring something to them in terms of revenue synergies, or that they can bring something to the group. This type of partner does exist, but it takes time to find it,” he concluded.