Robo-advisors Are To Disrupt the Asset Management Industry in Asia

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Asian asset managers are increasingly entering into strategic partnerships with other managers in the region as they look for various business strategies which could potentially enhance their revenue streams as cost pressures rise and competition stiffens.

This is one of the key findings of Cerulli Associates’ newly-released report, Asian Distribution Dynamics 2016: Responding to an Evolving Landscape.

Excluding Hong Kong and Singapore, most Asian markets are still inaccessible to foreign managers, with some markets, such as Taiwan and Korea, showing an increase in home bias. «An absence of distribution partners and lack of brand recognition are problems new entrants have to contend with and partnering with a local partner is seen as the best way to raise assets without a large initial investment,» says Shu Mei Chua, an associate director at Cerulli, who led the report.

She notes that strategic pacts are largely aimed at three key areas: asset growth potential, product development, and distribution dynamics.

E Fund Management entered into a partnership with Danske Capital to «jointly design and promote» investments. Korea’s Samsung Asset Management and its sister company, Samsung Securities, together have four pacts with other Asian or global managers and serve as the prime example to either co-develop products or to bring recognizable global managers to Korean shores.

«While most partnerships entered into so far are targeting joint product developments, we expect strategic partnerships to get more creative in light of a tighter regulatory environment and the rise of financial technology,» Chua adds.

Many asset managers are looking to alternative methods of distribution in the region dominated by brokerages and banks. Many have come to the conclusion that digital channels are set to play a big part in the next stage of distribution.

In fact, digital marketing has already made its headway in key markets in the region. Managers in China and India had the largest budget allocations to digital marketing among Asian markets and are using various digital tools to reach end investors.

«For instance, the use of messaging app WeChat to promote funds and provide investor education is considered indispensable for managers looking to gain customers in China,» notes Ivan Han, a senior analyst with Cerulli.

He adds that robo-advisors are possibly on the cusp of disrupting the asset management industry in Asia in a positive way by forcing the industry to consider how to offer inexpensive, scalable advice to the majority of investors who are often ignored because they have smaller accounts.

«Robo-advisory is more of a distribution story in that it allows managers to tap capital from investors who had been reluctant to invest in mutual funds due to a lack of advice,» Han says.

Los activos en manos de gestores de private equity de mercados emergentes alcanzan su récord

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Emerging Markets-Based Private Equity Hits Record $297bn in Assets Under Management

Foto: vinod velayudhan . Los activos en manos de gestores de private equity de mercados emergentes alcanzan su récord

El último informe de Preqin sobre private equity en mercados emergentes pone de manifiesto que los activos totales de gestores basados en estas regiones han aumentado hasta acercarse a los 300 mil millones, a septiembre de 2015 -los datos más recientes disponibles-. El total de AUM de los gestores basados en mercados emergentes no experimentó un gran crecimiento en 2014, año que cerraron en 258.000 millones e iniciaron en 248.0000. Desde entonces, sin embargo, han aumentado 39.000 millones en nueve meses, hasta alcanzado su récord.

Este aumento de activos gestionados se produce a pesar del creciente interés de gestores de fondos basados  fuera de estas regiones por los mercados emergentes. La proporción de capital agregado enfocado a mercados emergentes levantado por gestores basados ​​en estas regiones alcanzó su punto máximo en 2011, cuando representó el 77% de los 69.000 millones captados. Desde entonces, la proporción ha caído año tras año, y en 2015 los gestores con base en mercados emergentes se hicieron con el 49% de los 40 mil millones comprometidos. Desde el arranque de 2016 y hasta hoy, los gestores basados  en mercados emergentes sólo han captado el 33% del capital total recaudado para mercados emergentes, su nivel más bajo registrado.

«Los mercados emergentes se han desarrollado significativamente en la última década; pues muchos más mercados desarrollados han experimentado crecimientos más lentos a raíz de la crisis financiera mundial, y algunas economías emergentes gozaron de crecimientos de doble dígito. En estas circunstancias, los fondos de private equity centrados en estas regiones han sido capaces de aprovechar las oportunidades y los activos totales en poder de estos fondos han llegado a algo menos de 300 mil millones de dólares” dice Christopher Elvin, responsable de Private Equity, de Preqin. “Si bien los gestores basados ​​en estas regiones pueden tener dificultades para competir contra los recursos de los operadores provenientes de mercados mayores, podrían ser capaces de aprovechar su profundo conocimiento de sus mercados locales para atraer a los inversores.

Vest se alía con DIF Broker para ofrecer inversiones estructuradas basadas en opciones

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Vest Partners with DIF Broker to Offer Structured Option-Based Investments
Foto: AwesomeSA . Vest se alía con DIF Broker para ofrecer inversiones estructuradas basadas en opciones

El broker-dealer internacional DIF Broker ha anunciado su alianza con la filial tecnológica de Vest, un proveedor digital de productos estructurados centrado en opciones. La tecnología de Vest alimenta una plataforma que permite a los asesores de DIF Broker personalizar estrategias defensivas con opciones estructuradas en nombre de sus clientes, en la península ibérica y América del sur.

La oferta permitirá a los clientes del broker acceder a una serie de estrategias de inversión basadas en opciones, incluyendo aquellas que buscan dotar de medidas de protección ante las caídas. “Nuestro objetivo principal con este nuevo servicio es ofrecer un producto singularmente útil a nuestros inversores”, declara Paulo Pinto, COO del broker-dealer, quien añade que su equipo de consultores de inversión ofrecerá los servicios de la firma en unas regiones donde dichas estrategias no estaban disponibles hasta el momento.

La filial de tecnología de Vest desarrolla tecnología y soluciones de software para brokers y asesores de inversión, que les permite utilizar opciones cotizadas para construir sus payouts. Reduce la complejidad de las operaciones con opciones y ofrece mayor protección, dice la compañía.

           

Market Turmoil After Brexit Could Create Opportunity

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This time the opinion polls got it right. The “Remain” and “Leave” camps were running neck-and-neck coming into Thursday’s U.K. referendum on membership of the European Union and in the event some 52% of U.K. voters opted to reject the status quo and pull out.

Markets have responded dramatically. U.K. equity index futures have slumped and the pound sterling has tumbled to 1980s levels. Safe havens such as gold, German Bunds and U.S. Treasuries are seeing substantial investor demand. The euro has also come under pressure.

Fears of ‘Lehman Moment’ Overblown
No doubt Friday’s will be the first of many volatile trading sessions, and the major central banks may intervene if necessary. But we caution against reacting as though this were a second “Lehman moment,” as some commentators have suggested.

The likelihood of at least medium-term damage to the U.K. economy from a “Leave” vote, as well as pronounced market volatility on the back of political uncertainty for the U.K. and the EU as a whole, did lead our Multi-Asset Class (MAC) team to adopt a relatively neutral stance coming into the vote. But this stance was not only designed to try to buffer against volatility, but also to position the MAC team to take advantage, potentially by increasing allocations to riskier assets based on a longer-term view of fundamentals.

Still, the U.K. has chosen the rockier of two paths. It piles up the political distractions that have dogged the administration of U.K. Prime Minister David Cameron and his chancellor, George Osborne. The “Brexit” camp is clearly in the ascendant but the vote revealed a lack of national consensus. And even consensus would not wish away the complexity of this exit, a “monumental,” multi-year task in the words of one legal expert.

Economic Damage Likely to Be Contained
That complexity is likely to prolong the period of low corporate investment we have seen leading up to the vote, both within the U.K. and in the form of foreign direct investment. This, together with the higher costs of trading, is what led mainstream economists to forecast a 3-7 percentage point negative long-term impact on U.K. GDP.

The pain may not be felt evenly. Many of the large companies in the FTSE 100 Index are global rather than U.K. businesses—80% of the index’s revenues come from overseas. This should help insulate them from any domestic downturn and potentially deliver a windfall from the weakened pound. Smaller, more domestically-focused companies are more vulnerable to a fall in consumer demand and higher import costs. That could be a source of opportunity during a sell-off in U.K. assets, particularly if the U.K. makes its new status work over the longer term.

Elsewhere, the economic impact is likely to be felt most keenly in Europe and, in the words of one Federal Reserve Bank president, to have only “moderate direct effects on the U.S. economy in the near term.” Again, we expect an excessive market reaction to be a potential source of opportunity.

Another Blow for Globalization?
A more pessimistic reading of the vote would see it as one more crack in the edifice of international political and economic co-operation built over the past 70 years. Anti-EU parties in countries like France, Germany and Italy may take heart from the result and attempt to further exploit the euro-skepticism increasingly evident in opinion polls across the Continent.

But to us this merely confirms that globalization is under siege, a trend already well-advanced and understood by financial markets. Beyond Europe, a big effect on the outcome of the forthcoming presidential election is unlikely—and besides, as former Treasury Secretary Hank Paulson told Brad in an exclusive interview at our CIO Summit this week, neither the Republican nor the Democratic candidate is promoting a positive view of global trade and investment.

Look Through the Noise to Fundamentals
Most importantly, this vote will probably exert only a marginal effect on global economic fundamentals, which remain stable but weak. We still live in a slow-growth, low-inflation, low-interest rate environment, characterized by sluggish productivity and investment. “Brexit” has been a tail risk stalking markets in the same way that the oil price, the strong dollar and concerns about China created volatility back in January and February, but we think its implications are overstated. For that reason, we again stress the importance of looking through the noise to focus on fundamentals and watching for opportunities to add risk to portfolios. The market reaction may provide opportunities to add to some positions in riskier assets once the worst of the initial volatility has passed.

Looking further out, in a lot of places in the world we still need structural reform and a more appropriate fiscal response to the current malaise if we are going to allow our economies to grow on a proper footing, and our companies to generate sustainable earnings growth. Part of that progress will involve addressing the legitimate concerns of those who have failed to benefit from globalization, but populism and political division is not the way to do it. In that respect, today’s result is hardly good news. But we believe its effect will be marginal and the market’s initial response is likely to create opportunity for patient investors with cool heads.

Investing After “Brexit”

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«In the end, it happened and Europe will no longer be the same! Contrary to recent market expectations, the “Leave” camp won, leading to increased uncertainty over the future of Europe.» Matteo Germano, Global Head of Multi-Asset Investments at Pioneer Investments writes on his company’s blog.

After the unexpected “Leave” outcome of the U.K. referendum, they see conditions for a risk-off environment in the near-term. However, they believe that Central Banks are ready to act and their immediate focus will be to stabilize the markets and provide liquidity if needed.

Over the medium-term, uncertainties over the future of Europe and Central Banks’ reaction will dominate financial markets. Ultimately, Pioneer believes that the political and monetary policy response will be the major variables to manage an orderly Brexit.

The British vote has a massive impact on the geopolitical equilibrium, as it creates a precedent in the European Union (EU). Britain’s exit could trigger a surge of initiatives similar to the UK referendum. The elections in Spain and the constitutional referendum in Italy will be the next political events to follow to evaluate the strength of these centrifugal forces within Europe.

From a macro perspective, PIoneer believes that the victory of the “Leave” camp could increase the probability of the developed world being trapped in a low growth/low inflation scenario. «Fears and prolonged uncertainty in Europe following the vote could, in fact, hurt confidence and limit economic activity. A smooth management of the transition, which will take years to materialize, will be a key factor to avoid a deeper crisis that could hit the global economy.»

From a market perspective, the short-term impact of the “Leave” vote will result in increased market volatility and a further flight to quality. While over the medium-term, the focus will be on the political and monetary response.

Ken Taubes, Head of U.S. Investment Management, anticipates a rally in US Treasuries, while there may be a sell off of US high yield assets as well as emerging market assets, particularly driven by a perception that the demand outlook for oil will deteriorate in a risk averse environment. From a macro perspective, the negative economic impact of Brexit on the U.S. should be more limited compared to its impact on the UK and Europe. However, Ken Taubes expects reduced global demand due to a higher level of uncertainty and risk aversion. In his view, while the spillover effects on the US economy are unclear, it is possible that in the event of a significant negative economic impact, the Federal Reserve Board might consider other monetary policy options.

Moving to Europe, Germano and his team believe that the central banks’ immediate focus will be on stabilizing the markets, and to be ready to provide them with liquidity. According to Tanguy Le Saout, Head of European Fixed Income at Pioneer Investments, Brexit will cause a rally in German Bonds, accompanied by an under-performance of other markets, but especially peripheral markets such as Italy and Spain.

A sharp “risk-off” environment, accompanied by widening spreads in peripheral and credit markets could cause Central Banks to intervene. In Tanguy’s view, the monetary policy adjustments will be made, initially through measures of credit easing and broadening of the asset buyback program, but ultimately rate cuts may be implemented. On the currency front, the US dollar (USD) and the Japanese yen could benefit from the “risk-off” environment.

Equity markets are also likely to suffer a period of extreme volatility as investors digest the potential impact of the event. However, the presumed downward pressure on the sterling is likely to be positive for the earnings prospects for certain UK companies, given the predominantly international nature of their businesses. The view of Pioneer’s European Equity team, headed by Diego Franzin, is that the risk-off mode could be mirrored, with domestically focused Eurozone business models (financials for example) most impacted given the unknown ramifications of the decision on the Eurozone economy. In this instance, they suggest that investors consider keeping a cautious stance on the market, focusing on companies with a solid business model, while also being cautious on more domestically focused UK business models.

«From a multi-asset perspective, we prefer to keep a risk-off attitude, favoring “safe haven” assets such as US Treasuries. We believe that holding gold could be a natural hedge should the probability of a secular stagnation rise. We also continue to believe the Swiss franc should be favored versus the sterling, as it tends to behave as a safe haven currency, and we believe the USD could outperform the euro.» Germano concludes.

Los inversores institucionales están creciendo sus exposiciones a alternativos

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Institutional Investors are Boosting Alternatives Allocations
Foto: Eureka Hyman. Los inversores institucionales están creciendo sus exposiciones a alternativos

Los inversores institucionales están tratando de asignar más de su capital a estrategias alternativas en la búsqueda de altos rendimientos en el actual entorno de bajos tipos de interés, esto, de acuerdo con un nuevo estudio de BNY Mellon.

El informe, Decisiones divididas: La inversión institucional en activos alternativos, producido por BNY Mellon en asociación con FT Remark, encontró que entre las diversas clases de activos alternativos, el capital privado es el más favorecido por los clientes institucionales, con el 37% de su exposición, seguido de infraestructura (25%), bienes raíces (24%), y los fondos de cobertura (14%).

Según el estudio, casi dos tercios de los encuestados dijeron que las estrategias alternativas habían entregado beneficios de al menos un 12% el año pasado, mientras que más de una cuarta parte dijo que las estrategias se habían ganado un 15% o más.

«Los alternativos continúan ganando participación en las carteras, pero los inversores institucionales son cada vez más selectivos acerca de dónde y cómo despliegan su capital», dijo Frank La Salla, director general de Servicios de Inversión Alternativos y Productos Estructurados de BNY Mellon. «Como resultado, ellos están exigiendo una mayor transparencia por parte de sus gestores de fondos alternativos. Esta encuesta refuerza la noción de que los inversores y gestores de fondos por igual necesitarán crecientes niveles de apoyo, conocimiento y datos para tomar decisiones informadas.»

Las principales conclusiones del informe incluyen:

  • 39% de los encuestados dicen que van a aumentar sus asignaciones a activos alternativos de inversión, mientras que sólo el 6% dice que las disminuirán moderadamente.
  • Cuando se trata de inversiones de capital privado, el 62% de los encuestados dicen que van a buscar opciones con gastos de gestión más bajos y el 55% dicen que van a solicitar una mayor transparencia.
  • Los Hedge Funds favorecen usar activos en dificultades (distressed) cuando se trata de cubrir las asignaciones de sus fondos, con un 68% de los inversores con exposición a ellos y la clasificación de 58% como una de las tres estrategias más atractivas para los próximos 12 meses.
  • La presión de los inversores para reducir las comisiones está liderando, con el 78% de los encuestados considerando la reducción de sus gastos de gestión para los próximos 12 meses.
  • Los mercados emergentes, en promedio, ahora representan el 31% de las asignaciones alternativas de los inversores institucionales.

«El crecimiento continuo en las asignaciones alternativas será apoyado por un flujo constante de nuevos productos y estrategias», comenta Jamie Lewin, director de Estrategia de Producto y Gestión del Rendimiento en BNY Mellon Investment Management. «La innovación y la adaptabilidad serán dos diferenciadores clave que determinarán el que las empresas tengan éxito en la captura de lo que ha sido una parte integral de las carteras institucionales, concluye».
 

Brexit Causes Chaos in the Markets, but There are Still Opportunities for Asset Managers

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In a historic turn of events, the UK voted LEAVE in this Thursday’s referendum. After the result, the pound traded at minimums of over 30 years, and markets worldwide experience a selloff, but that doesn’t mean there are no opportunities to make money in asset management.

“Markets had been expecting a Remain vote, which means that this comes as a nasty surprise,” says Lukas Daalder, Chief Investment Officer of Robeco Asset Allocation. “This will lead to a lot of volatility and uncertainty in the days and weeks ahead, with risk-off pressures at first taking the upper hand.” But more than this short term volatility, once the smoke lifts Robeco expects a medium-term correction of 10% in European stocks and a decline of the pound against the dollar in the order of 15%. For their Asset Allocation team the mandate is to reduce risk and manage volatility looking for stock-specific opportunities.

Which is in line with what Eusebio Diaz Morera from Spanish EDM, whose signature fund has a 27% exposure to British stocks, told Fund Society in Mexico “Brexit volatility is in the markets not in the companies, the conversation in the companies is short and they are not as affected. As long as you stock pick robust companies with high ROE and growth perspectives with a strong leadership, you should be ok.” In the Forex arena, Nestor Quiroz, founder of FFSignal liked the opportunities presented by the Japanese yen which parity saw a 16.6% movement in the first 7 hours.

According to AXA IM “Central banks are ready to inject liquidity – as much as needed in order to prevent any liquidity squeeze in any important market, starting with equities… to some extent, financial markets’ reaction may influence political reactions, in case of acute tensions, on periphery debt, or some key sectors of the economy, such as banks.” They believe that in the short term, economic growth and jobs are unlikely to be affected: “real economies are like super tankers – they are slow to react to political and financial changes. Yet, market and political developments will be critical. As for the former, if well targeted, they will reduce financial market volatility and limit the extent of contagion across countries and thus mitigate the impact on real economies.”

Prime Minister David Cameron has announced he will resign once a new leader is chosen. The next PM will have to ‘deliver the instruction’ given by the popular vote and activate Article 50 of the EU Treaty in order to initiate the two year exit negotiations and deal with a probably “LEAVE the UK” vote from the Scottish, which voted to STAY in the EU. However Amundi believes that “a large chunk of this chapter remains to be written. Neither the governments nor the central banks are helpless during the transition phase. Within the EU, the political response will come through close cooperation to align governments’ positions and obtain an “orderly exit” of the UK from the EU. Until now, EU countries have always managed to benefit from periods of stress to consolidate their institutions.”

For Marcus Brookes, Head of Multi-Manager at Schroders, Japanese equities, Emerging Market equities and gold look like interesting bets, while he expects to stay away from high quality bonds.

Central and Eastern Europe Poised for Comeback

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Interest rates are at record lows in the euro area, as a result of which investors can feel a great deal of pressure to achieve acceptable yields. This situation shifts their focus back to the countries of Central and Eastern Europe (CEE). “Central and Eastern Europe currently comes with more positive aspects than one might think. There are factors at play that might drive investor attention to this region in the foreseeable future,” says Robert Senz, head of fixed income fund management at Erste Asset Management. The risks are largely of a political nature, as the tensions with Western Europe with respect to migration, the possible Brexit, the Ukraine conflict, and the re-emergence of nationalistic economic policies suggest.

“In the coming years, the gross domestic product in the region is going to experience strong growth at rates significantly above the growth perspectives of the core EU states.” For 2016 analysts expect GDP growth of +3% and above for countries such as Poland, Romania, and Turkey. Hungary and the Czech Republic will be growing at more than +2% this year and in 2017 (source: Bloomberg consensus estimates). Even Greece, after years of crisis, is starting to recover and might show a significant sign of life at +1.6% next year.

On the bond markets investors can expect a yield of 3.5 to 4.5% against a stable political backdrop. With its purchase programme, the ECB contributes to a run on euro government bonds and corporate bonds. But as far as ESPA BOND DANUBIA is concerned, the central bank can only buy 4% of the bond universe. The risk is therefore manageable and is largely restricted to the geopolitical level. The low exchange rates of the local currencies support exports. “The increase in purchase power acts as driving force for domestic consumption”, explains Anton Hauser, senior fund manager of the East European fixed income flagship fund ESPA BOND DANUBIA. The level of debt of the East European countries and companies also support the case for the investment region. In contrast to earlier crises, for example in 1998 and 2008, the debt ratios are now not excessive. Current account and budget deficits in the region are low. Competitiveness is up. In the most recent location ranking by the World Bank, 10 out of 20 East European countries had improved, among them Poland, Russia, and Slovenia.

After the CEE equity markets lost more than 40% of their value post-Lehman in the past five years (in euro terms), a trend reversal has recently become more probable. The stock exchanges benefit from the recovery of the commodity prices, especially the oil price, which has almost doubled since its February low.

Russia: potential in spite of oil and sanctions
Russia was most affected by the falling commodity prices, which came on top of the sanctions imposed by the EU and the USA. The GDP of the, surface-area-wise, largest country decreased by 3.7% last year. Even if the Russian economy will not be able to grow yet in 2016, the first indicators have started suggesting a recovery: inflation has fallen from its high of 16.9% (2015) to most recently 7.3%. We expect the central bank in Moscow, which reduced its key-lending rates only last week to 10.5%, to continue cutting rates in the coming months and thus to support economic growth.

Stock exchanges benefit from the comeback of the convergence story
The stock exchanges in the area command comparatively attractive valuations. At a price/earnings ratio of 11.3x, the CEE equity markets offer a valuation discount of 25% vis-à-vis the stock exchanges of core Europe. “And although the estimated earnings growth in Eastern Europe is still not convincing, the potential is intact for equity investors”, explains Peter Szopo, head of equity fund management of Erste Asset Management in Vienna. While the indices are dominated by the energy and banking sectors, it is the strong influence of commodities that may have positive repercussions on the market if the commodity markets were to stabilise further and gradually recover. Some of the biggest and most profitable energy and commodity producers in the world are based in Russia. They have benefited a great deal from the depreciation of the country’s currency, i.e. the rouble.

Turkey: young population, young economy
At a joint total of 74%, Russia and Turkey command the biggest weighting in the East European equity fund ESPA STOCK EUROPE-EMERGING. The Turkish equity market offers access to a rapidly growing, young economy with one of the best demographic developments in the world. The P/E is currently a low 7x.

Dividend yield clearly above European stock exchanges
The relative attractiveness of the East European stock exchanges is also reflected in the dividend yield. East European companies are currently traded at an average dividend yield of more than 4% p.a., i.e. clearly higher than the yields in Europe (3.8%) or on the global emerging markets (2.8%).

Political risks remain in place
The stock exchanges in Eastern Europe have not managed to de-couple from the global markets. There are still risks with regard to global growth, the interest rate policy from here on in (especially as far as the rate hikes in the USA are concerned), and the development of the local currencies. Investors will be monitoring the political development in Russia and Ukraine closely. At the end of the year, Russia will be holding parliamentary elections. Turkey and its constitutional amendments will draw a lot of attention. Lastly, there is Greece, where the debt crisis has not been fully overcome and no agreement with the IMF and the EU has been ratified yet. While the possible, albeit not likely, exit of the UK from the Eurozone (Brexit) would not have the same kind of significant effects on the CEE countries that it would have on Ireland, the Netherlands, and Germany, one would have to brace oneself for price spikes and volatility as well as for widening spreads in line with other financial centres, as Szopo points out.

 

XP Investimentos is Looking to Replicate their Business Model with XP Securities in the United States

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As in the previous six years, XP Investimentos will hold its annual event for Latin American professionals working in the investment, asset management, and insurance industry. This year, the Expert event will be attended once again by Bernardo Amaral, Chief Executive Officer at XP Securities, the US subsidiary of the firm, which is the largest independent broker-dealer in Brazil, with more than 600 hundred employees and more than BRL 40 billion in assets under management.

Amaral joined XP Investimentos in Brazil, in 2007, as Legal and Compliance Manager. After seven years in the firm, he changed his residence to the United States, where he took charge of the business, becoming the Chief Executive Officer of XP Securities. In an interview with Funds Society, Bernardo Amaral talks about the contributions of the Brazilian firm to the US market, their growth strategies in the institutional business, asset management, and wealth management for HNWI and the company’s expansion plans in Latin America. Hereunder, his answers:

XP Investimentos developed a new concept of investment firm in Brazil, what can XP Securities bring to the US investment market?

XP Investimentos has a very strong company-wide business model that has proven to be extremely successful in Brazil. We are looking to replicate this business model with XP Securities in the United States. XP Investimentos brought to Brazil the concept of the one-stop-shop financial institution, where products are offered through a network of independent investment advisors. Until 5 years ago this concept was practically unheard of in Brazil. Through combining quality products and unbiased distribution, we have been able to attain impressive numbers. We can confidently say that we know what advisors need in order to be successful. The fact that XP Investimentos has 70% of all independent financial advisors in Brazil is proof that XP offers the tools and structure necessary to allow independent advisors to be successful. We are looking to bring these same concepts to the US. Despite the fact that US financial markets are mature in this aspect, we feel that there is room for new approaches and development. In the US there are still extensive opportunities in terms of our usage of available technology so that advisors can scale service. In Brazil, for example, XP created an intelligent CRM system that combines efficiency and intelligence, which allows advisors to service a large number of clients. On the operational side, another significant innovation was the creation of a tool in Brazil that allows XP to send messages directly to clients’ cellular phones, which is used to provide clients with investment opportunities and, with a simple response via text message, clients can take advantage of the opportunity being offered. We are evaluating the possibility of replicating these practices here. This is the challenge.

The first XP Securities office was opened in New York back in 2012, two years later the Miami office was opened, is there any difference in terms of business focus between the two offices? How big are the teams in each office?

We have approximately 25 people in each office for a total of 50. We just moved our NY office to a large space and we are doing the same in Miami. The main focus of the Miami office is the servicing of retail clients (mainly high net worth). On the other hand, the New York office services institutional clients, which includes both US clients trading in Brazil or throughout other parts of Latin America, or Latin American clients trading in the US or any other part of the world.

XP Securities has a focus on institutional investors in the US willing to enter Latin American markets, what capabilities are offered to this type of investor?

In relation to Brazil, we are able to bring American investors a flavor of what is going on in local markets through XP Investimentos and its team of economists and political analysts, as well as through corporate access (which allows us to connect non-listed companies and experts to international investors). Furthermore, we have excellent capacity for trade execution, as XP Investimentos is the largest broker dealer in Brazil in terms of shares and options traded on the BOVESPA. 

In terms of Latin America, we have a team led by Alberto Bernal, one of the most respected strategists in the region, covering the various LatAm markets, which gives us an inside look at what is really happening in these countries.  For 2017, we are looking at opening offices in different countries throughout Latin America which will effectively increase our capacity to absorb local information which is of high interest for our US investors.

What services are in highest demand by the US institutional clients?

In our view, clients are in search of fresh, up to date and objective information, the type of information that cannot be found in traditional research reports.  We have been able to deliver this through corporate access meetings (XP Investimentos organized over 1,000 meetings in Brazil and 400 meetings in the US in 2016) and recently, through information specifically focused on the political world.  XP Investimentos has recently opened an office in Brazil’s capital, Brasilia, and has hired a team of political analysts that offer minute by minute coverage, giving clients live updates and insights on what’s going on in the executive and legislative branches of government.  At a time like this, when politics is the main driver of financial markets in Brazil, providing up to date political analysis adds significant value to our clients when making investment decisions.

Our clients covering Brazil and Latin America are also requesting a lot of two/three days bespoke trips where we assist them meeting with experts on different sectors of the economy, providing them with an opportunity to get a real local flavor on what is going on in the country. We have had trips to Brazil, Argentina etc.

You are also developing the wealth management division for Latin American clients in the US, which Latin American countries are you servicing?

XP Securities is servicing practically all of Latin America. In addition to receiving client referrals from XP Investimentos (which has approximately 150,000 active clients), we are taking advantage of a gap that we have identified in private wealth management segment in the US. In fact, over the past several years, American banks and broker dealers have been increasing their investment minimums in order to hedge their risk in Latin American clients as a result of problems experienced in Latin American countries. As a result, there is a significant number of clients that do not have an option of where to house their investments in the US. Additionally, there are many investment advisors/bankers that were let go as a result of the fact that a portion of their clientele had assets of US$ 250.000 to US$ 1 million, despite the fact that they also had a meaningful client base with assets from US$ 1 million to US$ 5 million. We are positioning ourselves to bring these bankers and investment advisors to XP and service their clients. We have exactly what it takes to service them: price, product and service.

What services are you offering to your wealth management clients?

In terms of products, we offer the industry standard such as equities, options, bonds, mutual funds, ETFs, structured notes and futures. Furthermore, we offer many non-traditional products such as hedge funds and private equity funds. For example, we were authorized to refer clients to 3G Capital, which offers highly sought-after and exclusive investment funds.

Another differentiating factor is what we call “Product Teams”. We currently have two main teams: one focused on equities and the other on fixed income. Each team is responsible for generating efficiency in their respective product in order to maximize profitability for clients. This structure is different than the industry standard where the trade execution desk assists advisors when a complicated client question arises. These teams work closely with our advisors, providing them information on flow, issuances issuers, etc., which facilitates advisors with clients.

Jim Lowe sucede a Tom Fritzlen en Oppenheimer Private Client Division

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Oppenheimer Makes Key Strategic Leadership Changes In Private Client Division
Foto: 401(K) 2012 . Jim Lowe sucede a Tom Fritzlen en Oppenheimer Private Client Division

Oppenheimer ha anunciado la jubilación del SVP Tom Fritzlen, después de más de tres décadas en la compañía, y el nombramiento de Jim Lowe como su sucesor.

Lowe, que asume las responsabilidades de Fritzlen como miembro del equipo de senior management de la división de Private Client de la firma, ha ocupado posiciones ejecutivas en varias firmas de wealth management. Antes de su nombramiento, desempeñaba el cargo de director de la sucursal del bajo Manhattan de Oppenheimer, al tiempo que dirigía una práctica de asesoramiento muy exitosa. También fue director ejecutivo en Josephthal & Co., supervisando las operaciones de 14 sucursales.

Además de este cambio, Mark Traffordy Todd Wiggins han sido nombrados directores de las sucursales de Seattley Atlanta, respectivamente.