Prudential market experts expect moderate growth in 2015 – led by the United States – as global economies continue to recover. Outlining their views at Prudential Financial, Inc.’s 2015 Global Economic and Retirement Outlook discussion, they said any growth is likely to be uneven across the globe and in the face of increased and prolonged volatility.
Ed Keon, managing director of QMA, said the current environment will lead to continued low yields for bonds and yet another strong year for the stock market.
“Bond yields have stayed low after the end of quantitative easing for a simple reason: bond demand is very strong, and bond supply is modest. Strong demand and modest supply means high prices in any market, and leads to low yields for bonds,” Keon said. “In the short run, stocks can continue to perform well as low interest rates support higher than normal valuations, but higher valuations carry a long-term cost. Eventually expected returns of stock and bond portfolios might be lower than historical norms, creating challenges for many investors.”
Mike Lillard, chief investment officer of Prudential Fixed Income, agrees that the outlook for stocks is more attractive than for bonds. Lillard also believes interest rates will remain low with the health of the economy weighing heavily on any Federal Reserve decisions.
“June would be my liftoff date for a rate hike from the Fed, but they will do it very slowly and patiently. If the economy begins to soften, however, they will stop to avoid sending us into another recession,” said Lillard. “They are going to be highly data dependent, and at the end of the day, our expectation is that they won’t be able to get short term rates very high.”
Quincy Krosby, a Prudential market strategist, warned that the recent slide in oil may not be as beneficial as Fed members make it out to be. She also questions whether a rate hike by the Fed could ultimately harm the economy.
“While consumer spending may have increased in the United States, the Fed needs to worry more about what lower energy prices mean globally. It could be signaling a decrease in demand in places like China, Europe, and Japan, which could lead to decreased production and job cuts in the energy sector,” said Krosby. “Taking that into account, the Fed also has to keep in mind that when rates rise, something always breaks. There’s no telling what asset class may start the ball rolling, but it can’t come as a surprise. That said, it has been the velocity of the oil price plunge that caught markets off guard. Consumers, however, are net beneficiaries of lower prices.”
John Praveen, chief investment strategist for Prudential International Investments, cautioned that divergent monetary policies from central banks are likely to lead to volatility in the coming year and that current and future geopolitical risk cannot be dismissed.
“The start of quantitative easing in Europe and possibly Japan will allow for greater expansion in those markets compared to the United States, yet any unforeseen risks could derail that proposition,” Praveen said. “Europe was supposed to be on an upswing in 2014, but Putin’s actions held any potential rally in check. With such interconnected global economies, any geopolitical or major risk can hold everything back.”
Sri Reddy, head of full service investments with Prudential Retirement, recognizes that this low growth environment described by Prudential’s market experts will challenge investors to think creatively when it comes to retirement income and will cause a shift in how retirement products are structured.
“This prolonged low interest rate and low growth economy has investors looking for new options to generate retirement income,” Reddy said. “Things like automatic enrollment plans, auto escalation options, and enhanced defined contribution plans need to become more of an industry norm to secure retirement income for today’s workers. With people living longer than ever before, the industry needs to continue to adjust.”
Foto: woodleywonderworks. Blackstone y TSSP compran Acenden Mortgage a los administradores de Lehman Brothers
Blackstone Tactical Opportunities, a través de algunos de sus fondos, y TPG Special Situations Partners han acordado adquirir Acenden Mortgage Servicing Solutions a los administradores de Lehman Brothers.
Ascenden es un proveedor de soluciones de administración de hipotecas. La empresa ofrece servicios primarios, de análisis y servicios de titulación. Cuenta con más de 64.000 préstamos bajo gestión, con un valor de unos 5.400 millones de dólares (a diciembre de 2013).
Acenden cuenta con casi 400 empleados repartidos entre el centro de Londres, High Wycombe y Dublín.
Amany Attia, CEO de Acenden, mostró su satisfacción por poder trabajar con Blackstone y TSSP y se mostró convencida de que Acenden está bien situada para beneficiarse a largo plazo de la colaboración con sus nuevos accionistas.
Se espera que la transacción, sujeta a las aprobaciones regulatorias y antimonopolio habituales, se cierre a principios de 2015.
Foto: Stefan Krause. Los fondos de pensiones chilenos saldan 2014 en positivo, con un crecimiento del 11,4%
Todos los fondos de pensiones chilenos cerraron 2014 con rentabilidades anuales positivas, informó la Superintendencia de Pensiones. El Fondo A (más riesgoso) subió el 8,86% entre enero y diciembre de 2014, respecto de igual periodo de 2013; el B (riesgoso), creció el 8,27%; el C (intermedio) aumentó el 9%; el D (conservador) lo hizo en 7,68%%; y el E (más conservador) registró un alza del 6,78%.
El valor de los fondos de pensiones, que son manejados por seis administradoras de fondos privadas (AFP), ascendió a $ 100.479.815 millones, a 31 de diciembre de 2014, el equivalente a 165.435 millones de dólares, lo que supuso un incremento del 11,4% real y de 17,7% nominal en el periodo.
Desagregadas por tipo de fondo y administradora, las mayores rentabilidades las registraron AFP Cuprum en el Fondo A, con un alza del 9,2%; Provida en el Fondo B, con el 8,54%; Cuprum en los Fondos C y D, con el 9,37% y 8,12%, respectivamente; y Habitat en el Fondo E, con un aumento de las ganancias del 6,95%.
En el último mes del año se registraron resultados mixtos. Mientras los fondos A, B, C y D anotaron caídas del 1,72%, 1,28%, 0,67% y 0,31% real, respectivamente en diciembre; el Fondo E logró un incremento del 0,1%. La disminución en la rentabilidad de los primeros cuatro portafolios obedeció a la baja que exhibieron las inversiones en instrumentos extranjeros y acciones locales, lo que fue parcialmente compensado por las ganancias que anotaron las inversiones en títulos de deuda nacional y por la depreciación del peso frente al dólar.
Del valor total de los fondos de pensiones acumulados a 31 de diciembre pasado, el 56,1% corresponde a inversión nacional y el 43,9% a inversiones en el extranjero. La renta variable, en tanto, explica el 40,3% del total de las carteras de inversión; y la renta fija, el 59,6%.
Asset managers globally recognize the importance of building brand awareness and have been increasing resources to support marketing and sales activities in this area, according to the latest issue of The Cerulli Edge – Global Edition.
A recent Cerulli Associates survey of European asset managers revealed that 77% expected to allocate more to marketing in 2014. And significantly, no manager intended to reduce their marketing budget.
«We believe this strong trend will continue into 2015,» noted Barbara Wall, Europe research director at Cerulli. «The recovering market and increased competition between managers merit allocating more to marketing and sales strategies. And overwhelmingly, managers globally share this view.»
In Cerulli’s U.S. proprietary survey of marketers, 78% of small and mid-size managers expected to increase their marketing budgets compared to 38% of large managers. The smaller managers need to spend more on marketing and building brand because they have significantly smaller salesforces and wholesaling operations.
A similar picture emerged in Asia where 63% of marketers anticipated an increase in their marketing budget. In total 29% expected the budget to increase by more than 10%, 11.5% forecast an increase between 6% and 10%, while 23% said the budget would increase by a modest 1% to 6%.
«Opportunity to grow local market presence throughout Asia and Europe is certainly on the cards,» said Angelos Gousios, a Cerulli senior analyst. «With increased competition in all regions, brand awareness is the key to gaining an edge in this game. But cultural and local nuances, especially in Asia, mean a one-size-fits-all marketing strategy is unlikely to succeed no matter how much money is thrown at it.»
The UBS Global Asset Management US Pension Fund Fitness Tracker saw the funding ratio of the typical corporate US pension plan drop by approximately two percentage points to 87% in the fourth quarter of 2014.
«Overall, 2014 was a negative year for US corporate pension plans, as we estimate that the average funding ratio declined by about 8 percentage points. After a 17% funding ratio improvement in 2013, the 8% decline in 2014 highlights the importance of plan sponsors adhering to their de-risking program and thereby minimizing the volatility of their funded status ge points. After a 17% funding ratio improvement in 2013, the 8% decline in 2014 highlights the importance of plan sponsors adhering to their de-risking program and thereby minimizing the volatility of their funded status», says UBS Global AM.
Investment returns of 2.5% could not keep pace with the 5% increase in liability values over the quarter, causing funding ratios to decrease. In 2014, funding ratios decreased approximately eight percentage points. These estimates are based on the average corporate plan’s reported asset allocation weightings from the UBS Global Asset Management Pension 500 Database and publicly available benchmark information.
The sharp decline in oil prices dominated the last quarter of 2014. This is seen as a net positive by the chair of the US Federal Reserve (Fed) Janet Yellen; however, it also has damaging economic consequences for oil exporting countries. Russia in particular has been hit by the combination of falling oil prices, economic sanctions and the fall of its currency. OPEC decided not to cut production at this stage, despite oil prices reaching a 5-year low.
In the U.S., the Fed updated its commitment to keeping rates low from «considerable time» to «patient in beginning to normalize the stance of monetary policy», as expected by market participants. The fall in oil prices contributed to the decrease in inflation expectations.
The economic slowdown continued in China while snap elections were called in Japan and Greece. The political uncertainty in Greece remained cause for concerns in Europe, which translated into increased volatility of the European market indices at the end of the year.
Further to a correction in the first half of October, the S&P 500 Index went on to end the quarter up with a total return of 4.93%. In US dollar (USD) terms, the Euro Stoxx Total Return Index was down 4.54% over the quarter. The MSCI Emerging Markets Total Return Index ended the quarter down 4.44% in USD terms.
The yield on 10-year US Treasury Notes ended the quarter down 32 basis points (bps) at 2.17%. The yield on 30-year US Treasury Notes decreased 45 bps, ending at 2.75%. High-quality corporate bond credit spreads, as measured by the Barclays Long Credit A+ option-adjusted spread, ended the quarter 16 bps wider. As a result, pension discount rates (which are based on the yield of high-quality investment grade corporate bonds) decreased over the quarter. The passage of time caused liabilities for a typical pension plan to increase by about one percentage point over the quarter. Together, these effects caused liabilities to increase 5.0% for the quarter.
Funding ratios decreased approximately eight percentage points in 2014. US Pension Fund Fitness Tracker of the typical US corporate plan’s funding ratio. Source: UBS Global Asset Management, Barclays, Markit.
Pixabay CC0 Public Domain. RACE organiza su primer torneo de golf solidario en colaboración con la Asociación Artrogriposis España
Allianz Life Insurance Company of North America (Allianz Life) announced this week its 2nd annual social media campaign, the #AllianzBirdies Challenge, taking place between Jan. 15th and Feb. 8th, the final day of the Allianz Championship at the Old Course at Broken Sound in Boca Raton, Fla. This year, every public mention on Twitter, Facebook and Instagram during that time period with the hashtag #AllianzBirdies will generate a $1 donation, up to a total of $40,000, for Junior Achievement of South Florida, with Allianz Life already committing a minimum of $10,000 to the organization.
“Last year’s inaugural #AllianzBirdies Challenge was a great success so we’re excited to expand the program in 2015. Our goal is to raise even more money for Junior Achievement in South Florida,” said Allianz Life Chief Marketing Officer Nancy Jones. “Junior Achievement’s commitment to helping young people build their financial literacy skills is a shared passion with Allianz Life and one which we’re thrilled to support through this exciting campaign.”
Photo Ops and Free Online Golf Game
In addition to golf fans using the #AllianzBirdies hashtag every time they witness a birdie from any of the legends of golf participating in the 2015 tournament, this year’s Challenge encourages people to share the hashtag in new ways, including via fun photos at the event. Volunteers from Junior Achievement of South Florida will be at the Allianz Championship Feb. 6-8, promoting photo opportunities in several ways, including a special #AllianzBirdies photo frame to enhance their digital photos.
Golf fans can also participate in the #AllianzBirdies Challenge by accessing the free golf game from World Golf Tour and playing in a virtual Allianz Championship tournament at the St. Andrews Links course between Jan. 15 and Feb. 15, 2015. Whenever players score a birdie during the virtual tournament, they will be prompted to share their accomplishment via social media with the #AllianzBirdies hashtag, which will generate an additional $1 donation to Junior Achievement of South Florida. Available online at WGT.com or via a free mobile app in the iTunes store, the game allows players to participate in monthly tournaments and a season-long points race with a championship in December 2015.
Focus on Financial Literacy, Lessons You’ve Learned
For anyone who can’t make it to the Allianz Championship, Allianz and Junior Achievement encourage people to share the #AllianzBirdies hashtag between Jan. 15 and Feb. 8 with social media posts that highlight the most important financial lesson they learned as kids and/or ways they see youth achieving great things in their community.
“We want to make financial literacy a significant part of the everyday experience for today’s youth, so we’re hopeful that more conversation on the topic through the #AllianzBirdies Challenge will help make that a reality,” said John Ray, Chairman of Junior Achievement of South Florida.
Follow Along Using Social Media
Starting Jan. 15, Allianz Life will share updates about the #AllianzBirdies Challenge via Twitter (@AllianzLife and @AllianzLifeNews) and Facebook (Facebook.com/AllianzLife). For more information about the #AllianzBirdies Challenge and the Allianz Championship, visit allianzchampionship.com.
With 13 chapters in Florida, Junior Achievement is the world’s largest organization dedicated to educating students about workforce readiness, entrepreneurship and financial literacy through experiential, hands-on programs. Allianz Life partners with Junior Achievement because of its focus on improving financial literacy. During the past two years, Allianz Life has donated more than $328,000 to Junior Achievement both in South Florida and in Minnesota, where the company is based.
The 2015 Allianz Championship is the first tournament of the early-season Florida swing for the Champions Tour. The Golf Channel will televise all three rounds on Feb. 6, 7, and 8 with tournament proceeds donated to the Boca Raton Regional Hospital.
Foto: Dominicus Johannes Bergsma . Tiempos interesantes para los bonos corporativos chilenos
Los bonos de empresas chilenas emitidos en el mercado de capitales han sido históricamente un activo muy noble, de baja volatilidad y con retornos bastante atractivos para los inversionistas de renta fija. Este tipo de activo entrega beneficios de diversificación, con retornos ajustados por riesgo bastante superiores a lo que se ve en el IPSA e incluso en bonos de gobierno. Durante los últimos 5 años, los bonos de compañías chilenas han tenido un retorno similar al que se puede encontrar en el índice accionario local, pero con una volatilidad cerca de seis veces menor.
Este mercado se ha desarrollado de manera importante durante la última década como una de las principales fuentes de financiamiento para las compañías locales, e incluso para compañías extranjeras que ven el mercado chileno como un lugar relevante para conseguir financiamiento ya sea para sus inversiones, operaciones o simplemente para refinanciamiento de pasivos. Más aún, dado el ambiente de bajas tasas que hemos experimentado los últimos años, hemos visto un aumento importante en el stock de deuda corporativa en el mercado local, con un crecimiento de un 29% anual compuesto desde el año 2005. Además, hemos visto un incremento significativo de emisiones de deuda de compañías chilenas en el exterior, que aprovechando el ambiente de bajas tasas en el mercado internacional incursionan fuera de Chile colocando bonos en dólares. Como ejemplo, el último trimestre tuvimos emisiones de compañías como ENAP, ECL y Codelco entre otras, acumulando este año cerca de 11.000 millones de dólares en emisiones y acercándonos al récord del 2013 con emisiones con cerca de 12.000 millones de dólares.
En este contexto, tuvimos un gran año para el mercado de deuda corporativa chilena, con retornos sobre el 12% impulsados principalmente por la inflación, una caída importante en las tasas base de gobierno y un gran apetito por parte de los inversionistas por este tipo de activo.
Ahora, ¿qué viene para adelante? Desde nuestro punto de vista, 2015 puede ser un año interesante para este tipo de activo, ya que en general la deuda corporativa se comporta bastante bien en escenarios de bajo crecimiento. Las compañías no necesitan generar utilidades ni crecer de forma importante como lo requieren los accionistas, los bonistas solo necesitan que sean capaces de generar suficiente dinero para poder pagar sus obligaciones de deuda, lo cual en este contexto de bajo crecimiento es lo más probable que suceda.
Por otro lado, desde junio de 2011 la deuda corporativa, sobre todo en los segmentos de compañías de mayor riesgo y por lo mismo con clasificaciones de riesgo menor, tiene un premio importante por riesgo y liquidez que no existía previamente. Aquí vemos que existen buenas alternativas de inversión, que al tener las capacidades para hacer un buen análisis e invertir de forma diversificada evitando las compañías que pudieran entrar en default, se puede obtener un devengo extra que algunos actores del mercado han evitado desde 2011.
Además creemos que en el escenario actual de bajas tasas —que esperamos que se prolongue por gran parte de 2015— existirá un mayor apetito por productos que entreguen un devengo extra a las tasas de gobierno. Dado esto último, sumado a que las emisiones de deuda corporativa deberían seguir su curso ascendente este año gracias a las bajas tasas, esperamos que los bonos corporativos de empresas chilenas obtengan atractivos retornos este año.
Columna de opinión de Rodrigo Barros, Portfolio Manager de LarrainVial Asset Management, para El Mercurio y recogida por Funds Society.
Investec appointed Florian von Hartig Head of Debt Capital Markets in its Specialist Bank. He joins from Standard Bank, where he was global head of debt primary markets, Investec said in a statement as mentioned by Reuters. Based in London, he reports to Chris Meyer, head of corporate and institutional banking.
Von Hartig joined Standard Bank on December 2005, leaving last October. Ian Dixon, a member of Investec’s debt capital markets, had been an interim responsible for the division since October 2013. Dixon will remain at the bank within the high-yield segment.
Pioneer Investments has announced two new senior hires to lead U.S. Intermediary Distribution and U.S. Marketing and Product Development.
Mark Spina has been named Executive Vice President and Head of U.S. Intermediary Distribution, effective January 5, 2015. He will lead internal and external wholesaling, business development, and relationship management teams focused on building relationships with leading financial intermediaries. He will be responsible for distributing Pioneer’s investment solutions, including mutual funds, sub-advisor services and closed-end funds. He is a member of the firm’s U.S. Management Committee and reports to Lisa Jones, President and CEO of Pioneer Investment Management USA Inc.
“Mark has extensive experience across all channels and a demonstrated track record of enhancing partnerships with clients,” said Jones. “I am confident that with Mark’s leadership, Pioneer will work closely with our clients to enhance our partnerships across these channels. I am excited to have Mark as a member of our leadership team,” she added.
Spina joins Pioneer from Voya Investment Management, where he served as Head of Intermediary Distribution since 2008. Prior to that role, Spina was Head of Strategic Marketing and Head of Business Development at Voya (formerly ING US Investment Management), where he worked since 2001.
Erik Gosule has been named Senior Vice President and Head of Marketing and Product Development for the U.S. Division, effective December 15, 2014. He is responsible for developing an integrated marketing platform for Pioneer’s investment solutions across all channels, including intermediary and institutional. He will also lead the U.S. Division’s product development efforts. Erik is a member of the firm’s U.S. Management Committee and reports to Lisa Jones.
“Erik’s breadth of investment experience, ranging from product development and management to marketing and consultant relations, makes him well suited to expand our suite of investment solutions and to better communicate the merits of Pioneer’s capabilities to the marketplace, ” she added. “Pioneer has a broad and compelling global investment platform. While many of our clients are well aware of our capabilities in both traditional and alternative strategies, we are seeking to enhance investors’ awareness of our robust equity, fixed income and multi-asset investment solutions,” said Jones. “Erik will be instrumental in developing a fully integrated marketing and product development platform aligning our investment capabilities with client expectations and needs,” Jones added.
Before joining Pioneer Investments, Gosule was Head of Client and Product Solutions at PanAgora Asset Management, where he was responsible for overseeing strategic and tactical marketing initiatives including product development, and for communicating PanAgora’s investment capabilities through a variety and distribution channels around the world.
Vanguard has filed a registration statement with the U.S. Securities and Exchange Commission to offer a national municipal bond index fund with an exchange-traded fund (ETF) share class. Vanguard Tax-Exempt Bond Index Fund will be the firm’s first tax-exempt index fund and ETF. Vanguard is one of the largest managers of municipal bond funds in the industry—with about $140 billion in tax-exempt bond and money market funds—and one of the largest ETF providers, with $422.6 billion in assets.
Vanguard Tax-Exempt Bond Index Fund’s target benchmark is the S&P® National AMT-Free Municipal Bond Index. The fund will offer investors exposure to investment-grade municipal bonds across the entire yield curve. The fund is intended to provide a sustainable level of current income that is exempt from federal personal income taxes.
“For investors in high tax brackets, a high-quality, broadly diversified municipal bond fund or ETF can provide tax advantages as well as diversification from the risks of the equity market,” said Vanguard CEO Bill McNabb. “Vanguard is pleased to bring a low-cost index option to the municipal category as a complement to our lineup of low-cost actively managed tax-exempt bond funds.”
The fund, which is expected to be available in the second quarter of 2015, will offer three share classes: Investor Shares, Admiral Shares, and ETF Shares (with estimated expenses ratio of 0.20%, 0.12%, and 0.12%, respectively). The municipal bond funds in Lipper’s General and Insured Municipal Debt Funds category have an average expense ratio of 0.97%; comparable ETFs in the category have an average expense ratio of 0.49%.
Investor Shares will require a minimum initial investment of $3,000 and Admiral Shares will require a minimum initial investment of $10,000. These share classes will also include a 0.50% purchase fee to defray portfolio transaction costs and enable the fund to more closely track its benchmark.
A municipal bond funds pioneer
Vanguard Fixed Income Group is one of the world’s largest fixed income managers, overseeing more than $800 billion, of which $140 billion is invested in tax-exempt bond and money market funds. Vanguard offers 12 actively managed municipal bond funds (five national, seven state-specific) and six tax-exempt money market funds (one national, five state-specific).
Vanguard offered its first three tax-exempt bond funds (short-, intermediate-, and long-term) in 1977. It was the first mutual fund company to offer shareholders a choice among municipal bond funds of differing durations.
Adam Ferguson, a portfolio manager in Vanguard Fixed Income Group, will manage the new fund. Mr. Ferguson joined Vanguard in 2004 and currently manages multiple municipal bond funds.
Vanguard has an experienced municipal team of approximately 40 professionals, including portfolio managers, senior credit research analysts, research associates, and traders. The team’s approach, whether managing money market funds, bond index funds, or actively managed bond funds, is to invest shareholders’ money in a disciplined, risk-controlled manner.
