Pixabay CC0 Public Domain. Los tres mitos más comunes sobre la inversión sostenible
The conversation around sustainable investing, or ESG (environmental, social, and governance) investing has rapidly taken on increased importance. Over the past year, the pandemic has proven the value of incorporating sustainability into corporate practice – and that extends beyond just environmental factors to social and governance policies. By incorporating ESG factors into their corporate structure, companies have not only been able to cope during challenging times, but also now have a social license to continue operating in the future.
Just as the signing of the Paris Agreementi in 2015 to combat climate change was a turning point for global sustainable affairs, the global pandemic is reinforcing structural change. The world is moving towarda stakeholder economyii, where companies seek to serve the interests of consumers, employees, suppliers, and communities as a whole.
More and more people, both globally and locally, are joining the conversation about sustainable investment strategies, and more asset management firms believe it’s important for financial advisors to do the same. The first step is to help guide investors by addressing misconceptions about sustainable investments and ESG.
To do this, we spoke with Jordie Olivella, Head of Distribution and Commercial Strategy for BlackRock’s Offshore Wealth business, to debunk three of the most common myths he hears from clients when it comes to sustainable investing.
Myth 1: Sustainable investing means sacrificing returns
Even before COVID, studies showed that sustainable investing can pay off, but last years’ market volatility was a litmus test, further demonstrating the resilience of sustainable products. Over the course of 2020, companies with better ESG profiles provided resilience in portfolios and outperformed lower-rated peers.
“In the first quarter of the year 94% of a globally representative set of sustainable indices outperformed standard indices. Extend that performance to the whole of 2020, and 81% of that same set of indices outperformed,” points out Jordie Olivella.
Myth 2: There aren’t any standards
It is true that definitions of “what is sustainable” can vary depending upon which investor or investment manager you speak to. At a global level, standardization should take into account three stages, according to BlackRock: the way in which companies report information, methodologies for obtaining an ESG rating, and the classification of financial products. BlackRock uses standardized methods to create indexed products that provide options for investors’ various financial and sustainable goals, from simpler methodologies such as negative screening that only eliminate certain industries to strategies that seek out investments by subject or impact.
“At BlackRock we’re committed to providing investors with full transparency about the sustainable objectives and characteristics for all of our investment strategies. We’re committed to providing the sustainable building blocks of investment portfolios, so that all investors have sustainable options,” says Jordie Olivella.
Myth 3: It costs more to invest with ESG products
Most investors assume it’s more expensive to invest in sustainable products, but that’s not always true. According to BlackRock, the management costs of sustainable funds and ETFs are often equivalent to, and in some cases, lower than standard products.
“iShares sustainable ETFs are on average five times less expensive than actively managed sustainable mutual funds, and as flows into sustainable products continue, these costs will keep falling,” weighs in Jordie Olivella
As the shift to sustainable investing progresses it’s important to understand the facts. Flows into sustainable strategies show no signs of slowing down – according to BlackRock 2020 Global Sustainable Investing Survey, global clients are planning on doubling their allocations into sustainable strategies over the next five years.
“Now is the opportunity to understand the facts behind sustainable investments and get ahead of the demand,” concludes the firm.
In Latin America: this material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds may not have been registered with the securities regulator of Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay or any other securities regulator in any Latin American country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico thus is subject to strict rules. For more information on the Investment Advisory Services offered by BlackRock Mexico please refer to the Investment Services Guide available at www.blackrock.com/mx
Pixabay CC0 Public Domain. Los inversores de los mercados emergentes esperan el momento adecuado para hacer uso del efectivo
Emerging market (EM) investors are holding high levels of cash in their portfolios, waiting for markets to stabilize before investing in higher-yielding assets, according to HSBC. Its latest quarterly EM Sentiment Survey found that 45% of investors polled have in excess of 5% of their portfolios in cash and 59% don’t expect to deploy it over the next three months.
“Emerging market investors are waiting for the right time to invest because the markets have been gyrating wildly over the past two months. Only last month, the US Federal Reserve turned more hawkish and the focus was on rate rises and tapering and this month the pendulum has swung completely the other way as investors worry about the continued impact of COVID on growth”, said Murat Ulgen, Global Head of EM Research at the firm.
The survey -the fifth of its kind in a series first launched in June 2020- was conducted between 8 June 2021 and 23 July 2021 among 124 investors from 119 institutions representing 506 billion dollars of EM assets under management.
The poll shows that around half of investors are neutral on the prospects for EM countries over the next three months, although 40% are now bullish, up from 34% in the first quarter of the year. Risk appetite (measured on a scale from 0 to 10 where 10 means the greatest willingness to take risk) also rose modestly to 6.17 from 6.04
EM investors are, however, becoming less optimistic on the growth outlook for EM countries over the next 12 months and have, therefore, also downgraded their inflation expectations. The proportion who are optimistic on growth dropped to 60% in the most recent survey, down from 89% at the end of last year, and those expecting inflation to rise dropped to 59% from 77% at the end of the first quarter.
Rates, the biggest concern
Nevertheless, a clear majority of investors (56%) still expect to see higher policy rates across EM countries with many central banks, including those of Brazil, Russia, Hungary and Mexico, already having hiked rates in 2021. “The feeling among investors is that while the growth outlook is dimmer and inflation is less of a concern than at the beginning of the year, EM countries will continue to hike rates because they are trying to pre-empt Fed tightening and avoid a repeat of the taper tantrum we saw in 2013-2014,” commented Ulgen.
The prospect of tightening by the US Federal Reserve was cited by more respondents as a concern than any other issue, ahead of inflation and COVID-19. This is encouraging investors to focus on economies with rapid rate increases. In this sense, Ulgen pointed out that when you fear that global rates are going to rise, “you’re going to be looking for a higher risk premium to invest in the emerging markets as insulation against tapering”.
With expectations for further rate rises in EM countries, 40% of survey respondents expect EM FX to appreciate against the US dollar, up from 22% in April. Those expectations tend to be most bullish in countries that are frontloading rate hikes, notably Russia and Brazil. Similarly, the poll results suggest investors are seeking a higher risk premium in fixed income as well, citing Russia (22% of the total), Nigeria (13% of the total) and South Africa (12% of the total) as the top three markets with a more favourable outlook in local currency debt.
While Asia remains the most favoured investment destination, the net sentiment has declined as investors are focusing on countries that are benefitting from the rise in commodity prices, including Latin America, Middle East and Africa.
Lastly, engagement with environmental, social and governance (ESG) investing continues to rise, with 45% of respondents now running an ESG portfolio either directly indirectly, up from 30% in June 2020. Climate change, inequality, and minority shareholder protection remain the top three ESG concerns respectively.
Foto cedidaNathalie Wallace, nueva directora global de inversión sostenible de Natixis Investment Managers. Nathalie Wallace, nueva directora global de inversión sostenible de Natixis Investment Managers
Natixis Investment Managershas appointed Nathalie Wallace as Global Head of Sustainable Investing, effective 1st September. She will report to Joseph Pinto, Head of Distribution for Europe, Latin America, Middle East and Asia Pacific, and will be based in Boston.
In a press release, the asset manager has revealed that, in her role, Wallace will be responsible for driving the firm’s ESG commitments across its distribution network, its affiliate managers and through its participation in industry-wide initiatives. She will also focus on supporting clients on their ESG journey from early stage integration to allocation to impact investing. “ESG is at the heart of the strategic ambitions of Natixis IM, which targets to have 600 billion euros of its AUM, equivalent to around 50% of the total, invested in the sustainable or impact investing category by 2024.
Wallace joins from Mirova US, where she was Head of ESG Strategy & Development. She earned her bachelor’s degree at the Institut Supérieur de Gestion Business School in Paris, France and is a Certified International Investment Analyst (CIIA). She served as French Foreign Trade Advisor from 2014 to 2020 and is a member of the CFA Institute’s ESG Technical Committee.
“Having most recently worked at Mirova, our dedicated sustainable investment affiliate, Nathalie, with her deep knowledge and long industry experience, is ideally placed to lead our strategy to support clients in their journey to align their ESG beliefs with their investment goals, and to help us further our contribution to the transition to a more sustainable global economy”, commented Tim Ryan, CEO of Natixis IM.
Foto cedidaRobert Sharps, asumirá como CEO de T.Rowe Price en 2022. Rob Sharps
T. Rowe Price has recently announced key leadership transitions. Its CEO and chair of the Board of Directors, Bill Stromberg, will retire on December 31, 2021, after 35 years at the firm. In a press release, the asset manager has revealed that Rob Sharps, its current president, head of investments, CIO and a member of the firm’s Management Committee, will succeed him as of January 1.
Sharps will then become president and CEO, take over as chair of the Management Committee and join the Board of Directors. He joined T. Rowe Price in 1997 as an equity analyst and his role and influence have broadened in recent years as he has taken a more active role in corporate strategy, product development and key client relationships. Before becoming head of investments and group CIO, Sharps was co-head of Global Equity, the longtime portfolio manager of the US Large-Cap Growth Equity Strategy, and portfolio manager of the former US Growth & Income Equity Strategy.
“I am honored to be the next CEO of T. Rowe Price and am grateful for the confidence that both Bill and the Board have placed in me. T. Rowe Price is well positioned to execute on significant opportunities ahead, and I am excited to lead our business forward and continue helping our clients achieve their financial goals”, he said.
Alan D. Wilson, lead independent director, highlighted that Stromberg has been a remarkable leader and highly effective CEO: “He has deftly navigated the firm through a period of significant change and disruption in the industry. Under his leadership, significant investments in our investment, distribution, product, operations, technology, and corporate function teams have helped the company deliver strong results for clients and take advantage of strong markets to grow assets under management, revenues, earnings, and dividends”, he added.
Lastly, Stromberg commented that, over the course of hist 20-year partnership with Rob, he has consistently demonstrated his abilities as “a talented investor, a principled decision-maker, and an accessible and impactful leader of people and processes”.
Additional leadership transitions
The firm has also announced other changes in senior positions. Specifically, Céline Dufétel, chief operating officer (COO), chief financial officer (CFO), and treasurer, will be stepping down, but she will serve in an advisory role until August 31, 2021, “to ensure a seamless transition”. Jen Dardis, currently head of Finance, will take over her roles and join the Management Committee.
Besides, Eric Veiel, currently co-head of Global Equity, head of U.S. Equity, and chair of the U.S. Equity Steering Committee (ESC), will become head of Global Equity, as of January 1, 2022. At that time, Josh Nelson, currently associate head of U.S. Equity, will become head of U.S. Equity and chair of the U.S. ESC and will join the Management Committee.
Pixabay CC0 Public DomainBonos convertibles . Bonos convertibles
The U.S. equity market set new records during the second quarter with the benchmark S&P 500 index marking its 34th record close of the year on the last day of June. U.S. stocks gained for a fifth straight quarter, the longest run since 2007, and this year’s first-half performance was second only to 1998. According to BofA, ‘stocks were the only major asset class with positive returns in 1H.’
The Fed’s aggressive monetary policy has forced short-term nominal U.S. interest rates down close to zero percent. The Fed is buying $80 billion of U.S. Treasuries and $40 billion mortgage bonds a month, swelling its balance sheet. The mid-month June FOMC statement surprised the markets by pulling tapering expectations for the first rise in short rates forward, citing strength in the U.S economy from vaccinations progress, strong fiscal and monetary stimulus, and the ongoing recovery in sectors hardest hit by the pandemic. With a focus on upcoming U.S. employment and economic releases, the Fed may have to shorten its taper lift-off date again as reverse repo market pressures continue to rise.
Evercore ISI’s economist Ed Hyman writes: The Pandemic Recession has been counted as a recession by the NBER, albeit totally unique with the biggest plunge ever, the shortest recession ever, and the sharpest rebound ever. Nonetheless, the most likely path forward is a typical expansion which have lasted 5 to 10 years.
Mergers and acquisitions activity remained vibrant in the second quarter with $1.6 trillion in announced deals – a new record – bringing global deal volume in the first half to $2.8 trillion, also a record. Market conditions remain conducive for continued M&A including historically low interest rates, accommodative debt markets and a desire to better compete globally. We realized gains on deals that closed including Corelogic, Extended Stay, Signature Aviation, and Cooper Tire. Newly announced deals in June include Lydal’s acquisition by Clearlake Capital for $1.3 billion, Cloudera’s acquisition by KKR and CD&R for $5 billion and CAI International’s acquisition by Mitsubishi Capital for $1 billion. We remain constructive on the M&A market and our ability to earn absolute returns.
Streaming wars and Tech, Media and Telecom deals will be heating up in Sun Valley, Idaho during a five-day conference which started July 6th. Media moguls from major companies including Netflix, Walt Disney, Discovery, Amazon, WarnerMedia, Comcast, ViacomCBS, Lions Gate, News Corp, and Fox were in attendance, bringing potential deals and the future of media to the spotlight.
In the convertible securities space, performance improved in June as underlying equities moved higher. Issuance continued at a more normal pace than the record numbers occurring earlier in this year. Convertibles remain a very attractive way for companies to raise capital quickly at agreeable terms, and we anticipate that 2021 will be another year of strong issuance. The global market for convertibles is approaching $600 Billion USD, with the US accounting for nearly 3/4 of the total outstanding.
Globally, convertibles have become very equity sensitive this year, with 54% in what we would consider equity equivalent issues, only 34% in total return issues and 12% in fixed income equivalent. By comparison, we remain focused on total returns for our shareholders, with 22% of the fund in equity equivalent issues, 72% in total return, and 6% in fixed income equivalent. As a result our portfolio has a 2.2% yield, 25% premium, 61 delta and average price of 120. The global convertible universe yields 1.4% with a 24% premium, 64 delta, and 129 average price. By picking up yield but maintaining a similar conversion premium and delta closer to par, we believe this more balanced mix of holdings will help us participate in further equity upside while still offering the asymmetrical return profile that makes convertibles attractive investments.
For the month of June, our top contributors to fund performance included QTS Realty and Splunk. QTS Realty is a data center provider that is being acquired by Blackstone Group. The stock was up sharply on the news and the convertible preferred moved higher as well due to its equity sensitivity. Splunk provides software for data analytics and security. The stock moved higher on news of a strategic investment from Silver Lake. Top detractors from performance this month included Southwest Airlines and JetBlue. Both of these airlines had moved higher in anticipation of travel accelerating, but the stocks and convertibles moved lower despite positive headlines in the month of June
To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
GAMCO MERGER ARBITRAGE
GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.
Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.
Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.
Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.
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
The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.
GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise. The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach: free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.
Class I USD – LU1216601648 Class I EUR – LU1216601564 Class A USD – LU1216600913 Class A EUR – LU1216600673 Class R USD – LU1453359900 Class R EUR – LU1453360155
GAMCO CONVERTIBLE SECURITIES
GAMCO Convertible Securities’ objective is to seek to provide current income as well as long term capital appreciation through a total return strategy by investing in a diversified portfolio of global convertible securities.
The Fund leverages the firm’s history of investing in dedicated convertible security portfolios since 1979.
The fund invests in convertible securities, as well as other instruments that have economic characteristics similar to such securities, across global markets (but the fund will not invest in contingent convertible notes). The fund may invest in securities of any market capitalization or credit quality, including up to 100% in below investment grade or unrated securities, and may from time to time invest a significant amount of its assets in securities of smaller companies. Convertible securities may include any suitable convertible instruments such as convertible bonds, convertible notes or convertible preference shares.
By actively managing the fund and investing in convertible securities, the investment manager seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market.
Class I USD LU2264533006
Class I EUR LU2264532966
Class A USD LU2264532701
Class A EUR LU2264532610
Class R USD LU2264533345
Class R EUR LU2264533261
Class F USD LU2264533691
Class F EUR LU2264533428
Disclaimer: The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.
Pixabay CC0 Public Domain. Allfunds refuerza su presencia en Norteamérica gracias a un acuerdo con Interactive Brokers
Allfunds, the world’s leading B2B wealthtech and fund distribution platform, has strengthened its reach within the US market by entering into an agreement with Interactive Brokers LLC, a leading global securities broker and custodian with over 348 billion dollars in clients assets, as of June 2021.
The firm has explained in a press release that the agreement will help Interactive Brokers offer mutual funds to RIAs, broker-dealers and self-directed investors. This is facilitated through Interactive Brokers’ Mutual Fund Marketplace which gives clients access to more than 40,000 funds worldwide, including 37,000 no-load funds from over 400 fund families.
The Mutual Fund Search Tool can be used to search for funds by country of residence, commission charged, fund type or fund family. It can be accessed by clients from over 200 countries and territories and includes many prominent fund families, including funds from Amundi, BlackRock, Franklin Templeton, Invesco, Lombard Odier, MFS Meridian, PIMCO and Schroder. In addition, over 7,700 funds are available with no transaction fees. Also, included within the platform is the ability to view suitable share-classes for RIAs and institutional investors.
Allfunds is in the process of building a pool of eligible funds to facilitate access of Offshore UCITS funds in Canada under the relevant local exemptions regime. “This will open the opportunity to fund managers to sell their products in an efficient and cost-effective manner to certain client types”, has pointed out the firm.
In its view, this agreement strengthens its “already sizeable reach” in the USA offshore market. In 2020 Allfunds opened its representative office in Miami to focus on the offshore market mainly composed of private banks, as well as, broker dealers, wirehouses and self-clearing firms. Allfunds is a global leader in open end fund offerings with clients in 60 countries and over 1.5 trillion dollars in assets under distribution.
“We are thrilled to continue to work with Interactive Brokers, a true leader in the electronic broker space. We have seen great success over the last several months working together and we look forward to seeing additional flows from Canadian and US investors into the platform. At Allfunds we are committed to transparent, efficient and cost-effective access to funds and this agreement with Interactive Brokers helps reinforce these values in the North American market”, has stated Laura Gonzalez, Global Head of Wealth Management at Allfunds.
Foto cedidaJoseph A. Sullivan como nuevo CEO de Allspring Global Investments (anterior Wells Fargo AM).. Wells Fargo AM pasa a llamarse Allspring Global Investments bajo el liderazgo de Joseph A. Sullivan como nuevo CEO
Private equity firms GTCR LLC and Reverence Capital Partners, L.P. have announced that upon closing of their acquisition of Wells Fargo Asset Management,announced last February, the newly independent company will be rebranded as Allspring Global Investments. As part of the transition, Joseph A. Sullivan will become Chief Executive Officer, in addition to his previously announced role as Executive Chairman.
Sullivan will succeedNico Marais, WFAM’s current CEO, who will retire upon closing of the transaction and continue to serve Allspring as a senior advisor. With this new name, the asset manager seeks to reflect its “rich history” in investment leadership and its commitment to renewal, growth, and meaningful client outcomes as a newly independent firm.
“I am honored and energized to have the opportunity to lead Allspring, as we enter a new era for the firm. In spending time with Nico and the organization over the past few months, I have been incredibly impressed by the depth of investment expertise and quality of our people and leadership. Our new name truly embodies a renewed corporate culture and commitment to continue to invest thoughtfully and partner with our clients to navigate the future”, said Sullivan.
Collin Roche, Managing Director of GTCR, highlighted that these announcements mark “key milestones” in the transformation of WFAM intoa focused, independent, global asset management firm serving private wealth and institutional clients around the world. “We are excited about the possibilities of our new name and that Joe Sullivan will become Allspring’s CEO. He is recognized as one of the asset management industry’s most respected leaders, and he will be exceptionally valuable as we execute on our growth strategy. We would like to thank Nico Marais for his strong leadership of WFAM, and we are pleased that he will continue to serve as a senior advisor”, he added.
Meanwhile, Marais commented that his is “a tremendously exciting time” for the company, and as they make this transition, he believes it is the right time for him “personally and professionally” to step down from active leadership and assume a new advisory role: “I have cherished my time as CEO of WFAM and am very appreciative of the passion and professionalism of our people. We have accomplished a great deal, including the transition to independent ownership. I look forward to working with Joe and the team, and I am confident about what the future holds for the organization”.
Lastly, Milton Berlinski, Co-Founder and Managing Partner of Reverence Capital, noted: “Today’s leadership and name announcements give us even stronger conviction that the partnership between WFAM, GTCR and Reverence puts us in a powerful position to execute on our strategic vision for Allspring. We are pleased to have a leader of Joe’s stature to take us forward as a newly independent company, and we are very grateful to Nico for his strong continued partnership during this time.”
Foto cedidaJoseph Pinto, director de distribución para Europa, América Latina, Oriente Medio y Asia-Pacífico de Natixis IM. . Natixis IM nombra a Joseph Pinto director de distribución para Europa, América Latina, Oriente Medio y Asia-Pacífico
Natixis Investment Managers has announced changes among its senior positions, with Joseph Pinto appointedHead of Distribution for Europe, Latin America, Middle East and Asia Pacific; and Christophe Lanne namedChief Administration Officer.
In a press release, the asset manager revealed that they will continue to report to Tim Ryan, member of the Natixis Senior Management Committee, Global CEO Asset & Wealth Management within Groupe BPCE’s Global Financial Services division, and to serve on the Management Committee of Natixis Investment Managers. They are also members of the Natixis Executive Committee.
Both professionals have a long track record in the asset management industry and will have a high level of responsibility in the company’s business after their promotions. Pinto, who was previously Chief Operating Officer,will oversee client-related activities and support functions for these regions.
Meanwhile, Lanne will oversee global operations and technology as well as human resources and corporate social responsibility strategy. He was previously Chief Talent & Transformation Officer at the firm.
“These appointments reinforce our ambition to progress among the top fifteen largest asset managers in the world and become the most client centric asset manager. With our affiliates’ distinctive investment capabilities: Active Management, Real Asset Liability Driven Investments, and Quantitative Management, and a more client-centric organization, we remain committed to delivering the best investment outcomes and the best experience for our clients”, said Tim Ryan.
Lastly, Nicolas Namias, CEO and Chairman of the board of directors commented that the appointments of Pinto and Lanne to these newly-created roles will support their pursuit of “the ambitious goals” they have set for Natixis Investment Managers under their strategic plan, BPCE 2024: “Notably the ongoing diversification of our activity as we bolster our commercial momentum and reinforce our position as a global leader in asset management”.
Foto cedidaNick Hayes, responsable de asignación de activos en las estrategias de retorno total y renta fija de AXA Investments Managers. Nick Hayes
The Global Strategic Bonds strategy, managed by Nick Hayes, Head of Asset Allocation for AXA Investments Managers’ Total Return and Fixed Income Asset Allocation strategies, is a flexible strategy that invests across the fixed income spectrum: government bonds, inflation-linked, investment grade credit, high yield and emerging market debt. This means that there is no single point in time when it is appropriate to invest in the fund, as it has the ability to adapt its allocation and positioning to the point of the economic cycle.
However, this does not mean that the fund provides strong positive returns in any environment. So far this year, the strategy has been able to navigate the bear market in fixed income with flat performance and, in recent months, has managed to begin obtaining positive returns as the bond rally has gained momentum. While the management team does not rule out the possibility for higher bond yields, it believes the worst of the sell-off in the fixed income market is over and attentions have now turned to the uncertainty in economic data and fragility of the ongoing recovery following the COVID outbreak.
According to Hayes, yields could continue to rally on any undershoot of investors’ high expectations for the recovery. As a result, the risk/reward trade-off has shifted to a more constructive view on duration. It could also be argued that the Global Strategic Bonds strategy offers investors benefits beyond attractive risk-adjustedtotalreturns, i.e. it provides much-needed diversification to complement an equity allocation and a strong focus on ESG integration.
The Inflation Debate
Reflation is the buzzword in 2021; inflation levels have reached much higher levels, and both expected economic growth and investor optimism are high. U.S. Treasuries have led the rise in yields throughout Q1, with the 10-year US Treasury bond reaching a yield of 1.74% at the end of March, with an apparent market consensus for 2% yields at some point in 2021. Despite this, however, bond markets have actually rallied since April, with much of the market caught underweight duration.
The reasons for this rally, according to Hayes, are much more driven by sentiment and technical factors than pure macroeconomic or fundamental. Although US inflation has printed much higher than in recent memory, the data has increasingly failed to meet or beat the even higher market expectations for inflation, leading to a consensus that it will be transitory and return to much lower levels at an undetermined point. Rather irrationally, investors sometimes place too much emphasis on key levels and round numbers. A 1% yield on the 10-year U.S. Treasury note is the starting point for the year, a 1.5% yield is halfway there, and a 2% yield would be the target that many investors think the market is headed for. If the market stays below 1.5%, bond investors will begin to focus on inflation data for the second half of the year, which will likely be lower than recent months and many will be concerned about the possibility of inflation falling below the central bank’s target, as has been the trend for many years.
Furthermore, at its June meeting, the Fed took a more hawkish tone by advancing the expectation of a rate hike with its dot plot, which summarizes Federal Open Market Committee (FOMC) participants’ outlook for interest rates, now suggesting two increases in 2023. A more hawkish Fed should point to higher yields, but other factors come into play, crucially that it might not allow inflation to run as hot as previously expected, adding credibility to the transitory inflation theory.
With yields rallying since April, investors have been rushing to close their short duration positions, creating technical demand for duration and compounding the move lower in yields. According to Hayes, for the time being, there is still reason to believe that the rally can continue with these factors in play.
Exposure to the yield curve
Looking at the spread between five-year and thirty-year U.S. treasury bonds, there has been a large steepening in yield curves in late 2020 and early 2021. With little movement in short-term bonds, the selling sprees have been focused on longer-term bonds that have substantially underperformed through March.
In recent months, however,stimulated by the transitory inflation momentum, the curve has been flattening, a move that accelerated during the week of the Fed’s June meeting. The scale and speed of the move appears to have forced many investors to rotate out of short-dated bonds and into long-dated bonds, unwinding many of the reflationary positions that were so consensual throughout the first quarter.
Over this period, the Global Strategic Bonds strategy has actively managed its duration position in line with market events. In mid-February, all the momentum seemed to be with the reflation trade, meaning much higher bond yields than expected, causing the team to significantly reduce duration from over 5 years to 1.5 years, stripping out nearly all outright US duration exposure but with a steepening position on the US curve. This worked well to protect the portfolio from the worst of the rates-driven sell-off in the first quarter. Since April 2021, however, the team has started building up a duration position once more, concentrated in long-dated US duration, which has worked well as the curve has flattened aggressively, sitting in early July with over 4 years of exposure.
Credit exposure
In the high yield corporate bond market, spreads continue to move sideways or tighten, supported by relentless demand from investor appetite for a bit more yield than that offered in the investment grade bond market. While these spread levels seem increasingly stretched from a valuation perspective, they appear to be well anchored with strong demand from both investors and central banks.
At the individual security level, there has been a greater level of dispersion in 2021 than there was in 2020, meaning lots of bonds with very compressed spreads as well as others trading at much more attractive valuations, making bottom-up credit fundamental analysis absolutely key. Increasingly, however, these levels of dispersion are beginning to decrease as spreads grind tighter and valuations appear stretched across the board, potentially making a more prudent approach to credit necessary in the coming months.
Currently, the Global Strategic Bonds strategy has a 36% allocation in emerging markets and high yield and 30% in investment grade credit. Its investment-grade bias is toward BBB-rated securities, investing primarily in bank and insurance company debt, and other companies that could benefit from the recovery following the COVID crisis. In high yield, the team has reduced exposure to some of the more cyclical companies and is focusing on shorter-dated high carry names. In emerging markets, they are moving away from traditional commodity sensitive areas, towards sectors that are influenced by the middle class consumer and increasing exposure to renewable energy brands.
Pixabay CC0 Public Domain. La complacencia respecto a la inflación podría ser el mayor riesgo al que se enfrentan los inversores
The “Roaring Twenties” lived up to the hype in the first half of 2021 as most major indexes –S&P 500, FTSE 100 or Shanghai Composite- posted double-digit returns. Looking into the second half of the year, strategists of Natixis Investments Managers believe that along with rising returns, investors should especially watch two things: inflation and valuations.
These are the conclusions of a mid-year survey of 42 portfolio managers, strategists and economists representing Natixis IM, 16 of its affiliated asset managers, and Natixis Corporate and Investment Banking. It shows that even as the market considers the first real dose of inflation in 13 years, complacency may actually be the biggest risk facing investors.
More than a year into the pandemic, with light at the end of the tunnel, Natixis experts believe that long-term consequences of the last year will be slow to unfold. Still, the year-end outlook remains constructive with few risks on the horizon, suggesting investors best keep their eyes wide open as the long-term effects slowly begin to unfold.
“The Wall of Worry continues to keep sentiment in check. We hear many concerns about peak growth, and we remind investors not to confuse peak growth and peak momentum. We expect the pace of the recovery to ease, but ease to levels that are still very supportive for corporate earnings,” says Jack Janasiewicz, Portfolio Manager & Portfolio Strategist for Natixis Investment Managers Solutions.
Despite big returns from investment markets, the global economy has not yet fully reopened. More than half (57%) of strategists project it will take another six to nine months for the world to fully reopen. Others are similarly split between whether the economy is gearing up for the reopening towards the end of 2021 (21%) or whether it will be delayed until the second half of 2022 (19%).
Strong growth in the US
Regionally, sentiment runs most positive for the US economy. After watching it reopen sooner and faster than expected, with Q2 growth set to be 11% (annualized), two-thirds say they expect it to neither stall nor overheat in the second half, suggesting still strong growth ahead.
Looking at China, where economic growth has recovered to pre-pandemic levels, six in ten say the recovery has already peaked. Less than one-third (31%) think there’s more room for the Chinese economy to run in the second half of the year.
In Europe, where vaccination efforts are a few months behind the US and reopening is set to accelerate during the second half, 57% believe the economy will continue to lag the US, though 43% do believe it will catch up to the rest of the world through the end of the year.
Is complacency the real risk?
In this context, no single risk stood out for Natixis strategists in this annual survey, with no risk factor rated above an average of 7 on a scale of 10. Taken together, the views suggest that investors should monitor risks and investors be on the watch for potential headwinds.
“Indications are that inflation will prove transitory, driven by consumers fresh out of lockdown and flush with cash, coupled with supply chain bottlenecks. But the risks are clearly to the upside. Even the Fed had to acknowledge that inflation would run hot in 2021, though it is confident it will not spiral beyond that,” said Lynda Schweitzer, Co-Team Leader of Global Fixed Income at Loomis Sayles.
Value continues to lead in equities
One of the key market trends to come out of the pandemic has been the rotation to value investing. Looking into the second half of the year, 64% of those surveyed say value has at least a few more months to run, though only a quarter (26%) believe that outperformance could last for a few years. Only 10% believe the value run is already over, a sentiment that was strongest among the 21% of respondents who see markets stalling in the last two quarters of 2021.
Chris Wallis, Chief Investment Officer at Vaughan Nelson Investment Management points out that for value to continue to outperform, “we will need inflation to prove transitory and further fiscal spending by the federal government”.
It all comes down to the Fed
Of all factors that could impact market performance over the second half of 2021, strategists say that Fed moves matter most, rating them 7.2 out of 10. Similarly, they cite economic data releases (6.7), fiscal spending (6.1) and liquidity (6) as key leading market drivers, demonstrating just how much sway central banks continue to hold over markets. Valuations (5.2), vaccinations (5.1) and geopolitics (5) round out the pack, showing that respondents are looking past the pandemic and that, while valuations are high, they often do not lead to a correction on their own.
The outlook for emerging markets in the second half of the year is also dependent on the Fed, according to the survey. Indeed, 45% of respondents caveat their call for EM outperformance with the dollar and yields remaining contained, showing how far-reaching the Fed’s impact is. Only 10% of respondents gave an outright “yes” to EM outperforming into the end of the year, while 14% say EM needs Chinese growth to remain robust and nearly one in three (31%) said “no,” emerging markets will not outperform during the second half of 2021, regardless of any caveats.
ESG and crypto positioning
In considering two of the leading investment stories to come out of the pandemic, Natixis strategists have the strongest convictions about ESG (Environmental, Social, and Governance) investing. Throughout the pandemic, ESG strategies generated impressive results in terms of both returns and asset growth. Few think the success will be short-lived, as one in ten of those surveyed think of ESG as a fad. Instead, 48% say these investments are becoming mainstream and 26% call them a must-have investment.
When it comes to cryptocurrencies, the asset manager believes that while they have been grabbing headlines over the past year, two-thirds of those surveyed believe the market under-appreciates the risks, 17% say crypto is nothing more than a fad and 12% believe it is a disaster waiting to happen. “Not one of the 42 strategists surveyed believes cryptocurrencies are a bona fide alternative to traditional currencies”, the analysis adds.
Post-pandemic winners remain the same
As we start to look post-pandemic, respondents saw little change in the projected post-pandemic winners compared to last year’s survey. This year, strategists call for technology (88%), healthcare (83%), ESG investing (76%), and housing (74%) to be the winners from the crisis.
Given that nearly six in ten strategists (57%) put stay-at-home business in the winners’ column, it appears many think it will take time for the sector to mirror the return to the office. Convictions do not run as strong for energy (38% winner / 62% loser) and travel (52% winner, 48% loser), an outlook that aligns with a full reopening sometime in the first half of 2022 rather than the last half of 2021.
