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How to Succeed in the Advisory Business by 2040

According to Boston Consulting Group (BCG), “the wealth management industry is over 200 years old. Yet for most of that history, providers have operated according to the same general playbook. It took the massive digital and regulatory disruption of the past 20 years to begin shaking up industry business models, and evidence suggests that most providers have moved slowly, with many still adhering to traditional ways of private banking.”

Wealth managers must take action on multiple fronts in order to navigate ongoing market volatility and build fresh capabilities that will enable them to create sustainable competitive advantage over the next decade, according to a new report by BCG, titled Global Wealth 2020: The Future of Wealth Management—A CEO Agenda.

BCG’s 20th annual study of global wealth management takes a 20-20 view of the industry, looking back over the past two decades as well as ahead to 2040. Its review of global market sizing, which encompasses 97 markets, provides a detailed retrospective on wealth growth over the past 20 years—and its resilience through downturns—and evaluates the potential long-term impact of the COVID-19 crisis.

BCG has also created a vision for the future of wealth management, examining how the industry’s value proposition and offerings will change over the next two decades, how forms of interaction will evolve, and which new business models will emerge. Finally, BCG offers wealth management CEOs a comprehensive agenda for protecting the bottom line, prioritizing the areas in which they hope to win in the future, and building appropriate supporting capabilities.

“Effectively serving the world’s wealthy is going to get far more complex in the years ahead,” said Anna Zakrzewski, a BCG managing director and partner, coauthor of the report, and global leader of the firm’s wealth management segment. “As the demographics of wealth shift, so will the needs and expectations of wealth clients. With all the choices available, clients don’t necessarily want more—they want better. In addition, the disruptive forces that emerged at the beginning of the century are accelerating. And as digitization lowers barriers to entry to wealth management as a business, competition will intensify and offerings that once provided differentiation will face commoditization.”

Global Wealth Growth. According to the report, a striking feature of wealth growth over the past two decades has been its extraordinary resilience. Despite multiple crises, wealth growth has been stubbornly robust, strongly recovering from even the most severe tests. Today, more wealth is in more hands, and the wealth gap that separated mature markets and growth markets at the beginning of the century has narrowed dramatically. Globally, personal financial wealth has nearly tripled over the past 20 years, rising from $80 trillion in 1999 to $226 trillion at the end of 2019.

The CEO Agenda. In the report, BCG outlines three potential scenarios for post-COVID-19 growth: “quick rebound,” “slow recovery,” and “lasting damage.” Regardless of which scenario emerges, wealth management providers are likely to face more pressure, and many of them were already in challenging positions before COVID-19. Client needs and expectations are changing at an accelerated pace, competition is intensifying, and cost-to-income ratios have been significantly higher than prior to the previous financial crisis (77% in 2018 compared with 60% in 2007).

Although some wealth management providers have made advances in recent years in adapting their businesses to the changing environment, nearly all still have considerable work to do. CEOs must treat 2020 as a pivotal point. BCG’s recommended agenda for wealth management CEOs features three key imperatives:

Protect the bottom line by pursuing smart revenue uplift, optimizing the front-office setup, streamlining compliance and risk-management processes, and improving structural efficiency.
Win the future by developing more-personalized value propositions, enhancing ESG and impact-investment offerings, designing challenger plays, and leveraging ecosystems and M&A.
Build capabilities by gaining better client understanding, attracting top talent, investing in digital and data, and designing a state-of-the-art technology platform.

“The last twenty years have witnessed many peaks and valleys,” said BCG’s Anna Zakrzewski, “and the next twenty will likely bring the same. Although some of the necessary initiatives may not be new, there is much more progress to be made. By acting decisively now, wealth managers have an opportunity to build on their current momentum and position themselves optimally for the future.”

In BCG’s opinion, the melding of technology and human capabilities will enable levels of customization for clients that previously would’ve been too costly, and the wealth management model will expand and refocus during the next two decades as the divide between people and machines fade. However, this will also put further pressure on margins.

“In addition, younger generations, accustomed to pricing transparency in other parts of their professional and personal lives, will insist on greater fee transparency from their wealth advisors,” the report said. “Online comparison tools will make it easy for them to search for the most competitive offerings. Together, these pressures could cut margins on investment services by half, with the result that wealth management providers will have to meet clients’ burgeoning demands and find new ways to drive value with just a fraction of today’s resources.”

To counter that, wealth management firms should shift to dynamic, value-based pricing not necessarily linked to assets under management.

Elsewhere, BCG said the need for scale, specialization and choice could cause the wealth management industry to remake itself around four models, Large-scale consolidation, Niche Plays, Retail Bank and Asset Manager Expansion, and Entrance of Big Tech.

A copy of the report can be downloaded here.

Has Covid-19 Thrown Up Value in the Local Currency Emerging Market Debt Universe?

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Captura de Pantalla 2020-06-16 a la(s) 12 — Courtesy Photo. ,,

The local currency emerging market debt asset class had a strong positive return in 2019. Despite the fears of a global slowdown part way through last year, investors in the asset class enjoyed a 13.5%[1] return in USD unhedged terms. The impact of Covid-19 however has negatively affected the asset class this year. Risk aversion and uncertainty have swept through markets as investors and policy makers have grappled with the short and long run consequences of the virus. Emerging markets have been caught up in that dislocation, prompting some to question the value on offer in this segment of the fixed income market. As the dust settles and the picture becomes clearer, we find an asset class with valuations near historic lows.

The local currency emerging market debt asset class suffered a large negative return in the first quarter of 2020. The -15.2% decline was the largest quarterly fall in the JP Morgan GBI-EM Global Diversified Index since its inception in 2003 (in USD unhedged terms). It is important to separate the sources of return when looking at local currency debt and differentiate between the return from bonds and that from currencies. Historically the separate bond and currency return streams have not been highly correlated, with a correlation of 0.55. The currency element is also more volatile than the underlying bond component. In this occasion as in previous episodes of volatility, emerging currencies were more affected by the correction than bonds which proved somewhat more defensive.

While some individual countries were more exposed to their own unique and identifiable issues, the bond component of the JPM GBI-EM Global Diversified index declined by -1.4% in the first quarter of 2020 (in USD hedged terms). This was a particularly strong performance given the scale of the economic disruption caused by the crisis. It also stands in contrast to the -13.5% decline in the bond component of the global high yield index[2] and the -4.2% fall in the global investment grade corporate bond index[3] (both in USD hedged terms).

In contrast, emerging market currencies were negatively impacted by the “virus shock” in the first quarter, compounded in some instances by the sharp decline in oil and other commodity prices. In aggregate, the currency component of the local market debt index declined by -14.3%[4] versus the USD in the first quarter.

To assess the attractiveness of the asset class today, we can look at the real yield and real exchange rate valuations on offer in absolute terms and relative to history. Combining the two provides an assessment of the current potential of the asset class.

Colchester’s primary valuation metric for bonds is the prospective real yield (PRY), using an in-house inflation forecast rate which is discounted from that country’s nominal yield. We supplement this with an assessment of the country’s financial soundness. The virus induced adverse demand/supply shock and large decline in the price of oil (which fell two-thirds in the first quarter of 2020) and other commodities prompted us to revise our inflation forecasts lower within our emerging market universe. The large fall in the exchange rate in some countries tempered that revision, but the pass through to domestic inflation of such exchange rate depreciations has declined markedly over the past decade.

The resulting decline in our inflation forecasts and rise in nominal yields in some markets has seen an increase in the overall attractiveness of emerging market bonds on a prospective real yield which now sits around the average of the post Global Financial Crisis period.

Colchester’s primary valuation metric for currencies is an estimate of their real exchange rate – or purchasing power parity (PPP). We supplement this with an assessment of the country’s balance sheet, level of governance, social and environmental factors (ESG), and short-term real interest rate differentials (i.e. “real carry”). Emerging market currencies were already trading at attractive levels of valuation versus the US dollar according to our real exchange rate valuation estimates before the coronavirus crisis, the dislocation and uncertainty surrounding the pandemic has made them even more attractive for a USD based investor.

Combining the prospective real yield bond and the real exchange rate valuations together to produce an aggregate prospective real yield for the benchmark, suggests that we are now at levels only seen a few times historically. The value on offer in the local currency asset class today is on a par with that seen at the depths of the Global Financial Crisis in 2009 and most recently in 2015 when US dollar strength combined with some idiosyncratic country issues to produce compelling value in the space. The average benchmark total return in the two years following the three previous episodes of similar extreme valuation – June 2004, January 2009 and September 2015 – was +33.7%[5].

Valuations must be viewed within the context of the fundamentals. In other words, are the declines in currency values and increase in real yields occurring for justifiable reasons? In short, the answer would appear to be ‘no’ when looking at the emerging market universe in aggregate.

Going into the pandemic, emerging markets as a whole were arguably on a more stable footing than developed market peers on several metrics. Looking at debt-to-GDP ratios for example, shows that emerging markets had less than half as much debt as developed markets. Furthermore, the relatively lower increase in government debt in emerging markets over the last 10 years or so highlights their more cautious approach to macro-economic management and the widespread adoption of generally prudent and orthodox policies. The external position of many emerging markets also looks comparatively solid when one considers short- and long-term financing needs.

History also shows that countries with more overvalued currencies tend to be more exposed to an adjustment and reversal in capital flows. In simple terms, the greater the need for foreign capital and the more overvalued a country’s real exchange rate, the more exposed or vulnerable that country is. Most emerging markets are in the less vulnerable with undervalued exchange rates and little to no dependency on short term capital inflows.

The credit rating profile of the local currency emerging market debt asset class has remained at a healthy average of BBB+ for the past several years[6]. However, given the emergency Covid-19 fiscal packages and the associated growth slowdown, several rating agencies have recently acted quickly to downgrade several issuers in the universe such as Mexico, Colombia and South Africa. In contrast, countries in the developed world like the United States and the United Kingdom have not yet had their credit ratings altered[7] despite spending and pledging upwards of 11% and 19% of GDP respectively (to date, and counting) to help their economies weather the pandemic. In comparison, the Mexican and the South African government spending and support packages have amounted to a paltry 1.1% and 0.6% of GDP (to date).

From a purely ‘quantitative’ aspect, looking at some of the various balance sheet metrics, it is difficult to understand how some emerging countries can be rated lower than some of their developed market peers. Clearly you would expect the level of a sovereign’s debt to be a key factor. While there is a relationship between debt levels and ratings, there is a clear differentiation between developed markets and emerging markets. Emerging markets are currently rated lower at the same level of debt across the board, all else being the same.

One explanation for the difference lies amongst ‘qualitative’ factors. This encompasses things like a country’s historical precedent, the consistency of policy, the social-political willingness to undertake necessary adjustments and the level of governance, which includes things such as the control of corruption and rule of law. This traditionally is seen as a weakness by the rating agencies.

Overall however, despite the virus induced deterioration in the fiscal metrics, we believe that the balance sheets of most countries within the emerging market universe remain sound. Rating agencies may continue to downgrade across the sector, but the fundamentals are not pointing towards a meaningful increase in the risk of default. On the contrary, the benchmark is solidly “investment grade” and is likely to remain so in the absence of a further global melt-down.

While the real yields of emerging market bonds have returned to near their long-term average historical valuations, emerging market currencies are currently extremely undervalued in USD terms. This gives the asset class an added source of potential return. Historically this level of valuation has proved to be extremely attractive.

There remain some good reasons for the difference in credit ratings between the developed and emerging world. However, the differences may not be as large as some perceive and on balance, most countries within the emerging market universe should weather the Covid storm.

[1] JPM GBI-EM Global Diversified USD Unhedged Index

[2] ICE BofA Global High Yield USD Hedged Index

[3] ICE BofA Global Corporate Bond USD Hedged Index

[4] JPM GBI-EM Global Diversified FX Return in USD Index

[5] The total return on the JP Morgan GBI-EM Global Diversified Index (unhedged USD) between June 2004 and June 2006 was 27.7%, between January 2009 and January 2011 was 47.7% and between September 2015 and September 2017 was 25.6%.

[6] The BBB+ rating referred to here is the Standard & Poor’s Local Currency Rating weighted average of those counties in the JP Morgan GBI-EM Global Diversified Index (USD Unhedged) as calculated by Colchester.

[7] As per Standard & Poor’s as at end April 2020.

Column by Colchester Global Investors

Norman Alex Opens a Montevideo Office Alongside Ricardo Soto

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Ricardo Soto has joined Norman Alex, an international consulting boutique providing executive search and corporate development services to clients within the financial services sector.

Soto, who is based out of Montevideo, will be in front of the company’s new Uruguayan office, covering the Latin American region and working closely with Norman Alex’ Miami office.

He has an extensive background in the financial services industry working for multinational banks. For the last three years he served as a Partner of a Swiss consulting and recruitment boutique based in Zurich and focused on wealth management. He also spent more than fifteen years at Citibank based in Montevideo and New York covering different areas but mostly private banking. He developed the wealth management activity in Uruguay managing a team of over thirty people and also led a project to implement credit sales teams throughout the region. Previously, he worked seven years for American Express Bank in several senior positions.

Soto speaks fluent English and Spanish (native language) and learnt French during a year in Geneva.

Established in 1997 in Monaco, Norman Alex has offices in Geneva, Paris, Luxembourg, London and Miami and they are looking to establish a presence in Singapore next year.

Financial Advisers and Professionals Expect Year-End Returns to Be More like 2018 than 2008

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investment-5241253_1920 — Pixabay CC0 Public Domain. La UE regula las plataformas de crowdfunding y crea un nuevo servicio de gestión de carteras de préstamos

Financial professionals, including investment advisers, wealth managers, broker/dealers, and financial planners, expect US stock returns to climb back from steep losses to finish the year down just 3.6%, according to findings of a survey published by Natixis Investment Managers. Despite seeing losses as high as -34% within the first few weeks of the crisis, financial professionals saw losses moderate to as little as -10% by the end of April.

The survey showed that 51% of financial professionals globally saw initial volatility caused by the coronavirus crisis as driven more by sentiment than by fundamentals. Optimistic the market will continue to right itself in the second half of the year, financial professionals’ main concern is the uncertainty of what happens next, including how investors handle it.

Between March 16 and April 24, 2020, Natixis surveyed 2,700 financial professionals in 16 countries, including 150 financial professionals in Mexico, and found that, globally, respondents forecast a loss of 7% for the S&P 500 and a loss of 7.3% for the MSCI World Index at year end. Their 2020 return expectations more closely resemble the modest declines seen in 2018 than in 2008, when the S&P plunged 37% and the MSCI posted a loss of 40.33%. In the US market, the outlook is more optimistic, but elsewhere, financial professionals are notably more pessimistic about stock performance in their own markets, with those in Hong Kong, Australia and Germany all projecting double digit losses for the year.

Ongoing volatility remains the top risk to portfolio performance and market outlook. Two-thirds (69%) of professionals globally cite volatility as a top concern, followed closely by recession fears (67%). Almost half (47%) say uncertainty surrounding geopolitical events poses a risk to their portfolios. In a dramatic shift in risk concerns from previous years surveys, a fifth of respondents (19%) expressed concern about low yields, while liquidity issues were also cited by 17% of those surveyed.

“With economies slowly reopening and global tensions easing, financial advisors around the world are bullish on recovery,” said Mauricio Giordano, Country Head, Mexico at Natixis Investment Managers. “But they are also focused on how to shield clients from the volatility they expect to come with it. The crisis has been a perfect storm for emotional investment decision-making, and with the downturn exposing the limitations of passive investing, the vast majority of advisors are looking to active management in the current environment.

Resetting expectations: Hard lessons and teachable moments

After a 12-year run in which the S&P 500 delivered average annual returns of nearly 13%, and fresh off record highs in January and February, the magnitude of losses caused by the coronavirus pandemic was swift and stunning. Never mind that nearly half of financial professionals (47%) agree that markets were overvalued at the time; eight in 10 (81%) believe the prolonged bull market had made investors generally complacent about risk. And as long as the markets are up, 49% of respondents say their clients resist portfolio rebalancing.

The survey found:

67% of financial professionals think individual investors were unprepared for a market downturn (63% in Mexico)
75% (72% in Mexico), suspect investors forgot that the longevity of the bull market was unprecedented, not the norm, historically
76% -67% in our country- think individual investors, in general, struggle to understand their own risk tolerance, and the same number say clients don’t actually recognise risk until it’s been realized

“The market downturn – and expected recovery – serves as a lesson in behavioural finance, even if learned the hard way through real losses and missed goals,” said Dave Goodsell, Executive Director of Natixis’ Center for Investor Insight. “Investors got a glimpse of what risk looks like again, and it’s a teachable moment. Financial professionals can show their value by talking with clients in real terms about risk and return expectations, helping them build resilient portfolios and how to keep emotions in check during market swings.”

Nearly eight in 10 financial professionals (79%) globally and in Mexico, believe the current environment is one that favours active management. For those who embrace volatility as a potential buying and rebalancing opportunity, it’s another teachable moment for portfolio positioning and active management. Almost seven in 10 advisers, both global and in Mexico, agree investors have a false sense of security in passive investments (68%) and don’t understand of the risks of investing in them (72%).

Financial professionals are responding to new challenges managing client investments, expectations and behaviour. Under regulatory, industry and market pressure, their approach is changing on all fronts: investment strategy, client servicing, practice management and education. In a series of upcoming reports, the Natixis Center for Investor Insight will explore in-depth how financial professionals are adapting.

How Brazilian Investors Can Diversify Their Portfolios Abroad Amid COVID-19 Disruption

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Captura de Pantalla 2020-06-15 a la(s) 11 — Fabiano Cintra and Rafael Tovar. ,,

The COVID-19 pandemic has caused extreme volatility in the financial markets this year, which represents additional challenges for Brazilian investors. Concerns about the impact of the novel coronavirus led the Brazilian government to bring down its projected growth this year from more than 2% to 4.7% contraction. Given these factors, where should investors in Brazil look to drive growth and outperformance during such a difficult time?

New opportunities from disruption

Many Brazilian investors have been forced to explore alternative options outside of their traditional fixed income portfolios, due to historically low interest rates. Despite attractive returns in the local equity index (IBOV) over the past 10 years, the Brazilian Reais exchange rate with the U.S. dollar went from 1.5 to 5.4. This leads many Brazilian equity investors to believe that they have missed opportunities abroad, and as a result, they are now looking for ways to diversify their portfolios.

Fortunately, the impact of technological advancements on the Brazilian economy is providing new opportunities for growth. For example, the COVID-19 pandemic has actually led to the push for greater accessibility and mobility with so many employees working from home. Even prior to the onslaught of the virus, smart phones in Brazil were becoming ubiquitous, more affordable and easier to use. Now, technology is continuing to facilitate a world on lockdown, with more connectivity tools to work from home, practice telemedicine and engage in e-commerce.

Given the critical nature of behind-the-scenes infrastructure to support these products and services, we are seeing companies, and even whole industries, being forced to either retool or fail. These are companies that work in sectors such as the cloud, cybersecurity, automation, semiconductors and robotics. Investors who look to equity strategies focused on technological disruption will be able to capture the benefits of long-term trends in these sectors.

Investing without borders

The market environment has changed drastically, such that investors in Brazil who take a more globally diversified approach are more likely to reap previously untapped benefits. By investing outside of the country, they can take advantage of some of the more dynamic and fast-growing global sectors in this new environment, including those involving automation and digital economy strategies.

This is a new approach for Brazilian investors, who have historically maintained a very strong home bias and have had little to no need to diversify their investments abroad. But now, they can also look to opportunities in the global fixed income markets, where we’ve been in a historically low-rate environment for years. In particular, the U.S. high yield market has provided attractive relative levels of yield over the past 20 years, due in part to the strength of the U.S. economy. U.S. high yield has outperformed most other fixed income options and provided returns that compare favorably with the equity markets but with lower volatility.

In addition, it’s important for Brazilian investors to start looking more closely at global opportunities in tech-focused sectors that are seeing accelerated growth and disruption. These technologies are primarily produced in developed countries, and their value is in U.S. dollars. Previously, investors have accessed these spaces via direct individual equity investments or structured notes. Now the market is ripe for selective investment managers to help make these opportunities more attractive and accessible to a larger investor base in Brazil.

As an example, AXA Investment Managers and XP Investments recently partnered to offer Brazilian-based investors access to global equity and fixed income strategies through three local products focused on the digital economy, automation, and the U.S. high yield market. This provides local investors international opportunities with companies whose businesses are not in lockdown but are actually growing. As they look for better ways to reach higher performance, investors in Brazil should look out for vehicles such as these that provide them with easier access to strategies that can diversify their portfolios abroad.

We hope to see Brazil thrive once the pandemic recedes and investors become more comfortable accessing more unique and dynamic portfolio options. As the investment process is made simpler and more accessible, we anticipate seeing this goal accomplished.

Column by Rafael Tovar, director, US Offshore Distribution, AXA Investment Managers and Fabiano Cintra, Funds Specialist at XP Investments

John Surplice Will Take Over as Head of European Equities at Invesco

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Surplice John_hi res — John Surplice. John Surplice sustituirá a Jess Taylor como responsable de renta variable europea de Invesco

Invesco has announced that Jeff Taylor will retire from his role as Head of European Equities at the end of 2020, after almost 20 years in the role and 23 years at Invesco. Taylor will hand over leadership responsibilities to John Surplice, his co-manager on the Invesco European Equity Fund (UK).

John will work alongside Jeff for the rest of the year as co-head of the team and will assume the role of Head of European Equities from 1 January 2021. The investment strategy and process across the portfolio will remain unchanged.

Jeff Taylor said: “I’m fortunate to work with very talented and experienced investors who are all focused and committed to delivering the best outcomes for our clients. In planning for a successor, it was crucial to ensure consistency in our investment philosophy and process. John shares my vision for the portfolio and team and has a deep understanding of our clients’ ambitions, as well as strong leadership qualities. I look forward to working with John and the rest of the team for the remainder of the year.”

Stephanie Butcher, Chief Investment Officer said: “We would like to thank Jeff for his dedication to clients over the years and his role in building a team of highly talented and experienced investment professionals. He has always placed a huge amount of importance on nurturing talent and supporting career progression and his leadership has ensured that there is great strength and depth across the European Equities desk. I would like to add my personal thanks for all the support he has given me over the many years I have worked with him. John’s broad contribution to the team, his investment insights and strong relationships with clients make him a natural successor to Jeff, and I look forward to working with him in the leadership role in the future.”

John has been with Invesco for 24 years, as a core member of the European Equities team and has worked with Jeff for the majority of that time. He co-manages several funds, including the Invesco European Equity Fund (UK) with Jeff as well as the Invesco Pan European Equity Fund with Martin Walker.

Further strengthening the team

With John taking on additional responsibilities, Invesco also announces the appointment of James Rutland to the European Equities team. James joined Invesco as a fund manager in early June and will co-manage the Invesco European Opportunities Fund (UK) alongside John.

James joins Invesco after more than five years at Schroders, where he was a key member of the European Equities team and had co-managed successful European portfolios since 2016 (Schroders ISF European Alpha Focus and Schroder ISF European Opportunities). Previous to that he had worked on the sell side and in investment banking. He brings with him a total of 12 years of industry experience as an analyst and a fund manager.

Commenting on his appointment John said: “I look forward to continue working with Jeff for the rest of the year and thank him for all his support during our time spent working together. The personal development of the team has always been high on his agenda and it will continue to be high on mine. I would also like to welcome James to the team, he has a thorough knowledge of European stocks which should benefit our clients and the team as it continues to strengthen its skillset and expertise.”

Southeast and the AMCS Group Join Forces

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Southeast and the AMCS Group create a strategic alliance to continue to expand the scope of services of both firms in the region. The alliance aims to combine the distribution reach of the AMCS Group with the expertise of Southeast on the implementation of wealth planning tools for Latin American families.

The AMCS Group, founded in 2018 by Andrés Munhó and Chris Stapleton, with offices in Miami and Montevideo, focuses on the distribution of investment and wealth planning solutions in the US Offshore and Latin American markets.

Southeast, founded in 2010 by Alex Bermúdez, is the premier Private Placement Life Insurance (PPLI) solutions consultant for Latin American families. Through a multidisciplinary team of specialists, they advise family groups in Chile, Peru, Ecuador and Mexico on the implementation of various estate, protection and wealth planning solutions.

Santiago Costa, Director of Southeast and specialist in the markets of Mexico and Peru, tells us “It is an important alliance that allows us to continue to grow our presence in Miami as a main wealth management hub and at the same time access other key financial centers such as Texas, New York and California.”

Andrés Munhó, Managing Partner of AMCS says “We are delighted to commence this strategic alliance with Southeast to continue to grow the breadth of solutions and added value that we can deliver to our clients. We have known each other for more than 15 years with Alex, Santiago and the entire Southeast team and this alliance reflects the great respect and trust that exists between both companies.”

Eaton Vance Announces the launch of Calvert ESG Leaders Strategies

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domino-2747758_1920 — Pixabay CC0 Public Domain. Eaton Vance Management lanza Calvert ESG Leaders Strategies, una gama de fondos de renta variable para inversores institucionales y profesionales

Eaton Vance Management has launched Calvert ESG Leaders Strategies, a new series of equity separate account strategies for institutional and professional investors offered by Calvert Research and Management, a subsidiary of Eaton Vance.

The Calvert ESG Leaders Strategies are co-managed by Jade Huang and Chris Madden, vice presidents and portfolio managers at Calvert. The strategies invest in the common stocks of selected companies with leading environmental, social and governance (ESG) characteristics as determined by Calvert. Calvert serves as the investment adviser to the strategies.

Calvert ESG Leaders Strategies are:

Calvert U.S. ESG Leaders
Calvert Tax-Managed U.S. ESG Leaders
Calvert Global ex.-U.S. Developed Markets ESG Leaders
Calvert Tax-Managed Global ex-U.S. Developed Markets ESG Leaders
Calvert Global Developed Markets ESG Leaders
Calvert Tax-Managed Global Developed Markets ESG Leaders
Calvert Emerging Markets ESG Leaders

The Calvert ESG Leaders Strategies seek to invest in companies that are leaders or emerging leaders in ESG factors that Calvert believes are material to long-term performance. The investment process has three primary components: stock selection, portfolio optimization and corporate engagement. The strategies seek to use corporate engagement to strengthen how portfolio companies manage material environmental and social exposures and governance processes and to enhance investment returns.

“Calvert’s proprietary, industry-leading research system enables us to identify companies that are leading their peers in managing financially material ESG risks, and which may be poised to take advantage of business opportunities based on their knowledge of and commitment to meaningful ESG practices,” said John Streur, president and chief executive officer of Calvert. “Financial materiality is a critical component of ESG analysis. We believe understanding the connection between sustainability factors and business success sets these companies apart and positions them to maneuver efficiently and effectively in an evolving world.”

Calvert ESG Leaders Strategies employ a dynamic investment approach that leverages quantitative and qualitative analysis and a risk-managed portfolio construction process, while seeking to effect positive change.

“In developing the strategies, we conducted a quantitative review of ESG leaders’ past performance,” said Ms. Huang. “The results indicate that companies that achieved top ESG scores in financially material factors have historically produced stronger financial performance than those with weaker ESG scores. Additionally, we found that by optimizing the portfolios, we could position the strategies to achieve positive environmental and societal impact by increasing exposure to companies with healthier environmental footprints and better gender diversity.”

Investors Appear to be Largely Ignoring the George Floyd Protests So Far

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Screen Shot 2020-06-04 at 6 — CC-BY-SA-2.0, FlickrPaul Becker/ Becker1999. fondos y asesores

Since last week, we’ve seen people stand together in 50 states and across the world, to demand justice and an end to systemic racism. The four officers involved with George Floyd’s death have been fired and charged. However, markets seem to not be taking note.

Adam Vettese, from eToro, said: “Away from the markets, mass protests over police brutality in the US continued to dominate headlines, as the civil unrest entered its eighth day yesterday. Most of the protests are peaceful but violence is escalating, with mass looting, thousands of arrests, and at least five deaths. Investors appear to be largely ignoring the protests so far, but that could change if the mass gatherings lead to a significant spike in Covid-19 cases, as the biggest risk currently facing US stocks is a second wave of the virus.”

Esty Dwek, from Natixis, said: “Markets continue to prove immune to negative headlines, as they climbed into the end of last week and were in the green yesterday as well, even as protests grapple the US and tensions between the US and China rise again.” The S&P 500 rose for a fourth straight day on Wednesday, trimming its YTD loss to just 3.3%.

Ryan Detrick, from LPL Financial, pointed out that for the last 50 trading days, the S&P 500 is now up 39.6%, making this “the best 50-day rally ever. Looking at the other largest 50-day rallies, they tend to take place at the start of new bull markets and the future returns 6- and 12-months later are quite strong”.

Keith Ellison, Attorney General of Minnesota, said he was of the opinion that people “have been cooped up for two months, and so now they’re in a different space and a different place. They’re restless. Some of them have been unemployed, some of them don’t have rent money, and they’re angry, they’re frustrated”.

Data released today shows that the number of Americans filing for unemployment benefits last week dropped below 2M for the first time since mid-March, though at 1.88 million, the figure still remains astonishingly high. So far, 42.6 million people have filed for benefit, the highest unemployment since the Great Depression.

Meanwhile, the Federal Reserve now allows smaller cities to raise funds by selling debt. Until the announcement yesterday, the Fed’s municipal bond-buying program, launched in April, only applied to cities with populations of 250,000 or more and counties with at least 500,000 residents.

Malie Conway, New Head of US Distribution at Allianz GI

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Screen Shot 2020-06-03 at 10 — Malie Conway, courtesy photo. davidpinter

Malie Conway, formerly CIO Global Fixed Income strategies, will become Head of US Distribution at AllianzGI. In her new role, Malie will relocate to New York, reporting to Tobias Pross, CEO of Allianz Global Investors.

“As well as being an outstanding investor, Malie has strong business and entrepreneurial credentials, having been instrumental in the build out of Rogge Global Partners for 18 years before joining AllianzGI. She is looking forward to moving back to the US and to working with the Distribution Channel heads to continue the growth of our business in the US and Latin America.” The company told Funds Society.

The change, comes after AllianzGI created an integrated, global set-up for fixed income. Having broadened and deepened its fixed income capabilities significantly over many years, AllianzGI has now taken the natural next step in the evolution of its fixed income offering by bringing its capabilities into an integrated, global structure. The new structure, effective June 1st, reflects the fixed income products and services that investors are focused on and AllianzGI’s strategic strengths.

With the launch of this globally integrated platform, AllianzGI’s global fixed income capabilities, responsible for EUR 193 billion of Assets under Management, will be grouped into five pillars of expertise: Core Fixed Income; Credit; Asian & Emerging Markets; Insurance & LDI; Advanced Fixed Income. “Each area will be led by highly-skilled and seasoned investment professionals from our existing capabilities, with the structure maximizing team-based and portfolio manager continuity while strengthening collaboration and implementation of our best ideas and practices”, the company said in a statement. Franck Dixmier, who has led their global fixed income business for the last five years, assumed a more involved role in the oversight of investment processes, becoming CIO Fixed Income.

According to the company, the simplified structure provides maximum continuity in terms of teams and investment processes, at the same time as unlocking the full potential of AllianzGI’s deep pool of fixed income talent. “The changes will see AllianzGI bring together over 25 individuals into a credit research powerhouse, including resource focused on advancing our pioneering ESG and sustainability capabilities even further onto our Fixed Income platform.” They mention.

Franck Dixmier, CIO Fixed Income, said:

“Fixed income markets are increasingly driven by a global opportunity set and clients recognize that a global mindset and global skillset, that AllianzGI is uniquely well placed to offer, can add significant value in any fixed income asset class and strategy, regardless of its geographical identity.

“This globally integrated setup is a natural progression for our teams that have already been working alongside each other as we have steadily built out our Fixed Income capabilities. By introducing a simplified, common framework and harmonized governance structure, we will be able to make best use of our considerable active investment talent to drive performance for clients as we continue to evolve our offering.”