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Legg Mason Boosts its Offerings in Brazil with the Launch of Two New Feeder Funds

Legg Mason continues to prove its strong commitment to Latin America, and especially to Brazil, the country where the asset management company recently decided to launch two new feeder funds, which are investment vehicles that allow local investors access to funds with UCITS format, registered in Dublin.

“We are presently living in times in which the political and economic situation has significantly helped Brazilian investors to start looking for new sources of return and diversification in their portfolios. To begin with, the Central Bank of Brazil has slashed its benchmark rate, from 14,25% on October 2016 down to 9.25%, a rate level which had not been seen since 2013. This has caused offshore products to start to seem more attractive to the local investor, as the yield on Brazilian debt is no longer as high when compared to the rest of the world. Another issue that must be taken into account is regulatory change. The Brazilian Securities and Exchange Commission changed its definition of qualified investor (proving investors with at least 1 million BRL, approximately 315,000 dollars), allowing the opening of the fund distribution business to mass affluent customers, greatly benefitting local feeder funds, vehicles that allow the investment of 100% of their assets in offshore funds platforms in Dublin. Finally, we should mention the country’s economic situation, strongly linked to the political scene. Brazil needs an urgent reform in its pension system in order to address its huge fiscal deficit, and it is very likely that this reform will be postponed until after the presidential elections of 2018. This uncertainty increases the search for opportunities outside the country,” says Roberto Teperman, Head of Sales at Legg Mason in Brazil.

The first of the funds, the Legg Mason Rare Infrastructure Value, is an equity fund that invests 100% of its assets in global listed shares of companies that develop long-term infrastructure projects,such as gas and electricity distribution and transmission networks, water supply and wastewater, airports, toll roads, railways, ports or communication networks. This strategy seeks to achieve a target yield of G7 inflation rate + 5.5% and offers very low correlation with the local equity market given its exposure to global alternative assets.

The second one, the Brandywine Global Credit Opportunities, is a fixed income fund that, using a top-down approach, invests in alternative credit in the global bond markets across the credit spectrum, including exposure to debt opportunities in emerging markets that the fund’s manager finds most attractive. In addition, the fund may use long and short positions through the use of derivative instruments, mortgage-backed debt instruments (MBS), high-yield debt and investment-grade debt.

These two strategies are in addition to the two feeder funds that the asset management firm already distributes in the Brazilian market, the Legg Mason Western Asset Macro Opportunities Bond and the Clear Bridge Global Equity.

“We try to launch fixed income and equity feeder funds in order not to focus on just one asset class. The decision to launch the Brandywine Global Credit Opportunities feeder fund was determined by the high demand for fixed income assets with high yields in Brazilian investors’ portfolios. In this regard, the Brandywine Global strategy offers a unique approach to investing in fixed income, uses a top-down process, and its average annual volatility fluctuates around 4%. However, the Legg Mason Western Asset Macro Opportunities Bond tries to leverage the opportunities that may arise in terms of duration in the yield curve, using a bottom-up approach in portfolio construction that uses relative strategies in credit, and usually has an average annual volatility close to 7% or 8%, with a limit of 10%,” adds Teperman.

Finally, Lars Jensen, Head of Legg Mason Americas International commented that the launch represents Legg Mason’s commitment to the region. “We intend to launch new feeder funds in Brazil before the end of the year. At some point, the hope is to have all our Investment Managers represented in Brazil.”

How Did the Top Private Banks Worldwide Fare in 2016 and Who Are They?

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Cuáles son las entidades de banca privada más importantes del mundo y cómo les fue en 2016 — Photo: Urbanrenewal. How Did the Top Private Banks Worldwide Fare in 2016 and Who Are They?

Scorpio Partnership’s latest edition of the highly anticipated Global Private Banking Benchmark shows a tale of two halves for the global wealth industry. The leading assessment of KPIs in wealth management highlighted that private banks successfully navigated regulatory and political upheaval in 2016, with assets under management rising by almost 4% on average.

The results, based on the publicly available information provided by over 200 wealth institutions, indicate that cost income ratios also fell below 80% for the first time since 2012, reflecting wealth managers concerted efforts to cut costs despite continued compliance pressures. Strong profitability growth masked the industry’s underlying struggle to improve revenues, with operating income rising just 0.04% on average.

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“As advanced technology continues to reshape the wealth management industry, firms will be able to recognise cost savings through process optimisation,” said Caroline Burkart, Director at Scorpio Partnership. “The challenge going forward will be managing the revenue side of the profits equation. These firms are experiencing pricing pressure, driven by regulations, the trend for passive investing and the wave of lower-fee competitor models entering the market. Solving the equation will require increased focus on enhancing the proposition with advisory capabilities and improvements to the client experience,” she added.

This year the largest 25 firms in the Benchmark managed USD13.3 trillion of HNW AUM, representing a 63.2% market share. The list was lead by UBS, followed by Bank of America, Morgan Stanley, Wells Fargo and Royal Bank of Canada.

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Of the top ten operators, seven had a North American focus. However, Asia’s private banks gained momentum in 2016. China Merchants Bank stands out in the ranking, having added over CNY400bn to AUM in 2016 as a result of enhanced customer acquisition efforts, as well as upgrading it’s private banking proposition. Another contender from Asia, Bank of China, entered the ranking this year, managing over CNY1 trillion on behalf of its wealth management and private banking customers.

By contrast, many of Europe’s key operators experienced negative AUM growth due to a combination of internal restructuring initiatives, decisions to scale back from non-core markets and reputational challenges.

As well as posting strong financial KPIs for 2016, wealth managers were also able to move the dial on client experience, with Scorpio’s annual client engagement tracker, which focuses on the three pillars of a wealth management relationship – Service, Proposition and Relationship, indicating an improvement of 5.72%. “Our research indicates that there a relationship between client perception of the firm and the AUM growth rate.” They added.

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As evidenced by Figure 2, some firms faired better at converting enhanced quality of the client service into improved financial performance. North American banks are leading the ranks of wealth managers, with only one European bank among them in a top quadrant by CES vs AUM growth metrics.

“North American operators tend to have a more forensic approach to tracking, measuring and monitoring the client experience across multiple metrics. As such, we see them consistently move the dial on client engagement and, as a result, their financial results,” commented Caroline Burkart, Director at Scorpio Partnership. “The commitment to active listening to the needs of the clients will be imperative to a strong advice-led model.”

For the full report, follow this link.

The Huge Opportunities for Private Equity in Mexico Create the Need to Strengthen Investment Teams

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Las enormes oportunidades para el private equity en México crean la necesidad de fortalecer los equipos de inversión — CC-BY-SA-2.0, FlickrLeon de Paul, courtesy photo. The Huge Opportunities for Private Equity in Mexico Create the Need to Strengthen Investment Teams

Facing impressive opportunities in private equity investments in Mexico, the Afores are seeking to increase their investments in alternative assets and the regulator, CONSAR, is preparing changes to the investment regime that will facilitate the process. Leon de Paul, Chief Risk Officer at Afore Citibanamex -the Afore with the largest investments in alternative assets, and according to the Institute of Sovereign Wealth Funds (SWFI), one of the best public investors in the world, spoke with Funds Society about its process, and expansion plans.

The investment team led by Leon is focused on the real assets and private equity side of alternative investments, such as real estate in its different sectors, infrastructure, energy and private loans. This is an asset class that the manager likes because “their returns can differentiate us from the rest of the managers and it can offer us higher risk-adjusted returns.” Citibanamex believes that private equity presents a great opportunity in Mexico for four reasons: Structural reforms, Regulatory changes – offering new investment vehicles, The appetite of foreign investors for participating in Mexican alternative assets and, mainly, Mexico’s demographics. “When you invest in an asset you want it to be profitable and have a market that demands it. Mexico is a very young country with an average age of 24 years. In 20 years, Mexico will need at least 60% more urban infrastructure, which means that we will need the assets. Someone has to built them and that someonehas to have a profit. In addition, with the current pensions’ structure, one of defined contributions, you can bring the assets to present value and invest in the long term to improve returns,” says the manager.

Regarding their due diligence, the Afore with the highest percentage of its assets, and amount, invested in alternatives has sought since 2008 to learn from its partners and is focused on creating the best investment team in the sector. They currently have seven professionals dedicated to reviewing the processes and expertise of the GP teams and are constantly growing because, considering their assets’ growth – one which makes it so that every five years they double their AUM, to simply keep 10% of their assets in Alternatives, they must maintain a robust and constant pipeline. Only in the last year and a half the risk team has doubled in size and the alternatives’ team has been created, says Paul.

However, there is still a long way to go… Between 2015 and 2016, only in infrastructure and energy in Mexico, more than 90,000 million pesos (more than 5.1 billion dollars) were committed and, according to Paul, the Afores, despite their mandate to invest in the long run, did not even invest 1% of that. “We must grow our teams to have more operations, to be able to invest relevant amounts and approach the authorities to look for small regulatory changes so that, taking care of the interests of pensioners, we can allow access other investments with international partners.” He is certain that as the Afores further invest in this asset class, that will attract more foreign investment “which will translate into greater infrastructure and therefore greater growth and quality of life.” As an example of this, the manager highlights the discovery of an oil field in shallow waters off the coast of Tabasco, the first one in years and the result od a co-investment in energy that Afore Citibanamex forms part, while with the Shared Network, Mexico will guarantee access to the best wireless technology in the world, at competitive costs, to almost 92% of the population, using the 700 MHz band spectrum. But this, is just the beginning…

Compass Promotes a New Co-Country Head and Regional PM

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Cambios de ejecutivos en Compass: nuevo Co-Country Head y PM regional — CC-BY-SA-2.0, FlickrAnabel Vidal and Jorge Rovira. Compass Promotes a New Co-Country Head and Regional PM

Jorge Rovira, who, until recently, led Compass‘ commercial effort in Colombia, assumed responsibility as Co-Country Head, along with Anabel Vidal, of Colombia and Panama.

In addition to this change, Anabel Vidal assumes the leadership of the regional PWM area, with the responsibility of deepening the process of integration, consolidation and growth of the firm’s offshore and services platforms for private clients in the region.

Before starting his career at Compass, Jorge worked at BlackRock where he led the Institutional / Retail business effort in Mexico, Central America and Colombia. He was also a Portfolio Manager for Global Strategies at GBM Mexico, Head of Investments for Corredores Asociados in Bogotá, and Head of Institutional Sales for Colombia and Peru in LarrainVial as well as Senior Strategist at BBVA Provida in Santiago de Chile.

Vidal has more than 19 years of experience in the financial industry. She joined Compass Group in 2007 and was Product Development Manager, in charge of Product Allocation and Portfolio Management for private clients at Compass Group in New York and Miami. Shortly after, she was in charge of the Miami offices and in the year 2015, also Panama and Colombia. Before joining the firm, she worked in the consulting area for the financial sector in Accenture and Procuradigital.

Terry Simpson: “Economic Expansion is Becoming Sustained and Synchronized Across the Globe”

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The global economy is moving towards more sustained economic expansion, and is still far from an inflationary environment. Although the Fed has begun its normalization process, there are still many questions surrounding the policies of the European Central Bank, the Bank of Japan, the Bank of England, and even the Bank of Canada, which recently decided to increase its reference rate by 25 basis points, the first-rate increase in seven years. Structurally, the economic environment is one of low growth and low interest rates, but what do these conditions mean for returns? Where can they be found in this environment? Terry Simpson, Multi-Asset Investment Strategist at the Black Rock Investment Institute, answered these, as well as other questions, during his visit to Miami for the presentation of the firm’s strategic vision for the second half of the year to their clients.

Simpson, who joined BlackRock in 2004, explained that they use various tools to be able to identify economic growth that is not captured by traditional economic indicators, such as capex, employment, or industrial production. In addition to estimating the growth of the G-7, the seven major world economies through advanced economic indicators using an econometric technique called Nowcasting, they also use Big Data technology to continue to innovate in their internal forecasting elements. “There are household spending patterns and business developments that you cannot capture with traditional economic variables, and we believe our differentiated approach gives us a competitive advantage over the data analyzed by the market consensus on the street,” he says.

In this way, BlackRock establishes that the G-7 12-month forward growth forecasts are shaping up to be 2% over the next 3 months, between 25 and 30 basis points above the market consensus, a difference that may seem small, but in which a low growth environment can be sufficient to influence asset allocation decisions and investor sentiment. “We are seeing that the improvement in global economic growth is in a synchronized trend. The United States’ economic cycle is ahead, but the rest of the G-7 economies are now catching up.” Last year all the improvement came from the US economy, but now there is significant improvement in Germany, Canada, Japan and France, which is very important to increasing global growth.”
Continuing with the theme of sustained economic expansion in the United States, Terry Simpson addressed a frequent question about the duration of the cycle. “The United States is now eight and a half years into this economic cycle, this is the third longest economic expansion in US history, and many expect it to end soon. This is erroneous. They are just thinking about it from the wrong perspective. By our analysis, we can see that, since the last cycle, we are still far from reaching what we call the potential in the economy, which still argues that this cycle has room to run and this cycle should be measured in years, not quarters.”

Next, Simpson referred to the more aggressive tone from central banks in the early part of the summer, beginning with statements by Mario Draghi at the Sintra symposium in late June during the European Central Bank Forum, where the market interpreted that the European authority on monetary policy is prepared to be more aggressive in withdrawing its economic stimulus measures. The FOMC then continued with its third-rate hike in 6 months. But this should not divert investors’ attention, who should nevertheless bear in mind that most central banks aim to keep inflation close to their target: “Since 2015, core inflation in the US, the Eurozone and Japan has remained very stable and flat, if anything we have recently seen a decline in US inflation, which has raised much concern. The reality is that Central Banks really have not been hitting their inflation targets, so it is very likely that they are not going to be aggressive while removing their expansionary policies and that is one thing that markets misinterpreted, and structurally, we believe that we are going to be in this low-growth, low- interest rate environment for the foreseeable future.” Most central banks are mandated to manage around an inflation target. Some banks have a dual mandate, like the Fed with full employment as their second mandate, but the vast majority of them conduct their monetary policy in relation to an inflation target, projections on GDP and developments on the output gap. In any case, in Europe inflation is around 1%, while the inflation target is 2%. “If Draghi announced the tapering of the QE program this year, we think it would be a very gradual wind down.”

China is another frequent concern for investors. BlackRock uses economic data to evaluate the trend for China’s PMI, a leading indicator for the country’s economic prospects. The current data remains high by recent historical standards, the highest of the last three years, so they do not believe that a hard landing is as automatic as some think. “Policy makers have identified the imbalances in the economy and are starting to address them; and that is a good thing. This doesn’t necessarily mean it’s going to be a smooth ride, but at least they recognized the importance and potential impact on the economy,” adds Simpson.

Rethinking Risk

At a time when volatility levels are at a minimum, it is important to ask about the likelihood of a shift to a high volatility regime. According to BlackRock, if we are currently in a low volatility regime like the present one, there is a 90% probability that we will be in the same regime one year forward and a 70% probability that the same regime will be maintained over a three-year period. This is an important fact, since most clients are de-risking their portfolios because they believe that such low volatility is not normal. “Volatility is at such low levels because of conventional and unconventional monetary policy measures of recent years. However, there are other reasons at the macroeconomic level: GDP, unemployment, and inflation volatilities are at levels below their historical rates. It is consistent that if you have low macroeconomic volatility, you will have low financial volatility, so we do not expect volatility to mean revert.”

It may rise from the current levels, but it would take a geopolitical shock or economic shock to shift us into high volatility regime. In other words, investors should maintain their current exposure to risk, or even increase it. “This is a contrarian call as investors are pairing risk exposure back and taking profit. We still like equities and high quality credit fixed income” he said.

Investec Launches an Investment Grade Corporate Debt Fund in Association with Compass Group

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Investec lanza, de la mano de Compass Group, un fondo de deuda corporativa con grado de inversión — . Investec Launches an Investment Grade Corporate Debt Fund in Association with Compass Group

Compass Group is the sub-manager of the new Investec Latin American Investment Grade Corporate Debt Fund, recently launched in Luxembourg and included in Pershing.

The strategy is almost a year old and will be managed by Tomás Venezian and Mathew Claeson, who have more than 15 years of experience in the industry, and currently the portfolio is built through a bottom-up process of ‘best ideas’.

Latin America is at a turning point, where growth and inflation stabilize, which has allowed an expansive monetary policy in the region. On the business side, a process of deleveraging has begun to be observed since mid-2016, which should result in much lower default rates than those observed in recent years.

On the technical side, Compass Group experts expect a negative net bond offer in Latin America this year, in an environment in which demand for interest rates continues strong, and therefore, global investors have appetite for the region.

US investment grade debt spreads and emerging market spreads remain at attractive levels compared to their historical average. Latin America is the most attractive region in terms of spreads adjusted by risk classification, says Compass.

The fund’s objective is to generate income with the opportunity to obtain long-term capital gains by investing in Latin American fixed income assets rated as investment grade.
The spectrum of bonds includes sovereign, quasi-sovereign and corporate, the latter having the greatest participation in the portfolio.

Compass Group LLC has a history spanning over 20 years, specializing in asset management in Latin America, where it has more than 40 specialists based in the main cities in the region.

Larrainvial Answers Three Questions About the Progress of the Agreements with Vontobel and Columbia Threadneedle

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Tres preguntas a LarrainVial sobre el avance de los acuerdos con Vontobel y Columbia Threadneedle — Wikimedia CommonsSantiago de Chile. Larrainvial Answers Three Questions About the Progress of the Agreements with Vontobel and Columbia Threadneedle

LarrainVial Estrategia has been promoting its funds’ offer and currently maintains contacts with two new administrators. The Chilean firm responded to three questions from Funds Society about these negotiations:

1. At what stage are the discussions between Vontobel Asset Management and Columbia Threadneedle Investments?

We are constantly monitoring the market in search of managers to complement the 36 fund managing companies with whom we currently have an agreement, with the idea of improving our availability of products to incorporate our asset allocation through the best instruments for each asset class.

We do indeed have contacts, however, agreements must be approved by our Compliance area, which may take some time due to the exhaustiveness of the review process of the counterparts that is carried out, both by us, and by the aforementioned managing companies.

2. What are the main advantages of these funds and what do they contribute to LarrainVial’s existing offer?

In Vontobel’s case, what caught our attention was its consistency in funds related to emerging markets, especially in fixed income.

In Columbia Threadneedle’s case, what caught our attention was its diversified range of products globally, with interesting alternatives mainly in European equities, where they have various diverse strategies.

3. How does the work of LarrainVial Estrategia fit into the company’s regional expansion policy?

LarrainVial Estrategia was designed to be an easily scalable model for the rest of the region, with a team characterized by absolute independence, open architecture, ability to combine national and international investments, plus renowned experience in combining traditional investments with the most complete range of alternative investments.

If to all of the above we add a great commercial capacity to lower our vision, and recommendations to our financial advisors, so that these can in turn be transmitted in a consistent way to their clients, we can see the leading role in our area within LarrainVial’s general strategy.

All this is being highly valued by our financial advisors and their clients, which is reflected by the fruits that our work has started to reap. This is evident by the extreme loyalty to the company shown by our clients, due to the consistency of their portfolios and the cohesion of the discourse within the sales force.

Aberdeen AM: Asia and Latin America Harbour Opportunities in Equity Investments

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Aberdeen AM: “Asia y América Latina ocultan empresas con fuertes balances, buena rentabilidad y dividendos sólidos” — CC-BY-SA-2.0, FlickrPhoto: Emilio García. Aberdeen AM: Asia and Latin America Harbour Opportunities in Equity Investments

According to the Aberdeen Global Equity Team, recent events – from the political to the economic – have conspired to test the mettle of even the most seasoned investors. Savers, particularly those using bond markets, have had their reserves eroded by a combination of inflation and a long period of very low interest rates. With the normalization of monetary policy (the U.S. Federal Reserve, or Fed, expects that rates will be increased “a few times a year” until the end of 2019, for example), they believe bond yields should rise. But while this is positive for those trying to generate an income using bonds, the consequences for global equities could be less positive, as stocks look less attractive to investors under such circumstances. “Although some equity markets, particularly those in the U.S., have surged in recent months, there seems to have been little real foundation for the gains. Instead, they have been built on bombast and political rhetoric.”

Another potential headwind for equities they identify is the recent surge of populism in the political sphere. At the time of writing, it is unclear to what degree Donald Trump will implement the protectionist policies he touted during his election campaign, although he has not shied away from controversy in the early days of his presidency. In addition, we do not yet know the terms of the UK’s exit from the European Union (EU). A worldwide decline in free trade could have severe implications for corporate earnings.

There is also the conundrum presented by an environment of increasing inflation and low economic growth. Before the Brexit referendum, Mark Carney, governor of the Bank of England, warned that leaving the EU could create just such a scenario — sometimes known as “stagflation”— for the UK. He predicted that a Brexit-induced decline in sterling could push inflation higher. Since the vote, the pound has fallen sharply, and inflation in the UK recently touched its highest level since July 2014. “Although equities are sometimes viewed as a hedge against inflation, increasing consumer prices have the potential to drive volatility and put pressure on future cash flows. And the UK is not the only country at risk from the phenomenon; we are yet to see the effects of Mr. Trump’s policies on the U.S. economy, while political tensions in Europe remain high.” They state.

Collectively, these circumstances seem to paint a pessimistic picture for those looking to gain an income from investing in global equities. However, the team believes there is a potential upside: “we have become relative veterans of political instability and uncertainty; we have lived with bank bailouts, national recapitalizations and dramatic government change for ten years. Now, as in those times, we believe that a focus on high-quality businesses combined with discipline on valuation will put investors in good stead.” They are certain however that there are several important questions income investors should ask when building their portfolios:

Is this company likely to grow both its profits and its dividends?
Is the company located in a place where there is potential for interest rates to come down?
Where are corporate profits beating expectations?

The team believes that many of these opportunities can be found in Asia and Latin America. “Both regions have underperformed in recent years, but they have companies with strong balance sheets, good profitability and robust dividends.”

Emerging equity markets had a very strong 2016, but they warn investors to view this performance in the context of the last five years and net investment withdrawal from the region. “The rebound itself is unsurprising, given the depth of pessimism about the region at the beginning of 2016. There is scope for further improvement should the trend continue.”

In their opinion, dividends, it seems, go in and out of fashion, but they are always significant to individual investors. In some markets, however, they are ascribed little importance, and there may be an almost inherent opposition to returning value to shareholders in this manner. Markets such as the U.S and Japan tend to have this view. In other regions, however, dividend coverage has become stretched, and capital expenditure by companies has been very low.

“When looking for income from equity investments, it is important to select companies that not only have good cash flow and are investing for the future, but that also have surplus cash available to pay dividends. Balance sheet strength, as well as the desire and willingness to return cash to their shareholders, are other very important characteristics. Above all, in-depth research is key when to achieving the objective of earning a steady income stream from a diversified portfolio, even in the most difficult markets.” They conclude.

Agustín Carstens and Maria Ramos Join the Group of Thirty

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Agustín Carstens, gobernador de Banxico, y Maria Ramos, CEO de Barclays África, se unen al G30 — CC-BY-SA-2.0, FlickrMaria Ramos and Agustín Carstens. Agustín Carstens and Maria Ramos Join the Group of Thirty

The Group of Thirty (G30) announced that Agustín Carstens, Governor of the Banco de México, and Maria Ramos, Chief Executive Officer of Barclays Africa Ltd., have accepted invitations to join the membership of the G30.

Jacob A. Frenkel, Chairman of the Board of Trustees, stated: “The G30 is very pleased to welcome Agustín Carstens and Maria Ramos to membership and I look forward to their engagement in our program and projects in the years ahead.” Frenkel added: “I am delighted that Agustín is joining the Group. He brings decades of knowledge of international finance and economics to the G30, from his leadership of the Banco de México, as Chair of the IMFC of the International Monetary Fund, and from his previous work both as Minister of Finance of Mexico, and other roles. Maria will add diversity of perspective, and a strong and influential South African voice, to our deliberations. She has a breadth of private and public sector experience that will benefit our work and discussions, from her current positions as Chief Executive Officer of Barclays Africa, as Chair of the Banking Association of South Africa, and her prior role as Director General of South Africa’s National Treasury.”

Tharman Shanmugaratnam, Chairman of the G30, said: “Agustín and Maria are outstanding leaders. They each bring a wealth of understanding of the financial and economic challenges of the times, which the G30 seeks to address through our deliberations and ongoing work program of studies. The work of the G30 in international financial and economic thought leadership relies on its dynamic, engaged membership, drawn from across the globe and across public and private sectors. I very much look forward to Agustín and Maria’s contributions in the years ahead.”

Carstens stated: “I thank Jacob, Tharman, and the G30 members for the invitation to join the Group’s membership. I am honored to join the organization and look forward to participating in its discussions and activities.”

Ramos stated: “It is a pleasure to join the G30, which does such key work on international economics and governance. I look forward to working together on projects of common concern and to supporting the Group’s mission.”

The Group of Thirty was founded in 1978. The Group is a private, nonprofit, international body composed of senior participants from the private and public sectors and academia. The Group
The Group is led by Jacob A. Frenkel, Chairman of its Board of Trustees, and Tharman Shanmugaratnam, Chairman of the G30. Amongst its members are Jean-Claude Trichet, Paul A. Volcker, Ben Bernanke, Mario Draghi, Timothy Geithner, Paul Krugman, Haruhiko Kuroda, and Jaime Caruana.

Australian Boutique Antipodes Partners Unveils UCITS Version of Flagship Global L/S Strategy

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Antipodes Partners Limited (Antipodes Partners), the boutique Australian investment management firm, has launched a UCITS version of its flagship long/short global equity fund.

The Antipodes Global Fund – UCITS, which was launched with $125m of cornerstone assets, has come to the market in response to strong demand from European and Asian investors. It is the first sub-fund of the Pinnacle ICAV, a Dublin-based UCITS umbrella distributed by Pinnacle Investment Management, a leading Australian multi-boutique platform with over $20bn in AUM across its affiliate managers.

A pragmatic value manager of global equities, Antipodes Partners was founded in 2015 by Jacob Mitchell, former Deputy CIO of Platinum Asset Management, together with a number of former colleagues and like-minded value investors.

The launch of the Antipodes Global Fund – UCITS follows the two-year anniversary of its flagship global long/short strategy, which delivered a 28.9% return since inception on 1 July 2015 to 30 June 2017, in USD terms, against the MSCI AC World Net Index return of 14.4%. Overall, Antipodes Partners manages in excess of $3bn in global equities.

Antipodes Partners builds high conviction portfolios and focuses on capital preservation, with the aim to deliver consistent alpha at lower levels of risk than the overall market. Its investment process seeks to take advantage of the market’s tendency for irrational extrapolation in the identification of investments offering a high margin of safety.

The experienced 13-strong Antipodes Partners investment team includes top sector specialists and a research team with expertise across multiple geographies and industries.

Mitchell explains: “At the core of our investment philosophy, we seek in our long investments both attractively priced businesses that offer margin of safety, as well as investment resilience characterised by multiple ways of winning. The opposite logic applies to our shorts. While the investment case will always be predicated on idiosyncratic stock factors such as competitive dynamics, product cycles, management and regulatory outcomes, we seek to amplify the investment case by taking advantage of style biases and macroeconomic risks and opportunities.”

The Antipodes Global Fund – UCITS, a high conviction portfolio of around 30-60 major long holdings, launched with a highly differentiated portfolio versus the index and peers. Antipodes Partners’ long/short strategy currently has its largest net allocations to Developed Asia, Developing Asia and Western Europe – with a minor net long to the US, the dominant geographic weight in the benchmark and, hence, most other global equity funds.

Mitchell believes today’s market backdrop has created a false sense of security, as investors are confusing the low volatility environment with low risk.

“Central bankers have somewhat cornered themselves. Increasingly, political and economic pressure to normalise interest rates or withdraw stimulus is likely to trigger volatility and widen credit spreads. While the low-volatility regime may endure, investors have grown too comfortable with the central bank reaction function, extending the illusion of stability,” Mitchell adds.

“We are avoiding expensive versions of the bond proxies as long investments, accumulating selective opportunities that have suffered the most from yield curve compression – while increasing our shorts on the beneficiaries of the low rate world.

“We are encouraged by the growing valuation dispersion within and across markets – across region, sector and factor – as we think it is indicative of broadening pragmatic value opportunities, both long and short. Flexible and risk-aware investment strategies seeking idiosyncratic alpha, rather than passive beta, should outperform in an environment where volatility awakens from temporary hibernation.”

Antipodes Partners has also opened a London research office, run by senior investment analyst Chris Connolly, and expects to add further investment expertise to its London office in the coming months.

The Antipodes Global Fund – UCITS includes an early-bird share class, which offers preferential fees for early investors.