Principal Launches an International Equity ETF

  |   For  |  0 Comentarios

Principal Asset Management is expanding in the ETF sector with the launch of an international equity ETF.

“This ETF will be a large-cap portfolio managed by the Principal equity team. Principal Equities, with $154.8 billion in AUM, follows an investment strategy that combines global perspectives with local insights to offer a broad range of specialized equity investment solutions,” according to the firm’s statement.

The company justifies its launch by highlighting market demand for such products.

“The demand for active ETFs was the strongest in history in 2023, reaching a record high of $349 billion in the category. This trend is expected to continue, with advisor allocations to active ETFs projected to increase by 45% over the next two years,” the statement adds.

“This new offering continues to build out our active ETF lineup, leveraging our strong capabilities and providing investors with an efficient vehicle to invest in international markets,” said George Maris, CIO and Global Head of Equities at Principal Asset Management.

The Principal equity team, led by Maris, has over two decades of experience managing non-U.S. equity strategies, according to Principal.

With the addition of the international equity ETF, Principal completes a suite of 10 ETFs representing approximately $4.7 billion in AUM, “designed to enhance investor returns, mitigate risk, and improve portfolio diversification,” the statement concludes

Pragmatic Optimism Among Managers: Expecting Higher Growth but Also More Inflation

  |   For  |  0 Comentarios

pragmatic optimism managers higher growth inflation

The monthly global fund manager survey conducted by BofA reflects an increase in optimism about growth, with more investors betting on a “no landing” economic scenario, U.S. equities, small-cap companies, and high-yield bonds, but also more inflation. According to the entity, as a sign of this optimism, the Bull & Bear indicator of BofA rises to 6.2, “although none are yet considered ‘extremely’ bullish, as it is not above 8,” they explain.

“The general sentiment FMS indicator, based on cash levels, equity allocation, and economic growth expectations, decreased to 5.2 in November from 5.5 in October. However, if only the post-election results are considered, the indicator would have risen to 5.9. For 22% of global managers who completed the survey after the U.S. elections, the average cash level was 4.0%,” the survey states in its conclusions.

It is noteworthy that global growth expectations improved, with a net 4% expecting a weaker economy. In fact, after Trump’s victory, 23% of respondents expect a stronger global economy, which represents the highest level of optimism since August 2021. A key issue for this vision is what managers expect regarding “landing.” In this regard, the probability among FMS investors of a “soft landing” fell to 63% from 76%, while the probability of “no landing” increased to 25% from 14%. Meanwhile, the probability of a “hard landing” remained unchanged at 8%. In contrast, the post-election survey shows a lower probability of a “soft landing”, at 55%, and a higher “no landing” probability, at 33%.

Inflation expectations for the full month of November increased, reaching their highest level since March 2022. As clarified by the entity, expectations for lower short-term interest rates also fell to 82%. “Post-election results show that 10% expect higher inflation, the highest level since July 2021, and a net 73% expect lower short-term interest rates, the lowest level since October 2023,” they explain.

What has not changed is that investors consider higher inflation the main “tail risk”, a perception that has increased from 26% in October. Meanwhile, concerns about geopolitical conflict took second place this month at 21%, down from 33% last month.

Expectations and asset allocation

When assessing managers’ expectations, the November survey shows confidence that small-cap companies will outperform large-cap ones: “Post-election results show that 35% expect small caps to outperform large caps, the highest level since February 2021.” Additionally, a net 41% expect high-yield bonds to outperform high-quality bonds, the highest level since April 2021. According to the November FMS, the asset classes expected to perform best in 2025 are: U.S. equities (27%), global equities (27%), and government bonds (14%). Post-election results indicate that the top-performing asset classes in 2025 will be: U.S. equities (43%), global equities (20%), and gold (15%).

A notable finding is that respondents to the November FMS mentioned the Japanese yen (32%), the U.S. dollar (31%), and gold (22%). However, when asked after the elections, the order shifted: the U.S. dollar (45%), gold (28%), and the Japanese yen (20%).

Finally, respondents to the November FMS noted a disorderly rise in bond yields (42%) and a global trade war (35%). This position will not change with Trump’s arrival: “Post-election respondents answered similarly: a disorderly rise in bond yields (50%) and a global trade war (30%).”

Regarding the positioning investors are taking, the survey shows they are overweight in equities, emerging markets, and healthcare, while they are more underweight in resources (energy and materials), consumer staples, and Japan. If we contextualize this reflection in the long term, the survey shows that investors are “long” in utilities, bonds, banks, and U.S. equities, and underweight in resources (energy and materials), cash, and consumer staples.

Rate Cuts, Low Auctions, and Gallery Discounts Drive the Art Market in the U.S.

  |   For  |  0 Comentarios

art market rate cuts auctions gallery discounts

A newly published report by Bank of America on the art market reveals that lower auction estimates, gallery discounts, and recent interest rate cuts are driving increased collector participation in major events, such as the fall auctions in New York and Art Basel Miami.

Favorable buying conditions have emerged following weaker-than-expected secondary market art sales in the first half of the year, with auction prices just 1% above their average estimates — the smallest increase in over seven years, according to the report.

Additionally, the lack of prominent estate collections in May sales may have dampened bidder confidence and enthusiasm. Fewer masterpieces are being offered in what is widely seen as a “buyer’s market.”

Gallery Challenges

Galleries face a critical decision: adapt to the new market reality or risk accumulating unsold inventory.

“Collectors are more discerning than ever. They know galleries are still selling A+ works, but terms are more negotiable for everything else. Collectors are using that knowledge to secure more favorable transaction terms — from bypassing waitlists and removing resale restrictions to ‘buy one, gift one‘ deals and price discounts,” said Drew Watson, Head of Art Services at Bank of America Private Bank.

Interest in Latin Artists

Although some auction prices are softening and bidder competition is decreasing in certain areas, the report highlights strong collector interest in specific categories, particularly the market for Latin American artists and the Latin diaspora, which is expected to continue growing through 2025. Sales in this sector have risen by 18% year-over-year, showing no signs of slowing down, supported by recent market activity and institutional backing.

“Latin American artists have seen strong buyer interest and high sell-through rates this year,” Watson noted. He also mentioned multiple record-breaking auction sales during the spring, while biennials and art fairs have become key platforms in the primary market.

Art as a Wealth Strategy

The report also highlights that collectors increasingly view art as an asset integral to their overall wealth management strategy. By 2026, the estimated value of art and collectibles is projected to exceed $2.8 trillion, representing approximately 11% of ultra-high-net-worth individuals’ portfolios.

Interest is expected to grow further as younger generations build and inherit wealth in the coming years.

UBS Private Wealth Management Adds Jason Zachter to Its New York Office

  |   For  |  0 Comentarios

UBS Private Wealth Jason Zachter New York

Jason Zachter has joined UBS Private Wealth Management from Morgan Stanley to strengthen the team at the 1285 Avenue of the Americas office, as announced by Thomas Conigatti, Market Director of the Swiss bank’s division.

Zachter worked for 14 years at Morgan Stanley, also in New York, and joins UBS to support their work with multigenerational families and institutions, according to information from the firm.

Accompanying the financial advisor is Debra Rosenbach, who will assume the role of Senior Registered Client Associate.

Zachter holds an MBA from Baruch College, City University of New York, according to his LinkedIn profile.

Rothschild & Co continues Middle East expansion with new Wealth Management office in Dubai

  |   For  |  0 Comentarios

Rothschild & Co Middle East expansion Dubai

Rothschild & Co announced the opening of its new wealth management office in Dubai, which offers independent investment advice to high net worth families, entrepreneurs, charities and foundations, and operates under a DFSA Category 4 license, the firm released in a statement.

The new office, located in Dubai International Finance Centre (DIFC) and already fully operational, is headed by Sascha Benz, a senior banker who has relocated from Rothschild & Co in Switzerland.

“Clients will benefit from increased access to locally based advisers, supported by the established Geneva-based Middle East team,” the Press Release said.

Laurent Gagnebin, CEO of Rothschild & Co’s Wealth Management business in Switzerland, says: “As our Wealth Management business continues to grow substantially, we are excited to be able to strengthen our presence in the Middle East with our new office in Dubai. With Sascha’s experience and existing broad network of qualified clients among local investors, business owners and wealthy local and international families, we are confident of growing a strong Wealth Management client base in the region, working closely with our successful Global Advisory and Five Arrows businesses here.”

Creating a local presence in Dubai is key for Rothschild & Co’s ambitious Wealth Management growth strategy, to invest in markets where it has an established network and reputation. Rothschild & Co’s Global Advisory business is one of the leading independent financial advisory firms in the Middle East, where it has been providing expert M&A, Debt Advisory and Restructuring, and Equity Advisory advice to a broad spectrum of clients for almost 20 years, the firm added.

Sascha Benz, Rothschild & Co’s Head of Wealth Management, Middle East commented: “This strategic expansion is a testament to our commitment to strengthening client engagement in the region. As a financial centre with impressive demographics and a growing GDP per capita, Dubai is a highly attractive market for us. Its international positioning acts as a gateway to the entire Middle East region.”

Principal® Names Deanna Strable as the New President and CEO, Succeeding Dan Houston

  |   For  |  0 Comentarios

Principal Deanna Strable new president CEO

Principal Financial Group has announced that its Board of Directors has appointed President and Chief Operating Officer Deanna Strable as the next President and CEO of the company, effective January 7, 2025. She will also join the Board of Directors of Principal in January 2025. Prior to being appointed President and Chief Operating Officer in August 2024, she served as the company’s CFO from 2017 to 2024, and before that, as President of its Workplace Benefits and Insurance business.

“I am incredibly proud of the company we have built, the culture and experience developed, and our unwavering commitment to our clients. It has been an honor to serve as president and CEO and work with so many talented employees around the world. Deanna has been a trusted partner and co-architect of the company’s growth strategy. I have the utmost confidence in her leadership and business acumen, and I look forward to working with her to ensure a smooth transition,” said Dan Houston.

“Deanna brings strategic vision, strong leadership experience, and a deep understanding of the company’s interconnected business units,” said Scott M. Mills, principal independent director of Principal’s Board of Directors. He added, “Deanna has developed extensive and deep experience over her 35 years with Principal and has held key leadership positions in shaping its strategy and business portfolio. We look forward to her continued leadership to drive Principal into the next phase of growth.”

According to the company, Strable has been instrumental in the strategy and business operations as Principal has experienced significant growth, and she has continuously strengthened the company’s market position, as detailed by the entity. She helped build the company’s Benefits and Protection business, as the first leader of its Special Benefits division, and led the integration with its life insurance business before assuming the role of President of the business unit in 2015.

“I am honored to be named the next President and CEO of the company and to build on the solid foundation we have established under Dan’s leadership. Throughout my career, I have seen Principal strengthen its position as a global financial services leader dedicated to helping clients build a solid financial future. Along with our dedicated and passionate colleagues around the world, I look forward to continuing our culture of innovation, inclusion, and service, with a focus on meeting client needs to drive growth and create value for shareholders,” said Deanna Strable.

Strable will succeed Dan Houston in the role. Houston has served as President and CEO of Principal since 2015 and has held several leadership positions during his 40 years with the company. During this time, he navigated highly complex business issues, from the financial crisis to industry reform and throughout the global pandemic. Under Houston’s leadership, Principal’s market capitalization grew from $13 billion to over $20 billion, as he focused the company’s strategy on high-value opportunities and growth drivers to serve clients and shareholders worldwide.

“Dan has been the driving force behind Principal’s evolution over the last 10 years,” said Mills. “He set the company’s growth agenda and led it through a significant transformation. Principal is in a strong position today and well-positioned for continued growth thanks to his leadership.”

Four Reasons That Will Fall Short of Growth Forecasts for Alternatives: Sovereign Funds, Individual Investors, Insurers, and Asia

  |   For  |  0 Comentarios

alternatives growth forecasts sovereign funds Asia

The growth of the alternative assets industry will be exceptional: it is estimated that the volume of private assets will increase to over $24 trillion, from a volume of $15 trillion in 2022, according to Preqin’s calculations. For now, the current alternative assets market still represents less than 11% of global GDP and only 2.4% of global financial assets, according to KKR. A study by the firm on the past, present, and future of the alternative market suggests that there are reasons to believe these figures may be conservative, as there are growth opportunities both by product, client base, and geographic areas.

1. Increased Growth of Sovereign Fund Allocations

Over the last decade, the maturity of alternatives as an asset class is evident, as Sovereign Wealth Funds (SWFs) – which the firm estimates to total at least $12 trillion in assets under management – have increased their exposure to private markets from around 16% in 2016 to 26% in 2024. However, conversations with sovereign funds from Latin America, the Middle East, and other parts of the world suggest a healthy desire to do more with alternatives, in addition to using private markets to broaden exposure to both emerging and developed markets.

In particular, “the reach and scale of sovereign funds is rapidly expanding beyond traditional infrastructure and real estate investments to include most private market asset classes across all geographies,” the report states.

At KKR, they believe the reason for this shift is twofold: in many cases, private markets can help boost returns and reduce volatility, especially as the correlation between stocks and bonds has increased. For example, sovereign funds can leverage private opportunities to invest excess revenues or diversify their total dependence on natural resources or their local economies. Alternative investments can also enable sovereign funds to acquire strategic stakes in local companies in economically important sectors.

2. Individual Investors Increasingly Turning to Alternative Products

The study notes that the individual investor market presents a significant growth opportunity. “Consider that the consulting firm Cerulli states that only 2.3% of assets from U.S. financial advisor clients invested in alternatives in 2023. However, this estimate pales in comparison to the 60% increase since 2007 in the number of individual investors with between $1 million and $5 million in the U.S., many of whom are seeking to compound their long-term returns more efficiently,” the firm explains.

In line with this view and with some of the customer work and surveys conducted by KKR’s Chief Investment Strategist, Paula Roberts, “allocation to alternative products may increase as private products become more accessible due to lower minimums, greater transparency, and greater liquidity.”

In fact, the report claims that all segments, from Ultra High Net Worth to retail investors, have significant growth potential, as the value of the illiquidity premium also becomes significant in a world where aggregate returns are falling. “We are not the only ones who think this way, as Cerulli also estimates that an additional $1 trillion could be invested in retail alternatives, with the total allocation from retail investors rising from the current $1.4 trillion to more than $2.4 trillion over the next five years,” KKR asserts.

3. Growing Appetite from Insurers

For insurers, the study suggests that uncorrelated private asset classes, especially higher-yielding ones, have gained importance. In a higher interest rate environment, they have created highly liquid asset funds that can offer global returns in support of reserves for claims when underwriting new business – something most want to do more of.

Moreover, the most recent investment environment has created a shift in mindset, allowing CIOs to focus on leveraging both liquid and illiquid allocations to build more resilient and all-terrain portfolios.

“We believe that the value of an uncorrelated asset in one’s portfolio increases materially if we are right in our base-case scenario, which points to the neutral rate for Fed funds now being higher; traditional government bonds can no longer diversify as much as they did in the past and global yields have compressed now that we’ve moved out of a low-rate, flexible monetary policy and restrictive fiscal policy environment,” the report reads.

The firm considers it “important” to highlight that diversification among issuers, sectors, and asset classes contributes to mitigating idiosyncratic risk, while diversification across asset classes helps mitigate systematic risk.

4. Increased Demand for Private Markets in Asia

Investments allocated to alternatives in Asia have grown at an average annual rate of 22% since 2000, nearly double the rate of private alternatives in North America and comparable in size to current private markets in Europe. “These numbers seem especially interesting given that we have seen a retreat in investment in private markets in China – from around 10%-12% to about 5% – while demand for alternatives from Asian clients is on the rise,” KKR explains.

The study also suggests that investment managers in Asia are seeking to diversify beyond equities, fixed income, and listed real estate, toward private equity, infrastructure, and private credit.

In line with the growth of Asian private markets, KKR has been increasing exposure to the region. Over the past five years, the firm’s allocation to Asia has grown from 10% to 16%, with a target allocation of 20% to 30%.

The firm justifies its optimism about Asia by stating that, of all the macro trends it observes, the rise in urbanization in Asia is one of the most powerful tailwinds it is monitoring: between 40% and 50% of the growth in urban population per decade, both in 2030 and 2040, will come from Asia. Additionally, urbanization generates demand for technology and energy efficiency. It also believes that key markets such as China, Japan, and India will spend significantly on a wide range of retirement and healthcare offerings in the future.

FINRA Plans to Increase Member Fees to Address Costs

  |   For  |  0 Comentarios

FINRA increase member fees address costs

FINRA has requested approval from the SEC to increase member fees to address the costs of supervising the industry.

In the proposal, FINRA outlines a phased approach to fee increases between 2025 and 2029, ultimately aiming to boost its annual fee revenues by $450 million, with total fees growing at a compound annual rate of 5.3% over this period.

The rise in expenses is largely attributed to increased salaries and accelerated hiring to meet expanding enforcement mandates, as well as higher spending on technology, including cybersecurity and data storage, according to FINRA’s submission.

FINRA highlighted the anticipated fee increases in its annual report from July, noting a net operating loss of $119 million in 2023, double the $60 million loss from the previous year, as reported by industry media. The regulator also expects to record further annual losses at the close of this fiscal year.

The implementation of new SEC mandates, including Reg BI, has required “substantial investments,” stated FINRA.

The increases will apply to a range of fees, including membership, qualification exams, arbitration, and other services. Some fees, such as the routine branch fee, will increase for the first time since 2013.

Registration fees will rise in 2028. For example, firms will need to pay $175 to submit a file for transferring a hired broker’s license, compared to the current $125. The cost of filing a U5 termination notice will increase from $50 to $70, as estimated by AdvisorHub.

Firms with more than 500 brokers will face over $400,000 in additional fees by 2029, according to the proposal. Firms with 10 to 150 brokers will see their contributions rise by more than $4,000 over the next five years.

The last time FINRA proposed fee increases was in 2022, with a plan to fund its operations up to this year, resulting in a total increase of $225 million.

Kathia Sánchez Mardegain Joins White Bridge Capital for the Real Estate Solutions Area

  |   For  |  0 Comentarios

Kathia Sánchez Mardegain White Bridge Capital Real Estate Solutions

White Bridge Capital announced the appointment of Kathia Sánchez Mardegain to lead its Real Estate Solutions area.

Based in Mexico City, Sánchez will work alongside Regina García Handal, Co-founder of White Bridge Capital, in response to the partnership with Vertix Group.

With seven years of experience in both corporate finance and investments, Sánchez has worked at firms such as Skandia, Citi, and Blackstone.

During this period, she supported portfolio growth by conducting operational reviews and financial modeling. Additionally, she has performed short- and long-term financial planning and the corresponding reporting process, according to her LinkedIn profile.

She holds an MBA from EGADE Business School and a bachelor’s degree in Financial Management from Tecnológico de Monterrey.

Patria Moneda Celebrates Its First “Uruguay Day,” Promising a Long-Term Commitment

  |   For  |  0 Comentarios

Patria Moneda first Uruguay Day long-term commitment

Patria Moneda, the new giant of Latin American asset management, celebrated its first “Uruguay Day” in Montevideo with a promise to establish a long-term relationship with the local industry. In the luxurious setting of the Sofitel Hotel in Carrasco, the group showcased its unique strength in the region: Moneda is the largest player in Latin American bonds, and Patria is the leader in alternatives.

The firm has been in Uruguay since late 2023, and during this time, its representatives have understood the essentials: that the local private banking sector needs committed companies to invest in alternatives, and that commitment must be made in a common language to facilitate basic processes such as quick subscriptions, understanding terms, and fees. And, in the process, to stop being told that they are not “financially educated.”

An investment house rather than a commercial firm

Alfonso Duval, Partner and Head of Commercial Andean Region, began by defining his company as a platform and an investment house with 40 partners and $45 billion under management.

Patria Moneda has 13 offices worldwide. They bring global capital to Latin America and provide access to international assets for local capital. The firm has relationships with 8 of the 10 largest sovereign wealth funds in the world, with 39% of its investors from Latin America, and a strong presence of pension funds.

Latin American asset management and the new mandate of Donald Trump

The Patria Moneda event took place on November 6, with the surprise of hearing about the quick and decisive victory of Republican candidate Donald Trump in the U.S. elections. Esteban Jadresic, Partner and Chief Economist and Global Investment Strategist, offered his first analysis.

If Trump fulfills his election promises, including tax cuts, projections suggest that U.S. debt could reach 134% of GDP. Jadresic notes that the first consequence would be an appreciation of the dollar, initial growth, and, if his protectionist measures are applied, a decline in the economy in the medium term with an increase in interest rates.

Latin American countries expect this possible scenario with “stable and sound” economies, said the expert, with independent central banks and historically high interest rates.

While China announces massive stimulus measures for its economy, will Trump impose a 60% tariff on the Asian country and a 10% tariff on the rest of the world, as promised? “It would be going back to tariff levels from 100 years ago, and that won’t happen,” says Jadresic.

Latin America pays more and “defaults” less

The phrase of the day came with the presentation of Fernando Tisné, Global Head of Credit Managing Partner: this year has been good for Latin American bonds, with High Yield yielding good returns and surpassing benchmarks: “Latin America pays more and defaults less.”

The firm’s message is that there are great opportunities in Latin American public debt and in the two strategies of the firm, currently backed by 24 years in the market and a team of 50 people.

A new era for Latin American private credit

Javier Montero, Partner and Portfolio Manager Credit Latam, quickly defined a key issue for Latin America: in the region, “financing essentially comes from banks, and private credit is almost nonexistent.” Currently, around the world, a company needs credit and can impose its conditions due to fierce competition and supply. In Latin America, the main demand comes from family offices, and there is still much work to be done.

Montero believes that the business opportunity is enormous, and that after 15 years of investing in private credit (“our business is lending money”), the combination of Moneda and Patria is a winning option for investors.