Foto: yoshika azuma
. Man Group adquiere Aalto y lanza Man Global Private Markets
Man Group has announced that it has entered into an agreement to acquire the entire issued share capital of Aalto Invest Holding and launched Man Global Private Markets (“Man GPM”), forming the firm’s private markets offering, which provides clients with access to longer term investments with a complementary risk reward profile to its current product suite.
Aalto is a US and Europe-based real asset focused investment manager with $1.7 billion of funds under management as of 30 September 2016. Aalto will form the real assets platform of Man GPM. Founded in 2010 by Mikko Syrjänen and Petteri Barman,Aalto specialises in the management of real estate equity and debt strategies including direct investments in single family homes in the US and lending to commercial and residential real estate in Europe and the US. Aalto has a strong track record across its differentiated product range, and serves a client base of predominantly large institutional investors.
The Company, which is wholly-owned by its founders and current and former senior staff members, has demonstrated a compelling growth trajectory having grown fourfold over the last four years. Aalto has 33 employees and is headquartered in London, with offices in the US and Switzerland. The Acquisition is expected to complete in January 2017, subject to regulatory approvals and other customary conditions.
Man Group believes the acquisition provides it with a core component for the long term expansion into private markets strategies; provides the clients with access to a range of strongly performing, differentiated real assets strategies; And it further expands Man Group’s presence in the US.
The transaction is expected to be EPS accretive from 2017 onwards. The total regulatory capital usage associated with the acquisition is expected to be approximately $75 million.
Launch of Man GPM
Man GPM will over time develop strategies across private markets such as real estate, credit, and infrastructure. On completion of the acquisition, Aalto will form a central component of Man GPM, providing a core platform upon which the firm can develop this new offering for clients.
The Aalto management team will continue under the leadership of the company’s founders. In addition, Mr Barman and Mr Syrjänen will be appointed Co-Heads of Real Assets within Man GPM, taking on a broader role in the strategic development of Man GPM’s offering in real assets. No change will be made to Aalto’s investment process as a result of the Acquisition and investment independence will be maintained. Mr Barman and Mr Syrjänen will report to Jonathan Sorrell, President of Man Group, and will join Man Group’s Executive Committee.
Foto: Scott S
. La SEC nombra a Melissa Hodgman directora asociada en la división de Enforcement
The Securities and Exchange Commission has announced that Melissa Hodgman has been named Associate Director in the SEC’s Enforcement Division. Hodgman succeeds Stephen L. Cohen, who left the SEC in June.
Hodgman began working in the Enforcement Division in 2008 as a staff attorney. She joined the Market Abuse Unit in 2010 and was promoted to Assistant Director in 2012.
Hodgman has investigated or supervised dozens of enforcement recommendations spanning a variety of misconduct, including: The SEC’s first case against a brokerage firm for failing to file SARs when appropriate; Fraud charges against a Wall Street CEO and his company, family members, and business associates accused of secretly obtaining control and manipulating the stock of Chinese companies they were purportedly guiding through the process of raising capital and becoming publicly-traded in the United States; And charges against Charles Schwab Investment Management, Charles Schwab & Co., and two executives for making misleading statements regarding the Schwab YieldPlus Fund and failing to establish, maintain and enforce policies and procedures to prevent the misuse of material, nonpublic information.
Hodgman has led the Enforcement Division’s Cross-Border Working Group, which provides expertise and assistance of matters with international actors and implications. Hodgman also co-founded and served as the enforcement representative on the Chair’s Attorney Honors Program, and is a member of the Enforcement Division’s hiring committee at its Washington D.C. headquarters.
“Melissa has supervised and investigated a broad range of noteworthy and first-of-their-kind cases across the spectrum of the securities industry and involving misconduct located around the world,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division. “She has distinguished herself with her excellent judgment and creativity, and I am pleased to have her join the senior ranks of the Enforcement Division.”
Hodgman said, “I am honored by this appointment and look forward to continuing our tradition of pursuing tough but fair enforcement actions in complex and cutting-edge cases, especially matters involving cross-border issues and efforts to hold gatekeepers accountable for breaches of their professional standards.”
Before joining the SEC staff, Hodgman worked as an associate at Milbank, Tweed, Hadley & McCloy in Washington. Hodgman earned her masters of law with distinction in securities and financial regulation in 2007 from Georgetown University Law Center, her law degree with high honors from Georgetown University Law Center in 1994, and her bachelor of science degree from Georgetown University School of Foreign Service in 1990. Hodgman received the Ellen B. Ross Award as well as an SEC Chairman’s Award in 2010.
Alfred F. Kelly Jr, Foto: Iona College. Alfred Kelly Jr será CEO de Visa a partir de diciembre
Visa announced on Monday that Charlie Scharf is resigning as chief executive officer effective December 1, 2016, and the board of directors has unanimously voted to appoint Alfred F. Kelly, Jr. as CEO. Kelly, a current Visa board member, is the president and chief executive officer of Intersection and the former president of American Express.
According to a press release, Scharf informed the board of directors that he decided to resign his position as CEO and board member because he could no longer spend the time in San Francisco necessary to do the job effectively. The board of directors did a rigorous review of a diverse set of internal and external candidates and is extremely gratified that Kelly has accepted the position. Kelly will join the company on October 31, 2016 as CEO designate. As part of the transition, Scharf will serve as an advisor to Kelly beginning December 1, 2016 for several months.
“Charlie has been a visionary CEO, highly successful by any set of metrics. He has helped transform Visa, the leading global payments technology company, into a technology-driven digital commerce company and has led a strategy that will benefit this company for years to come,” said Robert W. Matschullat, the company’s independent chairman. “The board of directors is extremely grateful for Charlie’s leadership and wishes to thank him for his outstanding four-year tenure, which saw total shareholder return increase by more than 130%, outperforming both the overall stock market and our peer group.”
“We are thrilled to have found someone with Al’s expertise and knowledge to take Visa to even greater heights. Al is a veteran payments industry executive who knows Visa well, having served as a board member for the past two-and-a-half years,” said Matschullat. “The board unanimously agrees that Al is the right leader for the company, and we expect a seamless transition given Al’s deep knowledge of the industry, demonstrated leadership capabilities, and his strong relationships with the talented management team currently in place.”
In his 23 years at American Express, Kelly held a variety of leadership positions. In addition to being president of American Express, he was head of the Global Consumer and Consumer Card Services groups. He currently serves on the board of directors of MetLife. And is a different Alfred F. Kelly, Jr from the one at UBS Wealth Management.
Scharf commented: “I love working and running this great global company and I am sad to have reached the conclusion that I should step down, but running a San Francisco based company just doesn’t work for me personally right now and wouldn’t be fair to Visa. It has been an incredible privilege and honor to work with my many colleagues who have contributed so significantly to our success and transformation, and have strengthened our position as the leading global payments provider. I feel confident that the clarity of our strategic goals and our decisive actions will ensure that we continue to thrive in this quickly evolving industry.”
“Visa is lucky to have Al Kelly as the next CEO. I and our senior management team have had the opportunity to work closely with Al – and those relationships, along with his depth and breadth of payment knowledge – will enable him to step in quickly without missing a beat. I, of course, will do everything I can to help make the transition as easy as possible for everyone. Al is the right person to lead Visa to continued success.”
Under Scharf’s leadership, Visa has strengthened its position in global electronic payments and has been a leader in bringing innovation to the industry. Visa has transformed its technology platform by opening access to its network and capabilities through the Visa Developer Center, partnered with the world’s leading technology companies to drive new payment experiences, introduced new technologies to improve payment system security, and built a world class management team. In addition, the company successfully completed the acquisition of Visa Europe in June 2016, and delivered strong financial results, with operating income climbing to $9.1 billion in FY 2015. Visa’s stock was added to the Dow Jones Industrial Average in 2013.
Kelly said: “I am extremely excited and honored to take on this role and build on Charlie’s work and that of all of the employees at Visa. Visa is incredibly well positioned for continued success, and I look forward to joining this preeminent global organization. I have had the pleasure of getting to know many of the Visa executives during my time on the board, and they are a talented group of business leaders who have been relentlessly focused on driving Visa’s global strategy. I look forward to working with them, including Ryan McInerney, Visa’s President, in serving our clients. Charlie has positioned Visa for great success, and I thank him for his leadership.”
Better Finance and EFAMA have joined forces to call for investors’ concerns to be duly considered.
Both organisations have always been strong supporters of the “PRIIPs” Key Information Document (“KID”), seeing it as a powerful instrument for retail investors to enable sound investment choices by allowing easier comparisons within a wide range of investment products. In order for this to happen, the rules defining the detailed contents of the PRIIPs KID must be correctly calibrated so that investors are given meaningful, comprehensible and comparable information.
Unfortunately, the recently rejected draft RTSs on the PRIIPs KID suffer from a number of flaws, leading to clearly negative consequences for retail investors. Better Finance and EFAMA firmly believe these flaws need to be addressed if the RTS are to succeed in providing the right information to retail investors.
While Better Finance and EFAMA may have diverging views on other issues, those addressed in this letter are so crucial for individual investors as well as for asset managers that the two organisations have come to a consensual view here.
Peter de Proft, Director General of EFAMA, commented: “There are two crucial issues that need to be addressed: allowing the disclosure of past performance, and fixing the misleading disclosure of costs and fees, and in particular the calculation methodology of transaction costs. The joint letter explains why both topics need to be solved”.
Guillaume Prache, Director General of Better Finance, commented: “Past performances of an investment product are an extremely valuable piece of factual information for investors in their investment decision, if only for investors to know whether the product has made any money or not. It is very difficult to understand why investors should be deprived of such information”.
Both organisations call on the EU institutions to reflect on and address these two concerns in light of the fact that both are of utmost importance for retail investors, the very investors the PRIIPs Regulation is meant to protect.
CC-BY-SA-2.0, FlickrPhoto: Alice Cavalier / LinkedIn / Andy Sedg . Alice Cavalier, New Senior Vice President of the Alternatives Team at PIMCO
PIMCO, a leading global investment management firm, announced that Alice Cavalier has joined the firm as a Senior Vice President in its alternatives team. In this new role, Cavalier will focus on the analysis of stressed and distressed investments in Europe. She will be based in the firm’s London office.
Cavalier joins PIMCO’s established alternatives team of 110 investment professionals globally. According to a press release, her hiring is part of the continued expansion of the firm’s alternatives investment platform and follows the hires of Paul Vosper, Executive Vice President and Real Estate Strategist and Lionel Laurant, Executive Vice President and Distressed Credit Portfolio Manager earlier in the year.
Cavalier joins PIMCO from Bayside Capital, the distressed debt and special situations affiliate of private equity firm HIG Capital. Prior to that, she worked as an analyst in the leverage & acquisition finance department at Morgan Stanley.
“Alice’s experience is a strong addition to our global team. Clients are continuing to diversify in their search for yield and alternative investment strategies are in high demand. We see excellent opportunities in the distressed credit market and expect this to continue for some time” said Laurant.
“We have hired more than 140 new employees this year and continue to recruit top talent from around the globe. Recent hires include over 40 investment professionals across alternatives, client analytics, emerging markets, mortgages, real estate and macroeconomics” said Dan Ivascyn, Managing Director and PIMCO’s Group Chief Investment Officer.
PIMCO manages approximately $26 billion in alternative investment strategies. The firm has developed and managed alternative strategies for more than 10 years, including a range of distressed credit and opportunistic strategies.
CC-BY-SA-2.0, FlickrPhoto: g0d4ather
. Renminbi: Depreciation Of Around 8% Or So Feels About Right On The Longer Term
The renminbi has been on a fairly consistent depreciating path versus the China Foreign Exchange Trade System (CFETS) renminbi index (the basket of trading partners’ currencies that Beijing implemented in December 2015), with some volatility around big moves in the US dollar spot index (DXY), points out Investec.
Initially the renminbi strengthened against the US dollar as the American currency generally weakened over the first half of 2016, but it weakened against the CFETS basket – a goldilocks scenario that helped China to contain capital outflows, as investors capitulated on their long view on the US dollar.
China has also benefitted from the UK’s unexpected vote to leave the European Union, said expert´s firm. The market shock that accompanied the result on 24 June, enabled Beijing to weaken in the RMB against the CFETS basket without causing market panic, as it had done on previous devaluations. The People’s Bank of China decided to manage the renminbi “with reference to a basket”, but it has not kept it stable, instead allowing the currency to depreciate steadily.
“We have seen the pace of depreciation at times up to 20% annualised”, says Mark Evans an analyst in the Emerging Markets Fixed Income team, “but it would be hard to expect that pace of depreciation going forwards without it triggering more capital outflow pressures. We believe that depreciation of around 8% or so feels about right on the longer term.” While there is likely to be some volatility, we expect the exchange rate to be stable near-term ahead of one important policy event: October’s renminbi inclusion in the Special Drawing Rights (SDR) basket of currencies, which effectively confers global reserve currency status.
China Global integration
An important aspect of integrating China into the global economy, remarks Investec, is the internationalisation of the renminbi. This aim advanced in December last year when the IMF agreed to include the Chinese currency in its SDR basket. There were, however, questions about whether the renminbi met all the criteria. By including the currency in the SDR basket the IMF hoped to encourage China to fully liberalise the renminbi by 2020. But in fact, it appears that the reverse has happened. The renminbi’s share of payments via the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network has fallen over the past year from a high of 2.79% in August 2015 to just 1.96% at the end of June 2016.
Surprised by the volatility and weakness over the past year, investors and corporates have reduced renminbi deposits held in banks in Hong Kong, Taiwan and South Korea over the past year. While investment inflows, which indicate willingness to hold Chinese assets, have also fallen 38% over the same period.
Beijing’s unpredictable policymaking history of the past year or so – state intervention in the stock markets and sudden currency devaluations – has also played its part. “We expect more policy clarity once we know the identity of the top echelons truly calling the shots after the leadership transition of the Politburo Standing Committee next year,” says Wilfred Wee, portfolio manager in the Emerging Markets Fixed Income team.
The Morgan Stanley Investment Management’s Global Fixed Income Team believes the upcoming months, including a full calendar of central bank policy meetings in September, will be key to watch as central banks reconsider their thinking, potentially shaking up the lull in sovereign bond markets.
Markets have been predicting more of the same over the next few months, and there is some chance expectations will not be met, in a bearish way. However, they said, adjustments will likely only result in a correction in government bond markets, as we maintain that the trend in central bank policy will be supportive of spread products and carry strategies. “But we are careful with our duration and do not want to be too long, given how far yields have fallen and how optimistic markets have been on monetary policy”, pointed out.
With moderate global growth and low inflation the most likely path forward and emerging market (EM) fundamentals stabilizing-to-turning, the Team believes EM debt should perform reasonably well.
“We continue to monitor signs that the credit cycle is maturing. However, we believe the strong technical backdrop afforded by easy central bank policy will continue to dominate the global fixed income markets going forward. Investors seeking returns will continue to buy global credit, while U.S. credit will likely outperform, as relatively attractive yields in the country will continue to attract foreign buyers”, concludes.
The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.
All information provided is for informational purposes only and should not be deemed as a recommendation. The information herein does not contend to address the financial objectives, situation or specific needs of any individual investor.
Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.
Prior to making any investment decision, investors should carefully review the strategy’s / product’s relevant offering document.For the complete content and important disclosures, refer to the pdf above.
Slight upside news for inflation, but still well below target
According to HSBC, we are not going to get a new forecast from the ECB on 20 October, but positive news for industrial production in Q3, the possibility of slightly looser fiscal policy in 2017 and a 5% rise in the EUR oil price imply slight upside news for inflation as the ECB prepares for its policy meeting.
For markets, the biggest news since the previous meeting was an ECB official quoted as saying that the “ECB might reduce purchases in steps of EUR10bn”. Some investors are taking the comments very seriously and, on top of the disappointment that the ECB did not extend QE in September, 10-year bund yields have risen around 20bps from their September trough.
Fabio Balboni and Simon Wells believe this small upside inflation news is unlikely to prompt a significant re-assessment by the ECB of its inflation forecast, which is well below target (1.2% in 2017, and 1.6% in 2018). The minutes of the September meeting made clear that the ECB “remained committed” to continuing asset purchases beyond March 2017 and “until the Governing Council saw a sustained adjustment in the path of inflation consistent with its inflation aim”. The sub-target inflation forecasts it made in September were conditional on market expectations of more (not less) monetary easing.
So in their view, it is too early for the ECB to start tapering its asset purchases.
Extend now, later or taper?
Once the technical constraints have been overcome, they continue to expect a six-month QE extension to be announced. Although an October extension might avoid a more heated debate in December as base effects push inflation up, more time may be needed for the ECB’s committees to complete their technical work. Also, the higher yields rise, the less binding the yield floor becomes.
“We therefore expect an extension to be announced at the 8th December meeting. Based on the ECB’s recent comments and inflation forecasts, we expect it to maintain the current purchase rate of EUR80bn per month. To do this, it may need to increase the issuance limit for bonds with Collective Action Clauses, but we also look at other options the ECB might have to explore. It is also possible that the ECB may start to signal its exit strategy from QE, once it thinks inflation is back on track.” They conclude.
In its latest report on responsible investment, the European Fund and Asset Management Association (EFAMA) presents the European asset management industry’s role and involvement in responsible investment and puts forward key recommendations for the future. The report is an update of EFAMA’s previous 2014 report on the same topic.
The growing demand from investors to address environmental, social and governance ‘ESG’ matters in the investment decision-making process has created a global momentum around sustainable and responsible investments. European asset managers, as intermediaries between investors and companies, have a crucial role to play in driving this trend.
Responsible investment has long been a focus for EFAMA. This year’s report sets out EFAMA’s outlook and recommendations on the main questions surrounding responsible investment: the importance of reliable and accurate reporting by companies, the debate about investment performance and responsible investment, the role of legislation and the different selection methods in the responsible investment process.
Peter De Proft, Director General of EFAMA commented: “In the context of the increased focus on sustainable finance at EU level, we believe it is particularly timely to discuss the European asset management industry’s ever-growing role and involvement in responsible investment.”
“There is no doubt that demand for sustainable and responsible investment is growing. This is in part due to the recognition that economic sustainability will impact longer term value creation, however the changing social and ethical values of asset owners and the broader public have also strongly influenced this transition”.
He concluded: “The European asset management industry is determined to continue to play its part in this global effort to solve some of the most pressing issues of our generation. We hope that this report will provide guidance for this collective initiative”.
The second part of the report details country-by-country descriptions of the legal frameworks and various private sector initiatives in relation to responsible investment in different Member States.
The debate on active versus passive investing has evolved following the growth of transparent algorithmic investment approaches such as smart beta. Advocates of smart beta believe that it offers benchmark-beating returns with lower costs than active management. However, smart beta investing is more complex than many investors perceive and requires careful consideration. Despite this, the widespread availability of these alternative passive strategies has undeniably changed the investment landscape.
Standard Life Investments, the global investment manager, considers the reality of smart beta investing in its latest edition of Global Horizons. The key points evaluated in the paper are:
The pitfalls investors should be aware of when considering smart beta strategies, including a lack of clarity in investment objectives and limited sustainability.
As the active versus passive paradigm shifts, traditional market benchmarking will be increasingly superseded by outcome oriented mandates. Transparent algorithmic components such as smart beta have a role to play but should not be used as static allocations.
Flows in smart beta have been significant and can strongly influence asset prices.
This presents opportunities to active investors who take a multi-strategy approach and offers new chances in the area of stock selection
Arne Staal, Head of Multi-Asset Quantitative Strategies, commented “advances in technology, the increasing availability of data and the rapid growth of smart beta strategies results in a fast-changing and expanding opportunity set for investors. However, they have more complex evaluations and choices to make, and a wider range of associated costs to assess against desired outcomes. An awareness of the pitfalls in utilising transparent algorithmic investment strategies such as smart beta is increasing but not yet widely discussed. We advise investors to approach smart beta investing with similar levels of due diligence as they would for active managers. Most active managers deliver a combination of smart beta and pure alpha. Those that consciously position their business model to build portfolios through security selection and active allocation to a broad range of strategies will be best placed to achieve better outcomes for clients and benefit from this evolution in asset management.”
