PIMCO, a leading global investment management firm, has hired Gene Frieda as Executive Vice President and Global Strategist for the firm’s emerging markets and global strategies and Yacov Arnopolin as Executive Vice President and Emerging Markets Portfolio Manager. They will both be based in PIMCO’s London office.
Frieda, who will work primarily with the emerging markets team but will also contribute to other global, country and sector strategies, will report to Andrew Balls, Managing Director and Chief Investment Officer – Global Fixed Income. Arnopolin, who will focus primarily on emerging markets external debt strategies, will report to Michael Gomez, Managing Director and Head of the Emerging Markets Portfolio Management team.
“Gene and Yacov are two tremendous additions to our global macroeconomic and emerging markets portfolio management expertise, as their deep experience will bolster PIMCO’s investment process and tap the investment opportunities we see for clients in emerging markets,” said Dan Ivascyn, Managing Director and PIMCO’s Group Chief Investment Officer. He added: “PIMCO will continue to use its considerable resources to hire the best industry talent globally. Already this year, we have hired more than 130 new employees, including 14 portfolio managers and 20 more investment professionals across many areas including alternatives, client analytics, mortgages, real estate and macroeconomics.”
Frieda joins PIMCO from Moore Capital Management where he was a Partner and Senior Global Strategist. Prior to that, he was the Global Head of Emerging Markets Research and Strategy at the Royal Bank of Scotland. Prior to joining PIMCO, Arnopolin was a Managing Director and Portfolio Manager at Goldman Sachs Asset Management in New York where he helped oversee emerging market portfolios for institutional clients such as pension funds, insurance companies and sovereign wealth funds.
“Gene and Yacov bring nearly 40 years of combined investment experience and complement other specialized resources we have added in recent years, including in emerging markets corporates and local markets,” said Gomez.
“As the adverse global backdrop of lower commodity prices and a stronger dollar give way to a more constructive picture for emerging markets, now is an exciting time to be adding two such talented investment professionals as Gene and Yacov to the PIMCO team,” said Balls.
According to new research from Cerulli Associates, digital advice could offer a solution for U.S. consumers with portfolios too small to attract the attention of financial advisors.
“The mass market and the lower end of the middle market are underserved by financial advisors,” states Tom O’Shea, associate director at Cerulli. “A vast majority of consumers do not possess the assets necessary to merit attention from financial advisors.”
“Digital advice innovation presents an opportunity to enhance the efficiency of advisors servicing small accounts,” O’Shea adds. “Combining human and digital advice can strengthen the fiduciary foundation of the client recommendations. This combination also allows an advisor to scale their practice in such a way that he or she can profitably manage the smaller accounts of mass-market consumers.”
“Almost 90 million U.S. households have investable assets of less than $100,000,” O’Shea explains. “Yet, only 8% of financial advisors treat this segment as their core market. The overwhelming majority of advisors target clients with higher levels of investable assets.”
“It is not that advisors are unwilling to help small investors,” O’Shea continues. “Rather, they cannot figure out how to make money when working with them, leaving investors to go it alone or rely on guidance provided by direct-to-consumer firms.”
Zurich headquartered GAM, the industry’s third-biggest provider of liquid alternative UCITS funds, announced the acquisition of Cantab Capital Partners, an industry-leading, multi-strategy systematic manager based in Cambridge, UK. Cantab manages USD 4.0 billion in assets for institutional clients worldwide.
At the same time, GAM launches GAM Systematic, a new investment platform dedicated to systematic products and solutions across liquid alternatives and long-only traditional asset classes including equities, debt and multi asset. Cantab will form the cornerstone of GAM Systematic.
By moving into the growing segment of scalable systematic investing, GAM takes an important step to deliver on its long-term objective to expand and diversify its active asset management business. Leading systematic strategies are attracting substantial allocations from investors globally due to their compelling returns and their rigorous, disciplined investment processes.
According to a press release, “GAM Systematic will complement GAM’s successful active discretionary investment offering. It will also serve as the Group’s innovation hub for the development of new technologies, investment ideas and approaches for systematic strategies and products.”
Alexander S. Friedman, Group Chief Executive Officer of GAM, said: “We have been evaluating how best to enter the systematic space for the past 18 months because we believe it represents an important capability for an active investment firm in the current environment and in the decades to come. GAM Systematic will offer our clients a compelling range of unique products complementary to our strong discretionary product range at a time when the investment industry is challenged to provide cost-efficient, liquid and diversified sources of returns.”
“The market turmoil following the UK referendum last week has only reinforced our determination to pursue, and deliver on, our strategy of diversification and long-term growth. In Cantab we are acquiring industry-leading intellectual capital, a highly distinguished decade-long investment performance track record, and a profitable and scalable business. In combination with GAM’s global distribution reach, I am convinced that this business is well positioned for significant growth.” He concluded.
Foto: Global Panorama
. BNP Paribas crea un holding para agrupar sus filiales en Estados Unidos
BNP Paribas has announced the creation of an Intermediate Holding Company (IHC), BNP Paribas USA, Inc., effective 1 July 2016. This decision signals the bank’s commitment to the US market, its largest market-by commitments as of 12/31/15- outside Europe and a region that is central to its businesses and development plans.
As a large Foreign Banking Organization, the bank is required by new regulation to place all its controlled US subsidiaries under a US holding company. BNP Paribas USA will hold the retail subsidiary ‘BancWest’ and the Corporate and Institutional Banking’s (CIB) and asset management subsidiaries in the United States.
The wholesale and retail businesses in the United States have seen significant growth over the past couple of years: in 2015 CIB and Retail Banking & Servicesincreased their revenues in North America by, respectively, 15% and 5% (in USD) vs 2014. Today the Group employs over 16,000 people in the country.
Michael Shepherd becomes Chairman of the new holding and retains his chairmanship of BancWest. And Jean-Yves Fillion, Head of CIB Americas becomes its CEO.
Foto: James Cridland
. Norteamérica lidera la captación de fondos para private equity en el segundo trimestre de 2016
The private equity fundraising market accelerated in Q2, as 180 funds closed securing a combined $101bn. Given that these numbers are expected to rise 10-15% as more information becomes available, the aggregate capital secured by funds closed in the quarter looks set to approach the record $112bn seen in Q4 2013. However, while the number of funds closed almost matches the 186 funds closed in the previous quarter, it falls some way short of the 261 funds that closed in the same period last year.
The majority (54%) of private equity funds closed in H1 2016 have closed above their target size, a record high. Just 21% of funds have closed below their target size, down from 28% of funds that did so in 2015.
The level of uncalled capital available to fund managers of core private equity strategies hit new record highs, rising from $745bn at the end of 2015 to $818bn as of the end of June 2016.
As of the start of July, there are 1,720 private equity funds in market worldwide, targeting an aggregate $447bn, compared to 1,630 funds that were seeking $488bn at the start of the year. This is the first reduction in aggregate target capital since the start of 2014.
North America-focused funds were the key driver of growth in the quarter; 96 funds focused on the region raised $60bn, accounting for 59% of the aggregate capital raised globally. By contrast, Europe saw 44 private equity funds raise just $33bn in Q2, of which the Ardian Secondary Fund VII accounts for $10.8bn. Only 11 buyout funds focused on the region closed, securing an aggregate $13bn. Elsewhere, 33 Asia-focused funds raised $6bn through the quarter, while seven funds focused on Rest of World raised $1.3bn.
“The second quarter of the year has seen robust fundraising activity, with over $100bn raised globally, despite the relatively low number of funds closed. This highlights the continuing trend seen of increased amounts of capital being allocated to a smaller number of experienced fund managers.
Global uncertainties surrounding the US presidential election and the British EU referendum have continued to cast a shadow over the industry, and while North America- focused fundraising has been robust, Europe seems to be experiencing a more cautious environment. With volatility persisting in the wake of Britain’s EU referendum result, we can expect further uncertainty to affect the European fundraising market.”Said Christopher Elvin, Head of Private Equity Products.
Generali Investments has been included in the ‘High-impact Socially Responsible Investments’ category in the 2015 report of the responsible investments in France compiled by Novethic, the Paris-based SRI certification agency, auditor and research center and the creator of the first European SRI certification. For the first time ever, Novethic has split the group of assessed companies into three categories, on the basis of how impactful their SRI approach is on the investment choices. Generali Investments has been nominated in the category with the strongest impact.
“The Novethic recognition is testament to Generali Investments’ continuous effort on SRI”, has commented Franca Perin, Head of SRI of Generali Investments. “Being included among the 29 most committed SRI asset managers certifies that Generali Investments is at the forefront of responsible investing thanks to a stringent, proprietary and innovative methodology and top- notch ESG analysis capabilities”.
Novethic has assessed 55 asset management companies operating in France and integrating Environmental, Social and Governance (ESG) criteria in their investment choices (barring mere exclusion principles). In the ‘High-impact SRI’ category, Novethic has included those managers applying either a best-in-class approach (i.e. excluding more than half of the investment universe, such as Generali Investments) or a best-in-universe approach (i.e. more than 25%) or offering thematic investments. The ‘High-impact SRI’ category accounted for €54 billion of assets in 2015, out of €746 billion of total responsible investments in France (+29% vs. 2014).
Headed by Franca Perin and composed of five analysts based in Paris, Generali Investments’ SRI team screens approximately 520 European listed companies in 26 different sectors on the basis of 34 ESG criteria. The criteria are applied in a way that rewards those companies making the ‘best efforts’ to reach the ‘best practice’. The initial universe is therefore halved, and the selected companies are included in the proprietary database S.A.R.A. (Sustainability Analysis of Responsible Asset Management). Generali Investments applies its SRI methodology to a portfolio of €30 billion in total. Generali Investments is also the appointed investment manager of two SRI funds – GIS SRI European Equity and GIS SRI Ageing Population.
Foto: Ted Goldring
. Hombres y mujeres tienen diferentes sentimientos en cuanto a seguridad financiera
After a significant increase in positivity toward personal finances last year, sentiments have stagnated, according to the latest Country Financial Security Index, a semiannual score measuring the overall sense of financial security in the United States.
In mid-2015, the Index score jumped 2.1 points to 66.9, the highest score reported since the financial crisis hit the U.S. in 2008. However, following the uptick, the score has moved at a fraction of that rate in the past year, settling in slightly lower at 66.7 in its latest reading.
On an individual level, many are accepting their current financial situation as a new normal. More than half of Americans – just over 51 percent – say their level of financial security is staying about the same. However, in general, men are more likely to believe their circumstances are improving than women.
“Americans seem to be settling into a new normal and accepting their less than ideal financial picture,” says Joe Buhrmann, manager of financial security at the company who run the research. “Yet, as the Country Financial Security Index score settles into its latest groove, women’s sentiments remain closer to record lows in the face of various societal issues that act as headwinds to achieving financial security.”
Meeting short-term goals reveals gender gap
In the aftermath of The Great Recession, Americans’ financial sentiments reached an all-time low of 63.7. Since reaching the bottom of the trough, the Index score amongst men has rebounded to 68.2, past the national average and near the all-time high of 69.3 set in June 2008.
However, the Index score amongst women remains stuck closer to the all-time low at 65.1 – and more than three in four women (76 percent) don’t see things getting better. At the same time, women are more likely to feel their overall financial situation is staying the same in comparison to men.
Men are making strides to improve their financial security on a short-term basis, making it easier to see their overall level of financial security improving:In the past three months, men are more likely than women to have set aside money for savings and investments; Men are also more likely to feel confident compared to women in their ability to pay debts – such as mortgages, car loans, credit cards and other debts – as they come due.
“When your day-to-day finances are out of order, it’s easy to feel overwhelmed – and the lack of confidence women are feeling overall is likely due to their inability to save, invest and pay off debts,” Buhrmann says. “Taking steps to adjust your expenses and spending habits can help establish a base for meeting both short-term and long-term financial goals.”
Large money matters weigh more on women
Beyond the basic short-term financial goals such as saving, investing and paying off debts, women have a more negative outlook when it comes to meeting longer-term financial goals.
“One tricky decision in particular is the choice between setting aside money for the college education of your children versus saving money for retirement,” Buhrmann says. “All parents struggle with this decision, but for women – single moms, especially – who are less likely to set aside money at all, this decision fuels some of their biggest financial worries.”
With the cost of a college education rising and longevity extending in the U.S., women are unsure about their ability to cover the costs: Women are significantly less confident they will have resources to send children to college than men and also feel significantly less likely they will have enough money and resources to enjoy a comfortable retirement.
“In order to meet long-term financial goals, everyone needs to have a plan and actively update it as their circumstances and desires change,” Buhrmann says. “A financial advisor can help address what seem like overwhelming financial burdens to ease the anxiety many women – and Americans in general – are feeling.”
. Commerzbank International in Luxembourg Becomes Julius Baer
The acquisition of Commerzbank International Luxembourg, announced in December 2015, was closed successfully on July 4th, 2016. Going forward, the acquired entity will operate under the name of Bank Julius Baer Luxembourg. The acquisition significantly strengthens Julius Baer’s presence in Luxembourg and provides further strategic flexibility for the Group’s European business.
At closing, CISAL reported approx. EUR 2.5 billion of assets under management and about 150 employees. Going forward, CISAL will operate under the name of Bank Julius Baer Luxembourg S.A., headed by CISAL’s former CEO Falk Fischer. Thomas Fehr, former Branch & Country Manager Luxembourg at Commerzbank AG, becomes COO and Member of the Executive Board of the Bank in Luxembourg.
The total consideration of EUR 78 million, which includes EUR 35 million of regulatory capital transferred as part of the transaction, was paid in cash. Total restructuring and integration costs are estimated to amount to approximately EUR 20 million.
According to a press release, an additional benefit of the transaction is CISAL’s banking platform which runs on the same system as Julius Baer’s target platform. “The acquired Temenos T24 platform and the related IT expertise will add relevant experience to Julius Baer’s currently ongoing worldwide platform renewal project. At the same time, the newly acquired booking centre will present Julius Baer with further strategic flexibility for servicing its European clients.”
Gian A. Rossi, Member of the Executive Board of Bank Julius Baer and Head Northern, Central and Eastern Europe, said: “I very much look forward to welcoming the new clients and colleagues to Julius Baer. CISAL is a high-quality franchise, which will enable us to further expand our footprint in this important financial centre. Additionally, the Luxembourg banking licence and CISAL’s T24 platform and expertise offer clear benefits for the Group as a whole.”
Falk Fischer, said: “My colleagues and I are excited to join Julius Baer. Thanks to the Group’s position as the leading Swiss private bank with a global reach and the great cooperation with the colleagues of the existing local franchise in Luxembourg, I am convinced that our clients will benefit from the unique investment knowledge, exceptional client focus and the enhanced offering the combined businesses will be able to provide.”
Foto: Alessandro Caproni
. La optimización fiscal solo provoca el 23% de las inversiones offshore
Despite the commonly-held belief that tax considerations primarily drive offshore investment, only 23.2% of global high net worth (HNW) wealth is invested offshore for tax reasons, while 24.1% derives from HNW individuals seeking access to a greater range of investment options, according to financial services research and insight firm Verdict Financial.
The company’s latest report states that wealth managers need to gain a deeper understanding of the drivers that are prompting HNW investors to look for new places to store their fortunes. Indeed, HNWI invest offshore for a multitude of reasons, which often depend on geographic and demographic factors, as well as political, economic or monetary conditions in their country of residence.
Verdict Financial’s senior analyst Heike van den Hoevel notes that, fueled by recent scandals and increased media attention, the word “offshore” is overwhelmingly associated with tax avoidance or even evasion. However, while reducing one’s tax bill is certainly a consideration for many HNW individuals looking at offshore investment – especially among those in countries with high tax rates or a complex tax system – it is not necessarily the primary consideration.
Heike explains: “Wealth managers need to understand that there is no single reason driving HNW offshore investment, and that providers have to factor in pronounced regional differences when designing their offshore propositions. For example, German HNW investors, who traditionally only invest a small proportion abroad, have been increasing their offshore holdings, mainly due to the lack of returns that can be earned at home, while HNW individuals in South Africa have been eager to channel wealth offshore to escape currency volatility in their own country, which suggests that offering hedging tools is essential.
The firm believes that local wealth managers would do well to offer a wider range of investment funds providing exposure to international markets to avoid losing funds to offshore providers. On the flipside, providers looking to attract offshore wealth should highlight more beneficial investment conditions in their country.
Photo: Colin Moore, director global de Inversiones de Columbia Threadneedle Investments.. How do I Maximize the Consistency of my Return?
Colin Moore, Global Chief Investment at Columbia Threadneedle Investments, discusses what was behind the volatile first quarter, where he sees opportunities and risks for the remainder of the year, and why he thinks investors should focus on maximizing consistency of returns.
What is your outlook for financial markets for the remainder of the year?
I wouldn’t say there can’t be positive returns in equities, but I don’t think the return relative to the volatility is going to be a particularly good trade-off. Investors need to understand that just getting a positive return isn’t enough if they have to take on too much uncertainty to get there. When there is volatility in the markets, investors often don’t behave well. They sell at the wrong point and buy at the wrong point, which is driven by their emotional response. Similarly, a lot of areas in fixed income don’t look particularly cheap to me. You will probably get the coupon in a number of areas, which is not particularly exciting, but at least the volatility will probably be less. In this challenging environment, I think the question investors should be asking is “How do I maximize the consistency of my return?” rather than “How do I maximize my return?”
What are some strategies that investors can use to maximize consistency of their returns?
Diversification is the standard strategy, but the mistake many investors make is assuming that if they own a lot of things, they’re diversified. What we’ve learned, particularly through the last crisis, is that a lot of things are diversified when you don’t need them to be, and when you need them to be diversified, i.e. in a crisis, they’re not. They act together. With more study and analysis of how to get proper diversification, investors can pursue opportunities beyond conventional asset classes. These may include alternative investments and accessing the futures market to hedge exposure to conventional asset classes. With help from their financial advisor, investors can implement strategies designed to generate reasonable returns while reducing overall portfolio volatility. I strongly recommend that we focus on ensuring that our clients are properly diversified.
What impact did the US Federal Reserve have on financial markets?
The Fed has been involved in extraordinary monetary policy for some time. I believe the first rounds of quantitative easing were necessary for reducing risk and stabilizing the financial system. However, I would argue that some of the subsequent elements of Fed policy were unnecessary and, in isolation, relatively ineffective in stimulating growth. The problem is that we did not see the appropriate response on the fiscal side of the economy, and, certainly, politicians failed to come forward with a comprehensive plan. That left the Fed trying more and more extraordinary measures with less and less impact. Last December’s rate hike shocked people, but I think it was the right thing to do, and I hope they raise rates at least one more time this year. Normalizing monetary policy will send the message that we no longer need extraordinary measures. Lower rates won’t make you spend money if you think there’s a crisis going on. But if you think the economy is relatively normal, then low rates may encourage you to spend on your business or yourself.
After a dismal start to the year, financial markets made a tremendous comeback, with US equities ending the quarter higher. How did we get there?
When there’s a lot of negative volatility in the marketplace, it’s usually because there’s a lot of fear. Expectations of growth were too high, and disappointing news caused investors to rethink those expectations. Then they became overly fearful that the world is going to melt down. As that fear is removed, markets bounce back. We believe that we will continue to see the modest economic growth rate we’ve been predicting for many years. In today’s low, slow growth environment, we’re going to have periods of over- expectation and over-fear. We’re going to have to learn to cope with that.
Do you think the market’s reaction to a slowing Chinese economy was correct?
It was good that the market began to realize that the transition of the Chinese economy would take longer and probably be less even than some had forecast. China is making a big transition from an investment, project-led economy to a better balance between that and the consumer. Like a supertanker turning around, the transition will take time, and it’s unlikely that both components will move evenly. But the market reaction to China, at times, has been exaggerated, partly because we’ve become overly reliant on China as an engine for world economic growth. Japan and Europe are barely growing, and the US looks to be on its current 2% growth trend for a long time.
We saw more central banks pursue a negative interest rate policy in Q1. What do you think of this trend?
I believe the negative interest rate regime is dangerous, and I don’t think it creates the right behaviours. While a negative interest rate policy should encourage banks to lend more, it does nothing to increase demand for money. In fact, the messaging around negative interest rates is that the economy could be facing a crisis. So while the amount of money available may increase, I don’t think the demand for money will change, materially. I think, ultimately, it fails. In the interim the policy is bad for savers and for financial institutions such as insurers.
Why haven’t low energy prices delivered a bigger boost to growth?
It’s been something of a conundrum for me. While I believe low energy prices are, on balance, a positive for the global and US economies, it’s not all good news. In my observation, consumers want to see if low energy prices persist before they change their spending patterns. Now that these low prices have been with us for a while, we hope to see people spending that extra money as they feel more confident that they can rely on it.
The world seems to be getting more dangerous by the day. What are the implications for markets around the world?
Geopolitical risk is ever-present, and it certainly looks like it is escalating. However, there is a major difference between how markets react and how human beings react to geopolitical tension. As investors, we need to differentiate between geopolitical risks that create short-term volatility versus those that change the direction of markets if it’s determined that one or more of those three factors is involved.
