CC-BY-SA-2.0, FlickrPhoto: m.krema
. Jean-Pierre Mustier, is Appointed New CEO at UniCredit
On June 30th, the Board of Directors of UniCredit SpA has co-opted Jean Pierre Mustier and unanimously approved that, starting from next 12 July, he will take on the position of CEO in replacement of Federico Ghizzoni.
One of his most important tasks in his new role will be to decide and execute on the fusion of Pioneer Investments with Santander Asset Management. Operation which, according to Reuters, will no longer happen once Ghizzoni left. The merger would create one of Europe’s leading asset managers with over 400 billion euros in AUM.
According to a press release, the Board Chose Mustier because of his international profile, the high quality of his professional skills as well as the excellent understanding of international financial services and the accrued deep knowledge of the Group structure he has.
Mustier, 55, began his career at Société Générale where he held various positions, primarily within the Corporate & Investment Banking from 1987 to 2009. In 2003 he was appointed as Head of the Société Générale’s Corporate & Investment Banking Division and member of the bank’s Executive Committee. Afterwards, from 2011 to 2014, he joined UniCredit Group as Deputy General Manager and Head of Corporate & Investment Banking Division. Currently he is partner at Tikehau Capital, an investment management company and member of the Board of Directors of Alitalia.
In compliance with applicable regulations, the appointment of Mustier as CEO shall be assessed by the ECB.
Foto: Mirosław Legęza
. Solo el 23% de los clientes con más de 10 millones recomendaría a su wealth manager
Only 39% of clients are likely to recommend their current wealth manager, falling to 23% among US$10m+ clients, according to the report ‘Sink or swim: why wealth management can’t afford to miss the digital wave’, published by PwC, based on a survey in Europe, North America and Asia.
Wealth management is one of the least tech-literate sectors of the financial services industry, and what is currently on offer is sharply at odds with what their clients, high net worth individuals, expect. When HNWIs were asked what they value most about their current advisor/wealth manager, their technical capabilities and digital offering ranked just eighth out of 11 options.
The work also finds that two-thirds (69%) of HNWIs use online/mobile banking, more than 40% use online means to review their portfolio or investment markets and over one in three are already using online services for portfolio management.
Demand among HNWIs for finance-related technology is, surprisingly, similar across both younger and older HNWIs, the exception being portfolio management, where under-45s are markedly more interested in managing investments online. Moreover, 47% of those who do not currently use robo services would consider using them in the future.
Over half of HNWIs surveyed believe it is important for their financial advisor or wealth manager to have a strong digital offering– a proportion that rises to almost two-thirds among HNWIs under 45 and in Asia. Where HNWIs are digitally confident, expectations that wealth managers should be technologically proficient are higher still.
On the other hand, two-thirds of wealth relationship managers do not consider robo-advisors a threat to their business. Moreover, they repeatedly insist clients do not want digital functionality, directly contradicting the importance their clients place on it.
“This conflict within wealth management firms, combined with a client-base that feels only weak affiliation to its chosen providers, is creating a sector that is now acutely vulnerable, to digital innovation from FinTech incomers, including robo-advice services,” says Barry Benjamin, Global Asset and Wealth Management leader at PwC.
In PwC’s view, to survive, wealth management firms must accelerate efforts to adopt a comprehensive digital infrastructure, harness the potential of digital, and be willing to partner strategically with FinTech innovators.
Benjamin concludes:
“Wealth relationship managers enjoy high levels of trust among their client base. They are already recipients of a depth and breadth of data and insight spanning both financial and non-financial aspects. Any future wealth management model needs, without question, to retain this human aspect.
“However, in an increasingly complex world where the investment office may, for example, have to evaluate more than 200 different investment products for a client, and where clients are also aware of what automated technology can do in the investment advisory space, technology will be vital to keep the job both do-able and scalable for a growing audience.
Argentina-based Properati, the Latin American online and mobile solution for the real estate market, announced it has received a US$ 2 million investments from Neveq II, NXTP Labs, and Telor International Limited. With this new round the company has raised a total investment of US$ 4.2 million since it was founded in February 2013 and plans to consolidate its regional presence in Mexico and Brazil.
The company will use these funds to expand and consolidate its regional presence in key markets like Mexico and Brazil, and to continue developing innovative solutions to help the Real Estate industry become more efficient in their sales processes.
Properati already has over 1 million properties published in Brazil and almost 2 million in LatAm, covering a significant area of the real estate market in those countries and the region, with an innovative business model where clients only pay for the qualified leads they receive, and users may browse an ad-free site.
Regarding the fund’s investment in Properati, Ariel Arrieta, NXTP Labs co-founder and CEO, stated that: “Properati’s product is the most efficient way for brokers and developers to generate qualified leads and convert them into sold inventory. Over the last 12 months the company has made a significant progress in markets like Brazil and Argentina, with a clear value proposition for its clients, and we are happy to support their next wave of expansion into Mexico and other Latin American markets”.
In addition, Properati has announced that Ariel Muslera will join the board of the company. Muslera is a specialist in fundraising and business strategy, and has extensive experience as advisor in different startups.
Photo: Karen Roe
. FOX presenta el "Private Investor Council", para inversores sofisticados
Family Office Exchange (FOX), a global membership organization of enterprise families and their key advisors, recently announced the formation of the FOX Private Investor Council, a new Council-level membership specifically for sophisticated investors who make their own investment decisions and consider different risk and reward dynamics than most other investors. This membership allows them to collaborate with other independent investors to share ideas and take advantage of the latest thinking brought to the table by selected industry experts.
“The members of this Council are primarily focused on their investing activity, and they are the ultimate decision makers,” said Alexandre Monnier, president of FOX. “They operate with great independence but know that they would benefit from having a working group of other top-notch practitioners to test their ideas, stimulate their thinking, and benchmark their results. That is the need this Council serves.”
“The advantage of belonging to the FOX Private Investor Council is that there is a constant stream of new ideas flowing into the discussion,” added Karen Clark, managing director at the organization and leader of this Council. “The quality of the group is not limited to the experience of those in the room which is considerable in the first place. Cutting edge ideas are brought into the discussion by experts to elevate the discussion.”
The Council will meet twice a year. An April meeting will coincide with the FOX Spring Global Investor Forum in San Francisco and a September meeting with the FOX Autumn Global Investor Forum in New York City.
Councils are the highest level of engagement at FOX and approximately 30% of members belong to one of the 12 different Councils, which provide heightened interaction among closely matched peers who are working through a relevant curriculum designed by FOX to foster their personal and professional skills.
Foto: Tambako the Jaguar. Sweet May for Event Driven Strategies
Global financial markets showed a pleasant picture in May as risk aversion receded. Equity indices displayed positive returns worldwide, with the US, European and Japanese indices outperforming Emerging markets. The latter were hit by the hawkish Fed minutes, which revived fears of a US rate hike over the summer. As a result, the US dollar strengthened, advancing against both DM and EM currencies.
On the alternative side, the Lyxor Hedge Fund Index was up 0.8% through the month, with Event Driven outperforming. Strategies with more directionality contributed to the bulk of the gains while CTAs continued to suffer from shifting market trends.
Event Driven kept up the positive momentum with Special Situations (+2.5%) outperforming Merger Arbitrage (+1.4%). The month of May recorded an acceleration of M&A activity. This dynamic is supportive for merger arbitrage as it provides a broader set of investable opportunities. Managers also benefited from a number of successful deal completions (including Time Warner Cable vs Charter Communication), while spread tightening on various transactions added to the gains (Baxalta vs Shire, SAB Miller vs AB Inbev).
Special Situations funds, which are more sensitive to market directionality than their peers, extended gains in May with the improvement of risk appetite. They thrived on their core positioning on Akorn, Athabasca Oil and Dow Chemical stocks.
“The performance of Event-Driven strategies picked up in May after having experienced difficult quarters. The strategy recently benefited from the completion of large deals and the tightening of deal spreads. Managers have also adopted a dynamic approach to manage risks, moving away from longer dated soft situations and skewing their portfolio towards hard catalyst M&A situations”, point out Philippe Ferreira, Senior cross-asset strategist at Lyxor Asset Management.
L/S Equity funds outperformed the MSCI World index, with long bias managers leading the pack. L/S Equity managers stuck to their guns, maintaining a cautious stance, with a dwindling exposure to cyclicals. In May, long positions on the financial and technology sectors were rewarding, though the picture was different across regions. All European managers posted strong returns on the back of the quality bias on their long books. Yet, ahead of a number of uncertain macro events and the looming UK Referendum vote, managers held a tilt towards defensive sectors and kept a low net exposure. This explains that their participation to the market rally during the second half of the month was somewhat limited. On the other side of the Atlantic, outcomes were significantly disparate. US managers took advantage from the rebound in the healthcare sector but suffered from their long exposure to the industrials and materials.
Fixed income and Credit arbitrage performances were muted as the positive support from the ECB and oil price appreciation started to fade away in credit markets. Managers recorded contrasting results, underlining the fact that alpha generation made the difference. Asian managers outperformed on the back of their positions on the energy and basic materials sectors while the performance of European funds was milder than that of their peers.
Global macro managers recouped the bulk of losses incurred last month, up 1.2%, thanks to the strengthening of the US dollar and their fixed income portfolio. Yet, this picture hides disparate returns across managers due to different positioning. Overall, long exposures to the USD against the G-10 currencies were the most rewarding. Managers sharply increased their short allocation to the EUR. The picture was similar for the fixed income bucket as returns were fuelled by both short exposures to US and UK durations and longs on European bonds. Relative value trades were also beneficial.
The appreciation of the US dollar and the rebound in energy prices were detrimental to CTAs. Long term models (-3.1%) weighted on the overall performance, while short term ones (-0.5%) proved more resilient. The strengthening of the USD was harmful to their short stances, especially against AUD, JPY and EM currencies. Alpha generation on shorts in EUR, CHF and GBP helped mitigating losses.
The European fund and asset management industry met on 16 and 17 of June in Malta, at the occasion of EFAMA’s Annual General Meeting. Hosted by the Maltese Funds Industry Association (MFIA), the AGM provided an opportunity for EFAMA members to discuss the investment and regulatory landscape and to exchange views with representatives from the European Commission and the Maltese Financial Services Authority.
The AGM marked the end of a first year under the mandate of EFAMA President Alexander Schindler, Member of the Executive Board of Union Asset Management Holding AG. During this time, the European asset management industry continued to grow, with 2015 being a record year and net sales of European investment funds rising to an all-time high of EUR 734 billion.
Schindler reported on the activity highlights during his first year, mentioning that the overarching EU initiative of the Capital Markets Union is a welcome, ambitious project which highlights the key role asset managers can play in providing alternative funding sources and channelling savings and investments into long-term projects. In the same vein, the European asset management industry, remains fully committed to the idea of developing a Pan-European Personal Pension product (PEPP). He commented: “Much has been done in recent years in the regulatory field. Much remains to be done in terms of implementing and applying these new regulations. With the MIFID II delay, industry now has more breathing room and is hands-on in preparing to apply the new rules.
According to EFAMA, the application of the new PRIIP KID rules remains a major issue, however, it should be done right for the sake of investors. “It serves no one’s purpose – and certainly not the investors’ interests – to rush through the Level-2 process.”
On the issue of personal pensions, they mentioned that “people need to start saving earlier, save more and save for longer, and the PEPP can address the current savings gap. Building on the excellent work done EIOPA, we hope the European Commission will concur that the creation of a PEPP would create invaluable benefits for EU citizens and the European economy”.
During the general assembly, EFAMA also welcomed two new National Associations as full members: the Cyprus Funds Association (CIFA) and the Croatian Association of Investment Fund Companies. Both have been members of EFAMA with observer status since June 2014.
Peter De Proft, Director General of EFAMA commented: “We are very pleased to see more full members joining our family. Dialogue, feedback, interactions and good governance are key elements in the smooth running of a European association. We are looking forward to working with the Cyprus and Croatian associations, and to continue to grow our membership and reach to feed into our increasingly constructive discussions with European institutions”. Adding that “in 2015, EFAMA and its members have had to begin adapting their modus operandi and will no doubt have to undertake further adjustments as the regulatory implementation stretches into the horizon. Some priorities, however, do not change: nine years after the start of the global financial crisis, we need to concentrate even more on performance in the interest of our investors.”
Kenneth Farrugia, Chairman, Malta Funds Industry Association (MFIA), commented: “The Malta Funds Industry Association is delighted to have been given the opportunity to host this prestigious event in Malta. The Association’s membership with EFAMA enables the MFIA to be an active participant in the multi-faceted developments shaping the European Funds Industry, with the end benefits being relayed to the members of the Association in Malta. Moreover, this provides an excellent platform for the Association to exchange views with other Associations on matters of common interest, share best practices and to analyse and monitor the impact of any significant new developments for the interest of the local industry.”
Foto: TurboSquid 3D printing. ¿Qué le pasó al mercado alcista?
According to Russ Koesterich, Head of Asset Allocation for BlackRock’s Global Allocation Fund, “the bull market has stumbled, but that doesn’t mean we are headed towards a bear market.”
Indeed stocks suffered a horrific sell-off last Friday following the surprise vote by the UK to exit the European Union. But even before the Brexit vote, stocks had been losing steam. U.S. large cap stocks have now gone well over a year without making a new high. The S&P 500 is trading right where it was in the fall of 2014. Small cap stocks have performed even worse. The Russell 2000 bounced sharply off of the February lows, but small caps remain roughly 10% below their 2015 peak.
What happened to the bull market? Koesterich believes that three trends help answer that question, which he explains in his company’s blog:
Stocks got expensive U.S. stocks are not in a bubble — valuations remain significantly below the peak in 2000 — but that is not the same as being cheap, or even fairly priced. At over 19x trailing earnings stocks are trading in the top quartile of their historical valuation range. True, stocks still look cheap relative to bonds, but it is worth considering why. Bond yields are low because nominal growth is remarkably weak, not a great environment for corporate earnings. In addition, central banks have increasingly treated bond markets as yet another manifestation of monetary policy. Bond yields have been driven lower not just by the Federal Reserve’s (Fed’s) quantitative easing (QE), but more recently by the behavior of other central banks. As the European Central Bank and the Bank of Japan have driven yields into negative territory, U.S. bonds have become more attractive to foreign buyers, pushing yields still lower. Stocks are cheap relative to bonds because bond yields reflect little growth and aggressive central banks.
Financial conditions have become less benign Interest rates, both nominal and real (i.e. after inflation), are incredibly low, but other measures of financial conditions are less benign. While the dollar is trading roughly where it was a year ago, it is up more than 20% from its 2014 lows. A stronger dollar is a de facto monetary tightening and a headwind for corporate earnings. Other measures also indicate tighter financial conditions. Credit spreads have narrowed from their recent peak, but high yield spreads are roughly 200 basis points wider than they were two years ago. Finally, liquidity has become harder to find, as demonstrated by the recent freeze in IPOs.
The tailwinds abated Much of the stock market gains in 2012 and 2013 were driven by multiple expansion on the back of aggressive monetary stimulus. Between the market low in 2011 and the end of 2014 the price-to-earnings ratio on the S&P 500 expanded by over 40%. Put differently, as central banks, including the Fed, embarked on an increasingly aggressive series of monetary experiments investors responded by consistently paying more for a dollar of earnings. However, since 2014, QE has ended and monetary stimulus by other central banks, notably the Bank of Japan and European Central Bank, is proving less effective in stimulating asset prices, outside of European credit.
Where does this leave investors? “The good news is that none of these conditions signal an imminent bear market. Valuations are high, but have typically been higher at market peaks. The dollar has stabilized, which should take some pressure off of corporate earnings. Unfortunately, with central bank policy increasingly impotent and valuations elevated and political risk on the rise investors need to recalibrate their expectations. Consistent years of double digit returns can be viewed as borrowing returns from the future. It appears that future is now, suggesting lower returns today.” He concludes.
CC-BY-SA-2.0, FlickrPhoto: Guilhem Vellut
. Introducing Colony NorthStar, Equity REIT With $58 Billion of Assets Under Management
NorthStar Asset Management Group, Colony Capital, and NorthStar Realty Finance have announced that they have entered into a definitive merger agreement under which the companies will combine in an all-stock merger of equals transaction to create a real estate and investment management platform.
The combined company will be named “Colony NorthStar, Inc.” The transaction is expected to close during the first quarter of 2017, subject to customary closing conditions, including regulatory approvals, and approval by the NSAM, Colony and NRF shareholders.
Upon completion of the transaction, NSAM shareholders will own approximately 32.85%, Colony shareholders will own approximately 33.25% and NRF shareholders will own approximately 33.90% of the combined company on a fully diluted basis. NSAM shareholders will also receive, in addition to its regular quarterly dividend, a special cash dividend equal to $128 million, which represents a one-time distribution of excess NSAM taxable earnings and profits.
Upon closing of the transaction, Thomas J. Barrack Jr. will be Executive Chairman of the Board of Directors of Colony NorthStar, David Hamamoto will be Executive Vice Chairman, and Richard B. Saltzman will be Chief Executive Officer.
The transaction creates a global, diversified equity REIT with $58 billion of assets under management, led by a seasoned management team with access to proprietary deal sourcing and a significant track record as a global investor, operator and asset manager.
The portfolio has a concentration in scaled verticals across geographies, property types and capital stack positions, consisting primarily of owned real estate.
The companies have estimated an approximately $115 million in total annual cost synergies, consisting of approximately $80 million of cash savings and approximately $35 million of stock based compensation savings, expected to be realized post-closing.
CC-BY-SA-2.0, FlickrPhoto: Barbara Willi
. Hong Kong and Switzerland Ahead of the United States in the Competitiveness Ranking
The USA has surrendered its status as the world’s most competitive economy, which it has led for the past three years, after being overtaken byChina Hong Kong and Switzerland, according to the IMD World Competitiveness Center Ranking.
The 2016 edition ranks China Hong Kong first, Switzerland second and the USA third, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top 10.
Professor Arturo Bris, Director of the IMD World Competitiveness Center, said a consistent commitment to a favorable business environment was central to China Hong Kong’s rise and that Switzerland’s small size and its emphasis on a commitment to quality have allowed it to react quickly to keep its economy on top.
“The USA still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness,” he said.
“The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.”
A leading banking and financial center, China Hong Kong encourages innovation through low and simple taxation and imposes no restrictions on capital flows into or out of the territory.It also offers a gateway for foreign direct investment in China Mainland, the world’s newest economic superpower, and enables businesses there to access global capital markets.Taiwan, Malaysia, Korea Republic, and Indonesia have all suffered significant falls from their 2015 positions, while China Mainland declined only narrowly retaining its place in the top 25.
The study reveals some of the most impressive strides in Europe have been made by countries in the East, chief among them Latvia, the Slovak Republic and Slovenia. Western European economies have also continued to improve, with researchers highlighting the ongoing post-financial-crisis recovery of the public sector as a key driver.
Meanwhile, 36th-placed Chile is the sole Latin American nation outside the bottom 20, while Argentina, in 55th, is the only country in the region to have improved on its 2015 position.
“One important fact that the ranking makes clear year after year is that current economic growth is by no means a guarantee of future competitiveness.” Added Professor Bris.
The European Fund and Asset Management Association (EFAMA) recently published in cooperation with SWIFT, a new report on the evolution of automation and standardisation rates of fund orders received by transfer agents (TAs) in the cross-border fund centres of Luxembourg and Ireland in the first half of 2015.
The report confirms that the automation rate in the fund industry increased to 83.5% in Q2 2015 from 82.6% in Q4 2014.
The report is an on-going campaign by EFAMA and SWIFT to highlight the advancement of automation and standardisation rates of orders of cross-border funds. 29 TAs from Ireland and Luxembourg participated in this survey, representing more than 80% of the total incoming third-party investment funds order volumes in both markets.
The report highlights include:
The total order volume of cross-border funds increased by 11% to 17.5 million orders in the first half of 2015, from 15.8 million orders in the second half of 2014. The use of ISO messaging standards rose by 3.8 percentages points (p.p.) to 53.2%, while the use of manual processes and proprietary formats (FTP) dropped to 16.5% (-0.9 p.p.) and 30.3% (-2.9 p.p.), respectively, in the same time period.
The total automation rate of orders processed by Luxembourg TAs reached 81.2% in Q2 2015 compared to 81.3% in Q4 2014. The ISO automation rate increased from 57.9% in Q4 2014 to 64.3% in Q2 2015, while the use of proprietary ftp decreased from 23.4% in Q4 2014 to 16.9% in Q2 2015.
The total automation rate of orders processed by Irish TAs increased to 88.3% in Q2 2015, from 85.6% in Q4 2014. The percentage of automated orders based on the ISO messaging standards increase to 30.7% in Q2 2015, from 29.5% in Q4 2014.
Peter De Proft, EFAMA Director General, says: “The findings presented in this mid-year status report confirms the growing use of the ISO messaging standards in the processing of cross-border funds in both Luxembourg and Ireland. Compared to five years ago, overall, the share of orders processed using these standards has increased from 36% to 53%. This is a very positive development which brings greater efficiency funds processing and lower costs.”
Fabian Vandenreydt, Global Head of Securities, Innotribe and the SWIFT Institute, SWIFT, adds: “This report indicates the strong focus of the industry towards a more efficient and reliable process in the funds industry. The decrease of FTP usage and manual processing versus adoption of ISO standards keeps on drawing the trends towards automation and cost reduction. SWIFT and EFAMA will pursue their efforts to lower the manual process as much as possible and support the industry where and when needed.”
