Photo: DanNguyen, Flickr, Creative Commons. NewAlpha Announces a Strategic Partnership with New York Based Naqvi-Van Ness Asset Management
NewAlpha Asset Management, the Paris-based global fund incubation and acceleration specialist, has announced a strategic investment with Naqvi-Van Ness Asset Management. As Europe’s leading incubator, NewAlpha is continuously seeking talented investment managers that are in their early stage of development or are looking for strategic partnerships to accelerate their growth… and now is Naqvi-Van Ness AM.
Naqvi-Van Ness’ investment approach combines a core quantitative driven long-short strategy on US equities with uncorrelated opportunistic directional strategies that seek to detect and exploit potential changes in market behavior.
The investment objective is to generate alpha and deliver absolute returns in all market environments. The strategy has been ranked by Bloomberg in the top 6% amongst their peer group over the past 5 years, and in the top 10% YTD (30/05/2016)*. Naqvi-Van Ness’ flagship strategy has $90 million dollars in AUM.
Commenting on the strategic deal, Ali Naqvi co-Founder of Naqvi-Van Ness said, “I am glad that our R&D efforts to apply our investment expertise in a highly liquid format succeeded in the successful development of our approach. This strategy is an innovative addition to the existing offering of classical hedge fund strategies and we view having on board an experienced investor like NewAlpha as an independent seal of approval regarding the thoroughness of our investment process and operations.”
Albert Van Ness, co-Founder of Naqvi-Van Ness, added “Furthermore, the NewAlpha investment will accelerate the growth and increase the attractiveness of the strategy. Having a strategic investment gives us an institutional level of credibility. Along with our differentiating strategy to Long/Short equity, this should be a positive combination for clients that have us on their radar.”
Antoine Rolland, CEO of NewAlpha, stated: “We are very enthusiastic to enter this strategic partnership with Naqvi-Van Ness. During their career, Ali, Albert and Charles have consistently shown dedication and drive to deliver the highest quality in terms of investment research, market insights and portfolio management. Their investment strategy offers many benefits, including diversification and performance, even more so given recent market volatility. In addition, Naqvi-Van Ness and NewAlpha share common values and both organizations have an entrepreneurial corporate culture..”
In 2001, Ali Naqvi and Albert Van Ness founded Naqvi–Van Ness Asset Management (NVAM) with founders’ capital to develop a systematic investment approach. This effort resulted in a research-intensive firm with proprietary models that utilize factors and insights underpinned by investor behavior and persistent biases. Prior to founding NVAM, Ali Naqvi gained extensive investment experience during 18 years at Citibank Global Asset Management, during which he was responsible for managing portfolios for large institutional clients. The portfolios under his supervision totaled nearly US $8 billion.
Co-founder of the Firm, Albert Van Ness was also a portfolio manager at Citibank Investment Management from 1994 to 2000. In 1994, he joined Ali Naqvi, managing portfolios for high net worth clients, pension plan sponsors, and sovereign investors totaling over $1.2 billion in AUMs.
In 2010, Charles DuBois joined NVAM as Director of Investment Strategies and Research. He is now responsible for developing models and strategies and researching new investment ideas. Previously, Mr. DuBois was a Global Partner and Head of U.S. Asset Allocation Strategies for the Global Structured Products Group of Invesco.
The International Capital Market Association’s (ICMA) Asset Management and Investors Council (AMIC) and the European Fund and Asset Management Association (EFAMA) have published a report on the legislative requirements and market-based tools available to manage liquidity risk in investment funds in Europe. The report also offers some recommendations to further improve the general liquidity management environment.
The report was written in response to public concerns that liquidity has become more fragmented, whether as a result of the reduced role of banks as market makers and liquidity providers or the prolonged accommodative monetary policy of the world’s most prominent central banks.
The main topics it covers include documents in detail for:
The current regulatory requirements of EU legislation (namely UCITS and AIFMD), emphasising inter alia risk management and reporting
Market based liquidity risk management tools, for example swing pricing or redemption gates.
Peter de Proft, EFAMA Director General, commented: “Our industry acknowledges the virtues of the EU regulatory regimes for funds. Indeed, existing regulatory requirements in EU legislation such as the UCITS and the AIFMD regimes form a very far-reaching, strict and sound regime. The legal requirements have proven their merits and ensure appropriate liquidity management for investment funds”.
Martin Scheck, ICMA Chief Executive, explains, “This report adds an important element to the discussion regarding liquidity fragmentation, and complements the IOSCO Report. It shows that there is a comprehensive framework already in place available to managers to manage liquidity in difficult market conditions, through a combination of regulatory requirements and market-based tools.”
The report also proposes three recommendations that could lead to improvements in the general liquidity management environment in Europe. Firstly, it encourages that all European jurisdictions make available the full range of market based tools. Secondly, it strongly encourages the European Securities Markets Authority (ESMA) and the European Systemic Risk Board (ESRB) to make use of the existing liquidity data already currently reported to national authorities in Europe. Finally, it supports the continuing efforts by European and national trade associations to develop further guidelines for best practices in liquidity risk management.
Foto: Thelittletx, Flickr, Creative Commons. La tecnología hace la selección de fondos de inversión más rentable, barata y transparente
According to the latest research from Cerulli Associates, a global analytics firm, technological advances are pushing providers to keep up with investor expectations, and, ultimately, be the center of their clients’ financial lives.
“Wealth management providers, in particular, feel pressure from technology solutions (such as digital advice), changing financial planning expectations, and the commoditization of investment management services,” states Shaun Quirk, senior analyst at Cerulli.
“The retail investor is demanding more, forcing these firms to offer a deeper client experience,” Quirk explains. “Many advice providers tout a ‘holistic’ planning model to bolster their perceived value. However, this overused term in wealth management is vague and heavily focused on investment management as opposed to true financial planning.”
“As financial planning opportunities become available to a broader investor demographic, providers will need to leverage technological advances to scale the solutions, and streamline everything from the onboarding and information-gathering stage to the recurring planning conversations,” Quirk continues. “The providers that can take the abstract nature of financial and retirement planning and make it an engaging, tangible process will win client assets.”
Digital platform improvements and technological advances allow firms to interact with investors in ways that were not available just a few years ago. Investors desire deeper online, goal-oriented resources, research, and content to satisfy their investment management and financial planning needs. However, at the same time, they lack the bandwidth or attention span to dedicate significant time toward their financial well-being and the multitude of investment services used.
Cerulli’s second quarter 2016 issue of The Cerulli Edge – U.S. Retail Investor Edition examines wealth management and the evolving landscape.
CC-BY-SA-2.0, FlickrPhoto: Susanne Nilsson. The Case for Small Caps in a World of Deflation and Disruption
Over the last 30 years, the case for investing in small caps has been debated extensively. The long-term statistics certainly suggest that smaller companies do indeed outperform larger ones. There is less agreement on the reasons. According to Schroders, the explanations range from the contention that small caps offer a risk premium in return for lower liquidity, that limited research means any new information has a bigger impact on the shares, and/or that small companies in aggregate tend to grow faster than larger ones.
Whatever the case, even though US small caps have underperformed large by over 10% in the last two years, their outperformance over a longer period is dramatic. So what of the future?
In truth, the outlook for all investors is murky. Everything from disruptive technology to persistent low growth is making it easier to pick losers than winners. The challenges span the waterfront, from environmental concerns that put a question mark over the future of the carbon-based economy, to advances in artificial intelligence that could undermine the position of over 230 million knowledge workers around the world.
In these circumstances, and contrary to received wisdom, Schroders thinks that more winners may be found amongst the mass of lesser-known and under-researched smaller companies than amongst their larger brethren. With innovation and technological advances moving at an unprecedented pace, companies that are nimble and less burdened by layers of management may be better equipped to keep up with these changes. In this environment, having a strong brand, a large installed base and a wide distribution network are not necessarily assets anymore. “Instead we are seeing a new generation of winners that are “capital light” and have a strong online presence. As industries evolve in this direction, barriers to entry are reduced and innovations progress faster, creating increasing opportunities for small companies.” They state.
However, periods of disruptive innovation inevitably create losers as well as winners. One classic period was the dot com bubble. During most of this time, the US small cap index underperformed the large cap index. “However, a very different story emerges when the small cap universe is broken down into sectors. Smaller pharmaceutical, biotechnology and software companies outperformed the US S&P 500 Index of larger companies, whereas traditional industries, such as banking and retailing, lagged behind. This shows how vital it is to be able to actively pick winners when disruption occurs.”
For Schroders, what often handicaps traditional companies when it comes to developing or adopting a disruptive innovation is the fear of cannibalising their existing revenues. In contrast, smaller and newer companies not tied to an established product have more incentive to direct resources to the next disruptive innovation. Medical technology is a good example of this. Historically, incumbent providers of medical equipment, such as video scopes for internal examinations, focused on reusable technology that is high margin, but also expensive. Clearly, these incumbents had little incentive to produce a lower- cost alternative as such a course would have eaten into demand for their existing products. This allowed Ambu, a small cap technology company with fewer existing sales to defend, to launch a single-use alternative which was both cheaper and came with a lower risk of infection. Not surprisingly, this has allowed Ambu to disrupt the existing market and gain market share.
There are, of course, a number of examples of large technology suppliers operating in markets where the “winner takes all”. Here the so-called FANG companies with dominant technology (Facebook, Amazon, Netflix and Google) often use their substantial cash reserves to buy up smaller competitors. For investors in the shares of these publicly-traded small companies, this is clearly good news, even if it may limit their opportunities for making even larger gains.
“Of course, not all small technology companies are publicly quoted. With return prospects low, venture capital financing is popular and often more readily available than other sources of finance (Figure 3). In this environment, innovative companies may remain private long after the development stage, denying investors the chance to piggy-back on rapid growth.” For example, the electric car manufacturer Tesla floated when it was valued at over $2 billion, while the app-based taxi group Uber remains private and is already worth over $60 billion. “However, we would argue that the publicly listed universe of companies still provides ample opportunity to find disrupters. For example, at the end of February, the technology sector accounted for 3.8% of the FTSE SmallCap Index, more than twice the figure for either the FTSE All-Share or the FTSE 100 indices. In the tech-heavy NASDAQ index in the US, about 65% of the constituents by number are valued at $500 million or less.
Beyond these general characteristics, they identify a number of specific areas where smaller companies enjoy advantages not necessarily shared by their larger rivals:
Unfilled niches
Pricing power
Better balance sheets
Investment impact
Lower profile
“Given the outlook for low economic growth and increasing technological disruption, we believe investors should pay particular attention to small caps. This environment will make life hard for large companies, whereas smaller companies have the opportunity to gain market share and grow faster than the market. At a time of unprecedented technological, social and regulatory change, small companies may be able to operate “below the radar” and dominate niches which are likely to grow in light of these changes. For investors, each investment will need to be evaluated on a company by company basis. They should not rely on the assumption that the small cap premium will operate universally. Being able to sort the wheat from the chaff will be vital to the success of a small cap portfolio.” They conclude.
Hervé Hanoune, Head of Fixed Income at Vontobel AM and fund manager of the Vontobel Fund- Bond Global Aggregate. Courtesy photo. "We Identify US Duration as The Strongest Source of Risk for The Next Couple of Months"
Hervé Hanoune, Head of Fixed Income at Vontobel AM and fund manager of the Vontobel Fund- Bond Global Aggregate, explains in this interview with Funds Society where he is looking for the best opportunities in the asset class.
In a low minimum return environment in many debt assets, is there still value?
Yes, of course, from a bond investor’s perspective, the current environment is actually a rather positive one, in particular for spread products. The reason is very simple.We face a landscape with low interest rates and low inflation, combined with slow or even sluggish economic growth. Low inflation will keep rates down and slow growth will keep corporates above water and enable them to meet their coupon payments and roll over their debts. Currently, we retain a positive view on European financials, insurers, utilities and the euro-zone “periphery” – the latter due our expectation that ECB President Mario Draghi will stress his wishes to normalise spread levels within the euroarea. We particularly like legacy tier-1 paper Intesa, BNP, Natixis, NSBC as well as insurers like AXA, Allianz, Groupama and Zurich.
In the current environment, with low rates in spite of they are likely to increase in the US, what do you prefer, duration risk or credit risk?
I actually prefer a global flexible fixed income approach. I don’t believe that investors are well compensated by being exposed to duration. Duration risk is notoriously difficult to manage, particularly in the current environment, where it is exacerbated by the asymmetric nature of the risk caused by low interest rates. With central-bank rates near zero, this danger is self-evident. The increase in duration has the effect of exposing bond portfolios to ever-larger drawdowns. But the good news is the fixed income universe is very large and in addition to traditional strategies there are further strategies that investors should consider, for example, multiplying the opportunity set, and that means investing globally. Investors should diversify by investing across asset classes, investment strategies and time horizons which helps to improve the risk-return profile of their portfolios. Last but not least, investors can also harvest returns by seizing relative-value opportunities.
Does it depend on the geographic area?
I believe that geographical diversification plays a key role. Indeed, investors who broaden their geographical scope from a local or continental one to a global one will be rewarded with a far larger choice of investment opportunities and strategies. I believe diversifying in today’s environment is crucial as bond investors require an approach that is capable of delivering returns, regardless of the direction of interest rates and regardless of market cycles. So opportunities for fixed-income investors will arise as long as they diversify and remain flexible.
Can you comment your positions in credit and public debt in your portfolio?
Our top ten positions are balanced between credit and public debt which reflects our conviction on issuers and sectors. In terms of public debt, we hold long-term UK and Portuguese government bonds. The UK is offering very attractive yields and while the currency would be at risk from a potential Brexit, gilts should prove resilient in the face of a British exit from the EU. Portugal in turn is a big beneficiary from the ECB bond purchase programmeand the market has yet to price this fully. In terms of credit, as outlined above, we like solid carry products, too. For example, we favor solid Italian financial institutions like Intesa Sanpaolo, one of the largest Italian banking groups.
In this context with so many news of central banks, how can they weight on markets and how do you manage it in your portfolio?
Our investment proposition is well prepared to handle these challenges. We only invest in areas where we see value. Therefore, we are able to avoid investments that we consider too expensive following the ECB bond purchases, e.g. German government bonds. In other areas, such as the euro zoneperiphery, we see the ECB action as supportive for our investments in carry products. As announced in April, the ECB is happy for now with their measures including extended bond purchases. With regards to the Fed, we only expect 1-2 additional rate hikes for this year, but this expectation is not set in stone. We have seen that the Fed is in a really dovish mode and has somewhat changed their typical behavior, so we need to act with some flexibility here.
Which are the major risks in this environment?
We believe that the strongest risks are now tied to capital preservation trades, which could sharply deteriorate when market normalize. We identify US duration as the strongest source of risk for the next couple of months.The need to be flexible/tactical is even more important now than at the beginning of the year. Our central scenario of sluggish but positive global growth, with very low inflation pressure, continues to be the one signalled by the economic data released so far. Especially in Europe and Japan, an investment landscape with zero or negative interest rates can prevail for still some time. We continue to believe that there are many opportunities present right now as the low liquidity and market stress creates many inefficiencies.
Regarding valuations, are the pricing a recession?
We clearly saw the credit market at recessionary type of valuations in January and February, but the recovery since then has led to more normal levels. We consider the general credit market fairly valued but pockets of value still exist.
Are there bubbles in some segments?
If you see the level at where German government bonds are trading, one can conclude that some government bond markets might be in bubble territory.
In Europe, you see value in peripheral debt, as Spain, Italy or Portugal. Why?
Yes, as mentioned before, peripherals are attractive, mainly Portugal and Italy, as their fundamentals are improving and they are supported by the ECB. There is an ongoing mutualisation of European debt, which is not priced in yet by the market.
Are you concerned about political risk in markets like Spain? How can it affect?
In the context of the current political trend where the electorate moves away from the established parties, this could have a negative effect. But as you could see it in Portugal, the market pays more attention to the ECB actions than to the national politics.
Currencies and sharp moves in markets like China or US are key issues now.
We remain short on various Asian currencies and will continue to actively manage our exposure to this theme when prices change. We also believe that the oil prices have stopped to correct and that producers will recover in the next few months with emerging-market oil-producing economies likely to outperform importers. As a consequence, we are long on the Russian rouble, and short on the Turkish lira.
We certainly have an element of competitive devaluation and the US took the main burden in 2015 by appreciating strongly. The US has made clear to the Chinese that they are not willing to accept a further appreciation at their expense and so the Chinese have turned to the Japanese Yen. Given that scenario, we can expect some indications that the BoJ will devalue their currency again.
Which sectors do you like?
We retain a positive view on European financials and insurers. In addition, we like utilities, industrials and peripherals. In summary, exposure to credit is defined from a top-down perspective. However, the sector and issuer exposure is constructed through a detailed bottom-up approach supported by our experienced credit analysts. As with all other asset classes within the permitted investment universe, the value of credit is continually assessed relative to other asset classes.
Geographically, how is positioned your portfolio?
Our top 5 country weightings are the UK, France, Portugal, Italy and Germany.
It is time to enter in emerging countries? What do you think about Latin America?
We remain cautious on emerging markets, particularly on local currencies. As mentioned above, oil prices have stabilized which will help producers to recover in the next months. However, we are still very selective in emerging market hard currency sovereigns. In Latin America, we therefore consider countries such Mexico and Colombia attractive.
This is the personal opinion of the author and does not necessarily reflect the opinion of Vontobel Asset Management.
CC-BY-SA-2.0, FlickrGuillaume Jamet, fund manager of the Lyxor Epsilon Global Trend Fund. Courtesy photo. "What Many Investors Do Not Realize Is That Most Hedge Funds Have A Positive Correlation with Equity Markets"
Guillaume Jamet, manager of the Lyxor Epsilon Global Trend Fund, explains in this interview with Funds Society why CTAs are an interesting option for investors in the current environment.
Taking into Account the current market situation, which are, in your opinion, the reasons why Alternative UCITS are becoming so popular?
In the current market environment traditional asset classes offer few entry points. Due to (ultra) low interest rates fixed income offers an unattractive risk / reward profile: carry is low and it seems unlikely that rates will decrease even further. Equities suffer from relatively high valuations across the board and from weak global growth trends, particularly in the US. In such an environment it is logical that investors turn to alternatives.
We see that in Europe alternative UCITS are doing very well. A broad set of alternative strategies has become eligible for UCITS wrappers since the UCITS III introduction in 2003. However, the credit crisis of 2008 has been a real turning point: since then regulators are actively stimulating the usage of UCITS legal vehicles, rather than offshore constructions. Investors appreciate the protective elements of the UCITS framework, such as concentration limits.
Which are the most demanded strategies? Are CTAs among them?
Morningstar data shows us that the top 4 collecting strategies in April 2016 are, in decreasing order of collect: Multistrategy, Market neutral-equity, Long-short equity UK and CTAs. The strategy has gained in popularity relative to 2015, where CTAs were “only” the 6th largest collector. Due to the straightforwardness of their investment process and their ability to have a managed volatility, CTAs appeal to all investor types. Our own investor base includes amongst others banks, family offices, pension funds and distributors.
Which is the main advantage of including a CTA in a portfolio? Performance, diversification… and why?
Both performance and diversification. Performance of CTAs has historically been strong. The SG Trend Index, a performance indicator for the trend-following strategy sector, generated 6.5% annually since inception in 2000, clearly outperforming equities and bonds. CTAs offer true diversification opportunities to investors. Firstly, the strategy is intrinsically diversified: as it focuses on price data, all asset classes and markets can be reached in a single portfolio. Secondly, correlation between CTAs and traditional asset classes is low or even negative. Consequently, adding a CTA to an investment portfolio with traditional investments can significantly improve the portfolio’s risk/return characteristics. Thirdly, CTAs tend to do particularly well in periods of crisis as many asset classes show clear trends. Thanks to this “crisis alpha” ”, CTAs offer diversification when investors need it most. As an example: Epsilon Managed Futures generated 38% during the credit crisis, whereas the MSCI World Index plunged by 59%.
Their truly de-correlating characteristics make CTAs stand-out from many other alternative strategies. What many investors do not realize is that most hedge funds have a positive correlation with equity markets. E.g., the HFRI Fund weighted index, an indicator of general hedge fund performance, has a correlation of 0,74 with the MSCI World Index calculated over the period 1991 – 2015. Many strategy-specific hedge fund indices, such as the HFRI Equity Hedge (equity long / short), HFRI Event Driven and HFRI Relative value (fixed income long / short) also have a correlation of more than 0,5 with the MSCI World Index over the same period.
Which are the characteristic of your fund you would highlight over competitors?
First of all our track record. The Epsilon program was launched in 1994. Since then we continuously invested into research and development of the model, systems and infrastructure. Epsilon Managed Futures, one of our two flag ship funds, has an annual performance of 8,0% since inception in 1997. Secondly, our investment approach. We are a true trend follower, without any discretionary portfolio manager intervention. Many other CTAs apply an amalgam of techniques, making them opaque to investors. In our peer group of CTAs we are amongst those which have the lowest correlation with both the SG Trend Index. Thirdly, our diversification model. Many CTAs diversify equally over markets. Our proprietary research shows that this can lead to sub-optimal outcomes as many markets are correlated.
Which are the main risks the CTA strategies front nowadays?
Frankly, I don’t see any major risks. What is important for investors to realize is that CTAs generate their performance during relatively short periods. Most of the time CTAs generate zero, or even slightly negative performance, while “seeking” trends. During such periods, investors need to hold on to their investments, knowing that performance will be generated once two market conditions have been fulfilled: markets show clear trends and correlations between asset classes are low.
CC-BY-SA-2.0, Flickr. Schroders Enters into Strategic Relationship with Hartford Funds to Accelerate Growth Plans in US
Schroders has entered into a strategic relationship with Hartford Funds, a leading US based asset management company that offers a broad range of actively managed strategies to US financial advisors and their clients.
The relationship will involve Hartford Funds adopting 10 of Schroders’ existing US mutual funds, with potential for the partnership to expand over time. The adopted funds will be advised by Hartford Funds, sub-advised by Schroders, and renamed ‘Hartford Schroders Funds’. The funds, which include equity, fixed income and multi-asset strategies, collectively have $2.2 billion in assets under management.
Peter Harrison, Group Chief Executive at Schroders explained that “Hartford Funds is a high-quality company whose reach and scale makes them an ideal strategic partner for Schroders. The addition of funds sub-advised by Schroders to Hartford Funds’ investment platform will give investors in the US access to our diverse investment management expertise. This relationship will enable us to build scale in our US intermediary business and accelerate our growth plans in the US market.”
“This relationship allows us to expand the breadth of our investment capabilities and continue to deliver quality solutions to US investors, both now and in the future. Schroders’ history of product innovation and disciplined investment processes reflect our belief in differentiated, long-term thinking that helps investors meet their financial goals,” said Jim Davey, President at Hartford Funds.
Hartford Funds has $73.6 billion assets under management and offers more than 45 funds in a variety of styles and asset classes.
The fund adoptions are expected to be complete by the end of the third quarter of 2016, subject to shareholder approval.
Uncertainly as to the consequences for the UK’s fund industry in the event of Britain exiting the European Union is adding to the ‘fear factor’ ahead of the June 23 referendum, according to a poll conducted for the latest issue of The Cerulli Edge – European Monthly Product Trends Edition.
Nearly 54% of respondents expected sales of funds across Europe to be affected to varying degrees should the UK pull out of the EU, says Cerulli Associates, a global analytics firm. Just over 30% foresaw some hurdles to doing business for up to three years, while 15.4% predicted long-term disruption that would require new distribution and sales strategies. Just under 8% of respondents envisaged difficulties for up to 12 months. The largest individual grouping–46% of those polled–did not feel that a Brexit would affect sales.
“Cerulli believes that if only half of asset managers’ worries about Brexit are justified, then the industry should be firmly in favor of remaining in the EU,” says Barbara Wall, Europe managing director at Cerulli Associates, adding that the vast majority of asset managers seem to regard voting to remain as a no-brainer, even if an exit would only cause anxiety and inconvenience rather than a catastrophe.
“Uncertainty abounds, partly due to no one knowing whether a Brexit would result in Britain’s relationship with the EU looking more like that enjoyed by Norway, Switzerland, and South Korea, or something else. Nor does anyone know how long the renegotiating of agreements would take. This uncertainty is feeding the ‘fear factor’,” says Wall.
While it is unlikely that a Brexit would stop UK asset managers from managing funds sold in the EU or prevent sales of funds in the other direction, Cerulli believes that it would be disproportionately expensive for many smaller companies to make the necessary adjustments, and it could threaten the viability of some operations.
“Whether Britain stays in the EU is a matter for the electorate. Many voters will feel the businesses in which they work have given them a strong steer, usually to vote to remain in the EU. Cerulli believes this is because those who would be charged with adjusting for a Brexit have examined this scenario–as far as it is possible to examine it–and can see far more downside than upside,” says Wall.
CC-BY-SA-2.0, FlickrPhoto: Alex Crooke, responsable del equipo de Global Equity Income de Henderson . Global Equity Income: Value Opportunities Emerging
In this video update, Alex Crooke, Head of Global Equity Income at Henderson, reveals where his team are finding the best opportunities for equity income and capital growth. He also explains the long-term regional and sector findings from the Henderson Global Dividend Index, a research report into global dividend trends.
Where are the best opportunities?
We are finding interesting opportunities within the financials sector. A number of central banks have started new policies, such as negative interest rates, which have been affecting sentiment and profits in the short term for a number of financial companies. Longer term, we believe this will create value so we are looking to selectively increase our bank exposure in Europe by investing in good-quality recovery companies such as ING, the Dutch multinational banking and financial services company. Insurance is another area that was negatively affected earlier this year but offers the potential for very good dividend growth. The pharmaceuticals sector has been impacted by market rotation this year after a strong 2015 but we believe it remains attractive and recent underperformance is providing an opportunity to invest in quality companies at more attractive valuation levels.
Which are the regional dividend trends?
Key findings from the Henderson Global Dividend Index (HGDI) reveal that Japan and North America have exhibited the best dividend growth during the last two years. We are also seeing some interesting opportunities arise in Europe, where companies are returning to the dividend payment list, particularly in the financials and consumer-related sectors.
Which are the sector dividend trends?
HGDI shows that the technology sector is continuing to provide good dividend growth. A number of companies are increasing their payout ratios (the proportion of profits paid out as dividends) as well as earnings and profits, which is feeding dividends. Pharmaceuticals and financials were the largest sectors in terms of dividend payments in Q1 16, although growth has been moderating. Consumer-based sectors are demonstrating good dividend growth and we expect this to continue through the rest of the year.
Dividend growth outlook
We are seeing a slower environment for dividend growth overall. This reflects slower economic growth from many countries around the world and the fact that payout ratios have reached higher levels than in previous cycles. With earnings, cashflow and ultimately dividends from commodity-based sectors still under pressure from recent price falls, markets with a high percentage of oil or mining companies, such as the UK and Australia, are experiencing dividend cuts. Despite this, many businesses outside of these sectors are delivering sustainable dividend growth.
Why global equity income?
In the current environment the benefits of a global approach to equity income are based on opportunity and value.
In opportunity terms, we can position the strategy away from difficult areas, such as concerns about growth from China and worries about a potential Brexit vote, while accessing growth in other parts of the world.
In terms of value, we are still finding some very good opportunities, with the dividend yield available on equities looking good value relative to bond yields and interest rates. We believe that by maintaining a good-quality bias and searching for opportunities in international markets and sectors we are able to provide an attractive long-term strategy for investors.
Foto: Leif and Evonne
. Nancy Bosley nombrada directora de desarrollo de negocio de Global Insurance Solutions Group
Nancy L. Bosley has been named Director of Strategic Business Development for Global Insurance Solutions Group (GISG), an independent insurance brokerage firm with offices in Greater Philadelphia and Miami, as announced by Michael Blank, managing partner. In this role, Bosley is responsible for the strategic development aspects of GISG, with specific emphasis on the firm’s expanded services for the international and domesticwealth management, private banking, and investment advisory channels.
Bosley most recently served as President of Transamerica Life Brokerage after serving as the organization’s Senior Vice President, Chief Marketing Officer, and Chief Sales Officer. Prior to joining Transamerica, Bosley served as President and Chief Executive Officer of LifeMark Partners, a national brokerage marketing organization. Bosley has been in the life insurance industry since 1980, first serving as a principal in Security House, for 20 years, an independent life brokerage firm.
“Our firm is privileged to be a recognized leader in insurance-based solutions for businesses and families world-wide. With the additional bench strength of Nancy, we are further positioned for expansion and growth in 2016 within the registered investment advisory and private banking channels,” said Blank. “Our expanded team further elevates our support model to assist wealth managers and private banks as they grow and scale their businesses.”
