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BlackRock: 2016 Latin America & Iberia Investment Forum

Connectivity brings with it a positive force for change, and in turn, innovation. By almost all measures, the world is more connected than ever, hastening the access and speed of information and data. The impact of connectivity and innovation on the financial community is no exception.

On March 14-16, 2016 BlackRock hosted its fourth annual Investment Forum with the objective of Connecting for a Better Tomorrow.

The message throughout the conference was focused on how best to transform challenges into opportunities by working hand and hand with key partners that will help foster innovative solutions. Through this message of connectivity, BlackRock empowered its clients to make connections to the trends, insights and solutions that will matter not only today, but also in the future investment landscape.

Over two days, The BlackRock Investment Forum connected 180 wealth and institutional clients across 10 countries in Latin America & Iberia. Clients attended a total of 15 sessions led by BlackRock leaders across the firm, such as the President of the firm, six members of the Global Executive Committee and several investment leaders.

Notable sessions included:

Keynote: Talent and Innovation

The keynote address from Rob Kapito, President and Director of BlackRock, stressed the importance of rethinking how our industry can help clients move cash off of the sidelines in order to invest for the future. To set this catalyst for change, “modern technology can be applied to the challenges clients are facing in order to help make better investments decisions to achieve the outcomes needed.”

Big Data achieve returns

In a recent study, IBM estimated that approximately 90% of the data in the world today was created in the last two years. In addition to there being more data, we have the capability to understand this data more comprehensively and quickly than ever before.

In this forward looking session, Rob Goldstein, Chief Operating Officer of BlackRock, interviewed Raffaele Savi, Co-CIO for Blackrock’s Scientific Active Equity and Co-Lead of Active Equities on how the intersection of technology and investors will revolutionize the way we invest in the future. They focused their discussion on understanding how BlackRock’s Scientific Active Equity (SAE) Team harnesses the power of Big Data, providing new signals and indicators through advanced methods of data extraction to seek sustained alpha across market environments.

The Power of Factor Investing: Smart Beta

Other ways investors are building better portfolios is through Factor Investing. Sara Shores, Managing Director and Head of Smart Beta Strategies at BlackRock, touched on the importance of factor investing and how it is empowering investors by identifying and precisely targeting broad, persistent and long-recognized drivers of return.

Smart Beta strategies have democratized access to Factor Investing. Individuals, investment professionals and institutions alike are using these strategies to screen thousands of securities to capture single or multiple factors transparently and efficiently. As of April 2016, Smart Beta ETP flows hit a new monthly high with $7.8bn*”

Other sessions presented at the 2016 Investment Forum included:

The State of the Markets
Geo-Political Perspectives
Connecting Investors to Retirement Capabilities
Financial Distribution Trends
Casting a Wider Net with Multi Asset Investing
Equity Markets: New Drivers, Rethinking Fixed Income in 2016 and Beyond
ETF Growth
Connecting to New Sources of Diversification: The Alternatives Approach
Investing with IMPACT
Portfolio Construction

At the end of the Forum clients walked away with a better understanding of the importance of becoming more outcome-oriented than ever before. Investment decisions are no longer just about products or asset classes but rather finding the diversified solutions that will help investors achieve their investment goals. As highlighted by the Forum, connecting with the right partner is critical in order to foster innovative solutions that can transform today’s challenges into tomorrow’s opportunities.

*Data is as of March 31, 2016 for all regions. Global ETP flows and assets are sourced from Markit as well as BlackRock internal sources. Flows for the years between 2010 and 2015 are sourced from Bloomberg as well as BlackRock internal sources. Flows for years prior to 2010 are sourced from Strategic Insights Simfund. Asset classifications are assigned by BlackRock based on product definitions from provider websites and product prospectuses. Other static product information is obtained from provider websites, product prospectuses, provider press releases, and provider surveys.

How Important is the Valuation of High-quality Companies?

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¿Cómo de importante es la valoración a la hora de incorporar una empresa de alta calidad en la cartera? — CC-BY-SA-2.0, FlickrPhoto: Lucas Hayas. How Important is the Valuation of High-quality Companies?

Does the valuation of a high ROIC company matter? If Q1 companies have typically outperformed, is there any benefit to also selecting cheaper companies, or should we simply remain agnostic to stock valuation?

According to Investec experts, they prefer to use free cash flow (FCF) yield as their valuation metric as it captures the cash-generating power of the business, rather than the income statement profits, which are based on accrual accounting and are more vulnerable to manipulation by management. Moreover, the FCF yield better reflects the available cash that can be reinvested into a business for future growth, or returned to investors.

The next graph prepared by Investec shows that valuation does matter, and is more important for companies with low ROIC (those in Q4). The highest return at the individual stock level appears to be achieved by investing in companies with a high ROIC and FCF yield. Historically, investing in these companies has provided outperformance of 3.8% per annum. Meanwhile, investing in the most expensive companies with a Q1 ROIC has typically resulted in modest underperformance of 1.2%. Importantly, this analysis takes no account of the final ROIC of the company like the prior charts, and does not, therefore, assess the sustainability of high returns.

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“We believe in exercising caution when operating in these areas of the market. A combination of high ROIC and seemingly cheap valuation can imply the market is anticipating a structural problem with the company’s business model, often meaning that returns have a high probability of fading fast. In this scenario you need a fundamental understanding of the inner workings of the company’s business model to properly assess the sustainability of returns. In our experience, we rarely find such an opportunity that is attractive on a risk-adjusted basis over a long-term investment horizon,” says Investec.

Alternatively, they suggest, to purchase a stock with a Q4 FCF yield, “we require the business model to be impeccable with structural trends that mean we are compensated with above average growth and limited uncertainty. Again, these types of opportunities tend to be few and far between. Lofty valuations are often caused by market over-exuberance around future growth, resulting in long-term underperformance. Consequently, we select moderately valued companies with a high ROIC that we believe can be maintained over the long term.”

Implications for portfolio construction
To generate outperformance they aim to construct a portfolio for their Investec Global Franchise Strategy that, in aggregate, maintains a Q1 ROIC. Figure 7 tracks the Investec Global Franchise Strategy’s ROICs against the median quartiles for the market and shows that this aim has been met for almost the entire lifespan of the strategy. “We believe this is a positive indicator for its future performance, as we have confidence that the companies that make up this portfolio have competitive advantages to maintain their current high returns. Crucially, this confidence is based on our detailed bottom-up analysis of these companies and an assessment that their ROICs are sustainable over the long term.”

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“Valuation plays an important role in our investment process. Although we believe that quality companies deserve a premium valuation, we are not willing to include overpriced stocks in our portfolios. For us, investing in high-quality companies only makes economic sense if FCF yields are superior to long-term bond yields. This comparison comes from the stable and consistent cashflow generation of these companies, many of which have bond-like characteristics,” they conclude.

Schroders Enters into Market for SME Direct Lending Through a Partnership with NEOS Business Finance

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Schroders entra en el mercado de financiación directa para pymes y nombra responsable de Marketing para EMEA — CC-BY-SA-2.0, FlickrPhoto: Moyan Brenn. Schroders Enters into Market for SME Direct Lending Through a Partnership with NEOS Business Finance

Schroders today announces that it has entered into a strategic relationship with Dutch direct lending firm NEOS Business Finance. Schroders has acquired a 25 per cent. stake in the business.

Launched in 2012, NEOS Business Finance provides institutional investors access to an alternative debt financing platform for Dutch small and medium-sized enterprises (SMEs). The company has developed an approach to give SMEs access to small to medium size loans through a standardised issuance and loan terms process.

NEOS Business Finance will provide investment advisory services to Schroders in connection with the management of investment funds of Schroders’ clients investing in SME financing.

NEOS Business Finance has an extensive network and broad client base. To date, NEOS Business Finance has launched one investment fund funded by two large Dutch pension funds. In addition NEOS Business Finance works with the largest Dutch bank ABN Amro to source SMEs in need of financing. This complements Dutch government policy which encourages pension funds and other institutions to actively participate in local economies.

Philippe Lespinard Co-Head of Fixed Income at Schroders said: “Small and medium enterprises (SMEs) in Europe are increasingly looking to obtain debt financing from non-bank lenders. Part of this trend is explained by the decreasing supply of credit in that space by commercial banks who face increasingly onerous capital requirements on loans perceived as risky by regulators and supervisors. On the demand side, borrowers expect faster approval times and lower collateral requirements than afforded by banks’ traditional processes and systems. These conflicting trends open up a space for non-bank actors to provide growth financing to SMEs on simpler and faster terms.”

UBS, Henderson and Generali Investments, Amongst the Winners at the 2016 UCITS Hedge Awards

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Organized by the Hedge Fund Journal and currently in their sixth year, the UCITS Hedge Awards reward the best performing funds on a risk adjusted basis across a range of asset classes and strategies. The winners are chosen following the in-house calculation of the Sharpe ratio based upon the 2015 full calendar year data points.

Generali Investments, the main asset manager of the Generali Group, has received a significant double acknowledgement for its expertise in convertible bonds. The Generali Investments SICAV (GIS) Absolute Return Convertible Bond fund was awarded as the Best Performing Fund in 2015, and Best Performer over a 3-year period, in the Fixed Income – Convertible Bonds category at the 2016 UCITS Hedge Awards.

Henderson‘s UK Absolute Return fund won Best Performer over a 2 Year Period in the Long/Short Equity – UK category, as well as over the three year period. UBS‘ Equity Opportunity Long Short Fund was awarded with the title of Best Performer over a 2 Year Period in the Long/Short Equity – Europe. While the Pictet Total Return Agora fund won Best Performing Fund in 2015 for Equity Market Neutral – Europe.

Other winners include Helium Opportunités, Rothschild CFM, Muzinich, Aquila, Candriam and Finex.

Finex

Rothschild CFM

You can see the full list of winners in this link.

Repurchasing Confidence: The Potential Benefits Of Stock Buybacks

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Los datos demuestran que las empresas con programas de recompra de acciones superan al mercado a largo plazo — CC-BY-SA-2.0, FlickrPhoto: Susanne Nilsson. Repurchasing Confidence: The Potential Benefits Of Stock Buybacks

There’s no substitute for a well-run company with solid fundamentals, steady earnings growth and a seasoned management team. But investors in even the most profitable firms are always looking to add value. Two commonly used methods for bolstering corporate shareholder value are dividends and stock buybacks.

A company may decide to repurchase outstanding stock for many reasons — to telegraph confidence in the company’s financial future, return cash to investors in a tax-efficient manner (shareholders typically pay taxes on dividends) or simply to reduce the number of shares outstanding. In some cases, buying back shares just makes good financial sense – particularly when a company’s stock is trading at a discount, explains Thomas Boccellari, Fixed Income Product Strategist at Invesco.

A positive buyback performance track record

For these same reasons, investors may wish to consider companies with a propensity for repurchasing shares. A company stock repurchase is like reinvesting a dividend without incurring taxes.

“Consider also that the shares of companies that repurchase stock have tended to outperform and exhibit lower volatility than the broader market. In fact, studies show that buyback announcements have historically led to a 3% jump in stock price on average, and that the subsequent average buy-and-hold return over four years was 12%” points out the strategist.

And he adds, “the chart below shows the dollar amount of share buybacks for companies within the S&P 500 Index since 2004, as well as the performance of the NASDAQ US BuyBack Achievers Index relative to the S&P 500 Index. A rising orange line indicates that the NASDAQ US BuyBack Achievers Index (BuyBack Index) outperformed the S&P 500 Index; when the orange line is falling, the BuyBack Index underperformed the S&P 500 Index”.

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So, according to the expert, while past performance is not a guarantee of future results, you can see that when the dollar amount of buybacks increased, as shown by the purple line, the stock of companies that repurchased shares (as measured by the BuyBack Index) generally outperformed the S&P 500 Index. Conversely, when the dollar amount of buybacks decreased, the stock of companies that bought back shares generally underperformed the broader market.

The benefits of international buyback shares

While stock buybacks have long been popular as a means of returning cash to shareholders in the US, they are also gaining favor internationally — particularly in Japan and Canada, poins out.

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“Investing in international companies with a history of buying back outstanding shares offers the added advantage of international exposure — including geographic diversification and, in some cases, more attractive valuations than US-based companies. With both interest rates and stock valuations currently low, I believe international companies will increasingly view share repurchases as a sound investment proposition and a means of enhancing shareholder value”, concludes.

The PowerShares International BuyBack Achievers Portfolio tracks the NASDAQ International BuyBack Achievers Index and provides diversified exposure to international companies that repurchase their own shares.

Why Do Chileans Invest in Chile? Should We Follow Their Example?

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¿Por qué los chilenos invierten en Chile? ¿Deberíamos seguir su ejemplo? — Courtesy photo. Why Do Chileans Invest in Chile? Should We Follow Their Example?

Luis Felipe Céspedes, Minister for Economy, Development, and Tourism of the Republic of Chile, shared his overview on the current situation of “the most competitive economy in Latin America,” its optimistic forecasts and investment opportunities in the country –which was placed 35^th in the Global Competitiveness Index– for the more than 200 participants in the World Strategic Forum. We had a chance to interview him after his speech at the event held in Miami last week.

Céspedes attributes the success of this Southerneconomy on the strength of four key elements: its institutions and the communication between them, the macroeconomic framework, the financial system and the commitment to the country’s openness and global integration. “We need to generate savings which will later be invested,” he said, referring to the financial system, adding that the vocation of integration with the economy of the rest of the world is not only governmental but a commitment of the country.

The reality is that Chilean investors represent a tiny part of the capital which the wealth management industry manages in Miami, since, say the experts, Chile presents conditions of security, stability, and opportunities for investment which are rare in the region. The Minister agrees and explains that the process of internationalization of companies, the strong growth of the economy, and its openness made it very attractive to invest in Chile. To this we must add that the government recently carried out a tax reform plan that included a capital repatriation plan, with a preferential tax rate of 8% so that fortunes held offshore would be returned to the country.

Chilean investors who wish to seize the opportunities offered by foreign instruments can do so without major difficulties, contrary to what happens in other economies in the region. According to a report by ALFI, the Association of the Luxembourg Funds Industry, of the 100 most international fund managers in the world, 57 have their products registered in Chile. And according to a study by Global Pension Assets Study, published by Willis Towers Watson, Chile is the market where the volume of pension fund assets under management grew the most globally, according to CAGR figures over the last 10 years (in local currency), up to 18%.

Cespedes insists that “the growth of the Chilean economy is due to its own engines” even though it “benefits when neighboring countries do well”. With a GDP of $ 22,972 (ppp), and a net public debt with a surplus of 3% of GDP, the minister explained that the state budget is consistent with the long-term forecasts, so that, for example, “this year we have adjusted our budgets to the lower copper prices and its long-term forecasts”. Unemployment is at around 6%, inflation fluctuates between 3 and 4%, and growth forecast for this year stands at 2%.

Challenges

The great challenge is to increase productivity; that is difficult partly because the Chilean labor force is very small -half of that in the OECD countries- and its economy is concentrated in several, but limited sectors. In this respect, the government has set several objectives: to generate diversification, attract investors, establish policies to improve competitiveness and provide opportunities for innovation.

Mining

One of the country’s great talents and major industries is mining. Chile is the largest copper producer in the world and accounts for 30% of world reserves of a mineral which represents 60% of its exports, 20% of revenues in the state coffers through taxes, generates 11% of all employment and accounts for 13% of the country’s GDP. The question is can copper play a new role in the development of the Chilean economy?

“We have to attract investments”

It’s complicated, but doable. At least, that’s what is deduced from the optimistic speech of this finance professional, and from the policy stating that “we have to attract investments” in order to improve technology and innovation, the connection between demand and providers, care for the environment, and develop the production process to adapt it to global needs, promoting exports of other, already manufactured, copper-related products.

Opportunities

Following the fall of oil prices and the sharp rise in energy prices, the government took action: “Since 2013, the government has reduced the price of energy by 40% and investment in the energy sector is now greater than that allocated to copper. We have attracted new investors to the energy sector,” the satisfied Minister for the Economy pointed out.

According to the minister, opportunities currently lie in mining development, sustainable tourism, healthy food, construction, creative economy, the fishing and fish farming sector, technology, and health services.

“The five largest companies in the world did not exist 20 years ago, however, the 10 largest Chilean corporations are all more than 20 years old,” he says, convinced that the key is to attract innovative minds.

Profile

Luis Felipe Céspedes Cifuentes is Minister of Economy, Development and Tourism of the Republic of Chile. He previously held various positions in the Central Bank of Chile, the last as Director of Research; he was chief economist adviser to the finance ministry, a professor at several universities, both in Chile and in the United States, and author of numerous publications on monetary, fiscal, and currency exchange policies.

Revenge of the Bonds – Why a US Inflation Scare is Looming

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Presupuesto de riesgo: gasta con sabiduría — CC-BY-SA-2.0, FlickrPhoto: Scott Hudson. Risk Budget: Spend It Wisely

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair” – Sam Ewing (baseball player)

According to Aneet Chachra and Steve Cain from Henderson, discussing inflation far too often devolves into a cage match between the “deflation forever” team versus the “hyper-inflation is coming” camp. The former has gained the upper hand with ECB President Mario Draghi pushing through a comprehensive easing package while Google searches for “helicopter money” are surging. However, based on recent economic data and the stabilization in commodities, a moderate pickup in inflation is more likely ahead. Meanwhile, the US Treasury Inflation-Protected Securities (TIPS) market appears to systematically underestimate future inflation due to structural reasons. Thus, bond markets and the Federal Reserve could be “behind the curve” necessitating two or more rate hikes in 2016 with a knock-on effect on medium-term yields. This is not a call for persistent, surging inflation, but rather a view that fixed income markets are overly optimistic in disregarding the risks of higher inflation.

February headline consumer price inflation (CPI) in the US was just +1.0% year-over-year (YoY), however core CPI (which excludes food & energy) rose +2.3% YoY, its highest reading since 2008. This wide differential was mainly due to lower commodity prices, especially crude oil which fell -32% YoY through February 2016. However, the March 2016 decline is much smaller at -20% YoY, and the futures curve projects that oil’s year-over-year change will turn positive during the fourth quarter of 2016.

Another deflationary force has been the rising US dollar which gained 20% over the last two years, reducing the cost of imported goods. But the year-over-year change for the dollar index just turned negative for the first time since mid-2014. This will gradually make imports more expensive for US consumers, although with a typical lag of 6-12 months.

Importantly, lower unemployment is finally driving higher wages with companies passing on some of the post-crisis profit margin expansion to employees. Fourteen US states have raised their minimum wage in 2016, with California (the most populous state) poised to further increase its minimum from $10/hour to $15/hour over the next five years. Labour markets have recovered not just in the US and the UK, but the unemployment rate in Japan is below pre-crisis levels. European unemployment remains elevated but has been improving since 2013.

Given all the above factors are widely known – why do TIPS still only forecast annual inflation of about 1.6% over the next decade? Perhaps TIPS prices are biased. There is an argument that TIPS should be expensive relative to nominal bonds as they are one of the few ways to directly hedge inflation risk.

But the available evidence since TIPS were launched in 1997 shows the exact opposite. Even with fairly benign inflation over the last 20 years, realized 5-year and 10-year inflation has averaged above TIPS-implied forecasts at issuance. The average gap has been about 0.35% per year ie. TIPS buyers have generally outperformed nominal bondholders.

Despite their valuable inflation protection qualities, why have TIPS historically been under-priced? Two reasons stand out. The first is their liquidity is poor relative to regular US bonds – traders joke the acronym really stands for “Totally Illiquid Pieces of Stuff”. Secondly, inflation expectations are often highly correlated to equity market moves particularly during large sell-offs. Hence TIPS do not provide the diversification to risk portfolios that other bonds do.

The generally negative correlation of nominal treasuries offer significant hedging benefits and are likely expensive to reflect this “crisis alpha” value – especially in the era of Risk Parity funds. Thus nominal treasuries are overvalued, TIPS are undervalued, and both distortions artificially compress the implied inflation rate forecast. An alternative measure that uses nominal 10-year yields minus trailing 12-month core CPI shows that real US 10-year rates are currently near 30-year lows of -0.5% per annum.

An interesting historical precedent is the 1985-1988 period when oil prices collapsed from above $30/barrel in late 1985 to below $10/barrel in 1986 pushing inflation lower. However, starting in 1987 (see black line below) a gradual rebound in oil prices drove a spike in CPI. This led to several Fed rate hikes and a significant selloff in US treasuries, with bond yields rising from 7% to above 9% within six months.

“Although we are unlikely to see a bond selloff quite as severe as 1987 given sluggish world growth and low yields globally, fixed income markets appear to be ruling out even a modest spike in rates. We should also not underestimate the highly stimulatory effects of cheap energy on importing nations where offsetting shale oil industries do not overwhelm them – eg. the Eurozone and Japan. Remarkably, Fed funds futures are only pricing in one rate hike this year, while US 10-year yields have fallen about 30bps in the last five months despite a concurrent 40bps rise in core CPI. Stronger inflation data and consequently a rise in bond yields appear to be an underappreciated risk,” they conclude.

Source: Bloomberg, as at 30 March for all data, unless otherwise stated.

The Reserve Bank of India is Focusing on Liquidity and Transmission

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Las nuevas medidas del banco central de la India juegan a favor de su renta variable — CC-BY-SA-2.0, FlickrPhoto: Koshy Koshy. The Reserve Bank of India is Focusing on Liquidity and Transmission

In his latest white paper, Paul Milon, Investment Specialist, Indian Equities, Hong Kong at BNP Paribas Investment Partners talks about the Reserve Bank of India’s decition to cut its key policy repo rate by 25bp to 6.50% on 5 April 2016. in what he believes was a widely expected move.

“The 25bp repo rate cut was widely expected by financial markets. By January 2016, Consumer Price Index (CPI) had met the central bank’s target of 6% and now seems on track to be at 5% by March 2017. Moreover, the budget announced on 29 February supported the government’s commitment to fiscal consolidation. Despite the pressure on expenditure from the implementation of the 7th central pay commission, the budget maintained the government’s fiscal reduction targets aiming for a deficit of 3.5% of GDP for FY2017, down from 3.9% for FY2016.”

He mentions that as well as the rate cut, the RBI has also taken several steps to improve liquidity and transmission. “While the cash reserve ratio (CRR) was unchanged, the minimum daily CRR was reduced from 95% to 90%. Additionally, the Marginal Standing Facility (MSF) rate was reduced by 75bp to 7% and the reverse repo rate was increased by 25bp to 6%, leading to a narrowing of the policy rate corridor from +/-1% to +/-50bp around the repo rate.

These measures to improve liquidity, combined with the recent introduction of the marginal cost of funds-based lending rate (MCLR) on 1 April 2016, are likely to lead to better monetary transmission. Since the implementation of the MCLR, fresh lending rates have already declined by around 25bp and are expected to decline further following April 11th’s measures.

Following this rate cut, the RBI is likely to remain cautiously accommodative. In assessing further moves, the RBI will monitor a) the CPI inflation trajectory along with the 5% target by March 2017; b) monsoon development as deficient rainfalls could lead to higher food inflation; c) the inflationary impact of the roll-out of the 7th pay commission; and d) evidence of transmission of prior policy rate cuts into lower lending and deposit rates.

In light of the inflation dynamics and RBI’s targeting of 1.5%-2% positive real rates, there may be room for another 25bp rate cut later this year, pending sufficient monsoons occurring.

Following the rate cut, banks are expected to lower their deposit rates, which may lead to more domestic investors shifting part of their assets from deposits to equities, providing some support to the Indian equity market.

He concludes that “More broadly, the accommodative monetary policy stance – with a focus on improving liquidity and policy transmission – is expected to help India’s economic recovery, especially as lower lending rates should lead to a pick-up in credit growth. The RBI continues to expect India to grow at 7.6% as measured by Gross Value Added (GVA) for the financial year ending in March 2017 (FY 2017), the fastest growth rate among large economies.”

Now Is The Time To Flock To Asian Equities, Says Pinebridge Investments

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Asia ex Japan equities are set to benefit from the second wave of the “flying geese” economic model, according to global asset manager PineBridge Investments.

In its most recent whitepaper: Why it’s Time Time to Flock to Asian Equities, PineBridge Investments explains that as developing markets move up the value-chain, long-term investment themes across the region are emerging, including increasing demand for premium goods and services in sectors including healthcare, media, tourism and telecommunications.

Wilfred Son Keng Po, Portfolio Manager, Asia ex Japan Equities at PineBridge Investments, says: “The dynamic we’re now seeing is that ambitious and well-managed companies in Asia are being buoyed by progressive population trends, increased wealth, better education and social welfare, and supportive government policies for innovation and entrepreneurship. We believe this new trend offers equity investors significant potential in the years to come.”

In its original incarnation, the “flying geese” economic model saw a cascade of technology transfer from Japan to the “Asian tigers”: Hong Kong, Singapore, South Korea, and Taiwan. But PineBridge explains that a second iteration is now in operation that includes China, Southeast Asia and India.

“Both China and India are vast markets that are becoming manufacturing and innovation power houses, supported by Asean nations. These Southeast Asian economies provide both the natural resources and value-added manufacturing products and services to drive domestic demand as well as to boost manufacturing sectors for exports,” adds Elizabeth Soon, Portfolio Manager, Asia ex Japan Equities at PineBridge Investments.

“We believe that while economic growth in Asia is impacted by US interest rates, commodity prices, and the pace of structural reforms, the progression of developing economies along the value-chain will continue be the main driver for powerful, long-running investment themes across several industries, despite the economic headwinds.”

These investment themes include:

Domestic demand will continue to expand, helping the consumer retail sector, especially in China where the government is re-directing the country’s economic growth from an investment and export platform to one based on household consumption.
Southeast Asia’s expanding middle class will also provide a strong market for branded consumer goods. This rapidly growing demographic segment is spending money on mobile phones, internet access, and online shopping. Some of the fastest growing sectors have been in technology, media, both outbound and inbound tourism and telecommunications.
Meanwhile, aging populations in countries such as Singapore, Taiwan and South Korea mean that health care – including hospitals, pharmaceuticals, and technology will be another opportunity for investors.

PineBridge says that for investors in Asia ex Japan equities to succeed, sectoral trends such as domestic consumption should be considered a main driver of growth but not looked at in isolation. Detailed analysis of company performance, management, balance sheets and potential, is needed as broad-brush investment style choices such as size, growth, value, and momentum are unlikely to be rewarded due to continued market volatility.

“Investors can use the volatility caused by macro factors to look for durable and high-quality companies within consumer sectors that are both driving the region’s growth and supplying demand for premium products and services across the flock of flying geese,” adds Mr. Son Keng Po.

Fannie Wurtz appointed Managing Director, Amundi ETF, Indexing & Smart Beta

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Fannie Wurtz, nombrada managing director de Amundi ETF, Indexing & Smart Beta — Photo: Fannie Wurtz. Fannie Wurtz appointed Managing Director, Amundi ETF, Indexing & Smart Beta

Amundi continues to develop its ETF, Indexing and Smart Beta, which are major components of the Group’s strategy. In this context, Fannie Wurtz is appointed Managing Director of the ETF, Indexing and Smart Beta business line under the supervision of Valérie Baudson, member of Amundi’s Executive Committee.

Fannie Wurtz is Managing Director of ETF & Indexing Sales at Amundi. Prior to joining Amundi in February 2012, she was responsible for ETF Institutional Sales and Amundi ETF business development with French & Swiss institutional clients at CA Cheuvreux from 2008.

In addition, the Board of Directors of CPR Asset Management has appointed Amundi’s Valerie Baudson as CEO of the company. CPR Asset Management is a subsidiary of Amundi which manages, in particular, thematic equities with close to €38bn in assets under management.

The CPR Asset Management Board of Directors has also promoted Emmanuelle Court and Arnaud Faller, respectively, to Deputy CEO heading business development and Deputy CEO heading investments. Nadine Lamotte has been confirmed as Chief Operating Officer responsible for Administration and Finance. The above named make up the Management Committee which also includes Gilles Cutaya, Head of Marketing and Communication.