The German receivables exchange Debitos is now offering a new trading segment on its online auction portal: From now on it’s even easier to sell claims against insolvent companies to the highest bidder. On the site creditors and investors have a direct overview of current company insolvencies whose receivables are being searched or traded on the Debitos online exchange. At Debitos alone some €1.3 billion of private capital from German and international investors is waiting for offers from sellers.
In most insolvencies the creditors have to wait for several years before finding out how much their claims are still really worth. So it often makes sense to sell claims to the highest bidder as quickly as possible, rather than leaving non-performing capital on the books. But how to find the best price and a solvent buyer? At the receivables exchange claims against insolvent companies can be auctioned off to the highest bidder. Since the online exchange started up in late 2012 more than 1,000 creditors, including several Landesbanks, have sold non-performing loans (NPL) valued at more than one billion euros via Debitos.
Claims against insolvent companies are one type of what are known as “distressed assets”. There is a large international market for this kind of investment – a market with risks, but interesting prospects too.
Last year already saw the first auctions on the site involving significant volumes of claims against companies like Prokon and KirchMedia. “We are seeing great interest in this segment”, says Timur Peters, managing director of Debitos, explaining why it is being expanded. “In Germany it takes an average of four years to wind up an insolvent company. The outcome is often uncertain and capital is tied up all the time”, says Peters. “So it is logical that we are paying more attention to this segment, because it provides much-needed liquidity directly.”
Sellers at Debitos can set a minimum price and then watch how investors place bids for the receivables in the online marketplace – the highest bid wins. All that is required to register a seller are the contact details of an authorised representative, a valid company address, VAT ID and a valid email address. Then the company details are verified to ensure that the information provided is correct. The competent Debitos team takes care of preparing the documentation for the auction. For banks and other companies the presence of currently some 350 specialised investors from all over Europe represents a real incentive to offer their outstanding receivables from a range of insolvencies for sale. Investors registered on the exchange consist mainly of banks, funds, debt collection agencies and lawyers.
Foto: m.shattock
. Los gestores activos están más amenazados por el potencial de crecimiento de las estrategias de beta estratégica que los pasivos
The growth of strategic beta assets will continue to strain active managers’ ability to retain assets, according to new research “U.S. Evolution of Passive and Strategic Beta Investing 2016: Opportunities for Asset Managers and Indexers” from Cerulli Associates.
“Strategic beta represents the middle ground on the active to passive spectrum-it can be viewed as a hybrid approach,” states Jennifer Muzerall, associate director at the firm. “The subjective assumptions made about the investment strategy lend itself more to an active strategy, but its rules-based and transparent implementation exhibits characteristics similar to those of passive.”
Growth of strategic beta assets will continue as more investors begin to understand the benefits of implementing strategic beta products into their portfolios, such as the potential to reduce portfolio risk and enhance returns while benefitting from a cost savings compared to active management.
“Over the next decade, strategic beta may influence a new way of thinking about the baseline for passive investing,” Muzerall explains. “Strategic beta development raises the bar for active managers and their ability to generate alpha. Active asset managers are begrudgingly moving into strategic beta because they continue to see outflows from active products. While new money may feed strategic beta products, asset managers express concerns that offering strategic beta may cannibalize assets from existing active products.”
“On the other hand, passive managers see strategic beta as an opportunity to offer differentiated, higher-fee products, a departure from the highly competitive commoditized passive business,” Muzerall continues. This leads to the question, who should be more concerned-active or passive managers? “Cerulli believes active managers are more threatened by the potential growth of strategic beta compared to most passive managers.”
The European Fund and Asset Management Association (EFAMA) has published its latest quarterly statistical release which describes the trends in the European investment fund industry during the fourth quarter of 2015, and the results for the year 2015.
2015 was a record year for the European investment fund industry. Net sales of European investment funds rose to an all-time high of EUR 725 billion in 2015 and assets under management broke through to EUR 12 trillion thanks for a growth rate of 11%.
Further highlights on the developments in 2015 include:
Investment fund assets in Europe increased by 11.3% to EUR 12,581 billion. Overall, net assets of UCITS increased by 13% to EUR 8,168 billion. Net assets of AIF increased by 8.3% to EUR 4,412 billion.
Net sales of UCITS reached EUR 573 billion. Demand for UCITS reached its highest level ever in 2015.
Long-term UCITS enjoyed a record year. Long-term UCITS recorded net inflows of EUR 496 billion, compared to EUR 479 billion in 2014.
Multi-asset funds attracted the largest net inflows (EUR 236 billion) as the broad market, asset class and sector diversification offered by balanced funds attract investors.
Equity funds recorded the best year for net sales since 2000 (EUR 134 billion) as investors remained overall confident in the economic outlook for Europe and the willingness of the ECB maintain its accommodative monetary stance to support activity.
Bond funds recorded lower net sales (EUR 83 billion) compared to 2014 against the background of a reversal in bond yields and the associated uncertainty concerning the evolution of the bond market.
Money market funds saw a turnaround in net flows, ending the year with positive net inflows (EUR 77 billion) for the first time since 2008.
Net sales of AIF reached EUR 152 billion, compared to EUR 149 billion in 2014.
Bernard Delbecque, Director of Economics and Research at EFAMA, commented: “The growth of fund assets has been substantially positive across Europe, with a very few exceptions, confirming investor confidence in UCITS and AIF.”
Signs of economic slowdown are increasing worldwide. This is the view of Guy Wagner, Chief Investment Officer at Banque de Luxembourg, and his team, published in their monthly analysis, ‘Highlights’.
Apart from weakness in the manufacturing sector, services activities are also starting to be affected, despite the favorable effects of falling oil prices on consumer purchasing power. “According to official advance estimates, US GDP slowed to 0.7% in the fourth quarter of 2015, due to a dearth of corporate investments and a slowdown in consumer spending. Most economic indicators also tended to deteriorate in other regions,” Guy Wagner adds.
January was a particularly difficult month for equity markets
January was a particularly difficult month for equity markets. The ongoing weakness of oil prices and increasing signs of economic slowdown heightened investors’ aversion to risk. The S&P 500 in the United States, the Stoxx 600 in Europe, the Topix in Japan and the MSCI Emerging Markets (in USD) all lost ground. “The financial sector was particularly shaky due to prospects of deterioration in companies’ capacities to service their debt following the slump in commodity prices and the economic slowdown,” says Guy Wagner. “Given current zero interest rates, the difficulty the central banks would have in responding to a major economic downturn makes equity markets vulnerable.”
Key interest rates unchanged in the United States and Europe
Having raised the fed funds interest rate by 25 basis points in December, the US Federal Reserve left interest rates unchanged at its January meeting. According to Guy Wagner, “Higher volatility on the financial markets and increasing signs of economic slowdown worldwide have reduced the probability of further monetary tightening in the coming months.” In Europe, ECB president Mario Draghi hinted at the introduction of further monetary stimulus at the Bank’s next meeting in March to combat low inflation.
No concessions on company quality
“In Europe, economic statistics continue to surpass low expectations, but in absolute terms the pace of growth is flagging.” Active management within asset classes, especially equities, is therefore all the more vital. “While the economic and financial environment remains weak, it is particularly important not to make concessions in terms of the quality of the companies in which you invest,” concludes Guy Wagner.
Standard Life Investments warns investors should expect another year of volatile outcomes in global credit markets, with further dispersion in regional performance.
In February’s Global Outlook, Craig MacDonald, Head of Credit for Standard Life Investments, has used a number of indicators to assess where investors are in the credit cycle, including trends in bank lending standards, corporate leverage levels, and the flatness of government yield curves.
MacDonald said: “Although credit markets came under general pressure last year, there was still considerable dispersion in regional performance and investment grade debt which provided selective opportunities for savvy investors. European high yield outperformed US high yield; Sterling investment grade outperformed Euro investment grade, and Asian emerging market credit was actually a strong performer despite global concerns over China.”
“However, there has been a weak and much more correlated start to 2016. Bank lending standards have tightened in emerging markets, and there are nascent signs of tightening in the US, although European lending is still loosening. Corporate leverage is relatively high in the investment grade sector, but remains lower than during the 1990s once the energy and commodity sectors are stripped out. Finally, although yield curves have flattened, they are still steeper than has been associated with previous recessions. While defaults have risen, this is only from historically low levels and they are generally a lagging, not leading, indicator.”
US high yield was one of the worst performing credit markets in 2015 with a -5% return. Almost 50% of bonds produced negative returns and a number entered distressed levels. Just over 20% of US high yield names are in energy and commodities and therefore vulnerable to the fall in commodity prices. Distress has also been seen in retail and telecommunications, however, yields have widened out to 9%, leading to selective opportunities.
“In US investment grade, good-quality issuers now look cheap and while we are avoiding some of the smaller regional US banks with over-exposure to commodities, it is a different story for the large banks such as JP Morgan, which have strong balance sheets with low book exposure to commodities. Another source of market worry has been emerging markets (EM). However, Russian corporate credit had a very strong performance in 2015 despite Russia’s myriad of problems. And Chinese credit outperformed, particularly property bonds. The lesson is that there are opportunities as well as risks in EM credit. The upshot is that we expect another year of volatility in credit markets, and believe the risk of recession is lower than the market is pricing in. This is an environment of selective opportunities. In high yield during 2015, our funds benefited from a reduced exposure to the most risky CCC rated debt, but it is still too early to reverse this positon despite the wider yields on offer, says MacDonald.”
Photo: Kenichi Amaki, potfolio manager at Matthews Asia.. Matthews Asia’s Kenichi Amaki to join Miami Summit
Kenichi Amaki, portfolio manager at Matthews Asia is set to join the Second Edition of the Funds Selector Summit to be held on 28th and 29th of April in Miami.
Amaki manages the firm’s Japan Strategy and co-manages the Asia Small Companies and China Small Companies Strategies. Now that the time has come to re-engage with Japan, he will share his perspective on the relevance of key governance changes that investors may have overlooked with all eyes on “Abenomics.” Kenichi will also explain how Japan has transformed from a “value” market to a “growth” market, and how the Matthews Japan strategy provides exposure to interesting investment opportunities across the market-cap spectrum.
The conference, aimed at leading funds selectors and investors from the US-Offshore business, will be held at the Ritz-Carlton Key Biscayne. The event-a joint venture between Open Door Media, owner of InvestmentEurope, and Fund Society- will provide an opportunity to hear the view of several managers on the current state of the industry.
Prior joining in 2008 as a research analyst, he was an investment officer for a family trust based in Monaco, researching investment opportunities primarily in Japan. From 2001 to 2004, he worked on the International Pension Fund Team at Nomura Asset Management in Tokyo.
Kenichi received a BA in Law from Keio University in Japan and an MBA from the University of California, Berkeley, and is fluent in Japanese.
You can find all the information about the Fund Selector Miami Summit 2016, aimed at leading fund selectors and investors from the US-Offshore business, through this link.
Foto: Never House. Candriam realiza tres fichajes para dirigir la distribución y el canal profesional en Reino Unido y para comunicación global
Candriam Investors Group recently announced two senior hires – Chris Davies as Head of UK Distribution, and Derek Brander as Head of UK Wholesale – as it seeks to bolster its presence in the UK. Both will be based in Candriam’s growing London City office.
The firm also announced the appointment of Marion Leblanc-Wohrer as Global Head of Corporate Communications. She will report to Candriam CEO, Naïm Abou- Jaoudé.
With 30+ years of experience at his helm, Chris Davies joins after 11 years at Fidelity. He will be responsible for driving distribution across institutional, wholesale and retail investor segments. Chris began his career at Lloyds Banking Group, where he was for seven years before moving to Prudential, and later to Fidelity.
Derek Brander brings 25 years of experience within asset management, most recently spending five years at Natixis Asset Management. Prior to his work at Natixis, Derek held senior roles at Societe Generale Asset Management, GLG Partners and AEGON.
Marion Leblanc-Wohrer’s career started in 1993, when she joined KPMG in Washington DC., shortly before moving to the World Bank in 1994. She next moved to London to Thomson Reuters and later worked as editor-in-chief of several magazines in Paris.
According to the latest BofA Merrill Lynch Fund Manager Survey, 42% of global investors are overweight on cash, taking their balances to 5.6%, their highest levels since 2001. The FMS also shows that investors have “reset” expectations for macro & markets lower and see default/recession as risk rather than reality. Actually, for the first time since July 2012, both growth and profit expectations are negative.
More than a slowdown in China, the biggest tail risk for global investors surveyed is a recession in the US, where ninety percent of fund managers expect no more than two Fed hikes in the next 12 months, up from 40 percent in December 2015.
Other key takeaways include the fact that positions in equities have fallen sharply to a net 5% from January’s 21%, while bullishness is growing on bonds. In regards to trades, the most crowded continues to be long US dollar, followed by shorting oil and shorting Emerging Markets. The most preferred region globally is Europe with 36% of managers overweight in it.
“Investors have ‘reset’ expectations for macro and markets lower and see default/recession as a risk rather than a reality,” said Michael Hartnett, chief investment strategist.
You can download the full research report in the following link.
The European Fund and Asset Management Association (EFAMA) has responded to the European Commission’s Call for Evidence on the EU regulatory framework for financial services. EFAMA welcomes the far-reaching debate launched by the European Commission with its Call For Evidence and wholly acknowledges its challenging nature. They believe “it will provide an excellent opportunity to address and resolve remaining regulatory inconsistencies and unintended consequences.”
With over 40 examples, the European asset management industry argues why existing barriers, inconsistencies and duplications that still exist in the current EU regulatory and policy framework need to be addressed. The examples are wide-ranging and include the regulatory framework built by the European institutions (European Commission, European Parliament and Council), but also regulatory and policy trends stemming from the European Supervisory Authorities.
In its response, EFAMA expresses a desire to ensure a certain degree of regulatory stability for the period to come. Much has been done in recent years in the regulatory field, setting a state-of-the art benchmark for global regulators, many of whom look at EU legislation for inspiration. However, some work remains to be done in terms of implementing and applying these new regulations.
In this regard, EFAMA calls for a realistic implementation timeframe. Too short or unrealistic implementation deadlines lead to legal uncertainty and cause serious challenges for European asset managers in the implementing phase of EU financial legislation.
Alexander Schindler, President of EFAMA, commented: “There are currently many examples of fundamental directives affecting our industry (MiFID II, UCITS V, PRIIPs) where it is extremely difficult to be prepared within the prescribed timetables”.
EFAMA equally supports the so-called “ better regulation” approach to European legislation.
Peter de Proft, Director General of EFAMA, commented: “Better regulation relies on constructive and efficient dialogue with all stakeholders, to obtain the necessary industry and technical expertise of those impacted by regulation. It also relieson the European co-legislators and the Commission to properly assess the potential consequences of a given piece of legislation”.
EFAMA also encourages further consistency and coordination within the European Commission services, between the European Commission and the European Supervisory Authorities (ESAs), but also among the latter (ESMA, EBA and EIOPA) as well as the European Systemic Risk Board (ESRB).
Foto: Tom. ESMA reanuda el proceso de reconocimiento de las entidades de compensación (o CCPs) estadounidenses
The European Securities and Markets Authority (ESMA) welcomes the common approach announced on February 10th by the European Commission and the US Commodity Futures Trading Commission (CFTC)on the equivalence of CCP regimes. This is an important step towards market participants being able to use clearing infrastructures in both the US and Europe, and for the proper functioning of the global derivatives markets.
Once the equivalence decision by the European Commission on the US regime for CFTC- supervised CCPs is adopted, ESMA will rapidly resume the recognition process of specific CFTC-supervised US CCPs that had applied to ESMA to be recognised in the EU.
While the European Market Infrastructure Regulation (EMIR) gives ESMA up to 180 working days to conclude that recognition, ESMA intends to do everything within its powers to shorten that period to the maximum extent and proceed with recognition as soon as the US applicant CCPs meet the conditions contained in those equivalence decisions.
Given the 21 June 2016 deadline for the start of the clearing obligation in the EU, ESMA understands that US CCPs will have a strong interest in becoming fully compliant with the EU equivalence conditions in order to be eligible to fulfill the EU clearing obligation requirement, which should help in shortening that period. ESMA cannot commit to any specific dates for the recognition decisions, given that such decisions mainly depend on the compliance by CCP applicants.
ESMA will also consider as a matter of priority the next steps on its consultation on the amendment to its Regulatory Technical Standard (RTS) regarding the minimum period of risk for different types of clearing accounts in EU CCPs.
