Columbia Threadneedle Investments has entered into an exclusive partnership with Rio Bravo Investimentos, the Brazilian independent money-management firm founded by former central bank head Gustavo Franco, to launch a Brazilian-domiciled fund available to Brazilian pension fund clients.
The fund, wholly managed by Rio Bravo and designed as a feeder, is fully invested inColumbia Threadneedle’s European Select strategy, a successful high alpha European equities portfolio. Due to current regulatory restrictions that prevent Brazilian corporate pension funds from holding more than 25% of total AUM of a fund, the Rio Bravo fund is launching with seed capital of BRL 34 million (approx. USD 8.5 million).
Joseph Sweigart, Senior Institutional Sales Director, Latin America Institutional Distribution at Columbia Threadneedle Investments said: “We are very pleased to partner with Rio Bravo Investimentos, a highly regarded, independent asset manager with long-standing institutional client relationships. We believe that Brazilian pension fund clients will be interested in funds that can generate both high alpha and geographic diversification. Columbia Threadneedle’s European equities team has the proven track record and quality focus to deliver long-term outperformance. Despite the low growth in European economies, the continent counts some of the world’s leading stocks, making it the perfect hunting ground for investors.”
Sweigart will be in Brazil to present at the 36th ABRAPP – Brazilian National Pension Fund – Congress on 8th October, talking about the benefits of global diversification for investors.
CC-BY-SA-2.0, FlickrFoto: Rob Brewer. ¿Final de ciclo crediticio en Estados Unidos?
On looking back at the asset management industry, the past few years have seen significant changes in the investment landscape. One that is affecting most investors is the levels of yield of their investments. In a world where, in many cases, interest rates are below inflation, finding sustainable sources of income is proving ever more challenging. Fixed income, the traditional source of income, has been hit particularly hard by easy monetary policies. Currently, less than 20% of the outstanding debt on the market exceeds a yield of 4%; an unthinkable scenario only a few years ago.
In such an environment, investors should look to have a more holistic approach to income generation, diversifying the sources of yield and reaching across non-traditional asset classes to achieve their income goals. For example, within the fixed income asset class, investors can diversify their holdings to incorporate sectors such as high yieldcorporate bonds and emerging market debt that still offer attractive yields
For those who have access to physical assets, some alternative investments carry attractive income opportunities, such as real estate or infrastructure funds due to the low correlation to the market that they offer.
However, for a successful diversified income portfolio, yield levels should not be the sole factor in defining one’s allocation. Income growth is crucial to ensure targets are reached and income growth outpaces inflation. Dividend paying companies can often play this role.
“By investing in stable companies with records of paying and growing dividends, there is a higher probability that your income portfolio can keep pace with the rising cost of living […]. In this asset class, we prefer Europe over any other developed market” highlights BlackRock.
With interest rates near record lows, investors have been looking for opportunities in these new areas. But navigating through the current environment has become more challenging. In order to make informed decisions about income-oriented strategies, it proves import to understand the key characteristics and risks of these different asset classes.
Many investors reaching for higher yields have increased the risk profile of their portfolios and are often unaware that they are doing so. This is where diversification can play a crucial role in ensuring that a portfolio is not over-exposed to a particular type of risk. It is also important to be aware of new risks that need to be considered such as issuer risk for credit exposures, foreign exchange, liquidity risk and equity volatility.
According to BlackRock “Striking a balance between what investment outcome needs to be achieved and the acceptable risk level to achieve it, is arguably the single most important principle in building an income portfolio.”
This material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds have not been registered with the securities regulator in any Latin American country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein.
Standard Life Investments has designed a new tool to help institutional investors manage risk and inform their decisions when investing in global real estate.
The Global Real Estate Implementation Risk tool (GREIR) can help investors find the right markets for their level of risk appetite and understand the expected returns in their global real estate portfolios. It provides an easy method for investors to assess and compare the individual risk ratings of 60 different countries.
GREIR produces a risk score for each country that can be converted into a risk adjustment factor, to achieve a more accurate comparison of the ‘at risk’ portion of expected returns from a global real estate portfolio.
The GREIR tool aggregates three categories of global surveys, representing more than 300 data points, to evaluate and assess economic, political and real estate specific risks.
Indices from all three categories are weighted to produce a risk score of between 1 and 10 for each of the 60 countries included in the rankings. The country with the lowest score is the least risky for real estate investment. The seven components of the score are market size, ease of doing business, competitiveness, innovation, public sector corruption, creditdefault swap spreads, and transparency. The rankings will be updated on a quarterly basis.
Anne Breen, Standard Life Investments, Head of Real Estate Research and Strategy, said: “The level of risk in real estate investment varies enormously from country to country, and the historic measures used for these can mean investors miss changes in risk.
“Cross border investment requires a three dimensional assessment of how the mix of risks affects expected returns. The aim of the GREIR tool is to address the need for a robust framework on which to base decisions about global and regional real estate investment strategies. It provides a more coherent measurement of the domestic risks involved, and helps investors find the right markets for their level of risk appetite.”
Over time the GREIR tool will be expanded to include leading cities within each of the countries listed.
Modest expected returns across a variety of asset classes, sub-par growth and a compressed outlook environment has left investors a challenge of how to maintain income when so many traditional sources of income are drying up.
The fact is that we are undergoing a drought of returns in the traditional “income” products. In order to discuss these, as well as other issues, Pioneer Investments will hold an exclusive due diligence meeting entitled “Embrace New Sources of Return” at the JW Marriott Marquis, Miami, on the 8th of October.
The event will provide attendees with the opportunity to listen to the outlook from several members of the investment team at Pioneer Investments, who will explore beyond the traditional asset classes, conventional asset allocation and risk management, identifying new and attractive solutions for investors who are looking for more flexibility, more sophistication and more active management.
According to the investment team at Pioneer Investments, trends which are changing the market revolve around three very important issues: ageing demographic, public debt and increased regulation.
All of these factors could jeopardize investors’ retirement and savings plans.“There is a need to consider a different way of investing that targets new sources of return, downside mitigation, and volatility management,” highlights the asset management firm.
In 1980, there were 9.8 workers at a global level for every retired person – by 2050, it is expected to drop to four workers per pensioner; and this, along with public deficits, means that in 10 to 20 years, public pension systems will encounter serious difficulties to meet the needs of its citizens.
In the past, such a scenario has led investors to run more risk yet the increase in regulation has made it harder for long-term investors to make riskier choices; and that is why the investment team at Pioneer Investments recommends the use of tools which achieve lower correlation with traditional asset classes. According to the company’s experts, this will help to maintain volatility under control and achieve higher levels of wealth accumulation over time.
To access these alternative sources of return, the industry is recording significant inflows into two types of assets: multi-asset strategies, and liquid alternative strategies.
Liquid alternative mutual funds aim to provide diversification, improve risk-adjusted returns, and may act as shock absorbers during times of market stress. They offer additional flexibility to long-only allocations as managers seek to realise opportunities from non-traditional strategies. Such flexibility allows liquid alternative strategies to seek to capture alternative sources of return while remaining relatively uncorrelated with the global equity and bond markets.
Multi-asset investments can provide different potential sources of return and a more diverse means of allocating risk than through a simple global macro strategy.
According to Pioneer, investors are increasingly inclined to invest in terms of risk-return objectives.“We believe that investors are thinking more about the risk they are willing to run and are increasingly willing to sacrifice some upside in return for better downside protection,” company sources added. Moreover, investors are adding the reliability and stability of the portfolio’s income sources to that equation , a factor that adds to the already known risk-return binomial, and the portfolio’s time horizon.
Amongst other Pioneer Investments Portfolio Managers and Market Specialists who will be attending the “Embrace New Sources of Return” event in Miami this Thursday October 8thAdam MacNulty, will be speaking about Pioneer Funds – Global Multi-Asset Target Income, and about liquid alt strategies as well, such as Pioneer Funds – Absolute Return Multi-Strategy, and Pioneer Funds – Absolute Return Multi-Strategy Growth. Thomas Swaney will also speak on Alternative Solutions – specifically, Pioneer Funds – Long / Short Opportunistic Credit.
“If you can free up some of your assets to work harder for you, if you can accurately measure your risk tolerance and if you have trust in your asset manager to be more active in your investments, then it is our opinion that you really could have the potential to generate greater returns in this environment,” concludes the firm.
The Luxembourg Stock Exchange in cooperation with the Association of the Luxembourg Fund Industry (ALFI) has announced the publication of a compendium of Luxembourg laws and regulations on investment funds. The compendium is currently published in English, French and German and made up of two separate publications in each language.
The first publication covers undertakings for collective investment in transferable securities (UCITS) established under Luxembourg law and contains the amended Law of 17 December 2010 on undertakings for collective investment as well as the main regulatory texts relating thereto.
The second publication covers alternative investment funds (AIFs) established under Luxembourg law and other investment vehicles which are neither UCITS nor AIFs. It contains the amended Law of 12 July 2013 on alternative investment fund managers (AIFM), the amended Law of 17 December 2010 on undertakings for collective investment, the amended Law of 13 February 2007 on specialized investment funds, the amended Law of 15 June 2004 on the investment company in risk capital as well as the main regulatory texts relating thereto.
Denise Voss, Chairman of ALFI, comments:“The publication of such a reference booklet was long overdue. The number of laws, regulations and circulars impacting investment funds is steadily increasing. Fund professionals now have access to a single source book for each particular type of fund, containing all main legal texts and accompanying circulars. I am convinced that these publications will prove extremely useful to the international investment fund community”.
Robert Scharfe, Chief Executive Officer of the Luxembourg Stock Exchange, adds:“Investment funds are the second largest segment on the Luxembourg Stock Exchange, with more than 6,500 listings. As an international exchange serving a global base, these two publications respond to a clear need from the fund industry and provide an essential reference”.
These two publications of the main legal and regulatory texts were produced by the two Luxembourg law firms, Arendt & Medernach and Elvinger, Hoss & Prussen, who have actively cooperated to select and compile the legal and regulatory texts that are relevant for the different types of investment vehicles concerned. These two law firms have also prepared the English and German translations.
Of all challenges facing asset managers -compliance, competition, volatile markets- Cerulli Associatesbelieves that effective communication is the toughest. Managers are keen to restore trust and confidence in an industry tainted by the 2008 financial crisis by targeting a variety of audiences with thought leadership initiatives -sharing knowledge, developing sustained rapport- via multiple channels, finds a new report from the firm entitled European Sales and Markeging Organizations 2015.
Managers said hat they want to offer fresh perspectives and solutions to help the wider audience -some of it new to investments- which they hope will give them an edge as competition and regulatory pressures intensify.
A total of 94% of European asset managers said that they use thought leadership initiatives to target institutional investors. And almost two-thirds of managers use thought leadership strategies to develop a rapport with consultants, while 55.6% use such initiatives to target private banks and wealth managers. And about a third of managers surveyed are focusing on platforms. A further 22.2% of managers are targeting independent financial advisors.
But thought leadership is not about the hard sell, say managers. They want their content to be informative and educational and a softer, more discerning part of the marketing machine.
“The written word alone is not enough and the variety of message is much wider, quirkier, and colorful. It is also sophisticated and fast moving: videos and podcasts are used as a matter of course,” says Barbara Wall, European research director at Cerulli. “Training for thought leaders has also evolved as fund managers go to greater lengths to develop talent, either through third-party experts or by developing internal know-how,” she adds.
Financial marketers spend between 10% and 20% of their total budget on their content marketing in the United Kingdom alone. And Cerulli’s interviewees have also allocated logistics and time to establishing internal systems while also involving third-party expertise, such as professional copywriters and respected academics. And in return for this commitment, fund managers want effective two-way communication.
“Feedback -any reaction, in fact- is meaningful because it shows that the message that caused it was incisive and engaging enough to warrant a response,”says Angelos Gousios, senior analyst at Cerulli. “This shows that the industry is growing more open and democratic, moving away from the one-sided information mode that has characterized it for so long,” he adds.
Meanwhile, managers are developing ways to measure the success of thought leadership initiatives, including external speaking requests and press coverage. A total of 80% of managers surveyed by Cerulli measure the impact of thought leadership campaigns by counting the hits on their digital and social media sites.
Investec gathers 250 investors from 23 countries in London for its 2015 Global Insights Event. Investec AM Global Insights 2015: Investors Must not Turn Their Back on Emerging Markets
At the Investec Global Insight Conference 2015 being held in London last month, Henrik du Toit, CEO of Investec Asset Management, outlined the company’s vision for the environment in which we currently operate by stating that investors must stop being locally biased to become true global investors.
The South African firm’s assets are a good example of this approach. With offices in Cape Town, London, Hong Kong, and Singapore, and US$120bn in assets under management, they are the only asset management company originating in an emerging country, which plays in the big fund managers’ league. Moreover, its assets under management are equally divided between developed and emerging markets.
Richard Garland, Managing Director for the Global Advisory business at Investec AM, pointed out that the firm has seven investment teams with unique investment philosophies, offering a varied range of products, with a dynamic and business oriented corporate culture which is fully aligned with the needs of their clients.
Proof of this is that 15% of the company is held by the company’s key employees, including all senior professionals involved in the investment process. In addition, portfolio managers invest a significant amount in the funds they manage, to ensure that their goals are fully aligned with the other investors in the fund.
Garland acted as Master of Ceremonies on the conference; Du Toit, the company’s CEO, gave a broad overview on key points of the business, to make way for the speech by James Hand, co-director of the 4Factor Equity team, and a presentation by Michael Power, strategist for the firm, on the “Collision of Two Worlds,” developed and emerging, and its impact on investment portfolios.
Undisputed Protagonists: Emerging markets
Du Toit claimed that, with the arrival of new economies into the global arena, we have embarked on a journey in which the world is changing. He stated that one cannot be left out of the process of wealth creation that is occurring in emerging markets, and that although right now their role is under question, their protagonism is indisputable in the long term. For the company’s CEO, the best advice is to invest with a global focus rather than a country-by-country one.
Power, strategist for the firm, said that deflation is the main issue that any investment portfolio has to deal with. Overheating in the developed world is being offset by the deflationary influence from the emerging markets, which are able to produce at much lower costs due to their specialization and the low cost of labor. Thus, according to Power, the price deflation process suffered by Japan since the nineties is now also affecting the United States, and Europe even more so, as they are also facing a serious demographic problem, “Europe needs more babies,” he said. In fact, Asia is taking the jobs of the Western world, and the institutions in developed countries have reacted by cutting rates, encouraging credit, and increasing spending.
In this environment, Power urges investors not to turn their backs on the economies that are generating wealth. If Korea and Taiwan stole the limelight from Japan in the nineties, creating its problem of deflation, this century China has taken over, and now “we can even envision that ASEAN countries could be replacing China in this process” Power says. In short, and in the words of this strategist, “the white man has lost his job in favor of an Asian woman,” a difficult reality to digest.
What to do in this environment? Power recommended to those investors and advisers present, to prepare portfolios for capital preservation in a deflationary environment, which is going to continue. “The type of high-quality companies in which the Investec Global Franchise strategy invests are a good choice; also invest in bonds and cash, making sure it is in the appropriate currency; equities and Asian fixed income are also interesting, as well as certain private sectors in the United States, such as pharmaceuticals.”
Asian Equities and Value Stocks are Cheap
Several 4Factor Investec investment team members, as well as portfolio managers for the Asian Equities and Fixed Income teams, gave their views on various sectors and investment styles in two panels. One of these concentrated on developed markets and the other one on China. One of the conclusions in relation to developed markets is that even though there is a somewhat more attractive valuation in value stocks, perhaps it is too soon to embark into overweighting this asset class. However, the quality factor, although in higher ratios, is offering opportunities in companies with high generation of free cash flows which justify their prices. “Those stocks with free cash flow yields higher than 5.5% which grow by around 8% annually, mark the path to success,” Clyde Rossouw, co-director of the Quality Factor, pointed out.
James Hand, co-director of the 4Factor Equity team, analyzed the situation by markets, styles, and sectors, concluding that looking at the valuations, the picture shows that emerging markets, Asia, and value stocks are cheap, while by sector, valuations are low in cyclicals versus defensives, “but at the moment, you have to be willing to buy in these markets, which are cheaper, without any evidence that the fundamentals are improving, so unfortunately there is no clear answer” .
The event counted with a stellar presentation by Francois Pienaar, former captain of South Africa’s national rugby team in 1995, year when the team won the World Cup. Pienaar, played by Matt Dillon in Invictus, the film production directed by Clint Eastwood, shared with the audience his sporting and human experience when leading his team to victory at a time when the country was taking its first steps towards democracy. “My main criticism of the film is that in it, I had a disproportionate leading role, the victory in the Rugby World Cup was the work of the whole team,” Pienaar assured. He also shared the inspiration which the team always received from Nelson Mandela, who clearly understood from the onset the power which sport has to unite a people who at that time were divided. “From him, I obtained the motivation to make the world a better place, starting from your own home, your street, your neighborhood, your circle of friends, your city, and your country,” he concluded.
Mixed asset mutual funds drove the bulk of long-term net inflows from European investors through July 31, 2015, according to new data released in two reports from Broadridge Financial Solutions, Inc.
The European Fund Market Mid-Year Review and July 2015 FundFlash Monthly Snapshot reports both detail continued momentum in mixed asset products – those that invest in equities, bonds, cash and other funds – and strengthening equity investments following June’s market correction. The reports include commentary and insight based upon a new partnership between Broadridge and MackayWilliams LLP, a leading mutual fund market analysis and research company firm for the domestic pan-European and cross-border fund markets.
Additional findings from Broadridge’s reports include:
Investors pumped EUR 55 billion into European investment funds including EUR 31 billion into long term funds in July
Mixed asset products accounted for 55% (EUR 124 billion) of total inflows in the first half and 23% (EUR 7 billion) in July
The top three markets by estimate net sales in July were Italy, Germany, and the United Kingdom
The top fund firms by sales in July were BlackRock, DeAWM, GAM Holding, Intesa and Vanguard
“It’s been a challenging year for asset managers in Europe with some periods of intense market volatility and increasing competition coming from the banks,” said Diana Mackay, chief executive officer of MackayWilliams, “But low interest rates continue to drive flows into retail funds and mixed asset funds, in particular, are having a blockbuster year.”
“Our new partnership with MackayWilliams follows our recent acquisition of the Fiduciary Services and Competitive Intelligence unit from Thomson Reuters’ Lipper division,” said Frank Polefrone, senior vice president of Broadridge’s data and analytics business. “Together, these investments demonstrate our ongoing commitment to providing our clients with innovative data, analytics and insights to enhance their sales efforts.”
New research from global analytics firm Cerulli Associates finds that institutional sales teams are adding personnel to their sales and service teams in the United States.
“We surveyed institutional sales managers about the types of changes they are making to their sales and service teams, and found, regardless of firm size, the majority of asset managers are focused on adding headcount,” states Alexi Maravel, associate director at Cerulli. “They plan to add headcount to nearly all groups, except relationship management, where headcount will remain the same.”
“Some institutional asset managers deliberately increase its client service and portfolio specialist headcount, because after the business is won, these relationships are immediately taken over by client service personnel,” Maravel explains.
“Institutional sales and service teams are typically structured to support portfolio management so that the firm’s investment personnel spend minimal time traveling and can focus on managing assets.”
“Managers that we spoke with also expressed interest in hiring junior associates for their sales, consultant relations, and client service teams,” Maravel continues. “Individuals in these roles are tasked with the more operational aspects of sales and service departments, such as intelligence and data-gathering, finding opportunities in territories, and assisting with creating slide decks that will be presented to clients and prospects.”
Foto: toastyken, Flickr, Creative Commons. Los family offices se vuelven globales
Morgan Stanley Investment Management has announced that MS INVF Global Brands has re-opened for subscriptions after capacity became available in the strategy.
The investment thesis behind Global Brands has remained the same since its inception, providing a concentrated portfolio of high quality companies with the aim of compounding investors’ wealth over the long term, whilst striving to preserve capital in down markets.
“We have long taken a conservative approach to capacity management and will continue to do so to protect investment returns,” said Managing Director and Head of the International Equity team, William Lock, which manages MSIM’s Global Brands and Global Quality funds.
Bruno Paulson, Managing Director and Senior Portfolio Manager, continued “The fund is benchmark agnostic and our goal is to grow clients’ capital and not lose it. The economic robustness of quality companies helps to deliver returns when they are needed most – during challenging market conditions.”
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in more than 43 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals.
