Model Providers Look to Stand Out in a Sea of Sameness

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In an increasingly overcrowded market, model providers are vying for shelf space. To succeed, providers will need to consider how their products are differentiated to fit into platform product lineups and whether they can deliver solutions at scale, according to The Cerulli Report—U.S. Asset Allocation Model Portfolios 2023.

81% of model providers indicate the most important criteria for selecting platforms and model marketplaces through which to distribute models are the placement and visibility for their strategies on the platform.

Given that overcrowding is a major issue, strategy placement and visibility are key factors in the success of a model on a platform. However, limited shelf space is overwhelmingly the most substantial barrier to placing models on distribution platforms, according to 48% of model providers.

“Models can be viewed as highly commoditized, particularly in target-risk/target-allocation products,” says Matt Apkarian, associate director. “In general, home offices do not like hosting substantially similar products on platforms and take only as many products on the platform as they can find gaps in the lineup needed to meet the portfolio objectives of their clients.

This creates extreme competition between model suites and a need for differentiation to achieve placement,” he adds.

At the same time, model providers selecting platforms must consider whether have they have the resources to deliver solutions at scale. Ongoing management of models on platforms can be an onerous process for model providers, as processes for model updates across platforms lack uniformity and create operational overhead for providers. For instance, the task of updating tickers and weights for each model is one of the top pain points listed by several model providers that discussed difficulties in working with various platforms.

Cerulli recommends model providers think strategically about the platforms they are considering and whether their solutions are aligned with the needs of advisors. “Even with proper placement, models do not sell themselves, so distribution efforts are essential to grow model assets under management,” says Apkarian. “Model providers should prioritize platforms preferred by advisors as a top priority for product placement.”

IFC & T. Rowe Price to Create First Blue Bond Strategy to Support the Sustainable Blue Economy across Emerging Markets

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IFC, a member of the World Bank Group, and T. Rowe  Price announced plans to create a pioneering global blue bond strategy to increase access  to finance for blue projects in emerging markets and help improve market standards for the  nascent blue bond market. 

The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy (T. Rowe  Price Blue) is expected to mobilize international capital from eligible investors to support blue labeled investments in emerging markets globally through blue bonds issued by financial  institutions and real sector companies.  

“The investor capital deployed into blue bonds through T. Rowe Price Blue will make a vital  contribution to furthering a blue economy,” said Makhtar Diop, IFC Managing Director. “This  first-of-its-kind strategy with a dedicated vehicle for blue investment will also be critical in  promoting sustainable capital markets in emerging markets and developing economies.”  

Blue investments seek to provide competitive returns while supporting the health, productivity,  and resilience of the world’s oceans and water resources, which are vital for sustainable global  development, especially in the face of climate change, overfishing, and pollution. Momentum is  growing for blue finance, with interest from both investors and issuers in blue bonds and loans  that fund ocean-friendly projects and safeguard clean water resources.  

“We are proud to partner with IFC to further the blue economy,” said Rob Sharps, CEO and  president of T. Rowe Price. “We’re gratified that our emerging markets investment experience  can be leveraged in such a meaningful, innovative, and important way, providing opportunities for 

positive investment returns while supporting sustainable capital markets and preserving valuable  water resources for generations to come.” 

The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy will draw on  IFC’s leadership in the blue bond market. Since 2020, IFC has invested and mobilized more  than US$1.4 billion through 12 blue bonds and loans issued by private sector financial  institutions and real sector corporates across emerging markets and developing economies.  

To bolster the supply of blue bonds issued by real sector borrowers, T. Rowe Price Emerging  Markets Blue Economy Bond investment activities will be complemented by a Technical  Assistance Facility, or TAF, managed by IFC, designed to increase the quality and quantity of  blue bond issuance in emerging markets. 

By partnering on this innovative strategy, T. Rowe Price and IFC are sending a clear message  to the market on the importance of mobilizing capital needed to make meaningful progress  towards achieving the Sustainable Development Goals. Specifically, UN SDG 6 “ensure  availability and sustainable management of water and sanitation” and SDG 14 “conserve and  sustainably use the oceans, seas and marine resources”.  

To ensure that the mobilized resources achieve the desired impact objectives, IFC and T. Rowe  Price have jointly developed Blue Impact Investment Guidelines that will be implemented  specifically for this strategy. These guidelines are aligned with IFC’s Guidelines for Blue Finance  which were published in January 2022 to guide IFC’s own investments in support of a  Sustainable Blue Economy. 

Fidelity International Announces Anne Richards to Transition to Vice Chair in 2024

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Photo courtesyAnne Richards

Fidelity International has announced that Anne Richards, who has been CEO of Fidelity International for the past five years, will be stepping down from her full-time executive position. However, she will remain involved with the company in the capacity of Vice President.

In her new role as Vice Chair, Richards will focus on nurturing key external relationships and strategic partnerships, leveraging her extensive experience and insights. The transition will be managed over the coming months under the guidance of the Fidelity International Board. The organization is yet to announce details regarding her successor as CEO.

Reflecting on Anne’s tenure as CEO, Abby Johnson, Chair of Fidelity International, highlighted her significant contributions. “Anne has been instrumental in driving our organization forward, particularly in expanding our capabilities and services across various markets. Her leadership in sustainability has set a solid foundation for our future endeavors,” said Johnson. She also credited Anne for her efforts in fostering a diverse and inclusive workplace, introducing enhanced parental and carers leave policies, and advocating for dynamic working environments.

Fidelity International stands as a testament to long-term, purpose-driven investment strategies. Serving over 2.9 million customers worldwide, the organization manages $714.3 billion in total assets. With operations in more than 25 locations, its client base ranges from central banks and sovereign wealth funds to private individuals. Fidelity’s dedication to investment solutions and retirement expertise is evident in its comprehensive approach, including investment choices, administration services, and pension guidance.

The organization emphasizes that it offers information on products and services but does not provide investment advice tailored to individual circumstances, except under specific conditions by an authorized firm. Fidelity International operates as a collective of companies outside North America, focusing on delivering quality investment management services globally.

As Anne Richards prepares to transition to her new role, Fidelity International continues its commitment to building better financial futures for its clients, employees, and communities worldwide. The organization upholds its legacy of thinking generationally and investing for the long term, evident in its approach to asset management and solutions for workplace and personal investing.

Will Crypto Spring Ever Come?

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While cryptocurrency used to make headlines for its radical performance, these days it’s often in the news because of lost fortunes, exchange bankruptcies and business fraud, said a Morgan Stanley report.

As investors monitor the crypto market, now is a good time to search for insights from past cryptocurrency trading cycles to understand what may lie ahead, the wirehouse added.

How “Halving” Affects Crypto Supply

Bitcoin is the leading cryptocurrency, accounting for about 50% of total digital assets by market capitalization, and, in many ways, acts as a proxy for the overall crypto market. One unique aspect of bitcoin is that it is designed to go through a process called “halving” that creates scarcity, so that bitcoins can maintain their value. Specifically, every four years, the number of bitcoins created every 10 minutes is cut in half. Eventually, when there are 21 million bitcoins in existence, no more bitcoins will be mined.

By intentionally limiting the supply of new bitcoin, the shortage caused by the halving can affect the price of bitcoin to potentially spur a bull run. There have been three such runs on bitcoin since its inception in 2011, each lasting 12 to 18 months after the halving.

The four-year cryptocurrency cycle roughly corresponds to the four seasons of the year:

Summer: Historically, most of bitcoin’s gains come directly after the halving. This bull-run period starts with the halving event and ends once the price of bitcoin hits its prior peak.

Fall: Once the price surpasses the old high, it tends to attract interest from the media, new investors and businesses, which can then drive prices even higher. This period represents the time between when bitcoin passes the old high and reaches a new one, which signals that the bull market has run its course.

Winter: In previous cycles, the bear-market decline has come when investors decided to lock in their gains and sell bitcoin, causing prices to drop while scaring off new investment. This period takes place between the new peak and the next trough. There have been three winters since 2011, lasting about 13 months each.

Spring: During this period preceding each halving, the price of bitcoin generally recovers from the cycle’s low point, but investor interest tends to be weak.

Is Crypto Spring Here?

Just as a farmer avoids planting seedlings in the winter or too late in the spring, crypto investors want to know when crypto spring has arrived to maximize their investment “growing season.” Here’s what to consider when trying to determine whether crypto spring is truly here, or if the market is still in the midst of crypto winter:

Time since the last peak: The trough of bitcoin in previous crypto winters has historically occurred 12 to 14 months after the peak.

Magnitude of bitcoin drawdown: Previous troughs were about 83% off their respective highs.

Miner capitulation: When bitcoin has neared the trough of past cycles, many bitcoin miners shut down their operations because they were losing money. When a miner shuts down, it makes it a little easier for the remaining miners. A statistic called “bitcoin difficulty” measures how easy or hard it is to mine bitcoin. When difficulty decreases, it is a sign the trough may be near.

Bitcoin price-to-thermocap multiple: “Thermocap” measures how much money has been invested in bitcoin since its inception. A lower bitcoin price-to-thermocap multiple indicates a trough, while a higher multiple indicates a peak.

Exchange problems: When the price of crypto drops, it tends to impact the viability of some crypto exchanges. Bankruptcies, bad news or new regulations may all indicate a trough.

Price action: A 50% increase in price from bitcoin’s low is typically a good sign that the trough has been achieved, although there have been examples of such a gain being followed by significant declines.

Estimates of when exactly the next halving will occur vary, but history indicates it has the potential to occur sometime around April 2024.1 Based on current data,1 signs indicate that crypto winter may be in the past and that crypto spring is likely on the horizon. However, keep in mind that there have only been three crypto springs to date. In other words, there is still a lot to learn.

One key thing to keep in mind: As with any investment, past performance doesn’t indicate future results. Potential risks such as encryption breaking, software bugs, recession or coordinated government action could emerge before the expected halving and disrupt the cycle.

While no one can tell you if now is the right time to buy or sell cryptocurrency, today is the right time to learn more about the crypto market’s cyclical tendencies so that you can ask questions, monitor trends and determine for yourself if the cycle will repeat a fourth time and whether to invest.

To read the full article click on the following link.

Lunate and BNY Mellon to Invest in New Wealth Technology Company

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Lunate, a global alternative investment management company with more than $50 billion of assets under management, and BNY Mellon are investing in a new company, Alpheya, that will develop a customized wealth management technology platform for wealth and asset managers in the Middle East and North Africa (MENA).

Based in the Abu Dhabi Global Market (ADGM), Alpheya will be funded with a capital commitment of $300 million and is expected to start serving clients in 2024. BNY Mellon has a minority share in the company, says a statement released by BNY Mellon.

The new financial technology company will meet the growing demand in the Middle East from wealth and asset managers, private banks, and investment houses, for an end-to-end digital solution that delivers a range of services, including client onboarding, financial planning, portfolio construction, trading and rebalancing, risk management reporting, and analytics. Utilizing the latest security and data architecture, the platform will be designed to meet the data privacy and localization requirements for each market in the region, the firm adds.

“We look forward to leveraging our local industry and investment expertise with BNY Mellon’s long history in wealth technology solutions to help wealth managers in the Middle East meet the evolving needs of their clients,” said Seif Fikry, Managing Partner, Lunate. “Not only will this new platform transform wealth capabilities for financial institutions across MENA, it will also strengthen Abu Dhabi’s role as a global hub for wealth and asset management.”

Built on open and modular architecture, the platform will provide the digital tools and solutions for clients to meet the growing challenges of managing complex technology and numerous investment vehicles, so they can focus on engaging with their clients and expanding their business.

“BNY Mellon is one of the largest wealth management technology providers, and the new company will leverage our deep expertise in providing wealth managers and investors digital tools and solutions for enhancing portfolio management, seamlessly connecting to local and global providers, and harnessing world-leading data management capabilities,” said Akash Shah, Chief Growth Officer, BNY Mellon. “We are proud to invest in an organization which recognizes the need for a locally-developed wealth technology solution, and to support the burgeoning wealth management industry in the region.”

“Wealth franchises today are managing complex technology environments and a multitude of investment options, that are all supported by more data and analytics and increasingly sophisticated risk management practices,” said Roger Rouhana, CEO of Alpheya. “The creation of a wealth technology solution that provides digital tools and software solutions in one integrated platform and is customized for the Middle East, will greatly enhance the ability of regional wealth managers to grow in a scalable and client-centric way.”

HANetf Partners with Tidal Financial Group to Offer Clients US and European ETF White Label Services

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HANetf, Europe’s independent white-label UCITS ETF and ETC platform, and leading provider of digital asset ETPs, is delighted to announce its partnership with Tidal Financial Group, US-based leading ETF investment and technology platform, to offer ETF white label services to one another’s clients, announce the firm. 

Under the agreement, HANetf will extend its suite of services to include Tidal’s extensive client base, allowing them to access the diverse world of UCITS ETFs, ETNs, and ETCs. 

Tidal will, in turn, provide HANetf’s clients and network the opportunity to venture into the U.S. market with 40 Act and 33 Act ETFs, setting the stage for a seamless and integrated approach to both markets.

Through this partnership, both companies will be able to offer their clients flexible options to enter both or either of the European and US markets irrespective of their global footprints. This essentially bridges the gap between the European and US ETP markets for Global asset managers looking to launch funds.

This dual approach can help to safeguard asset managers’ intellectual property by launching their IP in both wrappers and markets. It also facilitates access to a broader audience of global investors who may have specific preferences, such as tax considerations and time zones.

The US and European ETF markets are the two largest ETF markets globally, and the collaboration between HANetf and Tidal will enable their clients to tap into both markets without compromise. Both wrappers are also popular in other geographies including Latin America and Asia. Arguably, if asset managers want to deliver their investment strategies to a global audience they will be able to achieve this through issuing UCITS and 40 Act ETFs.

HANetf can launch ETFs quickly, and cost-efficiently, via its company-owned Irish ManCo and ICAV platforms. It also supports SICAV depending on asset manager choice. Beyond ETFs, HANetf can also offer clients the ability to launch ETCs via its ETC platform, and other ETPs on its multi-asset platform. Since its first launch in 2018, HANetf has launched over 45 products and accrued over $2.6 billion assets under management (AUM). 

Tidal owns and operates its own trusts, providing a robust platform for asset managers to enter the ETF market, and has partnered with over 54 ETF issuers with more than 118 leading ETFs on the market. It currently has over $9.5 billion in AUM.

Both HANetf and Tidal offer full fund management, regulatory, trade execution and operations services. In addition to infrastructure, both firms are equipped with comprehensive marketing and distribution capabilities, which are often regarded as the most challenging aspects of achieving success in the ETF market.

Hector McNeil, Co-Founder and Co-CEO of HANetf comments: “We are very proud to announce our agreement to work with Tidal in order to offer US ETF white label capability to our clients. Since launching HANetf five years ago, we have had multiple requests from global clients to be able to offer both UCITS and US ETF capability. Working with Tidal matches up the leading US white label provider and Europe’s first and leading white label provider. Clients will be able to either supplement their UCITS ETF offering with 40 Act ETFs or if they haven’t entered the ETF market will be able to offer both wrappers to allow simultaneous launch in both of the World’s leading ETF markets in one fell swoop.”

Mike Venuto, Co-Founder and CIO of Tidal Financial Group comments: “We are excited to expand our relationship with HANetf.  Over the past few years, we have participated in the growth of European ETFs as a sub-advisor to HAN clients.  With this partnership, we are now able to connect our US based customers with our counterparts in Europe. Recently, ETF Express recognized Tidal as the Best US White Label Platform due to our full service offering.  Through this partnership, our clients will be able to repurpose the innovations, ideas and content we produce with them here to also access the European UCITS ETF market.”

ZEDRA to Acquire Fiduciary Services Business From AlTi Tiedemann Global

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ZEDRA, a global specialist in Active Wealth, Corporate & Global Expansion, Fund Solutions and Pensions & Incentives, announces its plan to acquire LJ Fiduciary and Alvarium Private Office (“APO”), with offices in the Isle of Man, Geneva and the UK.

LJ Fiduciary and APO will be rebranded and merged into the existing ZEDRA Group.

LJ Fiduciary’s and APO’s service offering includes global private client and corporate administration services. This latest acquisition will enhance ZEDRA’s strategy in the Active Wealth and corporate services space, reinforcing the ambition to be recognised as an international leader in Active Wealth, Corporate & Global Expansion, Funds Services and Pensions & Incentives.

ZEDRA will welcome 59 employees who have been providing trust, corporate, marine and aviation, and family office administration services through its offices in the Isle of Man, Geneva and London.

This brings ZEDRA’s headcount to over 1,000 experts across 16 countries spanning Asia, Oceania, the Americas and Europe. Both organizations share the same core values of close client relationship management, assisting them with their personal interests, family requirements and business interests.

Their combined capabilities provide clients with access to a more diverse service offering, adding value and deepening client relationships.

Ivo Hemelraad, CEO at ZEDRA, commented: “We are delighted to welcome the team from LJ Fiduciary and APO. The combined extensive experience and knowledge will be a great asset as we look to further grow our footprint and our capabilities.”

The transaction is subject to regulatory approval.

Former Merrill Lynch Vice President Joins Snowden Lane Partners

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Snowden Lane Partners, an independent, advisor-owned, wealth advisory firm dedicated to providing client-focused advice in a values-driven culture, announced that former Merrill Lynch Vice President William H. “Trey” Jones III has joined the firm as a Partner and Managing Director, and will form The Jones Group with $230 million in total client assets.

With Jones joining, Snowden Lane has now recruited seven advisors representing over $1 billion in client assets in 2023.

“We’re consistently looking for quality advisors that align with Snowden Lane’s values and mission to deliver the highest quality advice, and we’re thrilled to welcome Trey to the firm, as he fits that mold perfectly,” said Greg Franks, Managing Partner, President & COO of Snowden Lane Partners. “More broadly, I’m extremely proud of the progress our firm has made over the past year amid a competitive recruiting environment and am looking forward to carrying that momentum forward in 2024.”

Added Jones: “Since the beginning of my career, I’ve always sought to meet each of my clients where they are in their financial journeys and deliver bespoke solutions that meet their individual needs. As I examined options for the next phase of my career, Snowden Lane stood out as a destination where I’d be empowered to carry those same values forward. I’m excited to be joining the firm and am looking forward to continuing to provide my clients with creative solutions.”

Prior to joining Snowden Lane, Jones spent 10 years at Merrill Lynch, most recently serving as a vice president and wealth management advisor. Jones joined the firm in 2013 in an operations role before successfully completing Merrill Lynch’s Financial Advisor program in 2017 and earning his CFP® and CRPC™ designations. He graduated from Coastal Carolina University with a B.A. in Business Administration.

Jones specializes in personalized financial planning, with a particular focus on retirement, Social Security, tax efficiency, and wealth management strategies that help address clients’ growth and income goals. Additionally, Jones supports small businesses with financial strategies and advice. He deploys a comprehensive approach to wealth management, delivering a breadth of investment, planning, insurance, retirement, and banking solutions on his clients’ behalf.

Since its founding in 2011, Snowden Lane has built a national brand, attracting top industry talent from Morgan Stanley, Merrill Lynch, UBS, JP Morgan, Raymond James, Wells Fargo, and Fieldpoint Private, among others, the firm says.

Just 19% of Investors Use Their Parents’ Advisor

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Just one in five affluent investors use the same advisor as their parents, according to the latest Cerulli Edge—U.S. Retail Investor Edition.

Advisors must reinforce the value of their services to clients both early in the relationship and in times of unique difficulty to strengthen and retain relationships for the long term.

Maintaining a relationship across generational divides is a ‘win-win’ for both investors and the advisory firm itself—young investors receive the benefits of an advisor who already is familiar with the family’s financial situation, and the advisor has a chance to preserve the account for the next generation.

Despite the benefits, Cerulli’s research shows more than 90% of affluent investors who use their own advisor did not consider their parents’ advisor in their selection process, and just 6% gave their parents’ advisor even the slightest consideration. The increasingly mobile nature of the younger demographic means they are more likely to switch advisors, unless the firm itself really gets to know them and their financial needs.

“While they may begin as a sort of ‘marriage of convenience,’ advisors can create long-lasting relationships with their clients’ children,” says research analyst John McKenna. “Advisors whose clients have financially interested children should work with them—either helping them with their own financial plans or directing someone else within the firm whose life experiences align with these clients to join the advising team,” he adds.

For parents, having family-level conversations can smooth out potential future trouble spots in terms of inheritance or financial support, should misfortune befall either generation.

“More than ever, involvement in financial discussions for wealth planning is becoming a ‘need to have’ rather than a ‘nice to have,’ and with an increasingly affluent Millennial demographic, advisors cannot afford to squander such business-expanding opportunities,” concludes McKenna.

Schroders Capital Reaches $1.5bn Private Equity Secondaries

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Schroders Capital has now successfully raised over $1.5 billion for private equity secondaries from its various vehicles over the past three years, showcasing the firm’s ability to raise capital across the platform and meet clients’ investment needs.

This follows a $410 million successful final close of Schroders Capital Private Equity Secondaries IV which underscores Schroders Capital’s strong track record and the confidence clients have in its secondaries strategy.

Schroders Capital’s secondary strategy is primarily focused on GP-led and select LP investment opportunities in the lower middle-market buyout and growth-equity segments.

Schroders Capital has been particularly active in GP-led secondaries, successfully closing on more than 50 transactions since 2021. This expertise and experience position the firm as a trusted partner for both GPs and LPs seeking liquidity solutions.

Last year, Schroders Capital acted as the lead investor in the single asset continuation vehicle for Init, a digital transformation service provider, managed by German buyout manager EMERAM Capital Partners. Earlier this year, Schroders Capital led a multi-asset continuation vehicle with Volpi Capital, including geospatial data company Cyclomedia.

Schroders Capital’s secondaries activity has a global reach, with dedicated teams in Zurich, New York, and Singapore. These strategically-located offices enable the firm to leverage its global network and expertise, providing investors with access to a diverse range of attractive secondaries opportunities across different geographies.

“We are proud of the success and growth of our secondaries activity. Our strong track record, deep industry expertise, and global presence position us well to continue delivering attractive investment opportunities to our clients,” said Christiaan van der Kam, Head of Secondary Investments Private Equity at Schroders Capital.