James Swanson, estratega jefe de Inversiones, MFS. Lecciones aprendidas este verano
There are two main things that have changed over the last few months, which affect markets and should be noticed by investors. James Swanson, Chief Investment Strategist at MFS Investment Management, discusses them in his latest video and blog:
U.S. corporate profits and margins keep risingeven if everyone predicted they had to revert to its mean. Corporations are growing in all types of environments, as in the U.S the first quarter of this year saw a drop, whereas the second one grew swiftly, and in both quarters margins and profits kept rising. Swanson numbers a series of reasons for this: U.S low relative labor costs, low energy costs, more effective use of resources, low interest rates and some financial engineering via share buybacks.
The direction of the U.S. economy, which seems to be accelerating, is different to the rest of the world. Meanwhile, Europe is heading towards its second recession, Japan is experimenting with totally new policies with an unknown outcome, and China is not growing at the same pace we are used to. The U.S. economy, according to Swanson, is benefiting from a pick up in car sales, a slightly better home market, better exports, factory production and growth in the service industry.
For investors, this has two implications: on one hand, slower growth in the rest of the world suggests that interest rates in the U.S. could stay low for a longer period of time. On the other hand, as stressed by Swanson, the resilience in margins and profits for U.S. corporations imply that investors can still find value in the U.S. equity market.
You can visit James Swanson’s investment blog “On the Lookout” thrugh this link.
Foto: Dietmar Rabich. Las inversiones cross-border desde LatAm superarán los 350.000 millones en 2018
Latin America cross-border allocations from pension and mutual funds will exceed US$350 billion by 2018 as new research from global analytics firm Cerulli Associates found.
“Although most mutual fund markets in the region are investing less than 5% of total assets abroad as result of the heavy bias to local products, the size of the potential opportunity cannot be ignored,” states Nina Czarnowski, senior analyst at Cerulli. “An increase of 1% in allocation translates to an additional USD$20 billion in inflows to global managers.”
“Pensions will continue to be the largest buyers of cross-border instruments. We predict that cross-border allocations by the pension markets in Latin America should more than double over the next 5 years, with Chile expected to hold its position as the largest regional allocator to cross-border vehicles,” Czarnowski explains.
According to Cerulli’s research, while the current size of the marketplace is an important factor to global managers wishing to expand in Latin America, growth potential, market saturation, and integration with global markets should not be underweighted. Having a long-term commitment is crucial in a region that continues to progress, albeit slowly.
“The region needs to educate industry professionals and investors to reconcile the difference between investors’ high ability and low willingness to take on risk,” Czarnowski continues
Simon Brazier. Investec AM aumenta su oferta de Renta Variable UK mediante contrataciones clave
Investec Asset Management announced that Simon Brazier, Head of UK Equities at Threadneedle Investments, will be joining the company in November 2014.
Brazier currently manages the highly rated £2bn Threadneedle UK Fund as well as a number of institutional mandates. Also joining from Threadneedle are fund manager Blake Hutchins, analysts Ben Needham and Anna Farmbrough, and product specialist Neil Finlay.
On joining Brazier will run UK Equity strategies consistent with his current UK alpha strategy and Investec will launch a UK Equity Income strategy to be run by Hutchins. They will have access to the significant research platform provided by Investec Asset Management’s extensive team of investment professionals. Their strategies will complement the well-established range run by Investec’s Value Team Head, Alastair Mundy.
Brazier will form part of the Investec Quality capability where he will operate as co-head with Clyde Rossouw, manager of the successful Investec Global Franchise strategy.
Domenico Ferrini, Co-Chief Investment Officer, said, “We are delighted that such high-calibre investment professionals have decided to join Investec Asset Management. This deepens our capability in UK equities and positions us to better meet the requirements of our UK advisor and institutional clients, and respond to the increasing interest from international investors for UK Equity strategies. “
David Aird, Managing Director, UK Client Group, said “Simon has an excellent UK equities track record. Positioning him alongside Alastair Mundy and his complementary Value Team provides our clients with a compelling choice of UK equity-centric strategies that strengthens our market position and relevance.”
Matthews Asia 2014 Forum, San Francisco. Matthews Asia Brings Together Over 100 Investors in San Francisco to Discuss the Future of Asia as an Investment Destination
This week in San Francisco, MatthewsAsia brought together 125 investors from all over the U.S. as well as Asia, Latin America and Europe. In this conference, held every two years, the asset management company, which specializes in Asia, presented the region’s financial situation and the reasons that support the right of Asia to become an asset class with its own identity. The volume of wealth, population, and GDP growth does not correspond to the weight of the stock market capitalization of its markets, especially if Japan pulls out of the equation. The figures are striking, Asia ex Japan accounts for 22.5% of global GDP, even though their markets represent only 9% of global market capitalization.
The next decade could be crucial in bridging this gap, and there’s every indication that it will be brought about by the growth in their stock markets. MatthewsAsia offers extensive experience in investing in Asian equities, having gone through all kinds of market environments since its inception in 1991. Matthews is the largest dedicated Asia-only investment specialist in the United States. It offers several strategies, primarily in equities, although since three years ago it has also offered fixed income strategies. The firm is headquartered in San Francisco, California, where the entire investment team, which travels to the Asian region on a constant basis, is located. Matthews had US$28.0bn in AUMs as of August 31, 2014.
WilliamHackett, CEO, and FrankWheeler, Global Director of Marketing and Distribution, opened the conference, which received a stellar presentation by Sydney Rittenberg. Rittenberg has personally known all Chinese leaders from Mao Zedong to Hu Jintao, as well as the father of the current Chinese leader. Sydney traveled to China during World War II and decided to stay, becoming the only US citizen accepted into the Chinese Communist Party. Years later, he was accused of espionage and was detained for 16 years in solitary confinement in China. In 1977 he was released and officially declared “friend of China”.
The 35 years spent in thecountry and his subsequent dedication to teaching and consulting on political and business ties with China make Sydney one of the most knowledgeable people on China. Of all that is currently happening in the country, Sydney Rittenberg emphasized the anti–corruption crusade which Xi Jinping is carrying out in China and how the next decade will see a big change in the country’s business fabric. On the one hand, he predicts that the private sector will continue to gain weight on the GDP, while on the other hand he also predicts a radical transformation of large state conglomerates (SOEs). For starters, they will open their books to both Chinese and international private investors, and thus will begin to be managed under market criteria, applying the fundamentals of corporate governance now absent.
The conference also featured presentations by Robert Boyda, Senior Managing Director and Senior Portfolio Manager for Portfolio Solutions Group at Manulife Asset Management, and Gary Rieschel, founder of Qiming Venture Partners, a venture capital firm specializing in China.
Meanwhile, members of Matthews Asia’s investment and distribution team reviewed the prospects for long-term investment in the region, and the situation of specific countries such as China; as well as which commenting on the investment process and philosophy of the firm, and the criteria used for stock selection. There were also specific panels dedicated to technology, innovation, sustainability of investment trends, demographics, energy, and entrepreneurship.
Matthews Asia has 15 investment strategies domiciled in the U.S., nine of which have a UCITS vehicle registered in Luxembourg.
Building where the RBC headquarters is located in Miami. Photo Regus.com. RBC Wealth Management Closes in Houston and Miami, as Part of its Reorganization in the U.S.
As confirmed to Funds Society by bank sources, RBC Wealth Management is in full process of reorganizing its international private banking business in the United States, a process that so far has lead to the closure of its Miami office as well as its agency in Houston, both specialized in cross border business.
That same source wished to point out that RBC shall continue to provide credit services and loans to American residents from its New York branch, while stressing that these changes affect “a very small segment of our business in the United States.”
Likewise, the source also underlined that the changes will have no impact on its growing retail broker dealer business, which is currently the eighth largest in the United States. “USA continues to be a fundamental market for the growth of RBC Wealth Management,” he said.
Finally, RBC wanted to make it quite clear that they remain operational and shall continue to serve their clients during this transition period, a period which has already started and which will continue until April 2015. During this stage, both RBC clients and employees will continue to receive timely information, which will give them enough time to make thoughtful decisions.
RBC wants to underlined too that the bank counts with International Advisory Group (IAG) that is separate from the U.S. Private Banking business. The IAG will continue to operate as a business line within WM – International, under the leadership of Ricardo Morean and will continue to leverage the infrastructure provided by the U.S. broker-dealer business to serve the investment needs of international clients from offices in the U.S.
As other sources familiar with the closure told Funds Society, the decision to close the Miami and Houston offices was reported internally last Wednesday and approximately 20 bankers have been affected: 15 of them in Miami, and five in Houston, as well as five investment specialists in New York. In Miami, where in addition to the private banking division there is a broker dealer, the bank employs around 100 people.
The international division of RBC Wealth Management serves high-net-worth (HNW) clients and a niche of corporate and institutional clients worldwide.
It should be recalled that last July RBC Wealth Management reported the closure of its office in Santiago de Chile after six years in the country and as part of a strategic review of its business in Latin America, while just over one year ago, the Canadian bank´s office announced its departure from Uruguay, also on the grounds of strategic reasons.
CC-BY-SA-2.0, Flickr. Los grandes patrimonios y las empresas familiares, llamados a explorar más vías de asociación
A new KPMG International survey has found that 58% of family businesses are currently seeking external financing to fund their investment plans, but finding the right strategic investment partner can be challenging. While family businesses create more than 70% of global GDP many say they find their fundraising options limited.
Private equity funding often requires the entire business to be sold to maximize value in the event of an exit, and corporate strategic partners often see any investment as part of a longer-term plan to secure full control. As a result of these limitations, many family businesses may not be maximizing their growth potential.
KPMG has identified one possibly underutilized route for investment with the involvement of high-net-worth individuals (HNWIs), many of which have family business experience as well as significant investment capital. It is estimated that there are up to 14 million High Net Worth Individuals around the world with around $53 trillion of wealth. Survey results show that the top priorities of HNWIs and Family Owned Businesses align, making this underutilization surprising: HNWIs name long-term capital appreciation (37%) as their top driver for investment, while family businesses name long-term orientation towards investment returns as their top investor characteristic (23%).
“From the survey, education and awareness on the potential benefits of these partnerships have emerged as important first steps to link these two groups. This report has revealed some important misconceptions on the sides of both family members and HNWIs,” Christophe Bernard, KPMG’s Global Head of Family Business explained. “By breaking down some of these barriers, KPMG’s Family Business professionals can help clients to build better business partnerships, encouraging increased collaboration between these two groups across the globe for their mutual benefits,” he concluded.
44% of HNWIs have previously invested in a family business and the vast majority (95%) say that it has been a positive experience in comparison to their other investments.
More than three-quarters of survey respondents (76%) say that the family holds a majority stake in the business.
60% of HNWIs are looking for investments with reasonable risks and reasonable returns, and are focused on long-term capital appreciation. Both of these traits are well matched by investment in family businesses.
While there are challenges on both sides, Family matters: Financing family business growth through individual investors reveals that both family businesses and HNWIs have an appetite for investment and could prove to be highly compatible partners.
“The fascinating results distil the essence of what potential HNWI investors look for, and their value to family businesses. Having interviewed the entrepreneurs directly, we really dived into the core of the subject matter without distorting what HNWIs expect and how they operate. Wealthmonitor is proud to have opened the doors to this highly sought after segment of the market,” explained Florian Pixner, Managing Director EMEA of Wealthmonitor, part of the Mergermarket Group.
KPMG in association with Mergermarket, surveyed 125 family businesses about the types of investment they require, their investors of choice and their previous experience of receiving investment from HNWIs or other family businesses. In addition, 125 HNWIs were surveyed about their investment strategy and how this might align with family businesses.
John Krieg has been appointed global head of institutional distribution at Northern Trust Asset Management, a new role created to lead the development and implementation of investment solutions for clients spanning regions and markets.
Based in Chicago, Krieg leads the global institutional sales and consultant relations teams. He brings 25 years of experience in business strategy, product innovation, thought leadership and sales/marketing serving institutional investors. Most recently he was located in London as Managing Director for Asset Management for the EMEA (Europe, Middle East and Africa) region.
“As our investment business expands to new markets, we see a substantial opportunity to offer a broader range of products to support global investors,” said Stephen N. Potter, President of Northern Trust Asset Management. “John Krieg is well positioned to lead this effort, following his success in bringing new investment clients to Northern Trust in EMEA through focused sales efforts, thought leadership and product innovation.”
Jason J. Tyler, Global Head of Client Solutions, said: “This new role enables John Krieg to build on the global momentum we have established with our investment solutions. Engineered Equity, Defined Contribution Solutions and Outsourced Chief Investment Officer services are all core to our growth strategy and John’s background is ideal for this effort.”
As Managing Director in EMEA since 2010, Krieg built business development teams across the Nordics, Benelux, Middle East and United Kingdom, and initiated expansion into Switzerland and sub-Saharan Africa. He led the development of market-leading product research and investor surveys on custom and alternative indexing and factor investing, and his team worked closely with many of the region’s largest asset owners, including sovereign wealth funds, central banks, pensions and fiduciary managers. From 2011 through 2013, new institutional investor clients contributed to strong growth in EMEA, with assets under management more than doubling to $114 billion in the region.
Before his EMEA post, Krieg was director of global investment product management. Prior to joining Northern Trust in 2002, he was director of relationship management and fixed income products for TimesSquare Capital Management in New York, and previously held sales and relationship management positions with Credit Suisse Asset Management, Hewitt Associates and Towers Perrin. He is a CFA Charterholder and Chartered Alternative Investment Analyst, and earned an M.B.A. degree from DePaul University and a B.S. degree from the University of Illinois at Champaign-Urbana.
Asset Management at Northern Trust comprises Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc. and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
CC-BY-SA-2.0, Flickr. Siete razones que avalan el éxito de Zara
The company Inditex may not be a well-known name outside Spain, but its flagship brand Zara certainly is. It is famous for selling fashionable clothing. So what are the secrets behind its success and why does Robeco Global Consumer Trends Equities invest in it? Interview with Portfolio Manager Jack Neele.
Inditex is a Spanish clothing retailer, which operates worldwide. Besides its main brand Zara it operates stores like Pull&Bear, Massimo Dutti and Bershka. The company is based in the coastal city of La Coruña in the northwestern province of Galicia. The founder and CEO of the company, Amancio Ortega Gaona, has a large stake in the company and has become one of the richest people in the world. Although Spain is still struggling economically, Inditex is doing well. Zara clothing is cheaper in their home market and the pain is compensated by successful expansion abroad.
Inditex is a very Spanish company despite its growth in international operations. Lots of clothing is still manufactured in the region of Galicia. “Inditex is a specific Spanish company. That’s where their roots are. Many Spanish people are proud of it, like the Dutch are of Heineken,” says Jack Neele, portfolio manager for Robeco Global Consumer Trends Equities.
Fits in well with philosophy of Global Consumer Trends Equities
Inditex fits in well with the investment philosophy of Global Consumer Trends Equities, says Neele. “We are looking for structural winners and have a preference for companies with strong consumer brands. The defensive Inditex stock provides good diversification with other more growth-oriented stocks in our portfolio.”
Inditex represents around 2% of the total portfolio, which is just outside the top ten holdings of Global Consumer Trends Equities. “The reason it doesn’t have a higher ranking in the portfolio holdings is that the stock is no longer cheap. Because of its strong track record, valuation has risen and the price-earnings ratio is in the low 20s.” He gives seven reasons why the company has been so successful.
(1) Low risk of fashion mistakes
The risk of making fashion mistakes by stocking clothing that customers do not want to buy is small, says Neele. “If you have only a limited number of ranges, then the impact of a fashion mistake is immense. You end up with large write-downs on unsold stock. But for Inditex, fashion risk is very low, because the stock levels of goods in transit are lower. It will just take a few days longer to sell this stock. You do not end up with a huge leftover winter range that you need to sell over the spring period.”
Having factories and suppliers close to their markets allows Inditex to react quickly to any change in consumer buying patterns. However, labor costs are higher than in Asia. “Inditex has production facilities in Spain, Portugal, North Africa and Turkey, which are close to their end market in Europe,” he says.
(2) Always something new
The Zara brand offers many different collections each year that attract increasing numbers of people to the store, says Neele. “The consumer knows that every three weeks there will be something new to discover in the Zara store.” This short cycle is due to the extremely short lead times for design, production and distribution, a concept sometimes referred to as ‘fast fashion’.
In contrast, competitors basically have one collection each season, he adds. “For example, it is difficult for H&M (Hennes and Mauritz) to have more than one collection each year, because their lead time for distribution is much longer. The reason is that H&M procures mainly in faraway Asia. This is a cheaper part of the world in which to produce, but shipping time to the market in Europe is far longer.”
(3) Easier to react to local consumer tastes
The company can easily cater to local consumer tastes, says Neele. “Store managers have a big influence on what is sold. For example, if a certain type of jeans becomes popular in Rotterdam, then the manager can easily receive more because of short lead times. But if you order additional jeans produced in Asia, then these can be out of stock for a considerable period of time.”
(4) Edge on the competition
Inditex is better positioned than its competitors, which allows the company to gain market share, says Neele. “H&M is one of the best companies in the industry, but Inditex is better. Zara sells fashionable clothing at attractive prices. H&M and its rival, Primark, offer lower prices, but have a more basic clothing line, because selling fashionable clothing can be risky: what is in fashion today can quickly be out of fashion tomorrow.”
There are other major competitors. Mango, their Barcelona-based rival, is a successful brand and a big competitor in their home market. But it is not in the same league, he says. “Mango is expanding abroad, but it still lacks the global scale of Inditex.”
(5) Low risk associated with international expansion Inditex has substantial growth potential in the countries where the company is already represented, says Neele. Entering markets in new countries is the riskiest part in the growth strategy of any major company. “Inditex doesn’t need to do that because they already have a presence in many countries, with relatively few stores.” Its Zara brand has just over 2,000 stores in 88 countries, while H&M has 3,300 stores in 54 countries.
Markets outside Spain should provide more growth, he says. “Future growth will come mainly from the emerging markets and, to a lesser extent, the rest of Europe.”
(6) Online shopping is helping Inditex to grow quickly
While the company was slow in starting up online shopping, it is now rapidly rolling out the concept internationally. They started out in their top six countries three years ago and are steadily increasing their presence. Neele explains how the concept works. “You can order online and pick up the clothing at the store or have it sent to your home.”
He adds: “To return items, you need to go to the physical stores or return items by mail and pay for postage. This is an effective policy, because it creates a barrier to returning goods. It differs from online retailers like Zalando, where some customers order six pairs of shoes, try them all on, keep one pair and return five,” he adds. “This shopping behavior is very expensive for online retailers.” Online shopping is especially useful for countries where Inditex has only a small presence. “With online shopping, everyone can buy at Zara even though there isn’t a store nearby,” he says.
(7) Innovative promotion of the brand
Inditex spends very little money on advertising, says Neele. “The stores promote the brand. There aren’t any Zara billboards or commercials around. Instead, Inditex promotes its brand by buying prime real-estate locations and creating stores with an air of luxury.”
Inditex recently bought a building for over USD 300 million on Fifth Avenue in New York to open a Zara store. “This might sound like a crazy amount of money, but it is a pretty smart move. This store functions as a giant billboard for the city’s 50 million annual visitors. Store visitors talk about it to others, and this helps generate worldwide interest in the Zara brand.”
* This publication is intended to provide investors with general information on Robeco’s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products.
Foto: Pusleogpixi. Citi Private Bank nombra a Peter Charrington nuevo responsable global
Citigroup announced this week that Peter Charrington has been named Global Head of Citi Private Bank. Mr. Charrington succeeds Mark Mason who was recently named Chief Financial Officer for Citi’s Institutional Clients Group.
“In his 20 years at Citi, Peter has helped build the Citi Private Bank brand, significantly increasing assets under management by working to strengthen client relationships and enhance our product offering and servicing capabilities. The Private Bank is an integral part of Citi and we are committed to continue investing in and growing the business,” said Jamie Forese, Co-President of Citi and Head of the Institutional Clients Group. “The complementary relationship between the Private Bank and other businesses within the Institutional Clients Group allows us to deliver the same sophisticated advice and product to our private bank clients that is normally reserved for the world’s largest companies and investors. This creates an extraordinary advantage for our clients,” he continued.
Citi Private Bank advises the world’s wealthiest, most influential individuals and families. With $310 billion in global assets under management, the franchise includes 50 offices in 15 countries, serving clients across 139 countries. The firm offers clients products and services covering capital markets, managed investments, portfolio management, trust and estate planning, investment finance, banking and art, aircraft and sports advisory and finance.
Mr. Charrington began his career at Citi Private Bank in 1994. He was a private banker in the United Kingdom and also held roles in structured lending and real estate. He later ran the Private Bank in the UK, Greece, Israel and Monaco. Following Citi’s sale of the Smith Barney brokerage business in 2009, the Private Bank shifted its focus to ultra high net worth clients with at least $25 million in net worth, and Mr. Charrington was named CEO for North America, the largest region by revenues and assets under management.
“Having spent my entire career in the Private Bank, working across Europe and most recently as CEO in North America, I am honored and humbled to accept the role of Global Head of Citi Private Bank,” said Charrington. “We have an incredible group of talented individuals around the world delivering the highest quality wealth management services for the worlds most sophisticated ultra high net worth and law firm group clients. Our ability to seamlessly deploy the global resources of the Citi franchise, with a presence in 160 countries spanning every asset class market and product, brings unparalleled value to families with complex investment, estate and succession planning needs.”
In 2013 Citi Private Bank received awards for Best Private Bank for Customer Service from The Financial Times, The Banker and Professional Wealth Management Global Private Banking Awards for the second year in a row, and Outstanding Private Bank for UHNW Individuals from Private Banker International’s Global Wealth Awards, among numerous other awards.
Ana Patricia Botín. . Ana Botín toma las riendas del Banco Santander tras la muerte de su padre
The board of directors of Banco Santander unanimously agreed to appoint Ana Botín as its chair. The appointment was made at the proposal of the appointments and remuneration committee, which held a meeting this morning.
Fernando de Asúa, 1st vice chairman of Banco Santander and chairman of the appointments and remuneration committee, expressed “the deep sorrow for the loss of chairman” and said: “Emilio Botín was extremely important for the bank, leading its extraordinary transformation, turning it into the leading bank in the Euro zone and one of the most relevant in the world, and for Spain.” His words were supported by all of the board’s members.
The appointments and remuneration committee considered Ana Botín is “the most appropriate person, given her personal and professional qualities, experience, track record in the Group and her unanimous recognition both in Spain and internationally.”
After the board’s meeting, Ana Botín said: “In these difficult times for me and my family, I appreciate the trust of the board of directors and I am fully committed to my new responsibilities. I have been working at Grupo Santander in different countries and with different responsibilities for many years and I have experienced the professionalism and dedication of our teams. We’ll continue to dedicate all our efforts with total determination to keep building a better bank for our customers, employees and shareholders.”
