MFS is enhancing its Fixed Income Department’s leadership team with the addition of two co-chief investment officers. Pilar Gomez-Bravo and Alexander Mackey will join current CIO Bill Adams to form a global leadership team of co-CIOs to lead the department.
“Pilar and Alex are experienced and highly regarded members of our global research platform and have demonstrated the leadership skills necessary to help lead the department to continued success globally,” said MFS CIO Ted Maloney. “Together with Bill, they will lead the continued execution of MFS’ multidecade strategic priority of growing its presence in fixed income markets around the world to the benefit of our clients,” he added.
With more than 25 years of investment experience overall, Gomez-Bravo joined MFS in 2013 and has been instrumental in establishing the firm’s London-based fixed income team. She is a portfolio manager on several fixed income strategies and serves on investment committees and working groups across asset classes.
Mackey began his career in 1998 with MFS and in 2001 joined the firm’s Fixed Income Department, where he has worked as both an analyst and portfolio manager. During his tenure, he has helped guide the firm’s US high grade corporate credit research process and portfolio management efforts.
“Having worked closely with both Pilar and Alex during their time at MFS, I’ve seen firsthand the positive impact their leadership has had on the fixed income team globally. I look forward to working with them in this role and to sharing our collective expertise and experience as we take fixed income at MFS to the next level,” added current Fixed Income CIO Adams.
Adams, Gomez-Bravo and Mackey will report to Maloney.
As of June 30, 2022, MFS managed more than US$94 billion in fixed income assets worldwide. The firm offers global, international, emerging market and domestic fixed income strategies for clients around the world. Since 2017, MFS’ fixed income assets have increased by more than 23% following a buildout that began more than a decade ago that has seen the firm double the size of its fixed income team globally while adding new capabilities and enhancing existing strategies to meet client needs, according the firm information.
“Today, with nearly 100 years of investment experience behind us, we have the people, capacity and strategies we need to create value for a diverse set of fixed income clients around the world. Markets will always present new challenges, and we look forward to the continued guidance Pilar and Alex provide the investment team as we work together to help our clients meet those challenges,” said Maloney.
Principal Financial Group announced its investment unit will be doing business as Principal Asset Management as the company intensifies its focus on asset management. This name will highlight the firm’s deep, local knowledge, and global perspectives across all asset classes to help drive long-term investment outcomes for clients, the press release says.
“Asset management is a core growth driver for Principal, adding significant value to the company both financially and strategically in our goal to provide holistic financial solutions,” said Dan Houston, chairman, president, and chief executive officer for Principal. “As markets mature and fluctuate, and demand for global investment solutions increases, Principal Asset Management is well positioned to help our clients achieve their financial goals.”
Principal Asset Management has been working to unify and strengthen its investment teams, processes, distribution model, and products to execute on a forward-looking strategy that reinforces its specialized investment expertise, the release adds.
“The $507.1 billion asset manager is leveraging talent, technology, and its global footprint to bring the firm’s public and private market capabilities together to best serve its diverse client-base, which includes more than 800 institutional, retirement, retail, and high net worth investors across more than 80 markets”, according the firm information.
Resources have been devoted to building new products and alternative investment options such as model portfolios and direct lending, respectively, the company said. Strategic hires have been made to support growth initiatives like global wealth alternatives and liability driven investments. And the client experience is being transformed with a digital strategy that combines data analytics with market insights from Principal Asset Management investment experts to help clients optimize portfolios and to deepen their relationships.
“We’re building and strengthening relationships with investors in over 80 markets, aligning our growth strategy to their needs and the evolving market opportunities to solidify a consistent global identity,” said Kamal Bhatia, chief operating officer for Principal Asset Management. “Principal remains focused on identifying compelling opportunities by providing clear perspectives that are harnessed by the power of our diverse, local investment talent. A global asset management platform that brings deep, specialist capabilities will continue to actively unlock insights and opportunities for all our clients.”
BNY Mellon announced that its Digital Asset Custody platform is live in the U.S. With clients now able to hold and transfer bitcoin and ether, this milestone reinforces BNY Mellon’s commitment to support client demand for a trusted provider of both traditional and digital asset servicing, the press release says.
BNY Mellon formed an enterprise Digital Assets Unit in 2021 to develop solutions for digital asset technology, with plans to launch the industry’s first multi-asset platform that bridges digital and traditional asset custody.
“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said Robin Vince, Chief Executive Officer and President at BNY Mellon. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.”
A recent survey sponsored by BNY Mellon highlights already significant institutional demand for a resilient, scalable financial infrastructure built to accommodate both traditional and digital assets. According to the survey, almost all institutional investors (91%) are interested in investing in tokenized products. Additionally, 41% of institutional investors hold cryptocurrency in their portfolio today, with an additional 15% planning to hold digital assets in their portfolios within the next two to five years.
“With Digital Asset Custody, we continue our journey of trust and innovation into the evolving digital assets space, while embracing leading technology and collaborating with fintechs,” said Roman Regelman, CEO of Securities Services & Digital at BNY Mellon.
BNY Mellon has been working closely with market-leading fintechs. The firm tapped digital asset technology specialists Fireblocks and Chainalysis to integrate their technology in order to meet the present and future security and compliance needs of clients across the digital asset space.
“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.”
More advisor practices are adopting the use of model portfolios to help advisors better serve clients and develop their business, according the latest Cerulli Edge—U.S. Advisor Edition.
When used appropriately, model portfolios can be an effective tool that can free up time advisor practices spend on portfolio management, allowing them to reallocate that time toward other highly valuable functions, not the least of which includes the delivery of financial planning services and asset gathering.
Cerulli expects that the industry’s slow and steady transition toward a financial planning-oriented service model will be a powerful impetus for the adoption of model portfolios.
Among advisor practices, insourcers—those who either customize portfolios on a client-by-client basis or use practice-level resources to build a series of custom models—spend 18.5% (practice models) and 29.5% (customizer) of their time focused on investment management. Model portfolio use allows advisors to reduce that time commitment to less than 10%.
“This saved time can be put toward client-facing activities, a particularly important activity, for example, for younger advisors that are focused on asset gathering and building a book of business,” says Brad Bruenell, associate analyst.
The way in which model portfolios can fit into an advisor’s practice varies significantly, depending upon the individual circumstances of each advisor and their practice. For example, for younger advisors focused on building a book of business, model portfolios can be an effective tool to maximize the available time to spend on asset gathering. For larger, more experienced advisory practices, model portfolios can be an effective way to efficiently service younger, less affluent clients, such as the future expected inheritors of an advisors’ wealthier clients, enabling advisors to serve the financial needs of multiple generations of a family.
“The effective use of model portfolios can increase advisor efficiencies and service offerings in both maturing and fully mature practices, in a variety of ways depending upon the preference of the practice,” says Bruenell. “We anticipate this trend will continue to gain traction among advisors in the future as they seek to improve their scale and service differentiation,” he concludes.
The IMF projects global growth is slowing under the burden of high inflation, impact of Russia’s war in Ukraine and lingering effects of pandemic announced Pierre-Olivier Gourinchas, the IMF’s Chief Economist.
The Fund expects global growth to remain unchanged in 2022 at 3.2% and to slow to 2.7% in 2023—0.2 percentage points lower than the July forecast—with a 25 percent probability that it could fall below 2 percent.
“The global economy is weakening further and facing a historically fragile environment. The outlook continues to be shaped by three forces. Persistent and broadening inflation, causing a cost-of-living crisis, the Russian invasion of Ukraine and the associated energy crisis, and the economic slowdown in China,” said Gourinchas.
Downside risks remain elevated, while policy trade-offs to address the cost-of-living crisis have become acutely challenging. The risk of monetary, fiscal, or financial policy miscalibration has risen sharply at a time when the world economy remains historically fragile and financial markets are showing signs of stress.
“Unfortunately, most risks to the outlook are to the downside. There’s a risk of monetary policy, miscalibration at a time of high uncertainty and fragility. In particular, we are concerned that central banks will ease too early, causing inflation to remain excessively high and requiring a much larger loss of output later. A persistently strong dollar could fuel inflation and amplify financial tightening, especially in emerging market and developing economies. High post-pandemic debts and higher borrowing costs could cause widespread debt distress in low-income countries. A deeper real estate crisis in China could cause severe financial stress. The war could further destabilize energy markets. A resurgence of the pandemic would hit under-vaccinated regions hard, especially Africa. Lastly, further geopolitical fragmentation could hamper global policy coordination and trade,” added Gourinchas.
Persistent and broadening inflation pressures have triggered a rapid and synchronized tightening of monetary conditions, alongside a powerful appreciation of the US dollar against most other currencies. Tighter global monetary and financial conditions will work their way through the economy, weighing demand down and helping to gradually subjugate inflation.
“The biggest fight now is the fight against inflation,” warned Gourinchas. The Chief Economist added that the central banks are laser focused and they need to keep a steady hand and growth will slow in 2023 as conditions tighten and some financial fragilities may emerge.
“But the main priority should be to restore price stability. This is the bedrock of future economic prosperity. Next, fiscal policy needs to be guided by coherent economic principles. First, pandemic era stimulus should be withdrawn, and buffers rebuilt. Second, fiscal policy should not work at cross-purposes with monetary policy. Third, the energy crisis will be long lasting. Solving it requires supply to increase and demand to decrease,” explained.
Price signals will be important to achieve that. Governments should provide direct, temporary and targeted help to low- and middle-income families. Finally, many countries are struggling with the strength of the dollar. Yet this reflects mostly the speed of the tightening cycle in the United States, as well as the energy crisis. Unless financial markets become severely disrupted, monetary policy should focus on inflation while allowing the exchange rate to adjust to underlying economic forces, alerted Gourinchas.
The SEC has voted to adopt amendments to the electronic recordkeeping, prompt production of records, and third-party recordkeeping service requirements applicable to broker-dealers, security-based swap dealers (SBSDs), and major security-based swap participants (MSBSPs).
The amendments are designed to modernize recordkeeping requirements given technological changes over the last two decades and to make the rule adaptable to new technologies in electronic recordkeeping. The amendments will also facilitate examinations of broker-dealers, SBSDs, and MSBSPs, the release said.
“I am pleased to support these rule amendments because they will bring the Commission’s electronic recordkeeping requirements for intermediaries such as broker-dealers and security-based swap dealers in line with technological innovation,” said SEC Chair Gary Gensler.
The SEC’s broker-dealer electronic recordkeeping rule currently requires firms to preserve electronic records exclusively in a non-rewriteable, non-erasable format, known as the write once, read many format. The amendments add an audit-trail alternative under which electronic records can be preserved in a manner that permits the recreation of an original record if it is altered, over-written, or erased.
The audit-trail alternative is designed to provide broker-dealers with greater flexibility in configuring their electronic recordkeeping systems so they more closely align with current electronic recordkeeping practices while also protecting the authenticity and reliability of original records. The amendments apply the same requirements to nonbank SBSDs and MSBSPs, the SEC added.
Among other things, to facilitate examinations and make them more efficient, the amendments also require broker-dealers and all types of SBSDs and MSBSPs to produce electronic records to securities regulators in a reasonably usable electronic format.
The adopting release will be published on SEC’s web siteand in the Federal Register. The final amendments will become effective 60 days after publication in the Federal Register. The compliance dates for the new requirements will be six months after publication in the Federal Register in the case of broker-dealers and 12 months after publication in the Federal Register in the case of SBSDs and MSBSPs.
Thomas G. Johnston, Head US Offshore at John Hancock IM
John Hancock Investment Management appoints Thomas G. Johnston as the new head of US Offshore distribution funds in Miami.
Johnston has twenty years of industry experience in Miami, where he has worked for several well-known fund managers.
He began at MFS Investment Management between 2002 and 2003 and then he moved to SunLife Financial International where he spent nearly eight years, according to his LinkedIn profile.
In 2014 he became part of Amundi, where he fulfilled functions both in New York and Miami until December 2020.
After that, he joined LarrainVial, where he worked until this month when he was announced at John Hancock Investment Management.
“I’m happy to share that I’m starting a new position as Managing Director, Offshore Funds (UCITS) Distribution at John Hancock Investment Management,” posted on LinkedIn.
Johnston is bachelor in art and international affairs from Suffolk University in Madrid. He also holds a bachelor’s degree in International Relations and Spanish from the same institution.
August data shows renters are feeling the strain of higher costs, as Americans spent more than one-quarter (26.4%) of their monthly budgets on rents in August, on average, according to the Realtor Monthly Rental Report.
Among the 50 largest U.S. metros, coastal areas topped August’s list of least affordable rental markets, with rents accounting for the highest shares of household incomes in Miami (46.5%), Los Angeles (40.7%) and San Diego (37.1%).
“Our analysis underscores the very real rental affordability challenges that many Americans face today. Rents are significantly higher than in previous years and are taking up a substantial portion of incomes, which are growing at a slower pace than inflation,” said Realtor Chief Economist Danielle Hale.
Hale added: “Still, there are some bright spots for renters as of late. Based on the general rule of thumb that you should keep housing costs to under 30% of your paycheck, renters were able to follow best practice in the majority of large metros in August. Plus, as rent growth continued to cool, national rents didn’t hit a new record-high for the first time in nine months. If these trends and typical seasonal cooling persist, renters may be better able to keep housing costs to a relatively manageable portion of their budgets in the months ahead.”
Hale explained that the U.S. median rental price declined for the first time since November 2021 in August, to $1,771 from $1,781 in July.
Additionally, rent growth continued moderating on a year-over-year basis, down to a single-digit increase (+9.8%) after 13 straight months at a double-digit pace.
However, national rents remained more than 20% higher than in August 2020 overall (+22.8%) and across all unit sizes: Studios at a median $1,489 (+21.2%), one-beds at a median $1,653 (22.6%), and two-beds at a median $1,964 (+23.2%).
Despite the cooldown in annual rent growth, August data indicates that rental affordability issues are rising. Nationally, rents accounted for a higher share of renters’ incomes in August compared to last year (26.4% vs. 25.7%, on average).
Julius Baer has announced several appointments in Brazil and a new team of relationship managers to strengthen the Mexico office in Zurich. In addition, the Swiss bank hired four executives from BBVA, professionals with experience in Itaú Private Bank, BNP Paribas and XP Investimentos.
The following appointments are for its local operations in sub-region Brazil:
Lucas Rizzi joins in October as Chief Operations and Chief Technology Officer. Lucas joins Julius Baer from Itaú Private Bank where he was Head Customer Digital Experience.
Greice Rabelo joined Julius Baer in September as Senior Relationship Manager. Greice joined from BNP Paribas where she was Head Private Bank Belo Horizonte.
Antonio Monteiro, previously responsible for Single and Multi-Family Offices at ASA Investments, joined in September as Senior Relationship Manager.
Laura Drummond Correa joins in October as Relationship Manager. She was previously at XP Investimentos.
Kevin Liu joins Julius Baer in October as Relationship Manager. He previously worked at Messem Investimentos.
“Brazil continues to offer excellent growth opportunities and the Bank’s local business has been expanding and growing successfully since its first acquisition in Brazil in 2011. A strengthened leadership team encompassing all our business activities in Brazil was announced in March this year”, the firm said.
Hires in sub-region Mexico and Hispanic Americas
In sub-region Mexico and Hispanic Americas, a new team of Relationship Managers joins Julius Baer in October to strengthen the Mexico Desk in Zurich:
Miguel Caballero joins Julius Baer as Team Head, reporting to Marc Furler, Market Head Mexico. Miguel was formerly Team Leader Mexican Desk at BBVA.
Martín Giménez Pina joins Julius Baer as Senior Relationship Manager. He was previously a Senior Relationship Manager at BBVA covering Mexico and other markets in South America.
Carlos Fernández joins Julius Baer as Relationship Manager and was previously at BBVA.
Fernando Caro Sierra joins as Assistant Relationship Manager from BBVA where he was an Account Manager.
To support the local business, Senior Relationship Manager James Armstrong relocated to Uruguay from Zurich, and Virginia Meharu was hired as Assistant Relationship Manager.
Sub-region Mexico and Hispanic Americas is part of Region Americas and includes Mexico, Chile, Argentina, Peru, and Colombia among other markets.
Beatriz Sanchez, Head Region Americas, commented: “These appointments are a further step towards expanding and growing the business successfully in the Americas. They also underscore our commitment to continuously invest in the advancement of the different teams in our diverse Region. I very much look forward to further developing our existing client base with the support of these numerous and valuable additions.”
Photo courtesyDavid Norris, Head of US Credit de TwentyFour AM
TwentyFour, Vontobel’s boutique, will present the virtues of fixed income to stop being conceptualized as a defensive measure in 2023 during its conference at the VIII Society of Funds Investment Summit.
During the event, which runs from October 5-7, David Norris, Head of U.S. Credit at TwentyFour AM, “will discuss the attractiveness of fixed income and how investors might not need to embrace the full volatility of equity markets to experience strong returns.”
The presentation “Late Cycle Investing and the Value Fixed Income” will discuss that with wide spreads and interest rates likely to stabilize in 2023, “the role of fixed income has the opportunity to shift from what has historically been viewed as a more defensive position, to a better option for those seeking less volatility and better predictability.”
“With yields high and the historical profile of bonds being that of a lower volatility instrument, investors are being presented with an attractive point of entry and an alternative to traditional equities as we wait for this phase of the economic cycle to play out,” the firm says.
David Norris
David joined TwentyFour in September 2018. Based in the New York office, he serves as the Head of US Credit as well as one of the portfolio managers of the Strategic Income Team. He is a credit specialist with 30 years’ experience in fixed income markets gained across a variety of senior roles in asset management and investment banking in London, Frankfurt and New York.
