J.P. Morgan Launches 24th Annual Summer Reading List

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J.P. Morgan launched its 24th annual Summer Reading List, a collection of books selected to spark curiosity, inspire new perspectives and unlock potential for the future. With new titles by creative luminaries, admired industry leaders and forward-thinking entrepreneurs, the books invite readers worldwide on a journey from the canopy of the Amazon to the ranches of Wyoming, to the boardrooms of Hong Kong and beyond.

“Books have fired our imaginations for centuries. As we enter an era marked by rapid technological advancement, our list illuminates ideas to fuel progress, from how to lead more inclusively to how to harness the latest developments in artificial intelligence,” said Darin Oduyoye, Chief Communications Officer of J.P. Morgan Asset & Wealth Management.

To curate the list, J.P. Morgan Client Advisors worldwide submitted hundreds of non-fiction titles. That list was then culled and reviewed based on timeliness, quality and appeal to the firm’s global client base.

A summer tradition for over two decades, the 2023 J.P. Morgan Summer Reading List introduces a future-inspired read, selected by and for the next generation. To select the “Next Gen Pick”, a sub-committee of Associate and Vice President-level J.P. Morgan Client Advisors representing North America, Latin America, Asia Pacific and Europe met to review and select one title to engage and inspire early-career clients and colleagues.

“We wanted the ‘Next Gen Pick’ to encompass emerging ideas and themes that will drive the future,” said Derby Chukwudi, Associate Investment Strategist at J.P. Morgan Private Bank. “Whether you’re a technology entrepreneur, environmental activist, creative artist, or the next generation of a family enterprise, the title we selected outlines how you can identify the role you have to play in preparing for what the future holds.”

The 2023 Summer Reading list line-up includes:

Good Power: Leading Positive Change in Our Lives, Work, and World by Ginni Rometty

The former IBM CEO shares her pioneering path from a difficult childhood to becoming one of the world’s most influential business leaders. With candor and wisdom, Ginni Rometty recounts her life and career milestones—personal challenges, critical decisions and passionate advocacy—all while redefining power as a way to drive meaningful change. From protecting trans workers to hiring employees with unconventional career paths, Rometty’s “memoir with purpose” offers a blueprint for using “good power” to inspire teams, advance careers and companies, and to build a better world.

Money Machine: A Trailblazing American Venture in China by Weijian Shan

In this fascinating tale of an American firm’s success in China, Weijian Shan delivers the compelling story of one of the most significant deals in private equity history: the first foreign acquisition of a Chinese national bank. In this firsthand account from the chief architect of the deal, Money Machine offers a peek behind the curtain of the process, including the complex negotiations between private equity executives and Chinese regulators, and the challenges of returning the bank to profitability. Tracing the deal from inception to victorious conclusion, Shan reveals insights into China’s capital system, how to thrive in a foreign culture and how private equity firms can add real value to companies.

Reflections of a Vintner: Stories and Seasonal Wisdom from a Lifetime in Napa Valley by Tor Kenward

This iconic, award-winning vintner recounts the lessons learned and friendships forged during his nearly 50-year journey through the burgeoning wine industry of Napa Valley. Detailing experiences from the mid-70s, when there were fewer than 50 wineries, to the present, with over 800, Tor Kenward shares his insights on the region’s evolution into a world-class wine destination. Weaving in anecdotes of his friendships with legends of the food and wine scene, including Julia Child, André Tchelistcheff and Andy Beckstoffer, Kenward offers an entertaining, inside look into the fascinating and complex world of wine.

Think Like a Horse: Lessons in Life, Leadership, and Empathy from an Unconventional Cowboy by Grant Golliher

Each year, Fortune 500 executives, celebrities, professional coaches and Supreme Court justices flock to “horse whisperer” and leadership expert Grant Golliher’s Wyoming ranch to learn his approach to horse training. Horse whispering may sound like magic, but Golliher demonstrates how his method is as fundamental and ageless as the relationship between horses, the people who ride them, and the beauty of the West. Golliher distills his hard-won horse sense into invaluable lessons about communication, boundaries, fairness, trust and respect—lessons we can use to better understand our common humanity and unlock untapped potential in our careers and lives.

Radically Human: How New Technology Is Transforming Business and Shaping Our Future by Paul R. Daugherty and H. James Wilson

As new AI-powered technologies such as the metaverse and natural language processing are rapidly advancing—with human behaviors and intelligence informing the design of new machines—all companies must be technology companies to compete. Accenture technology leaders Paul R. Daugherty and H. James Wilson address this intersection of technology and human ingenuity in Radically Human, which outlines how companies across industries are tapping into technology to reshape the very nature of innovation. With examples across a variety of industries, Daugherty and Wilson offer a framework for value creation and more human-centered, trust-based and sustainable organizations.

The Women of Rothschild: The Untold Story of the World’s Most Famous Dynasty by Natalie Livingstone

As Jewish women in a Christian society and a patriarchal family, the Rothschild women have often been outsiders—overlooked in their family’s iconic legacy. Natalie Livingstone pulls back the curtain of the family’s storied history to reveal how these women forged their own distinct dynasty—becoming influential hostesses and diplomats, advising prime ministers, advocating for social reform and even trading on the stock exchange. From London’s East End to the Eastern seaboard of the United States and beyond, Livingstone traces the extraordinary lives of the dynamic Rothschild women, shining a light on how their visions and persistence shaped history.

The Tree Book: The Stories, Science, and History of Trees by DK

Discover the beauty and mystery of the world of trees—from ancient oaks and great redwoods to lush banyans and magnificent cedars—in this immersive visual guide. Combining the scientific, ecological importance of trees with a wider look at their history, symbolism and mythology, The Tree Book reveals the enduring significance of these fascinating organisms in human history and culture. With a comprehensive look into trees’ anatomy and uses, as well as their necessity in preserving the earth’s diverse ecosystems, DK offers a new kind of guide to understanding this important canopy of life.

Abstract Expressionists: The Women by Ellen G. Landau and Joan M. Marter

Although the Abstract Expressionist movement has become synonymous with Jackson Pollock, Mark Rothko and Willem de Kooning, many are unfamiliar with the works of Perle Fine, Helen Frankenthaler, Sonia Gechtoff and Joan Mitchell—women who studied at the same schools, exhibited at the same galleries, and were part of the same social scene as the men. Abstract Expressionists: The Women features these bold innovators, whose time in the art history spotlight has finally come. Surveying more than 50 paintings, collages and sculptures from the Levett Collection, an unparalleled private collection of women Abstract Expressionists, scholars Ellen G. Landau and Joan M. Marter explore the vital role women have played in the iconic movement.

A Library by Nikki Giovanni

In this lyrical picture book, world-renowned poet, New York Times bestselling author and Coretta Scott King Honor winner Nikki Giovanni collaborates with artist and illustrator Erin K. Robinson to share an ode to the library as a magic place that inspires imagination and exploration. This vibrant read-aloud can be enjoyed by book lovers of all ages, and is a well-deserved tribute to librarians who provide a welcome home away from home.

Amazing: Asian Americans and Pacific Islanders Who Inspire Us All by Maia Shibutani, Alex Shibutani and Dane Liu

Inclusivity takes center stage in Amazing: Asian Americans and Pacific Islanders Who Inspire Us All. Crafted by Olympic ice dancing medalist siblings Maia and Alex Shibutani, this children’s picture book explores 36 inspirational Asian Americans and Pacific Islanders, such as disabled hero Daniel Inouye, immigrant astronaut Kalpana Chawla, world-renowned chef David Chang, and Olympic gold medalist Sunisa Lee. With quick biographies written with journalist Dane Liu, Amazing celebrates the lives of achievers who have helped shape our world while paving the way for future generations of Asian Americans to make lasting change.

Smart Brevity: The Power of Saying More with Less by Jim VandeHei, Mike Allen and Roy Schwartz

Axios journalists and co-founders teach readers how to say more with less in virtually any format in this guide to effective, efficient communication. A modern take on Strunk and White’s The Elements of Style, Smart Brevity breaks down how to prioritize essential news and information, and to deliver it in a concise and visual format. In a digital age in which we are constantly inundated with news and information, Jim VandeHei, Mike Allen and Roy Schwartz share tips for breaking through the noise and getting our messages across with impact.

Next Gen Pick

Facing Our Futures: How Foresight, Futures Design and Strategy Creates Prosperity and Growth by Nikolas Badminton

Even though businesses, organizations and society at large are all subject to unforeseeable events, Facing Our Futures makes the case that we can develop the foresight and strategy to prepare for what’s ahead. Futurist and researcher Nikolas Badminton shows how innovation and open minds can help organizations restructure to mitigate risk and locate opportunity. Badminton tells readers how to develop the skills and outlook to prepare for whatever challenges the future holds.

Northern Trust Appoints Michael J. Bracci President of East Florida and Mid-Atlantic Regions

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Photo courtesyMichael J. Bracci, new President of the East Florida and Mid-Atlantic Regions at Northern Trust

Northern Trust has expanded the role of Michael J. Bracci to President of the East Florida and Mid-Atlantic Regions. Bracci, who has been President of the East Florida Region since 2003, will now lead the strategic direction and execution of the Wealth Management business of both the East Florida and Mid-Atlantic Regions, including Atlanta, Philadelphia and Washington, D.C.

Bracci, who joined Northern Trust in 1993, is a leader in investment management, trust and fiduciary management, financial planning and private banking. Prior to becoming President, he served as the Regional Senior Banking Officer for the Palm Beach Martin Region, and as Managing Director of the North Palm Beach office.

“For many years, Mike has delivered proven leadership, shown an unwavering dedication to client service and developed a strong track record for creating advice-driven solutions,” said Glenda G. Pedroso, President of the East Region for Northern Trust Wealth Management. “I am delighted he will be taking on this expanded role as President of both the Mid-Atlantic and East Florida Regions.”

Bracci earned a Bachelor of Arts in Economics from Tulane University and has more than 30 years of experience in the banking and finance industry. He began his career in the management training program at a large Southeast regional commercial bank and subsequently led a regional commercial banking team.

He is a member of the Board of Trustees for the Raymond F. Kravis Center for the Performing Arts and previously served as the Chair of the Board of Trustees. He also serves on the board of the Nicklaus Children’s Healthcare Foundation and has been Chair of the Board’s Executive Committee since 2005.

In 2021, Bracci was named to the Board of the Community Foundation for Palm Beach and Martin Counties. He is the current chair of the Investment Committee, past Treasurer of the Board and past Chair of the Finance Committee.

Franklin Templeton Establishes a Strategic Partnership with Power Corporation of Canada and Great-West Lifeco

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Franklin Resources, a global investment management organization operating as Franklin Templeton, announced a strategic partnership with Power Corporation of Canada and Great-West Lifeco.

The Power Group of Companies including Great-West and IGM Financial are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration of approximately $2.1 trillion.

Great-West includes Empower in the US as well as Canada Life in Canada and Irish Life in Europe. IGM encompasses subsidiaries Mackenzie Financial and IG Wealth Management and also has investments in Rockefeller Capital Management and China Asset Management Co.

As a foundation of the partnership, Franklin Templeton has entered into a definitive agreement to acquire Putnam Investments (“Putnam”) from Great-West for approximately $925 million of primarily equity consideration. Great-West will become a long-term strategic shareholder in Franklin Resources, Inc., with an approximate 6.2% stake, consistent with Great-West’s continuing commitment to asset management.

Great-West will provide an initial long-term asset allocation of $25 billion to Franklin Templeton’s specialist investment managers within 12 months of closing with that amount expected to increase over the next several years. The strategic partnership aligns with Franklin Templeton’s focus to further grow insurance client assets, and significantly broadens the relationship between Franklin Templeton and the Power Group of Companies in key areas of retirement, asset management and wealth management.

Founded in 1937, Putnam is a global asset management firm with $136 billion in AUM as of April 2023. Putnam has offices in Boston, London, Munich, Tokyo, Singapore and Sydney. Putnam’s complementary capabilities and track record of strong investment performance accelerates Franklin Templeton’s growth in the retirement markets by increasing its defined contribution AUM and expanding its insurance assets, while adding further scale and efficiency to Franklin Templeton’s mutual fund platform.

Consistent with Franklin Templeton’s previous acquisitions, the execution plan is designed to minimize disruption to Putnam’s investment teams and client relationships.

“This is a compelling transaction for Franklin Templeton, and we are excited about the numerous opportunities that will be unlocked by this long-term strategic partnership with the Power Group of Companies including Great-West,” said Jenny Johnson, President and CEO of Franklin Templeton. “Power and Great-West are global leaders across financial services, particularly in the wealth, insurance and retirement channels. With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM. We are pleased to welcome Great-West as a strategic investor, along with the impressive team at Putnam.”

“Franklin Templeton is a leading global asset management firm, whose business model is well-positioned to build upon the investment and distribution strengths of Putnam,” said R. Jeffrey Orr, Chair of Great-West, and President and CEO of Power. “We are pleased to enter a partnership with Franklin Templeton that will be mutually beneficial to clients and our respective businesses.”

“This transaction furthers Great-West’s strategy of building strategic partnerships with best-in-class asset managers to support our client’s retirement, insurance, and wealth management needs,” said Paul Mahon, President and CEO of Great-West. “Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors.”

“Critical to this transaction is the strong alignment between our organizations. We share a client-centric culture, a core belief in active management, a collaborative and research-based investment approach, and a long-held commitment to fundamental investment principles,” said Robert Reynolds, President and CEO of Putnam. “We look forward to joining Franklin Templeton in this next phase of our growth, as we come together to serve our clients, upholding our commitment to them and their needs.”

Recruiting, Support, and Succession Planning Are Top Priorities for Banks as They Look to Fend Off Increased Advisor Attrition

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As banks and credit unions face increased market uncertainty, many are placing greater importance on wealth management to generate diversified fee-based revenue and broaden client relationships beyond core banking services.

As such, banks need to better attract, develop, and retain financial advisors throughout their lifecycles, according to a new Cerulli/BISA white paper, Improving Recruitment and Retention Throughout Advisors’ Lifecycles.

Over the last five years, the bank broker/dealer (B/D) channel has grown AUMs at a compound annual growth rate (CAGR) of 11.7%, while relative advisor headcount has only grown 0.7% annually. While advisor headcount in the bank channel has remained relatively stable, as the average advisor continues to age, banks and credit unions need to prepare for potential challenges.

“Shifting market dynamics and competing advisory business models are putting significant pressure on banks’ and credit unions’ ability to attract and retain advisors,” says Chayce Horton, research analyst. “Banks need to be able to compete with other advisory channels, such as the registered investment advisor (RIA) channel, which has outpaced the broader wealth management industry in terms of AUM and advisor headcount growth,” he adds.

The paper finds that attrition risk presented by aging advisors is considered one of the greatest threats to bank wealth programs today. Bank advisors, on average, expect to retire at the age of 64 (four years earlier than peers in other channels); yet nearly one-third (29%) of bank advisors transitioning into retirement within the next 10 years are unsure of their succession plans.

Considering this reality, banks will need to develop a two-pronged approach to retain advisors at the later stages of their career while also finding and developing rookie talent. “Wealth and investment programs at banks and credit unions are at a critical juncture relative to growth and expansion,” says John Olerio, senior managing director, head of Webster Investments, and Chair of BISA Research Committee. “Establishing career-pathing options for advisors in the later stages of their career is crucial for banks, as it fosters greater satisfaction, retention, and long-term growth for both the advisor and firm,” says Horton.

Cerulli analyst Matthew Zampariolo adds that, “On the other hand, given that the process of hiring, licensing, and training junior advisors is costly, it is critical that banks investing in young talent retain them.”

In tandem with developing strategic hiring and retention plans, investments in technology and firm culture will pay dividends. According to the research, 52% of bank executives and advisors are dissatisfied with their firm’s technology. “Not only do outdated legacy systems make advisors’ jobs more onerous, but often these pain points are passed through to the clients,” says Horton. Worries about prioritization and culture at banks’ wealth management divisions are also top-of-mind among advisors and an area where improvement could lead to better retention and recruiting outcomes.
“Banks and credit unions must act proactively to stay ahead in an increasingly competitive environment. By focusing on attracting and developing young and mid-level talent and retaining senior advisors, banks can better navigate the many challenges they face and remain competitive in the wealth management industry,” concludes Horton.

Asset Managers Forge Ahead with ESG Product Development Despite Skepticism

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Asset owners and managers remain focused on ESG initiatives, despite heightened regulatory scrutiny surrounding “greenwashing” and negative investor perception, according to Cerulli’s latest white paper, Global State of ESG. Even as firms acknowledge and take measures to quell cynicism, few show signs of being deterred by skeptics or deviating from the courses that have been set.

Increased criticism over ESG has led governmental bodies around the globe to step up efforts to more clearly define and better regulate the ESG investment market. Investment funds that purport to be “green” or offer sustainability benefits without meeting any set categorization standards are rightfully being met with increasing scrutiny as the industry aims to sort out greenwashing.

Cerulli’s data shows both U.S. and international asset managers welcome the opportunity for clarity. The majority of U.S. asset managers polled by Cerulli believe the SEC should be responsible for setting standards around both public companies’ ESG disclosures (73%) and asset managers’ ESG standards and product definitions (58%). Meanwhile, 85% of European institutional investors are in favor of fining asset managers that engage in greenwashing practices and only 7% are not.

Additionally, fears of negative returns and the perception that performance may be sacrificed in the name of ESG/sustainability continue to be a major challenge to firms when it comes to marketing their strategies. Despite this, Cerulli observes managers forging ahead with product development, sales, and marketing of ESG products. In Europe, nearly half (49%) of asset managers consider ESG marketing a very important feature of their overall marketing efforts, and in the U.S., 58% of managers consider ESG a top product development initiative.

“Overall, Cerulli’s research reflects an industry largely unswayed by negative rhetoric surrounding the topics and concepts related to ESG investment,” says David Fletcher, associate director. “By and large, sustainability and the overarching themes of ESG investment are already ingrained in the asset management industry. The challenges firms face in implementing ESG investment initiatives are pain points that will likely be viewed in retrospect as necessary steps in the legitimization and long-term success of these goals.”

BNY Mellon Investment Management Launches the BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF

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BNY Mellon Investment Management announced the launch of BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF. Listed on Nasdaq, both ETFs are sub-advised by Newton Investment Management North America, LLC (Newton), a BNY Mellon investment firm and a leading equity and multi-asset manager.

“This addition to our growing suite of ETFs provides investors with access to Newton’s deep experience in thematic investing,” said David DiPetrillo, Head of North America Distribution at BNY Mellon Investment Management. “Through Newton’s multi-dimensional research platform combined with fundamental research and analysis, these ETFs will enable investors to potentially benefit from themes we believe will drive economic and societal growth and progression.”

BNY Mellon Women’s Opportunities ETF
The BNY Mellon Women’s Opportunities ETF invests principally in companies that incorporate gender equitable practices in the workplace or provide products or services that enhance the ability of women to meet their work or other personal life responsibilities and needs, such as those relating to household responsibilities, dependent and elder care responsibilities, and gender-specific healthcare. The Fund is co-managed by Newton’s Julianne McHugh and Miki Behr.

As part of BNY Mellon Investment Management‘s ongoing commitment to gender equality, the firm has partnered with Girls Inc., the non-profit organization that inspires all girls to be strong, smart, and bold through direct service and advocacy. In addition, BNY Mellon ETF Investment Adviser, LLC, the Fund’s investment adviser, will contribute at least 10% of the management fee to Girls Inc. The BNY Mellon Foundation will also provide grant funding to Girls Inc. and its New York affiliate, Girls Inc. of New York City, in recognition of their impactful work that equips girls and young women to reach their full potential.

“Gender gaps have economic impacts—if women and men participated equally in the economy a further US$28 trillion could be added to global annual gross domestic product by 20256,” said Ms. McHugh. “We believe that companies that support women, cultivate strong cultures, offer attractive benefit policies in the workplace, as well as deliver offerings which empower women, are positioned to better perform over time.”

BNY Mellon Innovators ETF
The BNY Mellon Innovators ETF invests in innovation-driven companies whose products and services seek to transform or disrupt the way we live and work. The Fund invests across all market capitalizations through a wide range of industries and sectors in seeking to capture transformational growth opportunities over a long-term horizon. The Fund is co-managed by Newton’s chief investment officer and head of equity, John Porter, and Edward Walter.

“Average company life spans have dropped sharply, with 52% of Fortune 500 companies having disappeared in the last 15 years7. Paired with COVID, which spurred innovation and disruption at an unprecedented rate, this provides many attractive investment possibilities in every corner of the economy,” said Mr. Porter. “Our broad interpretation of innovation, coupled with our institutional capabilities and deep experience of thematic investing, means we can look at emerging opportunities in the healthcare, information technology and consumer discretionary sectors among others.”

Alternative Fund Managers Optimistic About Fund Launches and Capital Raising, Research Shows

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Pixabay CC0 Public Domain

New research from Ocorian, a specialist provider of alternative fund services, shows alternative fund managers are optimistic about launches and fund raising over the next 18 months.

More than eight in ten (81%) say levels of fund raising will be higher over the next 18 months compared to the previous 18-month period. 69% of fund managers are cautiously optimistic stating they are expecting to see a slightly higher level of fundraising, whereas 12% believe it will be dramatically higher. Just 18% say it will be about the same and 1% say it will be lower.

These results are reflected in the confidence of fund managers to launch new funds.  Almost all (98%) are confident in the ability of alternative fund managers to successfully launch new funds in the next 18 months, with 52% being very confident and 46% being quite confident.

The research from the team at Ocorian Fund Services, which specialises in administrating alternative asset funds globally shows that 91% of alternative fund managers predict there will be more alternative asset fund launches this year compared to 2022. Of these, 28% predict there will be significantly more alternative asset fund launches while 63% predict launches will be slightly higher. Around one in 12 (8%) predict it will be about the same, and just 1% think it will be lower.

And it’s not just about a rise in confidence to successfully launch new funds, the statistics are reflected in the ability to raise capital with 96% predicting that more capital will be raised in 2023 compared to last year. Around two out of five (40%) of those surveyed think there will be over 25% more capital raised this year compared to last year, and a further 39% think there will be between 10% and 25% more.  Around 17% believe there will be up to 10% more.

When asked to pick the top five asset classes that alternative fund managers expect to benefit the most from fundraising over the next 18 months, 73% selected private equity, followed by infrastructure (68%), real estate (65%), private debt (59%), and hedge funds (49%).

When specifically asked how fund raising will change in the next 18 months for certain alternative asset classes when compared to the last 18 months, real estate, private equity and private debt are expected to increase the most.

Paul Spendiff, Head of Business Development, Fund Services at Ocorian, said: “2022 was a tough year for the fund management industry, with the number of funds launched and amount of capital raised hitting the lowest levels we’ve seen for many years. While it’s still a challenging economic environment and with a number of geopolitical issues making fund raising more difficult in some markets, it’s encouraging to see how positive alternative fund managers are feeling about the year ahead, predicting both higher levels of fund launches and more capital being raised overall. Despite not being out of the woods yet, we expect to see high performing fund managers with the right strategy, good governance and a transparent approach around ESG will benefit from the improving sentiment in the market.”

About Ocorian Fund Services

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. Its team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

US Public Sector Pension Plans Intend to Build on Inflation Hedging Succes

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US public sector pension plan managers are confident that their plans are well hedged against inflation but still have worries about possible risk scenarios, new research from Ortec Finance.

The study with senior US public sector pension plan professionals who collectively help manage over $1.315 trillion, found 86% say their plan is well hedged against inflation, more than a quarter (26%) believe their plan is ‘very well’ hedged.

The research from Ortec Finance, which has clients with over $15 trillion in assets under management and offices around the world including in New York, found just 12% believe the hedging at their plan is average. 

The confidence in inflation hedging is not leading to complacency – managers are still active in changing asset allocations to hedge against inflation. Around two in three (66%) think they will increase allocations to commodities to help with this, while 50% will boost allocation to infrastructure investing. Some 32% will increase allocations to inflation linked bonds and 38% will increase allocations to gold to hedge against inflation.

The survey shows public sector pension fund managers still have concerns about the risk of stagflation – the combination of low growth and high inflation – for their investment strategies.

Some 48% of those surveyed say they are very concerned while 50% say they are quite concerned. All those surveyed expect to see a change in actuarial assumptions on the expected inflation or discount rate.

Marnix Engels, Managing Director, Pension Strategy Ortec Finance said: “While public sector pension plan managers are generally confident that they have addressed inflation hedging on their funds, they aren’t getting complacent.  More work is being done in terms of asset allocations with commodities emerging as the clear favorite for increased exposure in the year ahead and there are some lingering worries that the US economy will not achieve the soft landing of lower inflation and rising growth.”

Ortec Finance models and maps the relevant uncertainties in order to help pension funds monitor their goals and decisions. It designs, builds, and delivers high-quality software models for asset-liability management, risk management, impact investment, portfolio construction, performance measurement and attribution and financial planning, he added. 

Private Equity’s Resilience

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According toTom Franco, Partner at CD&R, Private Equity (PE) has always thrived in challenging environments. Amid market turmoil and economic downturns, the robustness and long-term investment approach of PE firms shine through. This competitive advantage is attributed to their ability to make calculated moves, unfazed by the short-term influences that often sway other asset classes.

He believes that market turmoil tends to be favorable for generating strong returns. “The reason for this is relatively straightforward” he tells Funds Society. “For PE firms, I believe that economic downturns spell opportunity. I believe the best PE managers invest over the long-term and in disrupted periods, deploy capital at more attractive terms, and make bold, calculated moves without being inhibited by the short-termism that frequently influences so many public and family companies. I believe this ability to take a long view creates important competitive advantages”.

In his opinion, while the near-term macroeconomic environment cannot be ignored, it does not necessarily change the PE investment approach. 

“The long-term view usually assumes the need to hold an investment through both good times and tougher times.” He adds. 

Franco reminds us that, across portfolio companies, macros often offset in ways that are hard to predict.

As he notes, “there are portfolio businesses where inflation has been a significant headwind in 2022 because PE firms have not been able to pass on inflationary costs due to long-term contracts that typically represent an investment positive when they are making an investment decision. But there are also businesses where inflation has been a significant benefit, due to positive net price realization with largely fixed cost structures. And interestingly, these businesses with opposite reactions to the macro also exist within the same industry.” 

Even within those businesses that are economically sensitive, he believes a depressed economy can create opportunities for consolidation or to take share, reset dynamics with suppliers and customers, recruit exceptional talent or reinvest at attractive levels.

“PE is focused on being a strategic partner to sellers, and I believe this fundamental approach is even more demand in tough times. In a tougher environment, there are more problems, and therefore more problems available for managers to solve.”

The PE specialist believes that the era when PE was associated with mere financial engineering is a distant memory. “After several cycles and events ranging from extraordinarily cheap capital to the credit crunch, many today argue that private equity creates value through underlying business and operational improvements.” 

In his opinion, the challenge going forward is the appropriate form of operational value creation and how PE firms should evolve their skillsets. 

“In the future, I believe PE will require increased industry and capability specialization to drive fundamental value creation, such as digital, supply chain and talent management. I believe it will also require much earlier operational interventions in the PE ownership life cycle. Today, PE operations teams are often brought in well after the transaction closes. I believe the rule in the future will be early engagement to ask questions, assess management talent, and ensure the capital structure will support the transformation envisioned for the business being acquired.”

Looking at the future

Environmental, Social, and Governance (ESG) factors are becoming a significant part of the PE playbook. Companies that efficiently use resources tend to be more valuable at exit. “Looking ahead, I believe we’ll see GPs transition from narratives about their ESG ambition to clear reporting frameworks with dedicated teams. I also believe that more GPs will make environmental, social and governance matters more prominent in their processes, from diligence through the holding period.”

As the PE industry continues to grow, with over 20,000 firms globally, Franco considers that the industry has to be vigilant to prevent being defined by a single bad actor, at a time when it becomes increasingly important for participants to engage on public policy issues. “Firms must proactively defend their license to operate as media, regulators, and lawmakers focus on PE’s role in stakeholder capitalism, ESG, employment, and the healthcare system.”

In conclusion, 2023 promises to be a year of opportunity for PE firms, with a focus on operational value creation, ESG excellence, and active engagement in public policy issues. Amidst the market turmoil, PE firms have the potential to thrive, leveraging their long-term investment approach, strategic partnerships, and operational improvements to generate strong returns.

Insigneo Incorporates Alfredo Maldonado to Lead Its Expansion in New York City

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Photo courtesyAlfredo Maldonado, Managing Director & Market Head in New York

Insigneo is delighted to announce the appointment of Alfredo Maldonado as Managing Director and Market Head for New York and US Northeast Region.

Maldonado will be based at Insigneo’s expanding office located on Madison Avenue and 41st Street reporting to Rodolfo Castilla, Insigneo’s Head of Sales. 

With this important incorporation, Insigneo reaffirms its commitment to delivering exceptional financial services to clients across the globe. The company’s decision to hire Maldonado underscores its focus on hiring the best talent and reinforces its position as a leading player in the global wealth management sector. New York is an important hub for the firm to continue its expansion plans while providing an integrated platform for Investment Professionals and their clients globally. 

In his new role, Maldonado will oversee Insigneo’s existing business in New York, driving the company’s growth by focusing on top line revenue and assets for its existing business, while expanding its footprint in the Northeast.

“Alfredo’s appointment reflects Insigneo’s aspiration to be recognized as the best value proposition for all independent advisors focused on international clients. We are thrilled to welcome such a distinguished professional, and particularly somebody that shares our values, which is critical to all of us,” said Rodolfo Castilla, Head of Sales for Insigneo.

Maldonado brings 25 years of international wealth management experience, having worked in New York, California, and Florida, expanding his network and knowledge across these regions. The senior hire brings a deep understanding of the New York market, which will be crucial in growing Insigneo’s presence in the city.

“Insigneo’s commitment to providing a pro-business approach for financial advisors, enabling them to provide exemplary service to their clients is unmatched in the industry,” said Maldonado. 

“I am happy to welcome a leader of Alfredo’s caliber and culture to our growing Insigneo family. New York and the Northeast are very important markets for us to grow and we are excited he will lead those efforts to make us a powerhouse,” said Javier Rivero, Insigneo’s President & COO.