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The SEC Accuses WisdomTree AM of Greenwashing in Three ESG ETFs

The SEC has accused New York-based investment advisor WisdomTree Asset Management of “making false statements and compliance failures related to the execution of an investment strategy marketed as ESG.”

According to the SEC order, from March 2020 to November 2022, WisdomTree stated in the prospectuses of three ETFs marketed with ESG criteria, and before the board of trustees overseeing the funds, that they would not invest in companies involved in certain products or activities, including fossil fuels and tobacco.

However, the SEC’s documentation concludes that the funds marketed as ESG invested in companies related to fossil fuels and tobacco, including coal mining and transportation, natural gas extraction and distribution, and retail sales of tobacco products. “WisdomTree used data from external providers that did not exclude all companies involved in activities related to fossil fuels and tobacco,” the SEC order explains, also concluding that the firm lacked policies and procedures for the selection process that would exclude such companies.

As Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, recalls, federal securities laws impose a simple proposition: investment advisors must do what they say and say what they do. “When investment advisors claim they will follow certain investment criteria, whether investing in or refraining from investing in companies engaged in certain activities, they must adhere to those criteria and adequately disclose any limitations or exceptions to those criteria. In contrast, the funds involved in this action made precisely the types of investments that investors would not have expected based on WisdomTree’s disclosures.”

For its part, WisdomTree has accepted the SEC’s order concluding that it violated the antifraud provisions of the Investment Advisers Act of 1940 and the Investment Company Act of 1940, as well as the compliance rule under the Investment Advisers Act. Without admitting or denying the SEC’s findings, WisdomTree agreed to a cease-and-desist order, a censure, and to pay a $4 million civil penalty.

abrdn Relaunches Its Emerging Markets ex-China Fund, Focused on Four Key Themes

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Relanzamiento del fondo de mercados emergentes de Abrdn

abrdn will relaunch the abrdn SICAV I-Emerging Markets Sustainable Equity Fund under the new name abrdn SICAV I-Emerging Markets Ex China Equity Fund. According to the asset manager, the fund introduces a series of changes for investors seeking to explore more opportunities in emerging markets. abrdn clarifies that the fund is available in Spain and the U.S.

Firstly, the decision to exclude China, as explained by abrdn, is in response to demand from a group of investors seeking active options to manage their exposure to the country. While abrdn continues to offer a wide range of strategies that include China, the firm is responding to client demand for diversifying their options.

Across the industry, the number of firms managing emerging market strategies excluding China has grown from three in 2017 to nearly 50 in 2024, according to Morningstar. abrdn has been managing an emerging markets strategy excluding China since March 2022 for the U.S. market. The change also comes at a time when, according to abrdn, opportunities in emerging markets are increasing, as they are expected to account for nearly 50% of global growth by 2050, according to abrdn’s Global Macro study.

They also note that the managers of the relaunched fund will be the Emerging Markets ex China portfolio construction team based in London and Singapore: Nick Robinson and Devan Kaloo in London, and Xin Yao NG in Singapore, supported by a broader global emerging markets equity team based in five locations outside China, from São Paulo to Singapore.

“China is home to some fantastic companies and is poised to surpass the U.S. as the world’s largest economy around 2035, so this is not a rejection of the Chinese market. However, we recognize that some investors want more flexibility in their approach to China. Ultimately, it’s about choice while embracing some of the key megatrends that we believe will drive emerging markets in the future. We see four powerful themes affecting the ex-China universe: consumption, technology, the green transition, and relocation. The fund invests in many companies that will benefit from these themes. The non-Chinese universe also offers sectoral diversification, as it includes more information technology and financial companies at the index level than the standard emerging markets index. The team believes that the strength of the tech sector will continue to expand beyond the U.S. market and holds a significant active position in companies benefiting from AI investments,” said Nick Robinson, Deputy Head of Global Emerging Markets Equities at abrdn.

The fund will remain classified as Article 8 under the SFDR and will continue to follow the NBIM exclusion list. The benchmark index will switch to the MSCI Emerging Markets ex China 10/40 Index (USD). These changes will not alter the fund’s risk profile. The fund will follow abrdn’s “emerging markets ex-China equity investment approach that promotes ESG aspects.”

By applying this approach, the fund commits to holding a minimum of 10% in sustainable investments, a reduction from the current 20% commitment to sustainable investments. At the index level, the MSCI EM includes 1,328 companies, while the MSCI EM ex China includes only 673. The fund will continue to use a qualitative identification process and avoid investing in companies lagging in ESG performance, incorporating negative screening based on the UN Global Compact, Norges Bank Investment Management (NBIM), controversial weapons, tobacco production, and thermal coal. The fund will also maintain explicit ESG objectives as outlined in its new investment objective and policy.

Harris vs Trump: Implications for Foreign Policy and Investment

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The 2024 U.S. presidential elections have been shaken by a series of political events in recent weeks. Here is a brief overview of how either government would address these challenges and the possible repercussions for geopolitical stability, U.S. national security policy, and the markets. Vice President Kamala Harris has assumed a significant role in the Biden administration’s foreign policy. In almost every area, the vice president’s stance on foreign policy closely aligns with President Biden’s. Therefore, regarding a possible Harris administration’s foreign policy, we should expect “more of the same” with continuity in both approach and personnel.

This means continuing to focus on protecting and promoting strategic sectors in industries critical to great power competition with China, such as artificial intelligence, quantum computing, biotechnology, and others (Harris, in particular, has supported U.S. export controls and restrictions on foreign investment in advanced semiconductors). It also means continuing to deepen relationships with U.S. allies in both economic and national security domains, including ongoing U.S. support for Ukraine and Taiwan, and increasing reliance on NATO and other multilateral organizations or initiatives. Her choice of Tim Walz as her running mate could be a differentiating factor in relations with China, as Walz – though highly critical of the Chinese Communist Party – has a strong personal relationship with the country and its culture.

Trump: His policy would likely reflect a similar approach to his first administration.

In summary, we would expect a more transactional U.S. foreign policy, similar to what we saw during President Donald Trump’s first administration, particularly regarding Ukraine and Russia, and including Taiwan.

Trade would also likely shape U.S. foreign policy in a second Trump administration. The former president’s promise to impose significant trade tariffs on China – as well as on some U.S. allies in Europe and the Indo-Pacific – would likely be a key feature of Trump 2.0’s approach to the world, almost certainly adding new tensions to U.S.-China relations, as well as new frictions with traditional U.S. allies.

Investment Implications: More winners and losers in the “new era” regardless of policy.

Regardless of the outcome in November and the differing policy priorities of Vice President Harris and former President Trump, the global geopolitical environment will remain challenging, likely for the next several years. In such an uncertain national security environment, U.S. leaders and other policymakers around the world will continue to emphasize national security, often at the expense of economic efficiency.

Therefore, investors should prepare for a very different context than in previous periods, including selective protectionism as the new normal, an increasing likelihood of inflation and structurally higher interest rates, more differentiated macroeconomic cycles, and lower global growth than what was seen during the “Goldilocks” period of globalization.

Allfunds Appoints Patrick Mattar as Global Head of ETP Distribution

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Patrick Mattar nuevo director en Allfunds

Allfunds has announced the appointment of Patrick Mattar as the new Global Head of Exchange-Traded Products (ETPs) Distribution. This announcement aligns with their intention to launch an ETP platform in 2025, an expansion that will complement their offerings of traditional and alternative funds, establishing a comprehensive three-pillar platform with a full spectrum of exchange-traded products under an integrated solution.

According to the company, in his new role, Patrick will be responsible for leading the development and launch of the ETP platform, guiding the strategy for this segment, and ensuring smooth integration with Allfunds’ existing suite of services. His focus will be on driving innovation, enhancing customer experience, and ensuring the platform’s long-term success in an evolving financial landscape.

“I am excited to join Allfunds and lead this exciting project. The opportunity to develop a comprehensive ETP platform is incredibly stimulating, and I look forward to working with the talented Allfunds team to deliver innovative solutions that meet the evolving needs of our clients,” said Patrick Mattar, Global Head of ETP Distribution.

Allfunds highlights that Patrick brings extensive experience to the role, having held leadership positions in leading financial services organizations. Before joining Allfunds, he was Global Head of ETFs at Aberdeen Standard Investments (now abrdn), and previously served as Managing Director at iShares, BlackRock, where he spent nearly a decade helping to drive the growth of ETFs through new products and uses by investors.

Patrick holds a Master’s degree in Economics from the University of St Andrews and was a fellow at the University of Pennsylvania. He also earned a Master’s in Science from the University of Stirling and attended Trinity College Dublin.

Following this announcement, Juan de Palacios, Head of Strategy and Product at Allfunds, commented: “We are delighted to welcome Patrick to Allfunds. His experience and leadership in the ETP and ETF sectors will be crucial in the next phase of our growth, and we are confident that under his direction, our new platform will deliver significant value to both the ETP ecosystem and our clients.”

FlexFunds and Funds Society release the II Annual Report of Asset Securitization 2024-2025: Key Industry Insights for the Next 12 Months

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Informe anual sobre securitización — Photo courtesy

FlexFunds, in collaboration with Funds Society, is pleased to announce the release of the II Annual Asset Securitization Sector Report 2024-2025, an in-depth analysis of the trends and challenges facing the asset management sector in a constantly evolving global economic environment. This report gathers the perspectives of over 100 investment experts and asset managers from 18 countries across Latin America, the United States, Europe, and Asia.

The report examines how the global economy has influenced asset securitization, identifying the most attractive sectors for asset managers and the strategies experts are adopting to navigate short- and medium-term changes. Download the full report here.

Key topics covered in the report include:

Main variables in 2024 and 2025

What are the most relevant variables when building or rebalancing an investment portfolio?

Most “securitizable” financial assets

Discover which groups of financial assets are most attractive for securitization.

Beyond conventional assets

Find out the experts’ conclusions on including alternative assets in portfolios.

Collective investment vs. separately managed accounts

What does the market think about the future of asset management? Will collective investment dominate, or will separately managed accounts prevail?

Challenges in attracting capital and clients

What is the biggest challenge in raising capital and acquiring clients in the world of investments and asset management?

The impact of technology

How does the use of artificial intelligence impact the asset management industry?

Tools and needs

The report reveals the advantages and disadvantages of various tools and needs in asset management, such as centralized account management and automated or outsourced NAV calculation.

The significance of this report lies not only in the quality of its data but also in the diversity of companies and experts who contributed to its creation. Companies such as Inversiones Security, Compass Group, Cucchiara & Cia, Dentons Ireland LLP, Harneys Fiduciary, Mason Hayes & Curran, AV Securities, Cix Capital, Black Salmon, and others provided their insights on the sector.

The II Annual Report of the Asset Securitization Sector 2024-2025 is an essential tool for industry professionals seeking to understand the evolving dynamics of asset management. With a comprehensive overview of future trends and challenges, this report offers valuable insights for building robust strategies in an increasingly complex financial environment.

Download the full report and discover key trends in asset management and securitization.

Growth or Value: Who Benefits More From the Fed’s Interest Rate Cuts?

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The interest rate cut made in September by the U.S. Federal Reserve (Fed) is marking a shift in market trends heading into the final quarter of the year. According to some international asset managers, while the move is gradual, the beginning of the global shift in monetary policy could be accompanied by the end of the leadership of technology stocks and cash.

This is the interpretation from Allianz GI, for example, whose fourth-quarter outlook suggests that we may be entering a period of below-potential growth, where downside risks will naturally increase. “After a period of relative calm in the markets, despite some spikes in volatility, investors should be prepared for a possible return of structural volatility in 2025,” they state at Allianz GI.

Despite their cautious tone, Allianz GI clarifies that these early signs should not be interpreted as a negative signal for equity markets. “As inflation and interest rates decrease, this trend is likely to be positive for quality and growth stocks. We expect these styles to register better returns in the coming months. Volatility is likely to rise in the final stretch of the year, especially considering the U.S. elections in November, so it could be a good time to carefully consider some defensive positions to balance portfolios,” says Virginie Maisonneuve, Global Chief Investment Officer of Equities at Allianz GI.

For Chris Iggo, CIO Core Investment Managers at AXA Investment Managers and Chairman of the AXA IM Investment Institute, “the bull market could extend well into next year.” In his opinion, the Fed is doing a great job, and market prices should reflect the weighted probability of all potential outcomes. “We do not know the likelihood of abrupt changes in market confidence, erroneous economic data, or the impact of the upcoming U.S. elections. If markets are rational, the current price is the best of prospects. Betting against that could be risky,” Iggo says.

In fact, he believes that most investors should be more satisfied with growth equities now that interest rates are heading toward 3%. “It is better to own equities when analysts confidently revise upward their earnings-per-share expectations than when rate hikes threatening a recession cut forecasts, as happened in 2022,” he argues.

Stephen Auth, CIO of Equities at Federated Hermes, explains that the Fed has realized that “it needs to start cutting aggressively to prevent a hard landing from turning into a full-blown recession,” and that “if the economy continues to slow down as we expect, there will surely be more cuts.” His main conclusion is that this new cycle of rate cuts will benefit value and small-cap companies, as opposed to growth.

“The market expects an additional 75 basis points of cuts by the end of the year, and another 125 in 2025. We see at least this much ahead. All of this is good news for value and small-cap companies, which, unlike the large cash-rich tech companies in the growth indices, primarily finance themselves using short-term interest rates. But investment flows to this side of the market will depend on the Fed continuing to act aggressively and signs suggesting that the current economic weakness is stabilizing at pre-recession levels,” he argues.

Investment Opportunities

In Maisonneuve’s opinion, UK stock valuations appear attractive and could benefit from rate cuts and political stability. Additionally, technology and small-cap companies could perform well in a rate-cutting, moderate-growth environment. She also believes that water-related stocks are good defensive opportunities in this context, as they are closely tied to a natural resource and are not influenced by the market.

“In general, we continue to pay special attention to the Asia region. Within equities, we prefer Japanese stocks due to ongoing structural reforms and the country’s recent stock market crisis, the second largest in its history. Moreover, companies are revising their profits upward, increasing dividends, and buying back shares. In China, the apparent recovery of the real estate market could act as a catalyst for stocks, which mostly trade at very attractive prices. There is no doubt that geopolitics continues to pose certain challenges, as the potential escalation of current trade tensions could affect confidence. Therefore, we expect a more favorable environment for Chinese equities in the fourth quarter of 2024,” Maisonneuve explains.

The Allianz GI expert also refers to India, where she believes the valuation premium of stocks is more than offset by the country’s strong growth. “The fundamentals are very solid, especially the region’s favorable demographics, with a large workforce and an average age of just 28 years, suggesting positive economic prospects for the coming years,” she concludes.

For his part, Iggo adds that “optimism is spreading, and equity markets are reaching new highs. The frenzy around artificial intelligence (AI) may have subsided, but the revolution is underway, and we shouldn’t rule out upside surprises in tech earnings in the third quarter and in 2025.”

The Global Housing Market Bubble Risk Decreases for the Second Consecutive Year

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Riesgo de burbuja en el mercado inmobiliario

The risks of bubbles in the real estate sector of the cities analyzed in the UBS Global Real Estate Bubble Index have decreased, on average, for the second consecutive year. According to the index, there is little evident risk of a housing bubble in San Francisco, New York, and São Paulo, which shows the lowest bubble risk among the analyzed cities. In Europe, following new declines in the index score, London, Paris, Stockholm, and Milan also fall into this low-risk category. Likewise, the bubble risk in Warsaw remains low.

On the other hand, Miami shows the highest bubble risk among the cities in this study. There is also a high bubble risk in Tokyo and Zurich, although in these cases, the index score has dropped significantly compared to last year. Additionally, there is a clear elevated bubble risk in Los Angeles, Toronto, and Geneva.

In the middle, the index reveals moderate risk in Amsterdam, Sydney, and Boston. In the same risk category are Frankfurt, Munich, Tel Aviv, and Hong Kong, after significant reductions in imbalances. Vancouver, Singapore, and Madrid complete the group of cities with moderate bubble risk. Dubai, included in this group of cities with moderate bubble risk, recorded the highest increase in the risk score among all the analyzed cities.

Bubble Formation and Burst

Currently, inflation-adjusted housing prices in the analyzed cities are, on average, about 15% lower than in mid-2022, when global interest rates began to rise. Claudio Saputelli, head of the real estate division at UBS Global Wealth Management CIO, explains that the cities that saw the largest price corrections “are those that showed a high housing bubble risk in previous years.”

Real prices in Frankfurt, Munich, Stockholm, Hong Kong, and Paris are at least 20% below the peaks they reached after the pandemic. Vancouver, Toronto, and Amsterdam recorded significant price drops of around 10% in real terms.

Overall, the last four quarters were characterized by weak housing price growth. However, significant corrections continued to be recorded in Paris and Hong Kong. On the contrary, in the most sought-after areas of Dubai and Miami, housing prices continued to rise. Additionally, in some cities with a severe housing shortage, such as Vancouver, Sydney, and Madrid, real prices rose more than 5% compared to the previous year.

Housing Shortage as a Stabilizer

On average, a skilled employee in the services sector can afford 40% less living space than in 2021, before the global interest rate hikes. Current price levels do not seem sustainable given the prevailing interest rate levels, especially in markets with high homeownership rates.

However, a significant deterioration in affordability does not necessarily lead to price corrections. The growing housing shortage, reflected in rising rental prices, helped stabilize many urban housing markets. Real rental prices have increased by an average of 5% in the last two years, outpacing income growth in most cases. In most of the analyzed cities, rental price growth has even accelerated over the last four quarters.

The UBS study reveals that supply is offering no relief, as high interest rates and rising construction costs have been major burdens on housing construction. Building permits have declined in most cities over the past two years.

A Certain Relief in Sight

Housing market dynamics are set to improve. Rising rental prices support the demand for homeownership in urban areas. The fall in interest rates will make the cost advantage of ownership clearly lean toward buying. First-time buyers will return to the market as affordability improves. Matthias Holzhey, lead author of the study at UBS Global Wealth Management, concludes that real housing prices in many cities “have bottomed out” and adds that it is likely that “economic prospects will determine whether prices surge again or evolve more laterally.”

UBS Global Real Estate Bubble Index: Overview, 2024

Regional Outlook

In Europe, London’s real estate market has lost a quarter of its value since its all-time high in 2016. More interest rate cuts are expected from the Bank of England, which could rekindle housing demand, especially as rents are also rising. Forecasts for the prime market seem a bit bleaker, according to the study, as uncertainty over unfavorable tax regimes for the wealthy could undermine demand in this segment.

Real estate prices in Warsaw skyrocketed nearly 30% between 2012 and 2022. Solid employment prospects, metro expansions, and modern developments have kept the market attractive for new residents and buy-to-let investors. A new government subsidy program triggered another buying frenzy in 2023. However, the price dynamics are expected to slow down in the coming quarters, according to the study.

Both Frankfurt and Munich showed very high housing bubble risks back in 2022. Since then, the rise in mortgage rates has caused both markets to drop, with real estate prices falling by 20% from their respective peaks. The forecast for interest rate cuts, combined with supply shortages, should trigger a price recovery.

Backed by falling mortgage rates and strong international demand, real prices in Paris rose by 30% between 2015 and 2020. Emigration, lending restrictions, rising mortgage rates, and an increase in property taxes have curbed demand. With a 10% inflation-adjusted drop in the last four quarters, Paris was the weakest real estate market in Europe among all the cities analyzed in the study.

Regarding Switzerland, buying a home to live in Zurich now costs almost 25% more in real terms than it did five years ago. In the last four quarters, the Swiss city also experienced one of the largest rent increases among all the cities analyzed in the study. The proportion of owner-occupied homes is decreasing, as new buildings are often marketed as buy-to-let properties. Due to the very limited inventory of owner-occupied homes in Zurich, these will increasingly be seen as a luxury good.

Middle East

Driven by falling interest rates and the growing housing shortage, real estate prices in Tel Aviv tripled between 2002 and 2022. The rise in mortgage rates ended the boom two years ago, and demand shifted to the rental market. As a result, real prices fell by 10% by the end of 2023. However, housing transactions began to recover in 2024 due to the fear of missing out on the trend, despite security concerns.

After a seven-year price correction, the bubble risk signal in Dubai was low in 2020. Since then, transaction figures have set new records each year, and the oversupply has been absorbed. In the last four quarters, real estate prices increased by nearly 17% and are 40% higher than in 2020. The report states that a high proportion of unforeseen (likely speculative) transactions and the large volume of new supply could trigger a moderate price correction in the short term.

Asia-Pacific

In the last four quarters, real estate prices in Hong Kong registered a double-digit decline. Inflation-adjusted, housing prices are back to levels not seen since 2012. The number of transactions plummeted, and mortgage growth stalled. Strong economic growth and falling interest rates should support demand next year.

In Singapore, rental prices have outpaced housing prices over the past five years, driven by the influx of global talent and construction delays. Last year, however, real rents fell by 7%, while prices rose by 3%. High interest rates and the reduction of supply bottlenecks have increased unsold inventories, suggesting moderate price inflation in the future.

Due to high interest rates, Sydney is currently the second most unaffordable city in the study, surpassed only by Hong Kong. However, inflation-adjusted prices increased slightly over the last four quarters and are only about 10% below the 2022 peak in real terms. The resilience of prices is mainly due to the acute housing shortage.

Real estate prices in Tokyo have risen around 5% in recent quarters, continuing the trend of previous years. In the last five years, housing prices have risen more than 30% in inflation-adjusted terms, more than double the rate of rent increases. Tokyo has one of the highest price-to-income ratios among all the cities in the study.

Americas

High inflation over the past two years has significantly reduced imbalances in Canada’s housing market. Despite lower affordability, the housing market has held up well. In inflation-adjusted terms, purchase prices in both Toronto and Vancouver are only slightly below the levels of three years ago.

After a prolonged period of weakness, housing prices in São Paulo have risen slightly for the second consecutive year in inflation-adjusted terms. However, real prices are still more than 20% below the peak they reached at the end of 2014. Renting remains financially more attractive than homeownership due to very high interest rates. As a result, rents soared by nearly 10% in real terms over the last four quarters.

The homeownership market in the United States is becoming increasingly less affordable, as the monthly mortgage payment as a percentage of household income is much higher than it was during the peak of the 2006-2007 housing bubble. Despite its low affordability, housing prices in New York have not corrected drastically. They are only 4% below 2019 levels and have even risen slightly in the last four quarters.

Boston’s real estate market has seen a 20% price increase since 2019, outpacing both the local rental market and income growth. However, the local economy has recently suffered, with layoffs primarily in the tech and life sciences sectors, which could change this trend.

Driven by the luxury market boom, prices in Miami have increased by nearly 50% in real terms since late 2019, with 7% of that occurring in the last four quarters. In contrast, real housing prices in Los Angeles have barely risen since mid-2023. Due to declining economic competitiveness and the high cost of living, Los Angeles County’s population has been decreasing since 2016. Consequently, rents have not kept pace with consumer prices.

San Francisco’s real estate market is showing signs of a turnaround. After real prices corrected by 8% last year, they remained stable over the last four quarters. The stock market boom and falling interest rates have already begun to revitalize the luxury segment, and sales are increasing.

The Assets in Sustainable Equity UCITS Funds Have Doubled Over the Past Five Years

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Sustainable investment in Europe has become a structural part of the industry. According to the latest report, *”Sustainable Equity UCITS: Promoting Sustainable Business Models”*, published by the European Fund and Asset Management Association (EFAMA), the growth of sustainable equity funds has surged over the past five years.

The report highlights that sustainable equity UCITS represented 24% of the total sustainable funds in the European industry in 2023, compared to 15% in 2019. A significant finding is that the net assets of these vehicles have more than doubled over the past five years, increasing from €0.6 trillion to €1.3 trillion.

Moreover, despite market volatility and economic uncertainties, EFAMA notes that sustainable equity UCITS have shown resilience, with positive net inflows, particularly in 2021 when net inflows reached €231 billion. “Although net inflows were smaller in 2022 and 2023, demand for these funds remained strong compared to global trends, underscoring investors’ confidence in sustainable investments,” they point out.

The report also states that nearly 20% of sustainable equity UCITS are classified as Article 9 funds, while 70% are Article 8, reflecting cautious sentiment among investors due to regulatory uncertainties. The ongoing review of the Sustainable Finance Disclosure Regulation (SFDR) is expected to provide clearer definitions and support for transition finance.

On average, sustainable equity funds have consistently delivered positive net returns, comparable to non-sustainable equity UCITS. These funds tend to be profitable, benefiting investors with sustainability preferences.

“Sustainable equity UCITS not only encompass a wide range of sustainability themes tailored to diverse investor preferences but are also a resilient investment product with competitive returns. This makes them an attractive option for investors,” explains Vera Jotanovic, Senior Economist at EFAMA.

According to Anyve Arakelijan, Policy Advisor at EFAMA, as the regulatory landscape evolves, “we expect the sustainable finance framework to become more investor-focused, resolve inconsistencies with other EU regulations, and provide greater support for transition finance, further driving sustainable progress and achieving the EU’s long-term sustainability goals.”

Banque Hottinguer Selects RBA From the iMGP Network to Launch an Asset Allocation Fund Based on ETFs

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iM Global Partner (iMGP) has announced that Banque Hottinguer has selected New York-based Richard Bernstein Advisors (RBA) as a partner to launch and manage an asset allocation fund based on its core strategy, which has been in operation for 15 years.

Richard Bernstein Advisors is a recognized asset allocation specialist that combines top-down macroeconomic analysis with portfolio construction driven by quantitative models, using ETFs to express its views.

This launch demonstrates the interest of international investors in RBA’s sub-advised solutions and the ability of iM Global Partner to create a strategy that reflects the allocation needs of European investors.

The fund was exclusively designed by RBA and iM Global Partner for Banque Hottinguer, catering to the specific needs of its private and institutional investors. The multi-asset portfolio is composed of ETFs with exposure to global equities, euro-denominated bonds, and a small portion of commodities. “RBA seeks to generate alpha by identifying global investment styles and themes where they believe there are disparities between fundamentals and sentiment. This is very different from the traditional bottom-up approach, which aims to generate alpha through individual stock selection,” they explain.

“This partnership with iM Global Partner and RBA allows us to offer our clients unique access to international management with a center of gravity in the U.S. This solution, based on a Pactive® investment approach (active management of passive investment vehicles, ETFs), is supported by a combination of macroeconomic analysis and profit cycle research that has proven its strength and performance throughout cycles,” said Laurent Deydier, Deputy CEO of Banque Hottinguer.

Richard Bernstein, CEO and CIO of RBA, commented: “We are particularly honored to be selected by Banque Hottinguer, a historic and renowned institution, for the design of this new product. This materializes our partnership with iM Global Partner and strengthens our presence in the European market as asset allocation experts.”

Regarding RBA, the company was founded by Richard Bernstein, a former Chief Investment Strategist at Merrill Lynch & Co and a recognized expert in equities, styles, and asset allocation, with more than 40 years of experience on Wall Street. Many of the highly experienced members of the investment team have worked with Richard since his time at Merrill Lynch & Co.

“We are delighted to work with Banque Hottinguer on this project and believe it demonstrates our ability to develop new strategic partnerships and innovate through new investment solutions,” concluded Julien Froger, Managing Director – International Distribution at the firm.

Six Steps to Success in AI-Driven Behavioral Finance

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Éxito en finanzas conductuales impulsadas por IA

Building scalable AI-driven behavioral finance solutions requires a structured approach, according to a Capgemini study. This involves integrating diverse data sources by leveraging both artificial intelligence and generative AI capabilities. Additionally, the integrated data must be ingested using sentiment and predictive analysis based on AI, and the derived insights should be implemented to drive real-time customer profiling, portfolio optimization, and hyper-personalized experiences for high-net-worth individuals, as noted in the study.

This holistic approach not only enhances customer experiences but also empowers advisors by automating mundane tasks, optimizing their time, and minimizing errors. For example, the study cites firms like RBC Wealth Management U.S., which are already utilizing Salesforce’s “Personalized Financial Engagement” solution to integrate disparate data systems, create unified client profiles, and offer intelligent, automated customer journeys using generative AI.

However, executing a structured approach successfully is a significant challenge. To ensure that a company can efficiently integrate, ingest, and implement data to achieve necessary business value, Capgemini recommends six critical steps:

1. Make internal data accessible: For banks, the key question is not whether they have valuable data, but whether that data can be located and accessed by AI applications in real time. Isolated, hidden, and poorly labeled datasets need to be connected, cleaned, and standardized across business units and acquired entities.

2. Incorporate external data: While retailers commonly use third-party data to gain deep insights into customers, banks have lagged behind. To fully realize the promise of behavioral finance, banks must identify and integrate appropriate external sources with internal data repositories.

3. Set up robust AI infrastructure: Data must be delivered quickly to AI applications, as latency can severely limit AI’s ability to derive relevant insights. Banks need to design and deploy the appropriate computing, storage, networking, and cloud infrastructure to support AI foundations.

4. Adopt AI and generative AI solutions for finance: Understanding customer psychographics, creating hyper-personalized financial plans, and offering high-level client experiences requires adopting robust, purpose-built AI applications. Capgemini’s “Augmented Advisor Intelligence” solution, for instance, helps relationship managers make informed decisions and generate client-oriented communications.

5. Prepare to expose AI insights to clients: While AI for behavioral finance and customer communications is currently an internal function, high-net-worth individuals will eventually seek self-service capabilities alongside personal interactions with their relationship managers. To meet this future demand seamlessly, banks must design the architecture of technology and application bases with foresight.

6. Address regulatory concerns: As with any new technology, implementing AI solutions must comply with regulations to minimize risks of deviations or losses caused by AI applications. In addition to properly designing, deploying, and monitoring AI applications, banks should maintain human oversight between AI applications and customers, at least for now.

This comprehensive strategy is essential for financial institutions to maximize the benefits of AI-driven behavioral finance solutions while mitigating risks and preparing for future innovations.