CC-BY-SA-2.0, Flickr. Guillermo Ossés joins Man GLG as Head of Emerging Market Debt Strategies
Man GLG, the discretionary investment management business of Man Group plc, announced on Monday that Guillermo Ossés joined the firm as Head of Emerging Market Debt Strategies, based in New York.
Guillermo, who brings 24 years of experience in emerging markets fixed income investing to Man GLG, joins the firm from HSBC Asset Management. Guillermo joined HSBC in 2011 and led the firm’s emerging markets fixed income capabilities, managing in excess of $20 billion. Prior to this, Guillermo was an emerging markets fixed income portfolio manager at PIMCO and held emerging markets positions at Barclays Capital and Deutsche Bank. He holds a BA in Business from Universidad Católica de Córdoba in Argentina and an MBA from the Massachusetts Institute of Technology Sloan School of Management.
The recruitment of Guillermo follows the acquisition of Silvermine and the recent hire of Himanshu Gulati last year, demonstrating Man GLG’s commitment to expanding its presence in the US, and further strengthening the firm’s capabilities.
Guillermo Ossés will report to Man GLG’s co-CEO Teun Johnston. According to whom, “it is with great pleasure that we welcome Guillermo to Man GLG. He has extensive experience in investment management and a distinctive investment process, alongside a proven track record of investing and managing investment teams in the emerging markets fixed income space. As Head of Emerging Market Debt Strategies, Guillermo will be instrumental in broadening our capabilities in the fixed income space and enhancing our client offering.”
Guillermo Ossés said: “Man GLG is a performance-focused business and its institutional framework, combined with an entrepreneurial environment and collaborative culture, make this a very compelling opportunity. I am very excited to be joining the firm, and working alongside Teun and his team as we strive to build a world class emerging markets fixed income investment management business.”
CC-BY-SA-2.0, FlickrPhoto: Pictures of Money. Don't Fight Today's Markets With Tomorrow's Money
Crude oil has now fallen below $28 per barrel. Not so many months ago, no one could have predicted — or even imagined — that this commodity would drop from over $120 per barrel so far and so fast. And with this deep decline in the price of oil, the US dollar is rising and global trade is slowing.
It is still my strong contention that cheap oil means more spending and growth. But that isn’t happening yet.
So where do I stand now? Here are my new points:
The majority of the world’s economies seem to be faring a bit better. A number of the eurozone’s peripheral countries have shown signs of turnaround. And in the United States, we haven’t seen the excesses that are typically associated with the risk of recession.
Looking at history, recessions haven’t occurred because commodities are cheap — usually it’s the other way around. Many of the world’s consumers and producers ultimately stand to benefit from low energy costs.
This is not the same situation we faced in 2008, when we were on the brink of the global financial crisis. The global banking system is exposed to oil and China now, but not nearly in the proportions we saw with exposures to risky US mortgage debt then.
I do think the smoke will eventually clear on the business cycle. However, until we get more data to indicate whether the slowdown in manufacturing, the weakness in exports and the stutter step in earnings will persist, fear could rule the markets for riskier assets.
In this unsettled environment, with so many unknowns, there’s a risk of jumping into the global equity markets too early. An investor with new money may want to consider a more conservative asset mix to ride out this storm.
CC-BY-SA-2.0, FlickrPhotos: Pablo Blazquez. Funds Society celebrated its 3rd Anniversary party in Miami and presented its objectives for 2016
On January 14th, Funds Society celebrated its 3rd Anniversary party in Miami. The rain did not deter over 160 professionals from leading Asset and Wealth Management entities in Miami and New York that attended.
Some friends and readers from Mexico, Barcelona and Madrid, who did not want to miss the occasion, also joined us for the event. During the party, photos of which can be seen in the attached video, Funds Society presented a corporate video with last year’s main achievements and its objectives for 2016.
The latter includes the launch of a print magazine for the Spanish market following the success achieved by its US Offshore edition, and creating a directory for the Asset and Wealth Management sector, segmented by major regions in which Funds Society has a presence: US Offshore, Spain, and Latin America.
In 2016 Funds Society will hold its second edition of the Fund Selectors Summit in Miami during the month of April, to be followed in October by an event aimed at fund selectors in New York.
CC-BY-SA-2.0, FlickrPhoto: Achim Hepp
. LVMH, Catterton and Groupe Arnault Partner to Create a Global Consumer-Focused Private Equity Firm
Catterton, the leading consumer-focused private equity firm, LVMH, the world leader in high-quality products, and Groupe Arnault, the family holding company of Bernard Arnault, announced today that they have entered into an agreement to create L Catterton. The new partnership will combine Catterton’s existing North American and Latin American private equity operations with LVMH and Groupe Arnault’s existing European and Asian private equity and real estate operations, currently conducted under the L Capital and L Real Estate franchises. Under the terms of this agreement, L Catterton will be 60% owned by the partners of L Catterton and 40% jointly owned by LVMH and Groupe Arnault.
L Catterton will become the largest global consumer-focused investment firm with six distinct and complementary fund strategies focusing on consumer buyout and growth investments across North America, Europe, Asia and Latin America, in addition to prime commercial real estate globally. L Catterton, a firm with a 27-year history and more than 120 investment and operating professionals in 17 offices across five continents, expects to grow its assets under management to more than $12 billion after various successor funds are closed.
L Catterton’s headquarters will be in Greenwich, CT and London, with regional offices across Europe, Asia and Latin America and will be led by Global Co-CEOs J. Michael Chu and Scott A. Dahnke, currently Managing Partners at Catterton. Each fund will continue to be managed by its own dedicated team in their respective locations across Europe, Asia and the Americas.
“We are delighted to partner with Catterton and its team,” said Mr. Arnault, Chairman and CEO of LVMH and Groupe Arnault. ” Having been investors in Catterton’s funds since 1998, we have participated in its growth and success, evidenced by its strong track record and its distinctive culture. I would also like especially to thank Daniel Piette whose entrepreneurship and leadership have been instrumental in creating and developing the L Capital franchise over the past 15 years. I very much look forward to continuing to collaborate with him at LVMH.”
Mr. Chu said, “We look forward to benefitting from the strength and global reach of the team at L Capital and L Real Estate as we continue to seek out investment opportunities with significant growth potential.”
“The globalization of media and technology, combined with increasingly permeable geographic borders, is driving rapid consumer growth on an unprecedented global scale,” said Mr. Dahnke. The transaction is expected to close early in 2016, subject to customary regulatory and certain investor approvals.
CC-BY-SA-2.0, FlickrPhoto: pedronchi
. Lazard Launches US Fundamental Alternative Fund
Lazard Asset Management announced the launch of the Lazard US Fundamental Alternative Fund. The Fund, which is UCITS compliant, is a liquid and diversified portfolio primarily focused on US securities, with the flexibility to invest across the whole market cap spectrum. Utilising bottom-up stock selection, the Fund seeks to take long positions in equities of companies believed to have strong and/ or improving financial productivity and attractive valuations, and short positions in companies with deteriorating fundamentals, unattractive valuations, or other qualities warranting a short position.
The Fund will be managed in New York by portfolio managers Dmitri Batsev and Jerry Liu, who leverage a dedicated and highly experienced US equity investment team. The team, which is made up of 23 investment professionals, has an average of 18 years of investment experience and 12 years at LAM.
“In our view it is financial productivity that ultimately drives the valuation of companies.” said Dmitri Batsev, portfolio manager of the Lazard US Fundamental Alternative Fund. “We believe that forward-looking fundamental analysis is key to valuing these opportunities, both when stocks rise and when stocks fall.”
Jerry Liu said: “Expanding the US opportunity set to both longs and shorts allows us to create a differentiated portfolio of investments, seeking to provide investors with strong down-market protection, up-market participation, and lower volatility than the overall market.”
The Lyxor Hedge Fund Index was down -0.7% in December. 3 out of 11 Lyxor Indices ended the month in positive territory. The Lyxor Merger Arbitrage Index (+1.5%), the Lyxor LS Equity Variable Bias Index (+1.1%), and the Lyxor CTA Short Term Index (+0%) were the best performers.
ECB and Fed related reversals in December. Disappointment following the ECB meeting and worsening concerns about credit and oil kept pressure on risky asset in early December. After the confirmed Fed’s rate hike, the bottoming in prices by mid-month paved the way for a year-end equity rally of small magnitude. It unfolded in low trading volumes and with scarce fundamental data. These intra-month reversals were overall detrimental to the performance of trend-followers and macro funds. By contrast, it supported the L/S Variable and Merger Arbitrage funds.
In retrospective, 2015 remained macro driven, dominated both by monetary policies and the shifts in deflation scares, themselves function of the stance regarding the Chinese transition and oil prices.
Hedge funds finished 2015 with marginally positive returns. Overall, they produced strong alpha relative to traditional assets until Q4. They lost about half of their advance during the rally, heavily dragged by the Special Situations’ underperformance.
In December, L/S Equity proved resilient after the ECB meeting and got boosted by a small year-end equity rally. Once again L/S Equity Variable funds proved very resilient during stress episodes. They had not rebuilt their net exposures. In particular, European funds refrained from playing the expectations building up ahead of the ECB meeting.
While the long bias funds felt the heat early December, they remarkably outperformed markets (which dropped nearly -5% post ECB). They were cautiously exposed, with higher allocations in the more resilient US markets. The bulk of their losses came from their sectors overweights.
Market Neutral endured minor losses after the ECB disappointment, but did not participated in the year-end rally, rather hit by unsettling sector rotations.
Merger Arbitrage thrived on higher deals spreads and completing acquisitions. Merger Arbitrage funds outperformed in December. They benefited from tightening spreads down from elevated levels. They also locked in P&L out of several acquisitions coming to their final stage, including BG vs. Royal Dutch Shell, Pace vs. Arris, and Altera vs. Intel deals.
There were a limited number of idiosyncratic events in the Special Situations space. Their returns tended to mirror that of broad markets: a detracting post-ECB correction, followed by a small upward trend after the Fed’s first hike.
Credit strategies suffered from the sell-off in HY markets, though by a smaller magnitude. Credit funds continued to produce strong alpha relative to their operating markets. The redemptions and gating in few US credit funds continued to feed concern among credit investors. Meanwhile E&P fundamentals steadily continued to deteriorate, in tandem with plunging oil prices. Credit funds remained cautiously positioned. They also benefitted from their allocations on European credit markets, which displayed better stability. The environment was calmer after mid-month.
The bulk of the December underperformance of CTAs LT models was endured in the aftermath of the ECB meeting. They suffered on their Euro crosses and in UK rates, as well as in their equity holdings (rebuilt back in October). Losses were partially offset by their short commodity exposures. Returns were mixed over the rest of the month, with offsetting gains and losses across markets.
Global Macro funds also suffered from the reversals unfolding over the month. As markets adjusted their positioning after the ECB meeting, Global Macro funds lost on their long USD crosses and US bonds, as well as on their equity exposures. Returns were flat over the rest of the month with, like for CTAs, offsetting gains across markets.
“The trading backdrop will probably remain similar to last year, with frequent rotations, hovering liquidity risk, erratic flows amid rich valuations, and markets overshooting fundamental changes. Within the hedge funds space, this is leading us to favor relative-value, tactical and macro styles.” says Jean-Baptiste Berthon, senior cross asset strategist at Lyxor AM.
CC-BY-SA-2.0, FlickrPhoto: Astiken, FLickr, Creative Commons. Niall Quinn: New Global Head of Institutional Business at Pictet AM
Leading asset manager Pictet Asset Management is pleased to announce the appointment of Niall Quinn as the Global Head of Institutional Business (excluding Japan), based in London, at the end of February 2016. He replaces Christoph Lanter, who retires after 17 years with Pictet Asset Management.
Niall has over twenty years’ experience in the industry, most recently as Managing Director of Eaton Vance Management International, responsible for all their operations outside North America. His focus was institutional business development.
Niall is an Irish national with a BA in Economics and Philosophy from Trinity College, Dublin.
Laurent Ramsey, Managing Partner of the Pictet Group and Chief Executive of Pictet Asset Management, said, “Niall is a great hire for us and we are delighted that he is joining the team. His appointment marks a step up in our institutional business effort globally.”
The Pictet Group
Founded in 1805 in Geneva, the Pictet Group is one of the premier independent asset and wealth management specialists in Europe, with EUR 381 billion in assets under management and custody at 30th September 2015. The Pictet Group is owned and managed by seven partners with principles of ownership and succession that have remained unchanged since foundation. Based in Geneva, the Pictet Group employs more than 3,800 staff. The Group has offices in the following financial centres: Amsterdam, Barcelona, Basel, Brussels, Dubai, Frankfurt, Hong Kong, Lausanne, London, Luxembourg, Madrid, Milan, Munich, Montreal, Nassau, Paris, Rome, Singapore, Turin, Taipei, Tel Aviv, Osaka, Tokyo, Verona and Zurich.
Pictet Asset Management includes all the operating subsidiaries and divisions of the Pictet Group that carry out institutional asset management and fund management. Pictet Asset Management Limited is authorised and regulated by the Financial Conduct Authority. At 30th September 2015, Pictet Asset Management managed EUR 134 billion in assets, invested in equity and bond markets worldwide. Pictet AM has seventeen business development centres worldwide, extending from London, Brussels, Geneva, Frankfurt, Amsterdam, Luxembourg, Madrid, Milan, Paris and Zurich via Dubai, Hong Kong, Taipei, Osaka, Tokyo and Singapore to Montreal.
CC-BY-SA-2.0, FlickrPhoto: Francebleu. Private Equity Investors in General do Not Have the Skills, Experience and Processes Needed for Proper Co-investing
According to Coller Capital’s Global Private Equity Barometer, 84% of LPs believe that private equity investors in general do not have the skills, experience and processes needed to do co-investing well. This is not only because meeting GP deadlines is hard (though 71% of investors acknowledge this) or because they are unable to recruit staff with the necessary skills (acknowledged by half of LPs) – but also, 55% of investors say, because Limited Partners have an insufficient understanding of the factors that drive the performance of co-investments.
Investors also expect a divergence in the returns that different types of Limited Partner will earn from the asset class. They believe small investors are increasingly being disadvantaged by the volume of money being committed by their large peers to individual funds (because small LPs have limited access to, and less negotiating-power with, the best GPs, for example). They also think that investors with a higher degree of operational freedom (to embrace direct investing, or open overseas offices, or set their own compensation levels, say) will achieve higher returns from private equity than more constrained investors.
The proportion of LPs with special (or managed) accounts attached to private equity funds has risen dramatically in the last three years or so – from 13% of LPs in Summer 2012 to 35% of LPs today. 43% of investors believe that this growth in special accounts is a negative development for the industry, on the grounds that it creates potential conflicts of interest.
“A huge amount gets written about the shifting dynamics of the private equity industry,” said Jeremy Coller, CIO of Coller Capital, “but the vast majority of it looks at it from a General Partner’s point of view. This edition of the Barometer provides valuable food-for-thought on the evolution of the industry for the trustees and CIOs of pension plans and other investors.”
Direct private equity investing has been a growing focus for many investors. The Barometer suggests this trend will continue: just over a third of investors plan to recruit investment professionals with skills and experience in directs over the next 2-3 years.
Investors also remain committed to expanding their emerging markets footprints. Over the next 3-4 years, the proportion of LPs with more than a tenth of their private equity exposure in emerging markets will rise from 27% to 44% (notwithstanding the 41% of investors who report that their private equity commitments in emerging markets have underperformed their expectations to date.) And on balance, Limited Partners remain positive about the prospects for China – with 37% of LPs saying China will be a more attractive destination for private equity investment in five years’ time, compared with only 17% who say it will probably be a less attractive destination.
With many investors having backed debut funds from newly-formed GPs since the financial crisis, the Barometer probed what LPs are looking for in these investments. Investors said several factors influenced them, but one factor in particular was cited by almost all LPs (94%), namely, that the new GP team in which they had invested contained individuals with an outstanding investment track record in other roles.
Investors’ medium-term return expectations remain strong, with 86% of Limited Partners forecasting net annual returns of 11%-plus from their private equity portfolios over the next 3-5 years. (They are almost unanimous that the biggest risk to this picture is today’s high asset prices.) Indeed, the majority believe it should be possible – at least for switched-on Limited Partners – to continue earning returns at this level even beyond a 3-5 year horizon, because they think new investment opportunities will open up even as established parts of the private equity market mature.
The Barometer also probed investor views on the implications of a ‘Brexit’ (an exit by the UK from the European Union) for the performance of European private equity as a whole. Very few investors (just 6%) think a Brexit would have positive implications for their European private equity returns, while one third of LPs believe it would reduce their returns.
The growing attraction of alternative assets shows no sign of diminishing, with 41% of Limited Partners planning to increase their target allocation to these asset classes over the next 12 months. Almost half of LPs (46%) plan to boost the share of their assets in infrastructure, with over one third (37%) planning an increase in their allocation to private equity.
The Winter 2015-16 edition of the Barometer also charts investors’ views and opinions on:
The importance of corporate brand for GPs
Expected returns from different regions and types of private equity
The implications of potential changes in the transparency and tax treatment of PE fees
LPs’ ongoing appetite for private debt funds
LPs’ plans for, and expected benefits from, upgrading their back office technology
CC-BY-SA-2.0, FlickrPhoto: Charlie Awdry, China portfolio manager at Henderson. How to Invest in a Changing China?
Charlie Awdry, China portfolio manager at Henderson, looks back at 2015 and discusses where investment opportunities can be found in a country that is undergoing significant economic, political and social change.
What lessons have you learned from 2015?
First, the Chinese currency can depreciate but we find it odd to call August’s 2% move against the US dollar a devaluation, given other emerging market currencies have fallen as much as 35% during the year. Second, President Xi’s reform programme is reaching a critical stage and his vision of market forces includes both the invisible hand of the free market and the state’s visible and powerful hand working towards stability. Third, when markets move in an extreme fashion, correlations between stocks increase − this lack of discrimination is a reliable source of investment opportunities for our strategy.
Are you more or less positive than you were this time last year, and why?
We have been downbeat on the Chinese economy, but upbeat on the stocks we hold for quite a few years; that stance continues into 2016. Overall, economic activity continues to be squeezed by the competing needs of reform and deleveraging and challenged by a loss of competitiveness in the manufacturing sector. Rebalancing is taking place but declining commodity prices illustrate how significant the ‘old part of the economy’ is. Unfortunately, the vibrancy of the ‘new consumer economy’ is probably underrepresented in official growth measures. The tough macroeconomic situation means we should expect more volatility in markets.
What are the key themes likely to shape your asset class going forward and how are you likely to position your portfolios as a result?
We will continue to see diverging valuations between consumer-driven businesses, such as technology, consumer services and healthcare. These sectors will generally be generating profit growth, while sectors dominated by state-owned enterprises (SOEs), like energy, telecommunications and financials, will struggle to react to the tougher economic environment, and will most likely continue to be ‘inexpensive’.We do not own any banks and continue to strongly favour privately-managed consumer-driven businesses with strong profit margins and cash flows.
CC-BY-SA-2.0, FlickrPhoto: Omar Burgos
. Neuberger Berman Acquires Options Investment Team From Horizon Kinetics
Neuberger Berman on Monday announced that it has acquired from Horizon Kinetics an investment team that manages collateralized index-based options portfolios that seek to capture global volatility premiums. The team’s investment track records, proprietary research and client assets have also transferred to Neuberger Berman.
Neuberger Berman’s new options investment team is overseen by Doug Kramer, who joined the firm in November 2015 as Co-Head of Quantitative & Multi-Asset Class Investments (working alongside current Multi-Asset Class Chief Investment Officer Erik Knutzen). Derek Deven salso joins Neuberger Berman from Horizon Kinetics as a Managing Director and senior portfolio manageralong with research analysts, Rory Ewing and Eric Zhou. With the addition of this team, Neuberger Berman strengthens its lineup of systematic, outcome oriented investment capabilities.
Previously, Mr. Kramer was CEO of Horizon Kinetics, an investment management firm with approximately $8 billion in assets under management, and prior to that a Managing Principal of Quadrangle Group and a Partner of Goldman, Sachs & Co., where he served as Chief Investment Officer and Head of the Global Manager Strategies Group.
Joseph Amato, President and Chief Investment Officer, Equities, at Neuberger Berman, said “This highly differentiated global options strategy has a demonstrated, long-term track record of delivering attractive risk-adjusted returns. Doug’s leadership and investment expertise is valuable as we serve global investors seeking innovative, outcome-oriented solutions.”
Mr. Kramer said of coming to Neuberger Berman, “The breadth and rigor of Neuberger Berman’s investment capabilities is well-suited to serve a wide variety of client needs. I am excited to be working with such a talented group of investment professionals as we help clients achieve their unique investment objectives.”
