Photo: Dennis Jarvis. Man GLG Launches Unconstrained Emerging Equity Strategy for Simon Pickard and Edward Cole
Man GLG, the discretionary investment management business of Man Group, announced that it has launched an unconstrained emerging equity strategy.
Available from September 1st, the strategy – run by co-portfolio managers Simon Pickard and Edward Cole, who joined Man GLG from CarmignacGestion in May 2015 – focuses on seeking out attractive opportunities for investors over the longer-term, with a view to generating returns above the MSCI Emerging Markets Free Index.
The long-only strategy seeks to blend value, quality, momentum and macro styles to create an actively managed and diversified portfolio of emerging market securities which the managers believe are mispriced on a long-term cashflow-derived valuation basis.
The strategy will typically hold around 50 stocks from a universe of around 300 stocks which conform to the managers’ screening process, with a pipeline of potential candidates aimed at ensuring only the most attractive opportunities are included in the portfolio.
Pickard and Cole have extensive experience of investing in emerging market securities. Pickard was formerly head of emerging market equities at Carmignac Gestion, running its large and mid-cap global emerging markets strategies for the last six years.
Cole was formerly a portfolio manager at Carmignac Gestion, co-managing its emerging market multi-strategy portfolio. He has 14 years of experience in financial markets and has previously worked as a co-manager for emerging markets strategies at Ashmore Group and Finisterre Capital.
Teun Johnston, Co-CEO of Man GLG, said: “Launching an unconstrained emerging equity strategy forms a key pillar in the development of Man GLG’s Long Only business. Simon and Edward are highly experienced investors, with significant trading expertise in emerging markets and we believe that this, combined with Man GLG’s robust infrastructure, will create a compelling proposition.”
Simon Pickard, Co-Portfolio Manager, said: “Businesses situated in emerging markets have the opportunity to exploit considerable structural under-penetration for their goods and services. This opportunity is undiminished by the current economic climate, and we see attractive entry points in terms of valuation. Against this backdrop we believe our stock-specific, active approach has the potential to generate attractive risk-adjusted returns for investors.”
Edward Cole, Co-Portfolio Manager, added: “Global deflationary forces are creating considerable volatility in emerging markets, but the situation will not remain like this indefinitely. Indeed such a backdrop presents what we view as a significant opportunity for us to build up a portfolio of stocks whose potential return on capital is high and which we believe are valued at much more attractive free cashflow yields than the market”
Photo: Jeffrey Zeldman
. SL Green Acquires Eleven Madison Avenue in the Biggest Real Estate Deal in New York
SL Green Realty, New York City’s largest commercial property owner, announced that it has entered into a definitive agreement to acquire Eleven Madison Avenue in New York City for $2.285 billion plus approximately $300 million in costs associated with lease stipulated improvements to the property. The building is being sold by a joint venture of The Sapir Organization and CIM Group. The transaction is expected to close in the third quarter of 2015, subject to customary closing conditions.
Eleven Madison Avenue is a 29-story, 2.3 million square foot Class-A, Midtown South office property that was built in 1929 and originally served as the headquarters of Metropolitan Life Insurance Company. After a $700 million modernization in the 1990s, it became the North American headquarters of Credit Suisse, which continues to be the largest tenant in the building today. It also will serve as the new headquarters for Sony Corp. of America. The balance of the building is occupied by Yelp, Young & Rubicam, William Morris Endeavor Entertainment, and Fidelity Investments, along with the Eleven Madison Park restaurant, which earned Three Stars from the Michelin Guide
The property features an art-decodesign highlighted by an Alabama limestone exterior, elegantly appointed main lobby, state of the art building systems, and large floor plates. It is also on the National Register of Historic Places.
SL Green Co-Chief Investment Officer, Isaac Zion, commented, “Eleven Madison Avenue is one of the best assets in New York City’s vibrant Midtown South submarket, with floor-plate sizes, amenities, and a robust infrastructure that are truly unique to the area. Occupying a full block across from Madison Square Park, the building has direct connectivity to One Madison Avenue, a 1.2 million square foot building that is leased to Credit Suisse and also owned by SL Green.”
“After the past two years of repositioning the asset and value creation through leaseup and renovations, we are pleased to consummate this sale with SL Green”, said Alex Sapir, President of the Sapir Organization. “We trust that they will continue to own and operate this trophy asset in the same manner that we have over the past 12 years.”
The law firm of Greenberg Traurig, LLP represented SL Green. The seller was represented by Darcy Stacom and Bill Shanahan of CBRE, Inc. along with the law firm of DLA Piper (US).
Foto: Kevin Dooley. Completion of Flag Acquisition Establishes Aberdeen’s Investment Capabilities in Global Alternatives
Aberdeen Asset Management announced that it has completed the acquisition of FLAG Capital Management, a diversified private markets manager with offices in Stamford, CT, Boston, MA, and Hong Kong.
The acquisition, together with the previously announced purchase of SVG Capital’s stake in the joint venture Aberdeen SVG Private Equity Managers, sees Aberdeen join a small number of private equity managers with investment professionals on the ground in the world’s major markets. The combined team now has around 50 such professionals in the US, Europe and Asia.
Since inception, FLAG has raised over $7 billion of discretionary commitments from its broad client base. FLAG’s investments are focused on venture capital, small- to mid-cap private equity, and real assets in the US, as well as private equity in Asia.
These acquisitions are part of Aberdeen’s strategy to grow its alternatives business via multi-manager hedge funds, property and private market allocations, direct infrastructure investments and pan-alternative capabilities. A recent PWC report predicted total investment in alternative assets would nearly double to $15.3 trillion by 2020.
In addition to the acquisition of FLAG, Aberdeen announced on August 4, 2015 that it had entered into an agreement to acquire Arden Asset Management, a specialist hedge fund manager and adviser with offices in New York and London. Arden’s clients span corporate and state pension plans, sovereign wealth funds, global bank platforms and retail investors. The acquisition is expected to close by the end of 2015.
Following the completion of the Arden transaction, Aberdeen’s alternatives division, under Global Head of Alternatives Andrew McCaffery, will have $30 billion of assets under management.
Andrew McCaffery, Global Head of Alternatives at Aberdeen Asset Management, comments: “The acquisition of FLAG is very important for our alternatives business. Alternatives are becoming increasingly popular with investors who are seeking diversification. But to be a credible provider you
have to be able to compare markets and sectors globally and then drill down and understand what’s happening on the ground. This deal will help us meet that aim. We are now one of a handful of private equity investors with genuine local expertise in the US, Europe and Asia.”
Photo: Sonja. Cayman Islands is Confident of Being Granted AIFMD Passport
The Cayman Islands is confident that the pan-European marketing ‘passport’ will be extended to alternative investment funds (AIFs) set up in the jurisdiction, according to the Alternative Investment Management Association (AIMA), the global hedge fund industry association.
Cayman, where a high percentage of offshore hedge funds are registered, still awaits assessment by the European Securities and Markets Authority (ESMA). It was not included in the initial assessments which saw ESMA recommend the passport for Jersey, Guernsey and Switzerland under the Alternative Investment Fund Managers Directive (AIFMD).
But AIMA said that Cayman was well-placed to have a successful review in the near future.
Cayman has already entered into the requisite co-operation arrangements with the major EU investment securities regulators and the necessary tax information exchange agreements with EU governments as required by the AIFMD, AIMA said. In addition, the Cayman Islands Government has been developing an AIFMD compliant opt-in regime to ensure that the jurisdiction can continue to meet the needs of Cayman-based alternative investment fund managers who want to market funds into the EU under the passport.
AIMA said it was in the interests of institutional investors in Europe and hedge fund managers globally that Cayman be granted the passport.
Jack Inglis, CEO of AIMA, said: “The global industry as a whole needs Cayman AIFs to be approved under the AIFMD passport to ensure that pension funds and other European institutional investors can continue to benefit from investing in some of the world’s leading alternative investment funds. We are confident that Cayman will be granted the passport since the new Cayman regime looks similar to those in the jurisdictions that have already obtained favourable assessments.”
Alan Milgate, Chairman of AIMA Cayman, said: “ESMA’s decision should not be misinterpreted. Cayman has simply not yet been assessed, and has certainly not been adversely opined on, or excluded by ESMA. We look forward to the Cayman Islands being assessed positively in ESMA’s ongoing review of additional non-EU jurisdictions and that AIFMs based in the Cayman Islands will continue to benefit from evolving legislation which is both flexible and adaptable.”
Foto: Doug8888, Flickr, Creative Commons. Lombard Odier IM and ETF Securities Launch Emerging Market Local Government Bond ETF
Lombard Odier Investment Managers, a pioneer in smart beta fixed income investing, and ETF Securities, one of the world’s leading, independent providers of Exchange Traded Products (“ETPs”), have listed their emerging market local government bond ETF on the London Stock Exchange.
This fourth addition to the range of fundamental, fixed income ETFs, is designed to provide exposure to local government currency debt ofemerging marketsand developing countries, using fundamental factors that assess issuers’ creditworthiness to identify those that we believe are best-placed to repay their debt.
Today, emerging sovereign bondsoffer an appealing yield-to-maturity as interest rates in advanced economies are likely to remain low for longer. In addition, unlike market-cap benchmarks, which reward the most-indebted borrowers, our fundamental focused approach is designed to deliver quality-based diversification and includes exposure to India and China (the two largest emerging market countries).
Kevin Corrigan, Head of Fundamental Fixed Income, Lombard Odier IM commented:“We are extremely pleased to introduce our emerging market local government bond ETF to the European market. As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally weighted approach provides greater quality-focused diversification for investors. Lombard Odier IM has over five years of experience in fundamentally-weighted fixed income investing and our partnership with ETF Securities enables us to offer a wide range of investors an innovative approach to investing in emerging debt markets.”
Howie Li, Co-Head of CANVAS, ETF Securities added: “The suite of ETFs that we have brought to the market with Lombard Odier IM aim to capture the increasing shift towards more cost-effective investment solutions but, at the same time, provide an improved risk-adjusted return profile. Our first three products, launched in April, were well received and investors have already expressed their interest in the launch of this innovative emerging market ETF. With bond liquidity increasingly being a source of concern, investors in ETFs have extra liquidity support from the secondary market to help mitigate this. This liquidity support coupled with the ability to trade intraday makes the ETF vehicle an ideal access route into fixed income at a time when liquidity matters.”
CC-BY-SA-2.0, FlickrFoto: Dana Riza. Asia vuelve a repuntar: ¿Qué está pasando?
The decision by the PBoC to introduce the new FX regime serves two purposes, explains Global Evolution in its last analysis. First, the move should be seen as a step forward to comply with SDR eligibility. The IMF recently declined the Chinese calls for letting the CNY become a SDR currency as the fund criticized the gap between the CNY’s market level and daily fixings. In fact, the IMF and the US Ministry of Finance have both welcomed the Chinese policy shift.
Secondly, economic growth is in retreat and the export sector is in dire straits judged by recent export data. A weaker CNY could help stem the growth decline although most would agree that the 2.7% adjustment in USD/CNY since Monday August 10 will not make much of a difference, points out the firm.
Still, if the market believes that the CNY should weaken leading to capital outflows the CNY adjustment may have more legs in the weeks and months to come. The PBoC will lean against disruptive currency volatility but welcome a weaker currency as long as capital outflows are manageable and the CNY depreciation takes place in a controlled and orderly fashion. Inflation is a no worry for now. July’s headline CPI inflation may have increased to 1.6% YoY from 1.4% YoY in June but PPI inflation declined to minus 5.4% from minus 4.8% thereby hitting the lowest level since autumn 2009. To put things short, says Global Evolution, what we now have in China is a managed float and who can blame the Chinese authorities for letting markets determine the value of their currency.
Sin embargo, si el mercado cree que el yuan se debilitará esto provocará la salida de capitales y el ajuste de la divisa china podría continuar en los próximos meses. El Banco Popular de China luchará contra la volatilidad de la moneda, pero estará a favor de una divisa más débil, siempre y cuando las salidas de capital sean manejables y la devaluación del renminbi se lleva a cabo de una manera controlada y ordenada.
La inflación no es una preocupaciónpor ahora, afirma Global Evolution. La inflación subyacente del mes de julio podría haber aumentado hasta el 1,6% interanual desde el 1,4% interanual en junio, pero la inflación de los precios de producción industrial disminuyó hasta -5,4% desde -4,8%, marcando el nivel más bajo desde el otoño de 2009. Para resumir, lo que tenemos ahora en China es una fluctuación controlada y quién puede culpar a las autoridades chinas por dejar que los mercados determinen el valor de su moneda.
“The genie is out of the bottle and the Asian devaluation race is on as illustrated by the Vietnamese central bank’s decision to devaluate the Vietnamese dong by 2%. Elsewhere in Asia, depressed commodity prices will allow for easy monetary policies with central bankers happy to see their respective currencies staying weak and competitive”, explain the firm specialized in emerging and frontier markets debt.
In emerging Asia, Singapore, South Korea and Malaysia are the countries that are most exposed to the Chinese business cycle whereas in Latin America Chile stands out with an export to China worth around 7% of GDP.
In Asian frontier universe Mongolia stands out with an export exposure to China worth more than 30% of GDP whereas in Africa, Angola and Republic of Congo are the countries most exposed.
What are the consequences?
Asian local fixed income should perform well as headline CPI inflation stay subdued. The tricky part is FX, growth, the banking sector and budget performance. “We believe that local Asian currencies have limited upside potential over the next few months and have cut Asia significantly in our local currency strategies. India and Indonesia are the two countries where we still hold some exposure with our strongest conviction trade being India and with Indonesia offering a notable carry in compensation for currency risks”, point out.
“As to Asian hard currency debt, sovereign debt stocks are low and we do not see roll over risks as a problem (with FX reserves being amble). Spreads may face upside pressure should the overall economic outlook deteriorate but that is only a mark-to-market risk. Distressed market pricing or defaults are highly unlikely. Asia constitutes 23% in the typical hard currency benchmark (JPMorgan EMBI GD) and we typically hold only around 15% of AuM in Asian “pure” sovereign debt (no quasi-sovereigns) across funds within our hard currency strategy due to zero-weighting of China, Malaysia, India, Mongolia and Pakistan. Therefore we believe that our Asian exposure in hard currency debt is highly manageable”, concludes.
Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Stragtegies in the Americas Region.
CC-BY-SA-2.0, FlickrPhoto: Esparta Palma. Investec Wealth & Investment Strengthens Research Team with Four New Appointments
Investec Wealth & Investment is pleased to announce the appointment of four new members to its research team. Dominic Barnes joins as a fixed income portfolio manager, Esther Gilbert as a fixed income analyst, while Marcus Blyth and Adrian Todd both join as fund selection specialists.
The decision to further strengthen IW&I’s research team stems from its conviction that increased market volatility over the medium term will create more challenging conditions in which to generate meaningful risk-adjusted investment returns for its clients. IW&I’s research team has, therefore, broadened its coverage to include an expanded range of sophisticated collective and fixed income instruments. The additional complexity of these products requires greater breadth and depth of resource in order to ensure they are thoroughly analysed for their suitability.
John Haynes, Head of Research at Investec Wealth & Investment, said: “I am delighted to welcome Dominic, Esther, Marcus and Adrian to the research team. They bring significant expertise in the fixed income and collectives sectors and will enhance the capabilities and performance of an already well-resourced team. Best-in-class research is an integral part of the service we offer our clients and gives Investec Wealth & Investment a significant advantage in the UK wealth management industry.”
Prior to joining IW&I, Dominic was a Director at Credit Suisse Private Bank & Wealth Management and, before this role, a Fixed Income Specialist at Merrill Lynch International. Esther joins IW&I from AXA Investment Managers, where she was a Portfolio Manager and Fixed Income Investment Analyst covering a range of securities such as global bonds, High Yield, emerging market debt and convertibles.
Marcus Blyth joins from Kleinwort Benson, where he covered collective investment schemes across all sectors. Adrian Todd joins from private bank Coutts, where he analysed third-party funds across discretionary investment portfolios globally.
Photo: TrentStrohm, Flickr, Creative Commons. Bruno Colmant, New Head of Macro Research at Bank Degroof Petercam
Bruno Colmant will join the executive committee of the group that will result from the merger between Bank Degroof and Petercam, subject to regulatory approvals.
He will be appointed Head of Macro Research at Bank Degroof Petercam and will also perform some specific assignments as Group Economic Advisor.
Bruno Colmant holds a PhD in applied economics sciences and is a commercial engineer from the Solvay Business School Economics & Management (ULB). He is a member of the Académie Royale de Belgique. He holds a Master of Sciences from the Purdue University (USA) and a Master in Fiscal Sciences (ICHEC-ESSF).
Bruno Colmant began his career at Arthur Andersen, Dewaay and Sofina. He was managing director at ING (1996-2006), Cabinet head of the Belgian Finance ministry (2006-2007), CEO of the Brussels Stock Exchange, member of the management committee of NYSE Euronext and chairman and CEO of Euronext Brussels (2007- 2009) and Deputy CEO at AGEAS (2009-2011). Since 2011 he is academic advisor AGEAS and partner of the consulting firm Roland Berger.
He is a member of the Central Council for the Economy and lecturer in finance at the Vlerick Management School, UCL and at the Solvay Business School Economics & Management (ULB).
CC-BY-SA-2.0, FlickrFoto: Yi Yuan Ma. China: ¿Estallido de la burbuja o exceso de pánico?
China’s slowdown has been going on for five years now. After the extensive stimulus measures that kept China safe during the U.S. credit crisis of 2008 (and that benefitted the whole world), a growth decline was simply inevitable, points out Maarten-Jan Bakkum, Senior Strategist, Emerging Market Equities at NN Investment Partners. “Policy makers and economists agreed that China should rebalance its economy, with less dependence on investment and export growth and greater importance for consumer spending. In this process, overall growth would decline, but that would obviously be fine if growth would be more balanced and sustainable.”
It soon became clear that Chinese policy makers were only marginally interested in rebalancing the economy in the short term. The credit-driven investment model, in which the primacy for the most important economic decisions lies with the government, remained intact. The sectors with the largest excess capacity were rarely addressed, as local governments had major economic interests in those sectors. Overcapacity became even more significant in industries like steel and aluminum, and in parts of the housing market as well. “It gradually became clear that the economy only became more dependent on credit. So the most urgent measure – reducing the debt level in the economy – came to nothing. Since the massive stimulus package in 2008, the debt ratio has increased by 85 percentage points. This is unprecedented anywhere in the world, and leads to a significant risk of a credit crunch,” reminds Bakkum.
With the recent correction on the Shanghai stock exchange and the mini-devaluation of the renminbi, NN Investment Partners has clear that the confidence in the Chinese government is declining significantly, leading to stronger outflows and further increasing economic problems. “For the first time in decades, people begin to realise that the government in Beijing no longer has complete control over the economy. The capital flight is very difficult to stop.
Over the past sixteen months, China has faced outflows of about 700 billion euros. The authorities have clearly been overtaken by developments. Their monetary stimulus has not been enough to offset capital outflows. This makes an economic recovery increasingly unlikely, which in turn leads to more capital flight and makes further rate cuts necessary. In this process, the renminbi needs to depreciate further. But this would have undesirable effects on the financial system, as companies have accumulated a foreign debt of roughly 3 trillion US dollars during the years of renminbi appreciation,” explains the senior strategist.
“For a long time, investors considered a sharp slowdown in growth to be the biggest risk in China. In recent months, the focus has slowly shifted to a systemic crisis. This creates great uncertainty in the financial markets. And it’s not just affecting emerging markets. Finally, the realisation begins to dawn that there is a real risk of a Chinese credit crisis” concludes Bakkum.
Within internationally invested portfolios, currency fluctuations can have a significant impact on overall risk and return. Investors seeking purer exposure to the underlying investments of any international market can potentially reduce risk with a currency-hedged investment. Deutsche X-trackers currency-hedged, international equity ETFs offer investors a variety of potential investment solutions from broad core international holdings to targeted investments in specific countries. The ETFs seek currency-neutral market-cap exposure to designated international markets.
“As a European-based bank, we have been able to leverage our local insight to offer the most comprehensive suite of currency-hedged international equity ETFs in the US,” said Fiona Bassett, Head of Passive in the Americas. “We will continue to strategically expand our suite, providing strategies that meet the demands of investors.”
Offering the broadest suite of currency-hedged ETFs in the US, Deutsche’s X-trackers US platform has experienced breakthrough success. With assets totaling USD 20 billion as of August 7, 2015, the Deutsche X-trackers platform has increased by approximately 365% since year end, and continues to be among the fastest growing exchange-traded fund (ETF) franchises in the US.
Earlier this month, the Deutsche’s X-trackers US platform improved its market share position to a top-10 ETF provider in the US. The firm’s global exchange traded products platform is now the world’s fifth largest, with approximately USD 76.9 billion in assets under management as of June 30, 2015.
