Fee Income From Private Markets Are Expected to Double by 2032, Reaching $2 Trillion

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Many asset and wealth management firms have recently embraced private markets. Managers emphasizing the launch and distribution of alternative assets and products have been rewarded by investors with higher market capitalizations than most firms focusing on publicly traded assets (Chart 1). Although private markets are not the sole reason for the higher market capitalization, they play a significant role, according to a report by Bain & Company.

As highlighted by Preqin, one key aspect of Bain & Company’s report is that, following the surge in demand for these types of assets, the challenge now is not to “die from success.” “The stakes are high. The demand for alternatives is booming, and investors, particularly new entrants, are forming new brand and product preferences. But it’s not just about profit and growth. As Bain titled its report, it’s also about ‘avoiding collapse,’” states Grant Murgatroyd, Head of News at Preqin.

Chart 1: Asset managers focused on private markets have experienced strong growth in their market capitalization

Private markets have gained popularity as the business models that have dominated asset management for years are nearly exhausted: margins have compressed, and average profit per assets under management (AUM) has dropped from 15 basis points in 2007 to eight basis points in 2022 (Chart 2). “Many firms have reduced management fees, leading to a 4% decline in average income from 2021 to 2022,” according to consulting firm Casey Quirk.

Chart 2: Asset management profitability has halved

Differentiation has also diminished: Bain & Company points out that data provider eVestment estimates low dispersion in returns (1% to 2%) and fees (4 to 6 basis points) in public equity investments among top- and bottom-quartile management firms. This decline has driven managers to opt for low-cost beta followers, and the share of passive investments is expected to rise.

According to Preqin, Bain’s analysis shows how traditional firms focusing on public markets have either maintained their value (Amundi) or lost ground (T. Rowe Price, Franklin Templeton, DWS, Invesco). “Asset managers focused on private markets have seen significant growth. Blackstone, KKR, Ares, EQT, and Carlyle have more than doubled their value,” they note.

The appeal of private markets

In this context, a promising business model emphasizing alternative private markets is beginning to emerge, but asset management firms will need to develop a range of new capabilities to secure their position in this new landscape.

Private assets represent a much larger market than public assets, offering potentially higher returns, diversification, and, in cases like real estate, an inflation hedge. In recent years, fewer companies have gone public, and global initial public offerings (IPOs) will decrease by 45% between 2021 and 2023 due to increased regulation and costs.

In contrast, “we estimate that private market AUM will grow at a compound annual growth rate (CAGR) of between 9% and 10%, bringing the value of these assets to between $60 trillion and $65 trillion by 2032, more than double the AUM of public markets (Chart 3). “By 2032, we expect private market assets to represent 30% of total AUM,” the firm states.

Chart 3: Alternative assets should continue to show strong growth

At the same time, fee income from private market investments, which reached $900 billion in 2022, is expected to double to $2 trillion by 2032. “Private equity and venture capital will remain the most important categories, while private credit and infrastructure investments will expand to the point of becoming significant asset classes.

Alternative credit has already grown at a 7% CAGR between 2012 and 2022, “and we expect it to grow at a 10%-12% CAGR by 2032,” Bain’s report states, noting that this accelerated pace “largely reflects the reduction in bank lending.”

The strong growth of infrastructure, with an average annual rate of 16% over the last decade, is expected to continue at a pace of 13%-15% over the next decade due to the shortage of public funds as the fiscal deficit grows.

Investor demand has also picked up, with institutional allocations to alternative assets expected to grow by 10% annually from 2022 to 2032, “pushing AUM to at least $60 trillion (Chart 4).”

Sovereign wealth funds, endowments, and insurance company funds are seeking higher returns due to the volatility of public markets and declining yields. Similarly, the increase in contributions from retail investors will push the proportion of AUM from these investors from 16% in 2022 to 22% by 2032, according to Bain’s report. “Individuals are drawn to the alternative asset market due to the prospects of diversification and higher returns, and they are willing to tolerate lower liquidity,” the study notes.

Chart 4: Retail investor participation in private assets is increasing

In response to this retail demand, some firms have launched innovative offerings, such as intermittent liquidity products characterized by periodic redemptions. Blackstone and KKR, for example, have launched private market funds with monthly or quarterly buyback frequencies, as noted in the study.

Recent moves in the chessboard

The share of traditional managers in alternative assets increased from 16% in 2018 to 22% in 2022, as firms sought diversification and better risk-adjusted returns. Some have made acquisitions to expand their product range, while others have expanded organically, like Fidelity, which launched 18 alternative products in 12 months. These firms are also extending their position in the wealth management value chain, such as BlackRock’s joint venture with Jio Financial Services in India to offer direct digital investment solutions through Jio’s local distribution network, according to Bain’s report.

Private banks and wealth managers have expanded to capitalize on client demand and generate higher fee income. Some firms are entering the retail market with their own products, while others have hired experienced advisors and wealth managers to target high-net-worth individuals.

Meanwhile, alternative asset managers and private equity firms have also expanded their portfolios of alternative assets. Others have attracted retail investors by offering evergreen products (with no fixed expiration date) following difficulties in raising funds from institutional clients and ensuring reliable fee income streams.

“In retrospect, we observe a convergence of strategies between traditional and alternative asset managers, with many preparing to become full-service providers across all asset classes, investor types, and positions in the value chain,” the report states, adding that this situation “will intensify competition in the market,” and it is likely that dominant firms will resort to two strategies:

1. Offering niche products that generate alpha, such as environmentally sustainable infrastructure products for ultra-high-net-worth individuals.

2. Developing large-scale alternative products, including vehicle creation and testing, distribution—including reach and conversion—or operational efficiency—including risk management and regulatory compliance.

The study reveals that many companies of all types have already started to follow one of these approaches, and some are using both to maximize their results.

What it takes to adapt

The transition of managers to private markets “poses significant challenges,” Bain notes, given the differences between retail and institutional investors. Companies will need to add or develop new capabilities around their technology systems, sales and marketing approaches, and investor education.

To fill gaps, some firms may turn to acquisitions, but many of them do not deliver the expected benefits due to cultural differences or ineffective integrations. And with a shortage of talent in certain areas, such as data science, recruiting and hiring enough people with the necessary skills can be difficult.

As companies consider how to expand into alternative assets, Bain believes firms should anticipate changes in the following areas:

1. Define where to play and how to win. It may seem obvious, but before making any moves, firms must know their starting point and ultimate ambition in private markets.

2. Develop new front-to-back-office capabilities. This can be achieved by training sales staff, incorporating product specialists, and redesigning operations, technology, risk, and legal processes. These activities will help bridge the gaps between, for example, a system for valuing private assets and one for public assets. A global insurance asset manager, for example, wanted to improve the performance of its private equity portfolio, which had been outsourced. After conducting a detailed portfolio review and competitive strategy study, the company developed new capabilities, carefully limiting changes to team structure and size. The new internal fund selection capability resulted in a 400 basis point improvement in its internal rate of return.

3. Educate investors on the risks and liquidity of alternative assets. Management firms will need to communicate how investors can have sufficient liquidity and the ability to collateralize private assets, that minimum investments and onboarding are more accessible than commonly perceived, and that reporting and tax filing processes have become more streamlined.

4. Adapt sales and marketing. New digital platforms and other distribution channels will be needed to raise brand awareness, attract funds, and offer a broader range of assets. Companies will need to hire and train sales representatives skilled at building relationships with wealth managers and explaining complex products to retail clients. A financial services company was experiencing a decline in revenue, AUM, and client numbers due to stagnant sales team productivity. A new training program and performance metrics for advisors doubled client acquisition and increased new AUM per advisor by 70%.

5. Improve merger and acquisition integration skills to combine talent, culture, and operations. Private market activity has accelerated since 2020, with more than 40 transactions in each of the past three years. More recently, traditional investment firms have announced some notable acquisitions and partnerships, such as BlackRock’s purchase of Global Infrastructure Partners.

According to Bain’s report, during this period of transition in which demand for private market assets is rising, retail investors are still forming their preferences for brands and products. “Regardless of their current market position, companies have the opportunity to shift their focus and expand their offerings if they

can develop the right capabilities, systems, and talent mix to capture that demand,” the study concludes.

Alternative Fund Managers Estimate That Compliance-Related Risks Will Increase

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The level of compliance risk facing alternative fund managers is rising and is expected to grow further over the next two years, according to a survey conducted by Ocorian and Bovill Newgate, a firm specializing in regulatory and compliance services for funds, corporates, capital markets, and private clients. Based on the experience of both companies, more investment is urgently needed to address the issue.

Following an international survey among senior compliance and risk leaders from alternative fund investment firms, it was found that 88% believe compliance risks have increased and will continue to rise over the next two years. Specifically, one in ten respondents expects this increase in risks to be dramatic.

This trend is occurring in a context where compliance teams report insufficient resources and a high level of fines. In fact, 64% of respondents stated that their compliance management team is already under-resourced, with over half of these (34%) feeling their resources are severely lacking.

The number of firms facing fines and sanctions is already high, with 67% of respondents admitting that their organization has been subject to risk and compliance fines or sanctions in the past two years. An additional 9% acknowledged receiving a request for information or a visit from the regulator within the same period.

In response to these findings, Matthew Hazell, Co-Head of Funds for the UK, Guernsey, and Mauritius at Bovill Newgate, remarked: “Our survey reveals a concerning backdrop of fines, sanctions, and under-resourced compliance teams within alternative fund managers, against which nine out of ten respondents believe the level of compliance risk their firms face will only increase over the next two years. It is encouraging that leaders within these firms recognize these future challenges and understand the need to act now to stay ahead.”

The Ocorian study highlights the three key areas where alternative fund managers believe investment is required in the next 24 months to address the issue: technology (58%), systems for managing processes and procedures (57%), and hiring knowledgeable, relevant personnel (53%).

Matthew added: “Firms need to have a deep understanding of their own compliance and risk needs, and any potential changes due to growth or organizational shifts, in order to invest wisely in the right systems, processes, and people to protect against these future risks. We recommend following a three-lines-of-defense approach to safeguard their businesses: first, implementing robust procedures, policies, and training; second, thoroughly monitoring these aspects; and finally, reviewing and challenging them through independent audits.”

Ocorian’s three-lines-of-defense approach to addressing compliance and risk challenges consists of the following:

– Line One: Establish clear and robust processes and procedures on the front line, complemented by online and in-person training programs for staff.

– Line Two: Build and empower a comprehensive compliance oversight function that monitors and evaluates processes and procedures while advising and supporting staff and senior management in meeting the company’s obligations.

– Line Three: Seek the review and challenge of the company’s AML framework through annual independent audits.

Tokenization: The Next Step in the Evolution of ETFs?

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The global ETF market has reached a new record in assets under management, driven by strong market performance and a clear investor preference for these vehicles. According to EY’s latest report on this industry, two clear trends have emerged in the past decade: the development of active ETFs and the entry of ETFs into the crypto asset universe. Could tokenization be the next step in this evolution?

“Digital assets are starting to gain traction, particularly with the SEC’s approval of spot bitcoin ETFs, which could begin to pave the way for asset tokenization, though challenges in liquidity and settlement mismatches persist. Efforts to shorten settlement times could accelerate the trajectory of tokenization in ETFs,” the report notes. The approval of spot bitcoin ETFs was followed by the green light for vehicles investing in Ethereum this past May.

According to the EY report, investor interest in digital assets and tokenization is on the rise. In fact, the consulting firm believes that in recent years, significant progress has been made as financial markets move in this direction. “ETFs physically backed by digital assets have been present in European markets for several years, offered by providers like Shares and ETC Group, allowing market participants to trade this asset class on European exchanges, albeit with certain distribution restrictions. In January 2024, the SEC also recently approved applications for 11 spot bitcoin ETFs submitted by companies like Fidelity and Invesco, as well as the conversion of Grayscale Bitcoin Trust into an ETF. This approval fundamentally changed the shape of this industry segment, shifting from being mostly unregulated, operating out of Europe with less than $13 billion by the end of November 2023, to being primarily regulated, operating out of the U.S. with nearly $53 billion by the end of January 2024,” the report explains.

In Europe, the European Commission is conducting a comprehensive review of the directive on eligible assets for UCITS. According to EY, this review could potentially open the door to digital assets in the future, though UCITS diversification requirements would mean that single-exposure products (like the SEC-approved spot bitcoin ETFs) would remain as ETPs in Europe, similar to commodity products and single-stock exposure products.

“However, the SEC’s approval of these products is fundamental and will see wider adoption and greater familiarity with digital assets among conventional financial market participants,” the report adds.

In its assessment, hailed as the next revolution in financial markets, this movement will undoubtedly drive what comes next for the industry. “It remains to be seen whether this is the approval of another trendy product or a further step toward tokenization across the asset management industry. And with this, questions arise about the longevity of the ETF wrapper, given that real-time settlements will come into play,” they suggest.

According to EY’s analysis, while the transition of ETFs into a tokenized product will occur in the medium to long term, the industry is already working on efforts to accelerate settlement across the value chain. “In May 2024, the U.S. and Canada will move from T+2 to T+1 in securities settlement times. To shorten settlement cycles, providers have been working to enhance their trading systems and automate manual processes wherever possible, ultimately bringing operational efficiencies, cost savings, and reduced settlement risk,” the report indicates.

In their view, this will have a profound impact on the global ETF industry: “It will create liquidity mismatches between ETFs traded in Europe (with T+2 settlement) and their U.S. securities portfolios (with T+1 settlement), or ETFs traded in the U.S. (with T+1 settlement) and their European securities portfolios (with T+2 settlement). This adds additional financing costs to their commercialization, as authorized market participants for these ETFs will need to bridge the gap between the primary and secondary market settlement cycles. Once T+1 settlement becomes routine in the U.S., and market participants operate on a shorter cycle, we expect calls for Europe to follow suit, and the European Securities and Markets Authority (ESMA) is already consulting on this.”

In this sense, they recognize that Europe is a much more complex trading market than the U.S., with multiple stock exchanges, currencies, languages, and legal systems. Shortening settlement time will be much more difficult than in the U.S.,” they believe. However, once this is done, will investors demand the industry to shorten the cycle again? “Tokenization could be the next step if the industry seeks to further accelerate the cycle and offer a solution for real-time settlement. The broader asset management industry is looking at tokenization to increase efficiency and liquidity in trading alternative assets (such as private equity or fixed income) and unlock new sources of capital,” they argue.

In fact, EY points out that some providers have been exploring pilot projects to tokenize fund issuance and work on commercial, legal, and technological challenges before expanding this effort. “The FCA in the UK has announced that it is working with the industry, and the Investment Association in the UK recently published a roadmap for implementing tokenization in this area. Tokenization has the potential to fundamentally change the asset management ecosystem. It could enhance settlement speed and open new avenues for both investors and ETF managers,” they conclude in their report.

BBVA Receives Green Light from UK Regulator to Take Indirect Control of a Banco Sabadell Subsidiary

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New advances have been made in the approvals for BBVA’s takeover bid (OPA) for Sabadell. The UK Prudential Regulation Authority (PRA) has given the green light for BBVA’s indirect acquisition of TSB Bank plc, Banco Sabadell’s UK banking subsidiary.

According to the bank, this authorization is one of the conditions tied to the purchase offer for Banco Sabadell’s shareholders and a necessary step to complete the deal, as TSB would become part of the BBVA Group.

BBVA submitted a purchase offer for Banco Sabadell shares to its shareholders on May 9th, and the process will begin once the necessary regulatory approvals are obtained. “Since then, BBVA has received approval for the operation from the competition authorities in several countries where Banco Sabadell operates (the United States, France, Portugal, and Morocco). The UK Prudential Regulation Authority, responsible for supervising around 1,500 entities, including banks and insurers, oversees TSB Bank, which is owned by Banco Sabadell,” BBVA explained.

Additionally, this authorization follows the Spanish regulator CNMV’s acceptance of the takeover bid for processing, “understanding that the prospectus and other documents submitted, following complementary documentation and modifications registered on 06/04/2024, comply with the provisions of the relevant article.” This does not mean the operation is final, but regulatory steps are being taken, as is customary in such cases. As Sabadell noted before the summer, the final decision will depend on the will of the shareholders.

Among the next steps before launching the purchase offer to Banco Sabadell’s shareholders is the approval of the offer by the European Central Bank (ECB) and the Spanish National Securities Market Commission (CNMV). Furthermore, the offer is conditioned on acceptance by the majority of Banco Sabadell’s share capital (a minimum of 50.01%) and approval by the Spanish competition authority (CNMC).

Tikehau Capital Completes the Sale of Its Stake in Preligens to Safran

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Tikehau Capital has completed the sale of its stake in Preligens, a global artificial intelligence (AI) firm specializing in the aerospace and defense sector, to Safran for an enterprise value of €220 million. Following an exclusive negotiation process that began in June 2024, Tikehau Capital is divesting its stake in Preligens to Safran.

According to the asset manager, Preligens, founded in 2016 by two French engineers, offers field-tested AI analysis solutions for high-end imagery, full-motion video, and acoustic signals. “Tikehau Capital’s investment in November 2020 has been pivotal in accelerating Preligens’ growth, which has seen its revenues increase tenfold (from €3 million to nearly €30 million), expanded its operations in the U.S. and Asia, and now employs around 250 people, including 140 R&D engineers,” they noted.

This sale marks the first divestment of Brienne III, the Group’s first private equity fund dedicated to cybersecurity. According to the asset manager, this strategy has raised nearly €4001 million across its two funds and has now invested €150 million in 16 companies, including Trustpair, Chapsvision, and Egerie in France, and VMRay in Germany.

Funds Have Accumulated Over 32 Billion So Far This Year

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In August, investment funds continued to increase the volume of their assets, primarily due to net subscriptions. Assets under management now exceed €380.815 billion, according to preliminary data from Inverco, after recording an increase of €1.233 billion in the last month (a 0.3% growth compared to the end of July).

The growth in August is largely attributed to net subscriptions by investors (over €1.1 billion) and, to a lesser extent, to slightly positive returns (0.1%).

For the year as a whole, the accumulated growth in fund assets amounts to 9.4% (€32.716 billion), thanks to both market performance and cash inflows: from January to August, net subscriptions to funds totaled €16.471 billion.

During the month, fixed-income funds once again drew significant investor attention (€1.026 billion), particularly in the short-term segment. Year-to-date, this category has already surpassed €13.737 billion in inflows. Investor interest also focused on the money market category (€603 million in August and €9.082 billion accumulated for the year). Mixed fixed-income funds also saw inflows during the month (€205 million).

On the redemption side, global funds registered the highest net outflows, exceeding €430 million, followed by guaranteed funds (€132 million). Target return funds and mixed equity funds also experienced net redemptions of approximately €102 million and €55 million, respectively.

Returns Near 5% Over Eight Months

Although the return in August was only 0.13%, with slight gains across all categories and declines in international equity portfolios (-0.7%), year-to-date fund portfolios have appreciated by 4.7% due to market effects.

Among the winning segments are international equity (11.65%), index funds (15%), and domestic equity (10.56%). No fund category has experienced losses from January to August, according to Inverco data.

Industry Professionals Expect the SEC to Be More Flexible With Digital Assets

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SEC fines J.P. Morgan subsidiaries

Institutional investors and wealth managers expect more flexible regulation from the U.S. Securities and Exchange Commission (SEC) in the coming year regarding digital assets, along with greater clarity, according to a new global study conducted by Nickel Digital Asset Management (Nickel), a London-based, leading regulated and award-winning digital asset hedge fund manager in Europe, founded by former alumni of Bankers Trust, Goldman Sachs, and JPMorgan.

The study, conducted with organizations already investing in the sector, found that 68% expect greater flexibility from the SEC compared to 35% who anticipate stricter regulation. More than half (53%) expect increased clarity and guidance, while 44% believe the regulator will be more constructive, reflecting political changes.

Nickel’s research, which surveyed institutional investors and wealth managers in the U.S., U.K., Germany, Switzerland, Singapore, Brazil, and the United Arab Emirates, who collectively manage around $1.7 trillion in assets, found strong support for the SEC and recognition of its importance in the sector.

Around 90% believe the SEC has been an effective regulator of the digital assets sector, and 85% say it is currently very or somewhat favorable to the sector. Only 5% say it is either not constructive or aggressively restrictive. Approximately four out of five (80%) believe it has been clear in distinguishing between securities and non-securities in the digital assets space.

Nearly three out of four (73%) say the SEC’s recent clarifications on Security Token Offerings (STOs) have had the most significant impact on the sector, compared to 42% who highlight its guidelines for Initial Coin Offerings (ICOs).

Around four out of five (80%) agree that SEC regulatory clarity is important for the sector, and 83% say the SEC’s regulatory actions will have a very or somewhat positive impact on innovation in the digital assets space.

However, only 35% of respondents say SEC regulations have a significant impact on their investment decisions in the digital assets sector, while 55% say the regulations have a moderate impact, and 10% say they have a slight impact.

“Strict regulatory actions against FTX and Binance have contributed to increasing confidence in the digital assets sector. The survey reveals that institutional investors and wealth managers now expect more flexible regulation of the sector by the SEC after a period of intense scrutiny. It is reasonable to assume that a more accommodative regulatory environment will drive growth of the asset class in the U.S.,” comments Anatoly Crachilov, CEO and founding partner of Nickel Digital, in light of the survey results.

Muzinich & Co. Strengthens Its Presence in US Offshore With Jesús Belascoain in Miami

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Muzinich & Co. has strengthened its presence in the US Offshore Latin American market by relocating Jesús Belascoain Gómez to Miami.

“The offshore market is one of our key targets as we seek to expand our credit solutions through a wider range of distribution channels. Jesús’s relocation, to be closer to our clients in the region, demonstrates our commitment to this channel as we continue to develop and promote our ability to create solutions based on our clients’ risk/reward parameters,” said Rafael Ximénez de Embún, Country Manager for Iberia and LatAm at the firm.

Belascoain, who has 20 years of experience in financial services, joined Muzinich in 2015.

At Muzinich’s Madrid office, Belascoain was responsible for the business development of the company’s wholesale and institutional client base in Spain, Portugal, and Latin America.

“Muzinich is already recognized as a respected corporate credit manager in the region, with a diverse offering that covers the entire credit spectrum. In this new challenge, I am looking forward to continuing to work on established relationships and creating new ones that highlight the firm’s longevity, expertise, and range of credit products in both public and private markets,” commented the industry veteran who arrived in Miami.

According to BrokerCheck, Belascoain obtained his FINRA licenses in July of this year.

August Has Passed… and the Market Is Once Again Suffering From Excesses

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The correction in the S&P 500’s price at the beginning of August was resolved almost as quickly as it occurred, and the market is once again suffering from the same symptoms of overvaluation and technical and sentiment-driven excesses.

The market is nearing overbought territory again, and retail investor surveys are once more showing excessive confidence, as evidenced by investors’ reaction to Nvidia’s results on Wednesday, with a post-market drop that reached 7%.

The numbers highlighted the potential of the business: the company continues to exceed consensus expectations in sales, margins, and EPS quarter after quarter. Its outlook for medium-term demand maintained the optimism of previous quarters. “We expect to grow our data center business significantly next year. Blackwell is going to completely change the game for the industry,” said Jensen Huang, CEO of Nvidia. Additionally, concerns about delays in the launch of its new product, Blackwell, were alleviated. However, the strong performance and the CEO’s comments—unclear regarding the ROI impact of the massive GPU investments by companies like Microsoft, Google, Amazon, or Meta—did not fully satisfy investors’ optimism.

This is relevant because Nvidia is one of those rare cases where a single company, or sometimes a single industry, like technology in 1999, becomes so significant that it comes to dominate the macroeconomic landscape by embodying the essence of the generative AI theme. This is the underlying idea behind the stock market rally over the last two years, since the official launch of ChatGPT in November 2022.

The numbers don’t lie: this year, the GPU company contributed about 230 points to the S&P 500 before the earnings release, accounting for 27% of the total returns the U.S. index has generated so far this year.

Maintaining business momentum like the one Nvidia has shown over the past 12 months is not sustainable, and its growth is slowing both year-over-year and quarter-over-quarter—although, to be clear, sequential growth is expected to pick up again in the fourth quarter as Blackwell begins reaching end customers, while demand for Hopper remains strong.

At a macro level, a similar situation is unfolding, despite the desire to celebrate Jerome Powell’s comments at Jackson Hole a few weeks ago. Despite the strong U.S. GDP data for the second quarter and the July retail sales figures, there is evidence of weaker growth. Manufacturing activity has contracted again, and the U.S. consumer, the main driver of global expansion over the past two years, is now less dynamic.

Real disposable income is growing at only 0.9% year-over-year, and a number of multinationals tied to household spending disappointed during earnings season (e.g., McDonald’s, Ford, Alphabet, or LVMH). The excess savings accumulated during the pandemic have been spent, fiscal policy will be less generous—regardless of who ends up in the White House in 2025, and especially if it’s Donald Trump—and the labor market is showing signs of fatigue.

Cumulative unemployment claims suggest that companies are reluctant to hire, and while the most optimistic observers attribute the activation of the Sahm rule to the exceptional nature of Tropical Storm Beryl, which impacted the U.S. Gulf Coast in July, the rise in unemployment over the past 12 months is affecting not just Texas but 80% of the 51 states that make up the union.

While it is true that payroll growth continues to be positive—and is usually negative in the context of economic contractions—this fact confirms that immigration is likely the main cause of the rise in unemployment from a low of 3.4% to 4.3%. We find ourselves in the unusual situation of rising unemployment alongside a growing economy because the imbalance is coming from the supply side of workers.

Demand is moderating, as indicated by the JOLT (Job Openings and Labor Turnover Survey) data on voluntary quits and hires. Although the economy is still creating a reasonable number of jobs each month, and inflation-adjusted private sector wages are increasing by 2.5%, these figures do not pose an imminent threat to GDP. However, growth has peaked, is deflating, and raises doubts about the ability to meet the ambitious EPS growth projections that consensus is forecasting for 2025.

On the geopolitical front, the potential implications of Harris overtaking Trump in betting markets (according to PredictIt, but not Polymarket) and in polls do not appear to be adequately priced into stocks. Investors don’t like the economic platform of either candidate, but in Harris’s case, it is assumed that Republicans will control the House of Representatives or the Senate (if not both), which would prevent much of her fiscal agenda from coming to fruition. In Trump’s case, he would have near-unilateral authority on tariffs, creating risk regardless of what happens with Congress.

Pictet AM Hires Juan Ramón Caridad García as Head of Strategic Clients for Iberia and Latam

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Photo courtesyJuan Ramón Caridad García, Head of Strategic Clients para Iberia y Latam de Pictet AM.

Pictet Asset Management, the institutional asset management and fund management division of the Swiss Pictet Group, has made two key appointments for the Iberian and Latin American markets, under the supervision of Gonzalo Rengifo Abbad, who has been its General Manager in Iberia and Latam since 2002.

As announced, Juan Ramón Caridad García is joining the Pictet AM team as Head of Strategic Clients for Iberia and Latam, reporting to Gonzalo Rengifo from the Madrid office. Additionally, Lorenzo Coletti Perucca has been promoted to Head of Iberia, taking on the responsibility for the Iberian market, while Tiago Forte Vaz becomes Head of Latam, responsible for the Latin American market. Coletti joined Pictet AM in 2001 as Sales Director for the Italian market and has been in Spain since 2005, while Forte Vaz joined in 2013 to develop business in Portugal and Brazil.

Meanwhile, Patricia de Arriaga Rodríguez, who began her career in 1984 and joined Pictet AM in 2006, will remain with the company as Deputy General Manager in Spain until the end of 2024, and later as Senior Advisor for key clients until her retirement in 2025.

Following Caridad’s appointment, Gonzalo Rengifo Abbad, General Manager in Iberia and Latam, stated: “This is a new transversal role aimed at facilitating a differential service in the various markets of Iberia and Latam and enhancing global synergies. Juan Ramón fits perfectly into the team, as he shares our values of responsibility, entrepreneurial spirit, and long-term thinking.”

Caridad has 25 years of experience. Until last May, he was Managing Director and Head for Iberia & Latam at GAM Investments. Caridad holds a degree in Economics and Business from the Autonomous University of Madrid and a postgraduate degree in Business Analysis and Valuation from the London School of Economics and Political Science. He is the Academic Director of the Master’s in Finance and Alternative Investment at Bolsas y Mercados Españoles and Co-Director of the I3 program at Instituto de Empresa. Additionally, he is a trustee of the FIDE Foundation.

Rengifo also highlighted that “Patricia will continue to contribute to the business with her extensive experience, deep knowledge of Pictet AM’s investment strategies and capabilities, and close relationship with clients. She has helped multiply the business in the Spanish market to €8.91 billion as of March 2024, making it one of the top ten international asset managers in our country. Among her wide range of achievements, she has been instrumental in successfully advancing thematic investments as well as financial education through various initiatives over the years.”

According to the firm’s head for Iberia and Latam, “these appointments underscore Pictet AM’s commitment to experienced professionals to drive growth and establish itself as a leading partner for institutional investors in the Iberian and Latin American markets.”