As Value Oriented Stock Pickers, We Believe Now Is Our Time To Shine

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U.S. stocks were mostly higher to finish March despite a banking crisis that caused the second & third-largest bank failures in U.S. history. The market’s mood and outlook shifted as investors’ expectations about the Fed’s policy path drove a significant rotation into growth names, with big tech, semis and software among the notable beneficiaries.

The month started with thoughts of a higher terminal rate in response to stronger-than-expected economic data, supported by comments from Fed Chair Jerome Powell’s congressional testimony about accelerating the pace of rate hikes if necessary. However, investors quickly focused their attention on bank deposit stress and losses on held-to-maturity (HTM) assets, as an accelerating bank run brought about the rapid regulatory shutdown of Silicon Valley Bank (SVB) and Signature Bank (SBNY). Both banks had an unusually high ratio of uninsured deposits that spooked customers into seeking insurance.

On March 22, the Federal Reserve announced another 25bps rate hike at the end of its two-day policy meeting, bringing the targeted federal funds rate to 4.75-5.00%. During his press conference, Fed Chair Jerome Powell noted that the central bank may be nearing the end of its rate-hiking cycle but he qualified that the inflation fight is not over. Most investors still expect at least one more rate hike this year. The next FOMC meeting is May 2-3.

Growth stocks have substantially outperformed value stocks to start 2023. We believe this creates an opportunity for Value Investors. The market is pricing a cut in interest rates sooner than Powell’s comments imply. The current environment of rising interest rates will continue to put a premium on near term cash flows, which should benefit our portfolio of companies.

As value oriented stock pickers, we believe now is our time to shine. We continue to seek franchise businesses with barriers to entry, pricing power, recurring revenue and large free cash flow generation that are trading below Private Market Value. The environment is still ripe for value surfacing catalysts: while M&A activity was down in 2022, it is still robust compared to most historical years. Companies have many opportunities to pursue financial engineering, not limited to M&A. We believe our portfolio of holdings is well positioned to thrive in this environment and their value will be recognized by the market in due time.

Global M&A volume totalled $580 billion in the first quarter, a 23% sequential decline from the fourth quarter of 2022 and a decrease of 44% compared to the first quarter of 2022. Healthcare was the most active sector for M&A, totalling $97 billion of dealmaking, an increase of 60% compared to 2022, and it accounted for 17% of all deals. Technology and Industrials were the next most active sectors, accounting for 17% and 13%, respectively.

Private Equity activity remained robust, accounting for more than 25% of deal volume in the first quarter. Despite the global slowdown in deals, public company M&A in the U.S. remained stable sequentially.  Notable deals that closed in March include: Atlas Air Worldwide (AAWW-NASDAQ) which was acquired by Apollo Global for $5 billion, Coupa Software (COUP-NASDAQ) which was acquired by Thoma Bravo for $6 billion, Vivint Smart Home (VVNT-NYSE) which was acquired by NRG Energy for $5 billion, Altra Industrial Motion Corp. (AIMC-NASDAQ) which was acquired by Regal Rexnord for $5 billion,  and Duck Creek Technologies (DCT-NASDAQ) which was acquired by Vista Equity Partners for $2.5 billion, among others.

Despite the noted volatility this month, the convertible market finished slightly higher with strong performance following the CS acquisition. Convertible performance is more a function of underlying equity movements than interest rates, but both factors had a positive contribution over the last few weeks. Issuance has continued to trickle in and we have added some recent new issues to the portfolio. Generally, these have helped increase current yield while diversifying the portfolio with balanced convertibles.

We continue to remain optimistic for the possibilities of convertibles as an asset class this year, as they allow investors to position their portfolio cautiously while allowing them to participate when the market moves higher. There are many convertibles with a yield to maturity in excess of the long-term expected return of the convertible market despite solid and improving fundamentals. As we have noted previously, we have managed convertibles through multiple market downturns and have seen how they can be a great tool for companies to raise capital despite uncertainty while offering investors a risk-adjusted way to participate in a recovery.

 

Opinion article by Michael Gabelli,  Managing Director at Gabelli & Partners. 

Santander, named Best Private Bank in Latin America by Euromoney

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Photo courtesySantander Private Banking team at the Euromoney Private Banking Awards ceremony

Santander Private Banking has been named the Best Private Bank in Latin America by Euromoney. Santander leads in several award categories, which are some of the most prestigious accolades in banking. The financial magazine also named Santander as Latin America’s Best Bank for Family Office Services and for Wealth Transfer/Succession Planning.

Santander has also been recognised for its teams’ work in several geographies including the awards of Best International Private Bank in Mexico, Argentina, Brazil, Peru, Uruguay, Poland, and Portugal; Best Private Bank for Ultra-High-Net-Worth Individuals in Spain and Colombia; Best Private Bank for Wealth Transfer/Succession Planning in Brazil; Best Private Bank for ESG in Chile; and Best Digital Private Bank in Mexico

“The breadth and distribution of these awards across Latin America & Europe demonstrates the value of the Santander Private Banking network combined with our local market expertise”, said the company in a press release.

Global private equity (CERPIs) beats local investments (CKDs) in returns

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Elaron

The international investments of the CERPIS in Private Equity, have improved the returns on this asset class by a ratio of three to one.  The 128 outstanding CKDs (including those that have been amortized) have a net IRR weighted by 2.7% net in Mexican pesos (MXN) as of December 31, 2022, while the IRR of CERPIs is 7.4%.  IRRs are in MXN and not US, because institutional investors who invest in CKDs and CERPIs have their portfolios evaluated in MXN. 

The CKDs are the vehicles registered in the Mexican Stock Exchange (BMV and BIVA) that allow institutional investors to invest in local private equity and the CERPIs are the ones that can invest globally. 

The weighted IRR of both is 3.8%.  There would be several considerations:

  • The CKDs (128) were born in 2009 (almost 14 years ago) and have called 75% of the capital to date.
  • The CERPIs (141) although they were born in 2016 it was from 2018 that they began to invest globally, which means that they are almost 5 years old and have called 32%.

 

With less time and capital called, CERPIs have improved profitability in this asset class. If the AFOREs had only invested in CKDs today the return would be 2.7% and if they had only invested in CERPIs it would be 7.4% net in MXN.  This data is weighted for the 128 CKDs and 141 CERPIs respectively.  When graphing the IRR of the CKDs, its evolution year after year has been gradual, while the behavior of the IRR of the CERPIs shows a steeper slope.

 

The great diversity of options available when investing in global private equity has allowed the AFOREs to select those global funds that have practically no “j curve”. The “j curve” is the investment period of private equity funds in which investments in this asset class show an initial loss (investment period) followed by a dramatic rise. On a chart, this pattern of activity would follow the shape of a “capital J”.

When reviewing the yields per vintage, it is observed that in four years (2009-2010-2014 and 2019)  CKDs had yields greater than 5%, the rest being lower; while for CERPIs there are three years with yields above 8% and only one year with negative IRR corresponding to the issuance of the first CERPI (j curve effect).

When presenting the net IRR in MXN for CKDs in a sectoral manner as of December 31, 2022, the Credit (17/128 CKDs) and Infrastructure (17/128) sectors are the ones that have offered the best IRRs to date. It is important to recognize a “J curve” with less slope for the most unfavorable sectors.  These results change over time by capital calls and market valuation, among other variables.

In the case of CERPIs, the Fund of Funds/Feeder sector (130/141), which concentrates 87% of the market value, has an IRR of 7.0% that weights the market value of the Credit sector (1/141), as well as the other sectors that allow the net IRR weighted in MXN to be raised to 7.4%. 

 

If the 8% rate (preferential rate) is considered as a threshold to distinguish the most profitable funds; with IRR greater than 8% net in MXN there are 37 of 128 CKDs (29%); if those with IRRs greater than 10% are considered, there are 22 CKDs and if those with IRRs greater than 15% net are considered, there are 4 CKDs. Of a total of 64 CKD administrators (GPs) only 19 have IRR greater than 10%, so there are few administrators who present competitive IRR to date.

In the case of CERPIs, 36 of 141 CERPIs (26%) have IRR greater than 8% as of December 31; with IRR greater than 10% there are 30 and with IRR greater than 15% there are 25 CERPIs with data as of December 31.  Being an important number of CERPIs Funds of Funds that act as Feeders, if in each CERPI there are two global funds (conservative number) in total there are more than 280 funds, although many of them are the same in the different CERPIs. Diversification is proving important in CERPIs.

Where is the market going?

Historical IRR makes CERPIs look like an alternative that has helped institutional investors to diversify and improve the returns in this asset class.

The competition that has occurred between local and foreign GPs has allowed the institutional investor to compare between the options in the market, selecting those sectors and managers with proven experience and attractive results.

Of course, these comparisons may change as the investment cycle of CKDs and CERPIs concludes, however, today the numbers are skewed in favor of CERPIs.

Column by Arturo Hanono

Is there a financial instrument that protects investors in the face of rising inflation?

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In a period such as the current one, where there are high levels of uncertainty with a latent recession, investors are searching for financial instruments that provide above-average returns but with protection against market volatility.

 

At the end of January of this year, inflation stood at an annual rate of 6.4%, higher than expected and only slightly below the previous month’s rate, 6.5%, which confirms the slowdown in the rise of prices. However, not at the desired rate, so the Federal Reserve has yet to rule out the possibility of continuing to raise rates. Nonetheless, this may be lower since continuing to push with moderate levels could trigger the U.S. to enter a recession.

 

According to the U.S. Securities and Exchange Commission (SEC), structured notes are securities issued by financial institutions whose returns are based on, among other things, equity indexes, a single equity security, a basket of equity securities, interest rates, commodities, and/or foreign currencies. Thus, your return is “linked” to the performance of a reference asset or index. Structured notes have a fixed maturity and include two components – a bond component and an embedded derivative.

 

Structured notes were introduced in the United States in the early 1980s and gained notoriety in the mid-1990s as a result of the crisis generated in the fixed-income markets during 1994, when the Fed raised interest rates by 250 basis points, generating heavy losses for fund managers with positions in structured notes issued by agencies.

 

According to a report by The Wall Street Journal, around US$73 billion in structured notes had been issued in the U.S. as of November of last year, getting very close to the record of US$100 billion in 2021.

 

According to Monex, structured products are generally created to meet specific investor needs that cannot be met with standardized financial instruments available in the markets.

 

Typically, structured notes are used by different market participants as:

 

– an alternative to direct investment

– a part of the overall asset allocation

– a risk reduction strategy in a portfolio

 

Just as stocks and bonds serve as essential components in the foundation of a well-diversified portfolio, structured note investments can be added to an investor’s portfolio to address a particular objective within an investment plan.

 

During periods of inflation, investors are turning to structured notes as a financial instrument to obtain above-average results thanks to the combination of elements of both fixed and variable investments, i.e., if used correctly, this instrument can offer specific protection against a downfall in the assets in which it invests. 

 

For the above reasons, using structured products as investment vehicles provides a possible system for regulating risk exposure, making it possible to adapt it to the investor’s profile, considering their profitability objectives.

 

An investment vehicle is a mechanism by which investors obtain returns; structured notes can be cataloged as one since they are hybrid investment instruments that allow the design of a tailor-made portfolio, which can have guaranteed capital.

 

Some specialists believe structured notes in uncertain conditions can improve the risk-return ratio since they can encompass many assets. This instrument also facilitates access to specific markets or financial assets that do not have sufficient transparency, liquidity, or accessibility.

 

How to do it in 5 simple steps:

 

At FlexFunds, we are specialists in the setup and issuance of investment vehicles through exchange-listed products (ETPs), for which we have designed a 5-step process that simplifies it:

 

Step 1. Customized assessment and design of the ETP:

A detailed study and data collection of the desired investment strategy is carried out.

 

Step 2. Due diligence and signing of the engagement letter:

Once the product structure is defined, the client’s due diligence is performed, and the process continues with signing the engagement letter. 

 

Step 3. ETP structuring:

The portfolio manager’s onboarding is performed in this step, and the essential documents, such as the “series memorandum,” are reviewed.

 

Step 4. Issuance and listing of the ETP:

The investment strategy is repackaged as a bankable asset thanks to generating an ISIN code that facilitates its distribution.

 

Step 5. The ETP is ready for trading through Euroclear:

Investors can access the ETP through their existing brokerage accounts from many custodians and private banking platforms.

 

Thanks to the features of instruments such as structured notes, FlexFunds can offer innovative, customized solutions that can allow you to diversify your investment portfolio and facilitate access to international investors.

 

Emilio Veiga Gil, Executive Vice President, FlexFunds 

 

Some Conclusions From Markets Behaviour in October

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U.S. equities rebounded in October, with the S&P recording its second-best monthly performance for the year. This month saw the kickoff of Q3 earnings with over half of the S&P 500 companies having reported through 10/28. Takeaways from the first few weeks of earnings included FX headwinds, continued supply chain disruptions, still-elevated raw materials costs and fears of a weakening macro backdrop. However, credit card companies and banks reiterated that consumer spending continued to show signs of resilience despite surging inflation.

Several catalysts will be in focus as potential drivers to push markets higher before year-end, such as an inflection point in the Russia-Ukraine war, U.S. midterm elections or inflation data indicating that prices are no longer rising.

Performance in the Merger Arbitrage space in October was driven by the closing of several deals, most notably Elon Musk’s $44 billion acquisition of Twitter, Berkshire Hathaway’s $12 billion acquisition of Alleghany, and Vista Equity’s $8bn acquisition of Avalara.  The strategy also benefitted from a bump in consideration in two transactions. Philip Morris raised its offer for Swedish Match from SEK 106 to SEK 116 per share in order to secure enough shareholder support to complete the transaction. Additionally, Flagstar Bancorp shareholders received an increase in terms of $2.50 per share, which was paid as a special dividend, as they awaited the final regulatory approvals needed to complete the merger with New York Community Bancorp.

For the convertibles market, the fourth quarter on a positive note after a very negative year. Sentiment was quite low coming into earnings season and the result has been generally positive. We had numerous holdings outperform significantly after beating what were admittedly low expectations. We also had a few surprises to the downside as some companies guided cautiously. Premium expansion as stocks moved lower helped limit some of the downside we saw relative to the underlying equities. This is a key attribute of convertibles as it helps to provide asymmetrical returns.

Franklin Templeton Completes Acquisition of Alcentra

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Franklin Resources, Inc., a global investment management organization operating as Franklin Templeton, announced the completion of its acquisition of BNY Alcentra Group Holdings, Inc. (together with its subsidiaries, “Alcentra”) from The Bank of New York Mellon Corporation (“BNY Mellon”).

Alcentra is an European credit and private debt managers with $35 billion in assets under management as of September 30, 2022 and has global expertise in senior secured loans, high yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies.

With this closing, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners (“BSP”), expands its capabilities and presence in Europe, nearly doubling its AUM to $75 billion globally, and increases the breadth and scale of Franklin Templeton’s alternative asset strategies to $260 billion in aggregate, as of September 30, 2022.

Alternative asset management is a priority for the firm, as investors are allocating more capital across the full spectrum of strategies.

In addition to alternative credit through BSP and Alcentra, Franklin Templeton’s alternative asset strategies include specialist investment managers focused on private real estate through Clarion Partners, global secondary private equity and co-investments via Lexington Partners, hedge fund strategies via K2 Advisors and venture capital through Franklin Venture Partners.

Founded in 2002, Alcentra employs a disciplined, value-oriented approach to evaluating individual investments and constructing portfolios across its investment strategies on behalf of more than 500 institutional investors. Alcentra’s dedicated and highly experienced team is based in its London headquarters, as well as in New York and Boston.

In connection with this transaction, there will be no change to Alcentra’s brand in Europe or Alcentra’s investment strategies.

SEC Charges 16 Wall Street Firms with Widespread Recordkeeping Failures

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The Securities and Exchange Commission announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.

The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.

“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said SEC Chair Gary Gensler.

The SEC staff’s investigation uncovered pervasive off-channel communications. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. These personnel included senior and junior investment bankers and debt and equity traders.

From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.

By failing to maintain and preserve required records relating to their businesses, the firms’ actions likely deprived the Commission of these off-channel communications in various Commission investigations. The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives.

  • The following eight firms (and five affiliates) have agreed to pay penalties of $125 million each:
    • Barclays Capital Inc.;
    • BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.;
    • Citigroup Global Markets Inc.;
    • Credit Suisse Securities (USA) LLC;
    • Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.;
    • Goldman Sachs & Co. LLC;
    • Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC; and
    • UBS Securities LLC together with UBS Financial Services Inc.
  • The following two firms have agreed to pay penalties of $50 million each:
    • Jefferies LLC; and
    • Nomura Securities International, Inc.
  • Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.

Each of the 15 broker-dealers was charged with violating certain recordkeeping provisions of the Securities Exchange Act of 1934 and with failing reasonably to supervise with a view to preventing and detecting those violations. DWS Investment Management Americas, Inc., the investment adviser, was charged with violating certain recordkeeping provisions of the Investment Advisers of 1940 and with failing reasonably to supervise with a view to preventing and detecting those violations.

In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and were censured.

The firms also agreed to retain compliance consultants to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures.

Yie-Hsin Hung Named President & CEO of State Street Global Advisors

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Photo courtesyYie-Hsin Hung, President and CEO of State Street Global Advisors

State Street Corporation announced that it has appointed Yie-Hsin Hung as president and chief executive officer (CEO) of State Street Global Advisors (Global Advisors), its asset management business.

Hung succeeds Cyrus Taraporevala, whose planned retirement was announced earlier this year. She will join Global Advisors in December 2022, reporting to State Street Chairman and Chief Executive Officer Ron O’Hanley and will join State Street’s Executive Committee.

Hung joins Global Advisors from New York Life Investment Management (NYLIM), where she served as chief executive officer since 2015. While at NYLIM, Yie-Hsin led a multi-boutique, global investment management business that provides a broad range of fixed income, alternatives, equity and ESG capabilities.

During her tenure at the firm, Hung led NYLIM to achieve a nearly four-fold increase in assets under management. Prior to assuming the role of CEO of NYLIM, Hung held numerous senior executive roles including co-president and chairman of NYLIM International. Before joining NYLIM, she held leadership positions at Bridgewater Associates and Morgan Stanley.

“We are delighted to welcome Yie-Hsin to State Street. She is an industry veteran, who brings to Global Advisors her notable history of delivering growth,” said O’Hanley. “Her career has been impressive, successfully delivering strong results as she expanded NYLIM’s investment capabilities, entered new markets and strengthened the business’ data and technology infrastructure. She also brings a true commitment to fostering a culture of inclusion, collaboration and product innovation.”

“I am excited to join State Street Global Advisors, an organization and leadership team that I have had the opportunity to work with at various points over my career,” said Hung. “It is a pivotal time in the asset management industry, and I look forward to building on the strong foundation at Global Advisors to continue to drive growth and help prepare our clients for the future.”

In 2022, Hung was named to Barron’s list of the 100 Most Influential Women in US Finance for the third time, and in 2021, she was selected by American Banker as one of the 25 Most Powerful Women in Finance for the fifth consecutive year. She has also been named by Forbes to its list of 50 over 50.

She is a member of the Board of Trustees of Northwestern University; the Chair of the Executive Committee and Board of Governors of the Investment Company Institute (ICI); the US Institute Asset Management CEO Roundtable; C200; The Women’s Forum of New York and the National Association of Corporate Directors. Hung also serves on the non-profit board of Next for Autism.

Hung earned her MBA from Harvard University and B.S. in Mechanical Engineering from Northwestern University, from which she received a Distinguished Alumni Medal in 2019, the highest honor granted by the Northwestern Alumni Association.

On Hung’s arrival, Taraporevala will assume the role of advisor and stay through early 2023 to provide a smooth transition of responsibilities.

Get Anti-money Laundering Training With FIBA’s CPAML and AMLCA Certifications: What Are They and How Can They Help You?

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Foto cedida

The Florida International Bankers Association (FIBA) is a non-profit professional association founded in 1979. The main focus of FIBA members is international finance, international correspondent banking and wealth management or private banking services for non-residents.

FIBA has long been recognised by regulators for its knowledge and expertise in Anti Money Laundering (AML) compliance and its excellent courses. FIBA has been providing anti-money laundering training for more than two decades, including its Annual Conference and FIBA AMLCA and CPAML certifications in partnership with Florida International University (FIU). FIBA will soon be organising two new courses for which you can register with a $200 discount code provided by Funds Society (FS200).

CPAML Certification (25/26th October)

The CPAML is an advanced level certification designed to expand the knowledge of professionals, officers, directors, or managers of any organization, with respect to the prevention of money laundering and financing of terrorism (AML / CFT).

The program is developed with a risk-based approach to identify potential risks, design an effective control system, investigate suspicious cases, and how to use these processes to best evaluate the effectiveness of internal controls.

The online course is an interactive option design for participants interested in completing the certification at their own pace. Through open discussions and activities, participants will have the opportunity to actively engage with the instructor and classmates to discuss the assigned materials.

October 25-26: Students will attend the CPAML course via Zoom videoconference

October 28: Students will work on their assignments and submit their workbooks before 5:00 PM EST

November 24: Final exam deadline – must be completed via Canvas before 11:59 PM EST

Participants who pass the final exam with an 81% or higher will earn the CPAML certificate. This certificate is valid for 2 years with 20 AML Continuing Education credits.

The registration fees are $1595 USD for non-members; $1395 USD for FIBA members; and $1195  USD for Government. Funds Society readers can access an exclusive discount with the code FS200.

AMLCA Certification (From 17th November)

The internationally recognized AMLCA Certification (Anti-Money Laundering Certified Associate) is designed for intermediate-level compliance officers in both financial and non-financial sectors. The in-depth curriculum is based on best practices and international standards regarding the origin, practices, and development of regulations in money laundering, terrorism financing, and the proliferation of weapons of mass destruction.

The next edition will start in 17th November. The online course is an interactive option design for participants interested in completing the certification at their own pace. Through open forums and discussions, participants will have the opportunity to actively engaged with the instructor and classmates to discuss the assigned materials. Participants will have 90 days to complete the reading materials, PowerPoint narratives, 23 practice quizzes and the final certification exam.

The final certification exam consist of 100 multiple choice questions that must be completed within 1 hour and 45 minutes. Participants must pass the exam with a 75% or higher mark to receive the prestigious FIBA AMLCA Certification.

The registration fees are $1395 USD for non-members; $1195 USD for FIBA members; and $995  USD for Government. Funds Society readers can access an exclusive discount with the code FS200.

AXA Investment Managers Launches an ETF Platform with a Focus on Active Management and Responsible Investment

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Marco Morelli, presidente ejecutivo de AXA IM
Photo courtesyMarco Morelli, Executive Chairman of AXA IM

AXA Investment Managers announces the launch of an ETF platform (“AXA IM ETF”) focused on active strategies and Responsible Investing (RI) to provide investors looking for enhanced liquidity with access to its strengths across responsible, thematic and quantitative investing.

The platform will initially launch with two actively UN SDG (United Nations Sustainable Development Goals) aligned ETFs, classified as Article 9 funds under SFDR regulation , which have dual objectives of seeking to deliver long-term financial growth and a positive and measurable impact on the environment, the firm says.

The first two ETFs launched will focus on climate and biodiversity themes.

Commenting on the launch of the new platform, Marco Morelli, Executive Chairman of AXA IM, said: “To meet the changing demands of investors we must continue to innovate and enhance our investment offering, and through the launch of this new platform we do this by combining our active investment insight with the flexibility of an ETF.

“With the support of AXA and leveraging our key strengths, primarily within active management and responsible investing strategies, this platform will complement our existing fund range while answering client demand for ETF structured vehicles and offering them a better trading experience as well as easy access to such strategies, high liquidity, and enhanced  transparency due to the nature of these products,” Morelli adds. 

Hans Stoter, Global Head of AXA IM Core, added: “We are observing long term trends such as blockchain technology, banking disintermediation and the emergence of online brokerage platforms which can transform the way funds are distributed. In that regard, we believe active ETFs will play an important role in the evolution of the asset management industry and we believe we are well placed to embrace such an evolution.

“Even though ETFs are often viewed as passive investments, historically replicating the portfolio holdings and performance of broad market indices, the ETF market has evolved to now offer a range of non-traditional custom-built portfolios. Today’s ETF can be actively managed, further expanding investor choice. In that regard, our new ETF range will complement our wide range of mutual funds.”

In the context of this launch, Brieuc Louchard has joined AXA IM as Head of ETF Capital Markets, joining from Euronext where he was Head of ETF.