Courtesy photo of ring the bell ceremony on April 19th, 2022. , foto cedida
On April 19th, 2022, abrdn, the leading global asset manager, announced the launch of two Brazilian Depository Receipts (BDRs) referencing existing North American exchange traded funds (ETFs) focused on precious metals.
The new BDR funds, initially offered to qualified investors and listed on B3, the Brazilian stock exchange located in Sao Paulo, will provide exposure to physical gold and silver, respectively.
The available BDRs will offer Brazilians easily accessible, liquid and cost-efficient exposure to both precious metals at a time when many investors are seeking to bulwark their portfolios with increased diversification and protection. Benefiting from investment, risk and operational knowledge drawn from abrdn’s existing stable of metals funds, the new instruments join a growing array of BDRs now listed on B3, numbering more than 100 overall.
“These new BDRs will immediately enhance the landscape of publicly-listed funds for investors, who have grown in number and sophistication but remain limited in their pathways to exposure to gold and silver,” said Menno de Vreeze, Head of Business Development, International Wealth Management at abrdn. “Today’s macroeconomic conditions demonstrate the imperative for fast, trusted access to these metals perhaps more than ever before, and we are extremely excited to bring these tools to a Brazilian market that is dynamic yet still broadly untapped. We were proud to work with B3 and our local partners on this timely and long-awaited launch, and will continue our work together to offer further exposure of this kind in Brazil in the future.”
“This is a big step in the Brazilian market, bringing an opportunity from of our shelf of passive vehicles in partnership with B3 via their BDR-of-ETF program to provide easy access to two of our flagship metals products. We believe this will also provide excellent foundation for future to provide exposure to our separate commodities suite, as well,” added Daniel Xavier, abrdn Business Development in Sao Paulo.
“B3 continues to support market participants to bring crucial and innovative BDRs to Latin America’s largest market, with providers today including abrdn and many of the world’s largest asset managers,” said Rogerio Santana, Director of Client Relations at B3. “Today’s new BDR offerings provide more confirmation of the Brazil’s market potential and steady maturity, meeting our investors’ requirement for local funds to help them properly diversify their portfolios and navigate volatility. We are excited to support these new BDRs going forward and congratulate abrdn on their first launch on our platform.”
Foto cedidaDavid Solomon, presidente y Consejero Delegado de Goldman Sachs.. Goldman Sachs completa la adquisición de NN Investment Partners
The Goldman Sachs Group announced the completion of the acquisition of NN Investment Partners from NN Group N.V. for €1.7 billion ($1.84 billion).
NN Investment Partners will be integrated into Goldman Sachs Asset Management with the company’s more than 900 employees joining the Goldman Sachs family and the Netherlands becoming an important location in Goldman Sachs’ European business and a center of excellence for sustainability in public markets investing.
The acquisition brings Goldman Sachs’ assets under supervision to approximately $2.8 trillionand affirms its position as a top five active asset manager globally with leading franchises in fixed income, liquidity, equities, alternatives and insurance asset management. It also brings assets under supervision in Europe to over $600 billion, aligning with the firm’s strategic objectives to scale its European business and extend its global reach.
The combination further strengthens our platform and provides an expanded product range and dedicated service to clients globally, bringing together the best of both organizations to deliver investment solutions at scale, across all asset classes.
NN Investment Partners is highly complementary to Goldman Sachs Asset Management’s existing European footprint, adding new capabilities and accelerating growth in products such as European equity and investment grade credit, sustainable and impact equity, and green bonds.
NN Investment Partners has been successful in incorporating Environmental, Social and Governance (ESG) factors across its product range, with ESG criteria integrated into approximately 90% of assets under supervision. Over time, Goldman Sachs Asset Management intends to leverage the expertise of NN Investment Partners to complement its existing investment processes, helping the firm to deepen ESG integration across its product range and deliver on clients’ sustainable investing priorities.
David Solomon, Chairman and Chief Executive Officer of Goldman Sachs, said: “This acquisition advances our commitment to put sustainability at the heart of our investment platform. It adds scale to our European client franchise and extends our leadership in insurance asset management. We are excited to welcome the talented team at NN Investment Partners, a center of excellence in sustainable investing, to Goldman Sachs and together we will focus on delivering long-term value to our clients and shareholders.”
As part of the transaction, Goldman Sachs Asset Management has entered into a long-term strategic partnership agreement with NN Group to manage an approximately $180 billion portfolio of assets, reflecting the strength of the business’ global insurance asset management capabilities and alternatives franchise.
The partnership also strengthens Goldman Sachs Asset Management’s position as one of the largest non-affiliated insurance asset managers globally, with over $550 billion in assets under supervision, and the acquisition will provide a foundation for further growth in the firm’s European fiduciary management business, building on the success of its platform in the United States and United Kingdom.
Foto cedidaEvan L. Russo, nuevo CEO de Lazard AM.. Lanzar elige a Evan L. Russo nuevo CEO para su negocio de gestión de activos
Lazard announced that Evan L. Russo, Chief Financial Officer (CFO) of Lazard, will succeed Ashish Bhutani as Chief Executive Officer (CEO) of Lazard’s Asset Management business.
Mr. Bhutani has decided to retire as CEO of Lazard’s Asset Management business and from the Board of Directors of both Lazard Ltd and Lazard Group as of June 1, 2022, to pursue philanthropic and personal interests. Mr. Bhutani will continue serving as Chairman of Asset Management and as a Vice Chairman of Lazard through the end of the year. Mr. Russo will continue serving as Lazard’s CFO and work with Kenneth M. Jacobs, Chairman and CEO of Lazard, to expeditiously identify his successor.
Mr. Russo joined Lazard in 2007. He has served as CFO and as a key member of Lazard’s executive leadership team since October 2017. In his role as an executive officer, he helped to lead strategic priorities for the firm, developing a deep understanding of the Asset Management business. As CFO, Mr. Russo significantly increased engagement with Lazard’s stakeholders. He also developed a deep bench of talent and enhanced the capabilities of the finance team worldwide. He successfully led projects to modernize and improve the firm’s global financial capabilities and optimized the firm’s capital structure. Prior to becoming CFO, Mr. Russo served as Co-Head of Lazard’s Capital Markets and Capital Structure Advisory practice in the firm’s Financial Advisory business.
Mr. Bhutani joined Lazard in 2003, was shortly thereafter appointed head of Lazard Asset Management and became a member of the Board of Directors in 2010. Under his leadership, Lazard’s Asset Management business has become a leading global asset manager with over $250 billion in assets under management. Mr. Bhutani, along with the senior management team, has built a business based on a culture of innovation and entrepreneurship, with a passionate commitment to serving clients with excellence. It is this culture that underpins Lazard’s success and will continue to be a driving force in its future growth.
Mr. Bhutani is Chairman of the Lazard Foundation in the U.S. in addition to being active in a number of philanthropic organizations, including serving as a Board member of City Harvest. He now plans to focus more on his personal philanthropic efforts.
“Over his two decades at Lazard, Ashish has led the transformation of our Asset Management business into a leading global franchise driven by a world-class team, and for the past 12 years he has served as a valued member of our Board of Directors,” said Mr. Jacobs. “Ashish has been an inspirational partner, and I admire him as a leader and as a philanthropist. On behalf of Lazard’s Board, I thank Ashish for his substantial achievements as a senior leader of the firm andhis contributions as a Board member.”
“The success of our Asset Management business over the past 20 years has been driven by our innovative and entrepreneurial culture, and an unwavering focus on delivering the best of Lazard to our clients,” said Mr. Bhutani. “I am confident that under Evan’s leadership, working closely with our experienced senior management team, the business will reach new heights in delivering best-in-class investment solutions and service to our clients.”
Lazard’s Asset Management business provides a world-class suite of investment solutions across a diverse range of asset classes, regions and investment styles, with operations in 24 cities, supporting clients in more than 50 countries across the globe.
Alexander F. Stern, President of Lazard, to retire from the firm at year end
Lazard also announced today that Alexander F. Stern, President of Lazard since 2019 and an investment banker in its Financial Advisory business for nearly 30 years, has decided to retire from the firm at the end of this year. He will continue serving in his current role as President through year-end 2022 and will also continue as Executive Chairman of Lazard Growth Acquisition Corp. I, a Special Purpose Acquisition Company.
“Alex has been an invaluable partner to me for many years and an important advisor to Lazard’s Board,” said Mr. Jacobs. “He has been a key member of our executive leadership team as President. In his prior role as Global Head of Strategy, he was responsible for our key strategic initiatives, and as Chief Operating Officer he ensured our successful transition to being a public company. As CEO of Financial Advisory until 2019, Alex steered the development of our Financial Advisory business globally, enhanced collaboration and productivity across our workforce and strengthened our relationships with our investment banking clients. On behalf of our Board, I thank him for his years of service and unwavering commitment to the firm, our clients and our culture.”
Pixabay CC0 Public Domain. La deuda pública mundial se disparará en 2022: 71,6 billones de dólares
2022 will see global sovereign debt rise by 9.5%, up by $6.2 trillion to a record $71.6 trillion, according to the second annual Janus Henderson Sovereign Debt Index. The increase will be driven by the US, Japan and China in particular, though almost every country is likely to borrow further.
Global government debt jumped to a record $65.4 trillion in 2021. On a constant-currency basis, public debt levels rose 7.8% as governments borrowed an additional net $4.7 trillion. Since the pandemic began, global sovereign debt has soared by over a quarter, up from $52.2 trillion in January 2020 to today’s record.
Every country Janus Henderson examined saw borrowing rise in 2021. China’s debts rose fastest and by the most in cash terms, up by a fifth, or $650 billion. Among large, developed economies, Germany saw the biggest increase in percentage terms, with borrowing rising by one seventh (+14.7%), almost twice the pace of the global average.
Despite surging levels of borrowing, debt servicing costs remained low. Last year, the effective interest rate on all the world’s government debt was just 1.6%, down from 1.8% in 2020. This brought the total cost of servicing the debt down to $1.01 trillion, compared to $1.07 trillion in 2020. The strong global economic recovery meant the global debt / GDP ratio improved to 80.7% in 2021 from 87.5% in 2020 as the rebound in economic activity outpaced the increase in borrowing.
2022 will see debt servicing costs significantly increase
The global interest burden is set to rise by around one seventh on a constant-currency basis (14.5%) to $1,160bn in 2022. The biggest impact is set to be felt in the UK thanks to a rising interest rates, the impact of higher inflation on the large amount of UK index-linked debt, and the cost of unwinding the QE programme. As interest rates rise, there is a significant fiscal cost associated with unwinding QE. Central banks will crystallize losses on their bond holdings which have to be paid for by taxpayers.
Bond market divergence signals opportunities for investors
During the first couple of years of the pandemic, bond markets around the world converged. Now, the theme is divergence. The US, UK, Europe, Canada and Australia are focused on tightening monetary policy to squeeze out inflation – both through higher interest rates and with tentative steps towards unwinding quantitative easing programmes. By contrast, the Chinese central bank is stimulating the economy with looser policy.
Janus Henderson sees asset allocation opportunities in shorter-dated bonds as they are less susceptible to changing market conditions. Janus Henderson believes markets are expecting more interest rate hikes than are likely to materialise and this means shorter-dated bonds will benefit if the tightening cycle ends sooner.
Bethany Payne, portfolio manager, global bonds at Janus Henderson said: “The pandemic has had a huge impact on government borrowing – and the after-effects are set to continue for some time yet. The tragedy unfolding in Ukraine is also likely to pressure Western governments to borrow more to fund increased defence spending. despite recent volatility, opportunities exist for investors in sovereign bonds markets.”
Payne adds tha during the first couple of years of the pandemic, the big theme was how bond markets around the world converged. Now, the theme is divergence; regime change is underway in the US, UK, Canada, Europe and Australia, which are now focused on how to tighten monetary policy to squeeze out inflation, while other regions are still in loosening mode. Regarding Asset Allocation, there are two areas of opportunity.
“One is China, which is actively engaging in loosening monetary policy, and Switzerland, which has more protection from inflationary pressure as energy takes up a much smaller percentage of its inflationary basket and their policy is tied, but lagging, to the ECB”, she adds.
Foto cedidaJuan Alcaraz, fundador y CEO de Allfunds.. Allfunds llega a un acuerdo para adquirir Web Financial Group
Allfunds announces that it has entered into an agreement to acquire the entire share capital of Web Financial Group, S.A. (‘WebFG’), a European financial technology company and provider of software solutions to the wealth management sector.
The acquisition will significantly enhance Allfunds’ customer proposition in digital & software solutions by gaining multi-asset and data capabilities, according the firm statement.
Headquartered in Madrid, WebFG provides bespoke digital solutions for the wealth management industry by harnessing sophisticated data management, cutting-edge technology, and industry leading expertise refined over 20 years. This technology will complement Allfunds’ already strong digital offering including data & analytics which continue to bring efficiencies to the fund distribution ecosystem.
Allfunds will reinforce its platform with stronger functionalities in multi-asset capacities and new features in multi-data connectivity. With the integration of WebFG’s technology, Allfunds will further bolster its tailor-made solutions available for the wealth management industry and progress towards an even more streamlined, efficient fund distribution ecosystem.
Allfunds will approach the combined service offering and scalability for WebFG’s existing client base, which includes retail banks, wealth managers, investment platforms and private banks.
As part of this investment, Allfunds will look to onboard the c.100 employees of WebFG which are located across six offices in Europe, further boosting its global footprint in key markets such as France, Germany, Spain, Sweden, Switzerland and the UK.
The addition of the WebFG team will strengthen Allfunds’ digital expertise, further support its global infrastructure and enhance Allfunds’ position as a leader in innovative WealthTech solutions.
Juan Alcaraz, Allfunds’ founder and CEO, said: “At Allfunds, we are fully customer-centric and, with this in mind, we are always looking for growth opportunities that complement and broaden our offering. We wish not only to fulfill our clients’ needs, but to anticipate them; the synergies, technology and talented WebFG team will, no doubt, strengthen our value proposition and help us deliver the world-class service we, at Allfunds, strive to provide.”
Julio Bueso, WebFG’s founder and CEO added: “It is exciting to become a part of the Allfunds business and I look forward to working together towards becoming an even stronger WealthTech champion. Our combined experience, expertise and synergies will reinforce Allfunds’ technology, delivery and ultimately, service offering as a whole.”
The transaction, which includes around $158 millions, excludes the media business, which was carved-out in August 2021.
The transaction, which is subject to customary closing conditions, including if applicable, FDI screening approvals, will aim to close during Q2 2022.
Pixabay CC0 Public Domain. Tres escenarios para Ucrania-Rusia y valores de recuperación de los bonos para Ucrania, Rusia y Bielorrusia
In this article, we focus on what we think are the three most likely scenarios of how the war could end, while acknowledging that within each of these stylized scenarios there are also multiple variants. This framework allows us to think clearly of the potential recovery values for Russian, Ukrainian, and Belarusian bonds. As always, our subjective probabilities will be reassessed as the facts change on the ground.
Scenario 1: Peace deal in the short-term (35% probability)
Russia and Ukraine are currently engaged in negotiations for a peace deal. It appears that the involved parties are not yet ready for an immediate compromise, but a deal within the next two months appears plausible. The details are yet to be defined, but based on publicly available information, one could expect Russia to agree to withdraw its troops from Ukraine in exchange for the latter giving up its NATO membership ambitions, recognizing Crimea as part of Russia, and limiting the future size of its military.
A kind of Minsk III agreement would be needed to resolve the struggle with Ukrainian separatists in Donetsk and Luhansk – a conflict that has been ongoing since 2014. Ukraine could potentially recognize the independent People’s Republics of Donetsk and Luhansk (DPR and LPR) under the protection of Russian peacekeepers. Alternatively, DPR and LPR could be granted some independence within Ukraine’s sovereignty. Either way, Ukraine would preserve most of its territorial integrity.
Ukraine avoids default or conducts a market-friendly restructuring. This would be possible on the back of significant financial assistance that is currently being provided by western partners that has, so far, allowed Ukraine to continue servicing its external debt. This large financial assistance will also allow for a quick rebuilding of the nation. For example: Iraq’s economy expanded by a cumulative 178% in 2003 and 2004 after the 2003 invasion, Kuwait’s rose by 147% in the two years following the 1991 invasion. The recovery value of Ukraine’s sovereign bonds could be between 70% and 100% depending on whether there’s a restructuring or not.
Russia may also avoid default depending on potential sanction relief. Russia’s sovereign and corporates have been demonstrating their willingness and ability to avoid default so far, but current US sanctions would prevent bondholders from receiving sovereign bond repayments after 25 May, 2022 (see OFAC General License 9A). If the peace deal occurs before this date and it is acceptable for the US, then there’s a possibility that this and other economic sanctions could be eased allowing Russia’s sovereign to avoid default. This is far from granted though and up to the US to decide. If Russia manages to obtain sanctions relief to avoid default following a satisfactory peace deal, then we would expect Belarus to avoid default as well.
A large majority of Russia’s corporate issuers avoid default. Only a few corporate issuers that see their revenues severely disrupted could conduct market-friendly restructurings with high recovery values.
Scenario 2: A prolonged war (45% probability)
The war could go on for several months if the involved parties fail to reach a peace deal in the short-term. This would inflict much larger infrastructure and humanitarian damage on Ukraine. Russia would likely increase its territorial control of Ukraine, forcing the latter to give up a larger share of its territorial integrity. Some variants of this scenario could see Ukraine divided in two with Russia having control over eastern Ukraine and a legitimate democratic government controlling western Ukraine.
Ukraine restructures its external debt; the recovery is highly uncertain. The recovery of Ukraine sovereign bonds will depend on how much of Ukraine’s territorial integrity is preserved as well as on the length of the war, which will determine the degree of infrastructure damage as well as a likely large loss of human capital mainly due to migration.
In the most optimistic case within this scenario, Ukraine preserves most of its territorial integrity and large financial assistance from western partners allows a quick recovery. A market friendly restructuring sees a recovery between 50% and 70%.
In the most pessimistic case within this scenario, Ukraine loses a large share of its territory. The lowest recovery of a sovereign restructuring in recent history was Iraq’s following the 2003 invasion, where Paris Club creditors accepted an 80% principal haircut. We see this as a lower bound for Ukraine.
Russia sovereign likely defaults after the 25 May. If the conflict continues for months, we think the US would be less inclined to extend the deadline imposed by General License 9A, which would prevent bondholders from receiving payments even if Russia remains willing and able to pay. Belarus is financially dependent on Russia, thus we see no reason for the former to avoid default if the latter is forced to stop paying.
No restructuring in sight. US sanctions on Russia’s Ministry of Finance, central bank, and national wealth fund would remain in place, which would prevent the sovereign from restructuring its debts in the foreseeable future. Venezuela’s sovereign bonds, which have been in a similar situation used to trade between 20 and 30 cents on the dollar following the November 2017 sovereign default.
Deep recession but not a Venezuelan-style collapse. The Russian economy will inevitably fall into a deep recession this year but an economic collapse like those seen in Venezuela and Lebanon seems highly unlikely in an economy that until now had been well managed, with very low levels of debt and a twin surplus (fiscal and external). Thus, we think that this long default scenario has already been mostly priced in.
Most Russian corporate issuers still avoid default. Economic sanctions will affect the revenues of Russia’s corporate issuers but given that most of them are exporters, have low leverage, and have assets abroad that could be seized by creditors, we believe that most of them will avoid default. Corporates with an important share of domestic revenues and those that see their exports severely curtailed by sanctions will have to restructure, but we expect market-friendly restructurings to prevail.
Scenario 3: A Russia-controlled Ukraine (20% probability)
The strong resistance from the Ukrainian military and population, and the constant military equipment provided by the west make a full conquest of Ukraine unlikely, yet it remains a possible outcome. In this worst-case scenario, Ukraine would be governed by an illegitimate pro-Russian government. Ukraine would thus become sanctioned and lose financial support from the west. All three sovereigns default and restructuring would only occur following regime change. The outlook for Russian corporates becomes more uncertain the longer strong economic sanctions remain. We would expect more corporate restructurings than in the previous scenarios.
Outlook
The situation on the ground in Ukraine is extremely fluid, so the scenarios outlined above will change as more information emerges, and international diplomacy continues. We note that the critical factor for bond investors will be policy decisions around sanctions, so we will continue to watch this closely. We are deeply saddened that a prolonged war seems to be the most likely outcome but remain hopeful that a peaceful outcome can be reached as quickly as possible.
Guest column by Carlos de Sousa, Emerging Markets Strategist, Vontobel AM.
Pixabay CC0 Public Domain. Las aseguradoras planean invertir más en private equity y bonos verdes o de impacto durante 2022
Goldman Sachs Asset Management released the findings of its eleventh annual global insurance survey, titled “Re-Emergence: Inflation, Yields, and Uncertainty.”
The survey of 328 insurance company participants, representing over $13 trillion in globalbalance sheet assets, found that as insurers continue to prioritize yield and ESG factors in investment decisions, they plan to increase their allocation most significantly to private equity (44%) and green or impact bonds (42%) over the next year.
In the Americas and Asia, 53% of investors expected to increase allocations to privateequity, the highest of any asset class, while in Europe, the Middle East and Africa (EMEA), green or impact bonds were the most favored choice at 59%.
The survey found that in a sharp reversal from the past two years, insurers now see rising inflation and tighter monetary policy as the largest threats to their portfolios, with rising interest rates displacing low yields as the primary investment risk cited by insurers.
“Against a complex macroeconomic and geo-political environment, demand for yield remains high, and we expect to see insurers continue to build positions in private asset classes as well as inflation hedges, including private equity, private credit, and real estate.“These assets can prove integral to diversifying portfolios while optimizing capital-adjusted returns,particularly over a longer-term time horizon,” said Michael Siegel, Global Head of Insurance Asset Management for Goldman Sachs Asset Management.
Regardless of private equity and sustainable bonds, insurers’ financial managers plan to increase their allocation over the next 12 months to include corporate credit (37%), infrastructure debt (36%), and real estate (31%), among others.
ESG triples in the investment process
According to the survey’s findings, sustainability continues to gain weight among the factors that govern investment decisions and the investment process. Thus 92% of insurance managers take ESG into consideration, almost three times more than in 2017, when only 32% took it into account.
Likewise, now more than one in five respondents (21%) say that sustainability has become a main element. This percentage almost doubles when it comes to companies in Europe, the Middle East and Africa (EMEA), where it is more than 37%.
More than half of global insurers (55%) expect ESG considerations to have a major impact on asset allocation decisions in the coming years, matching in importance what is so far the main factor for investment, regulatory capital requirements.
Asked about possible consolidation movements in the global insurance market, almost 96% expect this dynamic of concentration and new deals to continue. Finally, the 2022 survey has again asked CFOs and CIOs about their investments in insurtech and this year also about cryptocurrencies.
The search for greater operational efficiency has once again led to an increase in insurtech investment in all geographical areas of the world, and in the case of the cryptomarket, its gradual maturation explains why 11% of US insurers say they are already investing in this asset, compared with 6% of Asian companies and just 1% of European ones.
Methodology
The Goldman Sachs Asset Management Insurance Survey provides valuable insights from Chief Investment Officers (CIOs) and Chief Financial Officers (CFOs) regarding the macroeconomic environment, return expectations, asset allocation decisions, portfolio construction and industry capitalization. The survey analyzed responses from 328 participants at global insurance companies representing more than $13 trillion in balance sheet assets, which represents around half of the balance sheet assets for the global insurance sector. The participating companies represent a broad cross section of the industry in terms of size, line of business and geography. The survey was conducted during the first two weeks of February.
Pixabay CC0 Public Domain. Inversión en carbono: una clase de activos emergente
A very important tool in combating climate change is to put a price on carbon emissions. This price factors in the negative externality of climate change and creates an incentive for the invisible hand of the market to move companies and economies away from burning fossil fuels. Achieving Paris Agreement climate targets will require the widespread use of carbon pricing to steer the world onto a low-carbon and sustainable pathway.
Currently, carbon pricing follows two main methods: carbon taxes and cap-and-trade systems (or emissions trading systems, “ETS”). The advantage of an ETS over a carbon tax is that the total amount of CO2 released by participants in the scheme is capped at a pre-determined ceiling, which is subject to annual reductions. In addition, through the use of tradable emissions allowances, CO2 reduction can be facilitated at the lowest total cost to society.
Carbon allowances have become a liquid and investable asset class that traded approximately US$800 billion in 2021 across physical carbon, futures, and options; this was more than double the volume of twelve months earlier. Carbon has exhibited attractive historical returns and a low correlation with other asset classes, making it potentially attractive within a diversified portfolio.
The World Carbon Fund is a unique investment fund that invests across multiple liquid and regulated carbon markets. It is managed by Carbon Cap Management LLP an investment management boutique based in London. Carbon Cap have established a team with industry experience gained across carbon pricing, carbon trading and fundamental carbon markets research.
The Fund’s objectives are to generate absolute returns with a low correlation to traditional asset classes as well as having a direct impact on climate change. The Fund uses long-biased allocations across the carbon markets in order to capture the medium-term positive returns forecast in these markets. It also deploys a range of shorter-term alpha generating strategies including arbitrage and volatility trading.
There is a widespread acknowledgement that the price of carbon needs to continue to appreciate in order to provide sufficient incentive to meet Paris Agreement targets. 2021 saw significant price rises in each carbon market in which the Fund invests which has helped towards a positive return of more than 70% since its launch early in 2020.
The carbon markets can display high levels of volatility and the Fund operates within clearly defined risk framework in order to maximise risk adjusted returns. In general terms there is low correlation between the individual carbon markets and this apparent anomaly can be used both as an alpha source and to manage down overall portfolio risks.
The Fund is an Article 9 fund under the EU’s SFDR. It seeks, through its investment activities, to contribute directly to the reduction in global CO2 emissions targets. In addition, the investment manager contributes a fixed percentage of performance fees generated to purchasing and cancelling carbon allowances/offsets.
Investors in the Fund are institutions, wealth managers, family offices and private clients. As well as seeking to provide investors with non-correlated returns and climate impact, carbon investing can also act as an inflation hedge as higher carbon prices are seen to be correlated to consumer price indices.
South Hub Investments S.L, a company founded by Carlos Diez, will be responsible for the distribution of the funds in Spain. The company performs this function thanks to an agreement with Hyde Park Investment International LTD, an MFSA-regulated entity, which has 16 years of experience in European fund distribution.
Pixabay CC0 Public Domain. Australia, Países Bajos y EE.UU. se revalidan como los mercados más favorables para los inversores en cuanto a comisiones y gastos de los fondos
The fees investors pay for their funds are falling, according to Morningstar’s latest global report on fees and expenses in the industry. According to the report’s findings, Australia, the Netherlands and the United States receive the best ratings, while Italy and Taiwan are once again the worst performers.
The report Global Investor Experience (GIE) report, now in its seventh edition, assesses the experiences of mutual fund investors in 26 markets across North America, Europe, Asia, and Africa. The “Fees and Expenses” chapter evaluates an investor’s ongoing cost to own mutual funds compared to investors across the globe.
As explained from Morningstar, a key point of this report is the analysis it makes on the running costs borne by an investor for owning mutual funds, compared to other investors around the world. And whose result reflects in a global ranking compared to the last edition of this report in 2019.
Morningstar’s manager research team uses a grading scale of Top, Above Average, Average, Below Average, and Bottom to assign a grade to each market. Morningstar gave Top grades to Australia, the Netherlands, and the United States, denoting these as the most investor-friendly markets in terms of fees and expenses. Conversely, Morningstar again assigned Bottom grades to Italy and Taiwan indicating these fund markets have amongst the highest fees and expenses.
Australia, the Netherlands, and the U.S. earned top grades due to their typically unbundled fund fees. This is the fourth study in a row that these three countries have received the highest grade in this area, according the study.
“The good news for global fund investors is that in many markets, fees are falling, driven by a combination of asset flows to cheaper funds and the repricing of existing investments. The increased prevalence of unbundled fund fees enables transparency and empowers investor success. However, the global fund industry structure perpetuates the use of upfront fees and the high prevalence of embedded ongoing commissions across 18 European and Asian markets can lead to a lack of clarity for investors. We believe this can create misaligned incentives that benefit distributors, notably banks, more than investors,” said Grant Kennaway, head of manager selection at Morningstar and a co-author of the study.
Highlights
The majority of the 26 markets studied saw the asset-weighted median expense ratios for domestic and available-for-sale funds fall since the 2019 study. For domestically domiciled funds, the trend was most notable in allocation and equity funds, with 17 markets in each category reporting reduced fees.
Lower asset-weighted median fees are driven by a combination of asset flows to cheaper funds as well as the repricing of existing investments. In markets where retail investors have access to multiple sales channels, investors are increasingly aware of the importance of minimizing investment costs, which has led them to favor lower-cost fund share classes.
Outside the United Kingdom, the U.S., Australia, and the Netherlands, it is rare for investors to pay for financial advice directly. A lack of regulation towards limiting loads and trail commissions can cause many investors to unavoidably pay for advice they do not seek or receive. Even in markets where share classes without trail commissions are for sale, such as Italy, they are not easily accessible for the average retail investor, given that fund distribution is dominated by intermediaries, notably banks.
The move toward fee-based financial advice in the U.S. and Australia has spurred demand for lower cost funds like passives. Institutions and advisers have increasingly opted against costlier share classes that embed advice and distribution fees. The trend extends to markets such as India and Canada.
Price wars in the ETF space have put downward pressure on fund fees across the globe. In the U.S., competition has driven fees to zero in the case of a handful of index funds and ETFs, and these competitive forces are spreading to other corners of the fund market.
In markets where banks dominate fund distribution, there is no sign that market forces alone will drive down asset-weighted median expense ratios for retail investors. This is particularly evident in markets like Italy, Taiwan, Hong Kong, and Singapore where expensive offshore fund sales predominate over those of cheaper locally domiciled funds.
The U.K. has introduced annual assessments of value, one of the most significant regulatory developments since the 2019 study. These require asset managers to substantiate the value that each fund has provided to investors in the context of the fees charged.
Methodology
The GIE study reflects Morningstar’s views about what makes a good experience for fund investors. This study primarily considers publicly available open-end funds and exchange-traded funds, both of which are typical ways that ordinary people invest in pooled vehicles. As in previous editions, for this chapter of the GIE study, Morningstar evaluated markets based on the asset-weighted median expense ratio by market in addition to the structure and disclosure around performance fees and investors’ ability to avoid loads or ongoing commissions. The study breaks up the markets into three groups of funds: allocation, equity, and fixed income. The expense ratio calculations consider two perspectives: funds available for sale in the marketplace and funds that are locally domiciled. In this most recent study, we have adjusted the assets used in the weightings for available-for-sale funds in each market to better reflect the propensity of domestic investors to invest in nonlocally domiciled share classes.
You can read the complete study in the following link.
Laura Blanco, new head of ESG in Santander WMI, y Augusto Caro, global head of ASG's team in Santander AM. Copyright: LinkedIn. santander
Santander Wealth Management has hired Laura Blanco to lead its ESG unit, which was created last year to support Grupo Santander’s efforts to combat climate change, protect human rights and promote good corporate governance.
Blanco, whohas over 20 years of professional experience, directed Knowledge and Outreach for Impact Investment at Spain’s National Advisory Board since its creation in 2019. She began her career as an equities analyst at UBS before moving to Credit Suisse in 2003. She also worked at Lusight Research, Haitong Securities, Baring Asset Management and Nakatomi Capital.
To further strengthen the team, Blanco has also appointed Ana Rivero as sustainable investment director. She began career at Banif, before moving to Santander Investment Bolsa Sociedad De Valores and then to Santander Asset Management (SAM), where she held several senior roles, including head of Product and Market Intelligence and head of ESG.
Augusto Caro (CFA) joins Santander Asset Management as global head of ESG from Grupo Caixabank. He held a number of senior roles in the Investment team at Bankia AM (pensions, equities and balanced funds), where he also chaired its sustainability committee. He will report to José Mazoy, global CIO of Santander Asset Management.
“We are firmly committed to supporting the ecological transition and helping build a more sustainable world. These appointments will help strengthen our leadership in ESG in Europe and Latin America”, said Víctor Matarranz, head of WM&I, the bank’s asset management, private banking and insurance division.
WM&I aims to raise EUR 100 billion in sustainable funds by 2025. So far, it has raised EUR 27 billion across private banking and its fund manager. The target forms part of Santander’s push to raise or facilitate EUR 120bn in green finance by 2025 and EUR 220bn by 2030; cutting its worldwide exposure to thermal coal mining to zero by 2030; and reduce emissions relating to its power generation portfolio. Featured in the Dow Jones Sustainability Index 2021 for the 21st year in a row, with top marks in financial inclusion, environmental reporting, operational eco-efficiency and social reporting.
Banco Santander’s fund manager has its own ESG analysis team and SRI rating system. It became the first Spanish fund manager to join the global Net Zero Asset Managers initiative, which aims to achieve net-zero CO2 emissions in all AUMs by 2050. Last November, it also announced its target to halve the net emissions stemming from its AUMs by 2030. The targets for net-zero AUMs (which are subject to emissions gauging and metrics) align with the Net Zero Asset Managers initiative. Santander Asset Management became the first Spanish multinational to join the Institutional Investors Group on Climate Change (IIGCC), a European body that promotes collaboration between investors on climate change matters and represents investors committed to a low-carbon future. It is also a signatory to the UN’s Principles for Responsible Investment (PRI).
