J.P. Morgan Asset Management Launches its First Machine Learning Active Equity Thematic Fund

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JP Morgan fondo genético
Pixabay CC0 Public Domain. J.P. Morgan lanza un fondo sobre terapias genéticas que aprovecha el aprendizaje automático

J.P. Morgan Asset Management (JPMAM) is pleased to announce the launch of JPMorgan Funds – Thematics – Genetic Therapies in Europe, JPMAM’s first actively managed fund which combines both machine learning and active equity insights. The new fund leverages research carried out by UBS Global Wealth Management’s Chief Investment Office (UBS CIO) within its Longer Term Investments framework, and is being distributed by UBS initially.

Genetic therapies represent a once-in-a-generation breakthrough in the world of medicine. These treatments offer the hope of a cure for patients with serious inherited diseases, by modifying genetic information to address the underlying causes of disease. Today they are at an inflection point, moving from the clinic to commercial reality. This should generate high growth rates for companies operating in the space, and could prove highly disruptive for incumbent companies in the pharmaceutical industry if the technology proves to have wider applications.  JPMAM’s Genetic Therapies fund provides the opportunity to investors to gain diversified exposure to this new and exciting theme, and can help to hedge the risk of disruption to existing healthcare portfolios.

The fund will be co-managed by Yazann Romahi, Berkan Sesen and Aijaz Hussein. The portfolio management team sit within JPMAM’s Quantitative Beta Strategies (QBS) team, a team that specializes in quantitative portfolio management and are experts in developing innovative machine learning based technology solutions. Several members of the team hold PhD’s in Artificial Intelligence.

The fund has been designed to combine the strength and reach of JPMAM’s proprietary thematic engine, ThemeBot, with the portfolio management and research capabilities of JPMAM’s global equity platform. ThemeBot can efficiently identify stocks exposed to a range of investment themes including genetic therapies.

Using natural language processing, ThemeBot will screen more than 10,000 stocks globally, rapidly analysing hundreds of millions of data sources, such as news articles, company profiles, research notes and regulatory filings to identify stocks with the highest exposure to the theme and generate a high relevance portfolio, accounting for liquidity, market capitalisation and profitability. The portfolio will invest across the market capitalisation spectrum and provide diversified exposure to both innovative pioneers and established healthcare players. ThemeBot dynamically ensures only the most relevant stocks based on textual and revenue metrics are flagged for inclusion in the portfolio.

Once ThemeBot has selected the stocks it thinks are most applicable to the genetic therapies theme, the QBS team will work with experienced industry career analysts from JPMAM’s global equity platform to vet and validate ThemeBot’s output, to ensure stocks most relevant to the theme secure a spot in the portfolio. The portfolio management team will have access to five dedicated healthcare analysts with an average experience of 19 years. Additionally, the portfolio managers will be able to call upon the expertise of JPMAM’s broader equity analyst community, made up of 51 sector specialists.

Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies at J.P. Morgan Asset Management, said: “In seeking to create data driven portfolios which brings together human and artificial intelligence, we’re able to offer investors thematic solutions which enable them to tap into some of the central investment themes shaping our world today.”

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said: “Genetic therapies could develop into a profoundly disruptive technology for the pharmaceutical and biotechnology industry. Positioning portfolios to capture the economic benefits of disruption, while hedging or mitigating its effects on other assets, supports our goal to help our clients protect and grow their wealth over generations.”

George Gatch, CEO, J.P. Morgan Asset Management, said: “We’re delighted to partner with UBS in developing this new fund. We’re deploying our best Artificial Intelligence (AI) and Big Data capabilities combined with our global research expertise for this investment theme. Innovating jointly with our clients is an important priority for us.”

Christian Wiesendanger, Head of Investment Platforms and Solutions at UBS Global Wealth Management, said: “Developing new solutions with our partners is critical to implementing innovative ideas in clients’ portfolios. Machine learning is an exciting new tool for those looking to be at the cutting edge of investment management and will likely play a greater role in the years ahead.”

The fund’s C share class will have a Total Expense Ratio of 56 basis points.

 

Allfunds Strengthens its Presence in the Nordics as the Acquisition of Nordic Fund Market is Finalized

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CC-BY-SA-2.0, FlickrFoto: mariano mantel. estocolmo

Allfunds, the largest investment fund distribution network in Europe and a leading wealthtech platform, has successfully finalized the acquisition of the Nordic Fund Market (NFM), from Nasdaq. The acquisition was announced in March 2019 and has been pending regulatory approvals and customary procedures.

With this operation, Allfunds total assets under distribution (AUD) increase to more than €530 billion and further strengthens its presence in the Nordic region. The Nordic Fund Market client portfolio will boost Allfunds’ presence in the Nordics at the same time as benefiting existing NFM distributors and fund managers with added value solutions, increased efficiency and advanced technology. Current NFM distributors and fund managers will become part of Allfunds’ distribution network in the region which already compromise more than 20 entities in Sweden, Norway, Finland, Denmark, Iceland and the Baltic countries.

Allfunds now has an established office in Stockholm which will provide services to the distributors and fund managers throughout the Nordic region. All employees working with NFM at Nasdaq in Stockholm were recruited, one being the former CEO of Nasdaq Broker Services Mattias Hammarqvist who is the Head of Allfunds Sweden.

“I am very excited that we, with new office will be able to leverage on the technology, services and benefits Allfunds global platform provides. It enables us to improve our offerings to current distributors and fund managers as well as to attract additional,“ said Mattias Hammarqvist, Head of Allfunds Sweden.

With the new office, distributors and fund managers are able to leverage the technology and know-how of experts in the region while accessing a cost-efficient way to distribute funds and reducing operational risk.  This agreement and access to the global platform will benefit local financial institutions who can take advantage of the global scale and specialisation within Allfunds as well as to benefit from state-of-the-art technology and increased service offering to meet challenges in the industry.

Juan Alcaraz, CEO of Allfunds, said: “We are very excited to close this acquisition that allows us to increase our presence in the Nordics by bringing our leading fund and wealthtech platform to the region while strengthening our global position. The Nordic markets deserve a trusted and global B2B partner to boost and support local financial institutions. The integration of NFM’s business and infrastructure into our company and our solutions further enhances our innovative offering, disruptive and value-added services that will now be made available to Nordic entities and help them achieve their objectives.”

Tikehau Capital Appoints Olga Kosters as Head of Private Debt Secondaries

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Tikahu Capital - Olga Kosters
Foto cedidaOlga Kosters, directora de Private Debt Secondaries. Tikehau Capital ficha a Olga Kosters como nueva directora de Private Debt Secondaries

Tikehau Capital, an alternative asset management and investment group, appointed Olga Kosters as Head of Private Debt Secondaries.

Kosters’ role will be to launch the firm’s private debt secondaries business. She will be based in New York and report locally to Tim Grell, Head of Tikehau Capital North America, and to Cécile Mayer-Lévi, Head of Private Debt activity.

Olga Kosters (47) has twenty years of investment and structuring experience in private and public capital markets. Prior to joining Tikehau Capital Kosters advised large institutional investors on the US private credit strategies while at StepStone Global, and led the execution of corporate private debt strategy at Zurich Insurance Group. Prior to this Kosters has held several positions at the European Bank for Reconstruction and Development (EBRD) in London.

“Over the last fifteen years Tikehau Capital has grown to become one of the most well-capitalised asset management firms globally and has developed a deep network of institutional investors and strategic partners. The firm keeps its focus on underwriting, and continues to invest a large portion of its own capital alongside its investors,” said Olga. “In a context of fast growth, the team has successfully maintained its entrepreneurial spirit and a strong set of core values. I am delighted to join the team to build the new private debt strategy.”

Cécile Mayer-Lévi, Head of Private Debt activity, commented: “We are delighted to welcome Olga to our team and expand our offer to the secondaries market in private debt. We see that this market is emerging and we believe it could develop significantly in the coming months.”

Kosters received an MBA in finance from Hofstra University, and is a CFA charterholder.

Scharf Investments Launches First UCITS Fund With iM Global Partner

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Scharf-iM Global
Pixabay CC0 Public Domain. Scharf Investments lanza el primer fondo UCITS junto a iM Global Partner

 iM Global Partner, a leading investment and development platform focused on acquiring strategic investments, and Scharf Investments, an investment firm providing high quality value investment strategies, have announced the launch of iM Scharf US Quality Value fund, the first collaborative UCITS fund between the two firms. The equity fund will seek to deliver compelling risk-adjusted absolute returns through a value-focused, fundamental, bottom-up approach.

The fund, which launched on September 12, 2019, will give investors outside of the US access to Scharf Investments’ expertise for the first time, facilitated by the unique business model of iM Global Partner who acquired a 40% interest in the California-based US equity value asset manager a few months ago.

iM Scharf US Quality Value Fund will be managed by Scharf’s experienced investment team, with a similar investment strategy to its core equity flagship product which has a proven track record spanning approximately 30 years.  The investment team looks for securities trading at significant discounts to estimated fair value as a margin of safety and high earnings predictability. The fund is not publicly offered to all investors in all jurisdictions.

Brian Krawez, President of Scharf Investments, said: “We are delighted with the launch of our first UCITS fund with iM Global Partner. It is a great opportunity for Scharf Investments to reach new markets and new investors. We look forward to working with iM Global Partner as we continue to develop and refine our worldwide presence.”
 
Jose Castellano, Deputy CEO and Head of International Distribution at iM Global Partner, added: “Scharf Investments is a proven leader in value-oriented equity asset management and has an exceptional track-record. Their core equity flagship strategy outperformed the Russell 1000 Value and the S&P500 by 3.5%, with lower volatility*. Their entry into the UCITS fund market will allow broader access to Scharf Investments products for institutional investors and we are thrilled to support their expansion internationally.”

Scharf Investments is a California-based investment firm founded in 1983. Managed by Brian Krawez, President and Investment Committee Chairman, the company has grown from 5 people and under $700m of assets under management in 2007 to 22 people and $3.3bn of assets under management today.
 
Scharf Investments currently manages four distinct strategies:

  • A long-only US equity strategy, the firm’s core equity strategy on which the three other strategies are based
  • A long-only multi-asset strategy
  • A long/short hedged US equity strategy
  • A long-only global equity strategy

iM Global Partner, with its unique business model in Europe, has become a leading investment and development platform focused on acquiring strategic investments in best-in-class traditional and alternative investment firms in the U.S., Europe and Asia. Through the launch of this new UCITS fund, iM Global Partner continues its development as it pursues its dual objectives to both support its Partners with its management and distribution expertise and ensure investors have access to unique strategies that were not previously available.

iM Global Partner currently has strategic minority investments in five partners, including two outstanding complementary US large-cap equity managers with proven track records and a focus on downside protection.

 

Global Bond Investing in an Era of Negative Interest Rates

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foto tipos interes
Pixabay CC0 Public Domain. Invertir en bonos globales en una época de tipos de interés negativos

What once would have been considered a strange anomaly may now be becoming the norm as yields on a growing proportion of the global bond markets turned negative throughout 2019. The escalating US-China trade conflict, fears of a global economic slowdown and the aggressive accommodative monetary policy response by central banks to those developments have accelerated this trend in the middle of 2019, according to Colchester Global Investors.

This environment has resulted in the market yield on approximately US$11 trillion of government debt falling below zero percent as at the end of August, 2019. This accounted for approximately 37% of the universe of outstanding government debt at that time. Some 40% of this amount was issued by the Government of Japan, and a further 14% and 12% by the French and German Governments respectively.

As a result of the extensive quantitative easing programs undertaken by central banks, collectively it is estimated that they now hold approximately 80% of all negative yielding debt. Whilst negative central bank policy rates and negative bond yields on sovereign debt had been observed for some time, this phenomenon has not been restricted to government bonds alone. In recent months yields on an increasing number of corporate bonds have also turned negative, new corporate debt has been issued at those levels and even negative rate mortgages have been offered in Denmark. While not as prevalent, such declines have resulted in the yield on approximately 7% (US$1 trillion) of the universe of global corporate investment grade debt also falling below zero percent.

Mercados de bonos negativosShould investors hold negative-yielding bonds?

Given that negative yields imply an investor holding such a security to maturity will incur a loss (at least in nominal terms) does this imply that the ‘safe-haven’ characteristics of sovereign fixed income have been compromised? The evidence of the recent past would suggest not.

At Colchester they have observed that negative yields can become more negative in response to economic and political events and shifts in perceived risk levels. In other words, over the short term the returns to investors from ‘falling’ negative-yielding bonds may be positive as bond prices continue to appreciate. Indeed, many investors were surprised at the strength of the demand for safe-haven assets and the resulting size of the yield decline of already negatively yielding bonds during the most recent bout of risk aversion in the middle of 2019. For example, 10-year German Bund yields fell from -0.2% to -0.7% from mid-July to mid-August, returning +4.5% in USD hedged terms. Similarly, over the same period, 10-year Swedish bond yields fell from 0.1% to -0.4%, returning +3.0% in USD hedged terms.

This is not to argue that negative yielding bonds will always deliver positive returns, but simply highlights that the diversifying return characteristics of sovereign bonds still holds true in a negative interest rate world. Returns on a negative yielding bond may be positive or negative over the short term, just as they may be on a positive nominal yielding bond.

How is Colchester managing portfolios in the current environment?

Colchester continues to see the sovereign fixed income asset class as providing desirable diversification characteristics and specifically a negative correlation to risk assets. They believe that the events of mid 2019 suggest that despite the increasing prevalence of negative yields, this characteristic remains intact in the face of rising uncertainty and increased risk aversion. “The slowdown in global money and credit growth through 2017 and 2018 is likely to contain inflation in the near term and limit any large increase in bond yields. This benign environment is likely to be broadly supportive of bond prices and minimise the ‘cost’ of diversification insurance that may prove useful if the global economy, trade disputes or risk assets take a turn for the worse”.

Nonetheless at Colchester they are trying to limit their exposure to negative nominal yielding markets. “Instead we are skewing our portfolios towards markets that are offering positive real yields, that preferably also offer a positive nominal yield. Such markets are currently limited within the G10 or ‘traditional’ bond markets. It is tempting in such an environment to reach for yield by moving down the credit curve into subordinated or high yield debt, increasing exposure to emerging markets, or supplementing returns with an array of structured products. However, as all have a higher correlation with equity and other growth assets, this reduces the diversification benefit of holding bonds. Accordingly, we seek to build bond portfolios that not only offer higher relative real yields and attractive risk characteristics, but also maintain the diversifying integrity of a traditional bond market allocation. Therefore, while we are willing to add limited exposure to some non-traditional markets such as Singapore or Mexico, to benefit from their potentially higher real yields on offer and to offset some of the ‘insurance premium cost’, such exposure is limited to protect the diversification characteristics that most investors are looking for from their traditional sovereign bond allocations”.

Today their global bond portfolios are materially overweight versus benchmark those markets where they observe the most attractive prospective real yields. “Markets such as Norway, Singapore and Mexico, where both real and nominal yields are positive, feature in our portfolios. In contrast, the strategy is very underweight the euro area where both real and nominal yields are negative and our portfolios hold no exposure to German, French or Dutch bonds where yields are lowest. The strategy does however hold some exposure to negative nominal-yielding bonds, mostly in Japan. The Japanese market offers materially more attractive relative real yields than the core of Europe once we factor in the low level of projected inflation. Furthermore, the market exhibits very low levels of volatility. As we are looking to construct portfolios that in aggregate offer a balance between value (or expected return), liquidity and negative correlation to risk assets, it should be no surprise that despite their negative nominal yields, Japanese bonds have a role to play”.

A Strong Economy, Low Unemployment and an Accommodating Federal Reserve Have Led to Ripe Conditions for Accelerating M&A Activity

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Screen Shot 2019-11-06 at 9
MaxPixel CC0. Una economía fuerte, con un desempleo muy bajo y una Fed acomodaticia aceleran la actividad de fusiones y adquisiciones

While we are bottom-up stock pickers (and not stock market prognosticators or macro traders), we do note that despite the strong rally in the market so far this year, we continue to find many opportunities of stocks trading at significant discounts to our estimate of Private Market Value. Many of these are so-called “value” stocks including consumer staples, media and industrial companies.
 
The economy continues to be strong, with very low unemployment and now an accommodating Federal Reserve. This has led to ripe conditions for accelerating M&A activity, which, along with financial engineering, can cause undervalued stocks to close the valuation gap with over business values as Buffet and others typically describe.
 
Stocks have rallied into November first setting record highs as a solid October jobs report, improving China trade talks, easy central bank monetary policies, and the December UK election date agreement all fueled the advance.
 
After the FOMC statement release on October 30, Chairman Powell gave his assessment of the effect of recent rate reductions on the current state of the economy: “You are seeing strong durable goods sales. You are seeing housing now contributing to growth for the first time in a while. And you are seeing retail sales”…”More broadly, monetary policy is also supporting household spending and home buying by keeping the labor market strong, keeping workers incomes rising, and keeping consumer confidence at high levels.” Translation – rate pause. This all has benefits for the economy and value investing.
 
That said, it has seemed before that we are on the precipice of a trade deal with China, only to learn we are no closer and/or more tariffs are coming. So we wait and watch macroeconomic and political events closely, and seek a portfolio of companies that can withstand whatever economic conditions are before us. Furthermore, as we enter 2020 the market will surely be looking ahead to the November US Presidential election, with the market and specific sectors reacting accordingly which could help fuel further momentum for value stocks.
 
As always, we seek to buy high quality businesses trading at a discount to Private Market Value with Catalysts present to surface value.

Column by Gabelli Funds, written by Michael Gabelli

__________________________________

To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:

GAMCO MERGER ARBITRAGE

GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.

Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.

Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.

Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of  approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.

Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476

GAMCO ALL CAP VALUE

The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.

GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise.  The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach:  free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.

Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155

Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.

Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.

 

Julius Baer Appoints New Head of Corporate Sustainability and Responsible Investment

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Pixabay CC0 Public Domain. Julius Baer nombra a Yvonne Suter como su nueva directora de Sostenibilidad Corporativa e Inversión Responsable

Effective November 4th, 2019, Yvonne Suter took over as Head of Corporate Sustainability and Responsible Investment of Julius Baer. In this role, she is responsible for further developing the CSRI strategy of the Group across all business areas. She reports to both the CEO Office and the Bank’s Sustainability Board.   

Yvonne Suter joins Julius Baer from Credit Suisse, where she was Head of Sustainable Investment for the 5 past years and had held several leadership and management roles since 2005. She holds a Master in International Affairs and Governance from the University of St. Gallen.                  

Philipp Rickenbacher, CEO Julius Baer said: “I am delighted that we have been able to appoint Yvonne Suter, a proven expert, as the new Head of Corporate Sustainability and Responsible Investment. Thanks to her comprehensive knowledge and network, as well as her many years of experience, she has all the prerequisites for further developing Julius Baer in the areas of sustainability and responsible investment and expanding the Bank’s activities. This will further enable us to meet the ever-increasing demands in all aspects of sustainability: economic, social, as well as environmental.”

“After the Dotcom Bubble Burst Value Investing Enjoyed a Renaissance. We See No Reason Why History Will Not Once Again Repeat Itself”

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boyar
Foto cedidaLeft to right, Mark A. Boyar and Jonathan Boyar. boyar

New York based Boyar Asset Management recently signed an alliance with the Spanish manager Mapfre AM, to benefit from their mutual capabilities and which will boost their businesses. In this interview with Funds Society, Jonathan Boyar, President of Boyar Research – with 11 years of investment experience, and since 2008 relocated to Boyar, where he improves the analysis and management process, as well as being in charge of institutional sales for both the research area and the management service, explains the key points about this alliance and how to plan to make a foothold, with its particular investment style, in the portfolios of the Spanish investor. Above all, because he believes that value will have have its comeback, and will shine again.

You have recently signed an asset management alliance with Mapfre AM. What will Mapfre AM bring to Boyar AM and what will Boyar AM bring to Boyar AM after the agreement?

The entire team at Boyar Asset Management is excited about entering this partnership. With Mapfre not only do we gain access to long-term patient capital allowing us to make equity investments for the long term, we will also be able to leverage their significant distribution capabilities. We are also looking forward to access to Mapfre’s expertise in both ESG investing and European equities which are two areas that interest us greatly.

Through this strategic partnership, Mapfre will gain access to our expertise in long-term catalyst driven value investing which we have been practicing since 1975. Mapfre will also gain from the knowledge of our team of seasoned investment professionals. 

Is Boyar AM looking for greater expertise in European equities thanks to Mapfre?

While we currently do not have plans to launch a European product, it is certainly something we are seriously considering as we grow. We look forward to beinging able to leverage Mapfre’s expertise in this area when the timing is right.

And are you also looking for ESG capabilities? Do you think it’s a trend with potential?

ESG is here to stay. It certainly is not a fad. Many well-respected money managers have adopted this practice and we look forward to benefiting from Mapfre’s already significant capabilities in this area.

With this alliance, will Boyar AM also seek to position itself in the Spanish market?

Absolutely. We plan on utilizing Mapre’s distribution network in Spain to target the Spanish market. We think this audience will embrace a long-term value-oriented investment style.

Boyar AM is a value asset manager and it will offer Mapfre its expertise in asset management in the US. What characteristics distinguish its investment style from other value houses, what characterizes its investment methodology in the US?

Boyar is quite different than most money managers as we take a private equity approach to public markets.  Since 1975, our flagship publication (which through another entity we sell on a subscription basis), Asset Analysis Focus (AAF), has been read regularly by some of the world’s most sophisticated investors. In keeping with AAF’s mandate of uncovering undervalued stocks, we use that same research to build and manage individualized portfolios for our money management clients. Many money management firms claim to do their own research—but we can prove it.

Based on that research, we invest in companies whose stock is trading significantly below what we believe the entire company is worth—believing that within a reasonable period of time, the stock market will reflect (or an acquirer will purchase the company for) its intrinsic value.

Unlike many value managers we are focused on identifying catalysts that we believe will help the stock ascend in value over a reasonable period of time. We believe by identifying these catalysts it helps us to avoid value traps.

Is it difficult now, with valuations at high levels in the US, to look for opportunities, undervalued companies? In this sense, what levels of liquidity do you have in your funds?

While the overall market is somewhat expensive by historical standards. We are finding many names in the small and mid-cap area that are selling at significant discounts to what we believe the company is truly worth. This market has been led by a handful of mostly mega cap technology shares, at some point the leadership will change and we believe investors like us that stick to their style through both  think and thin will be rewarded for their patience.

Value is not at its best… the performance has been bad compared to growth in recent times. Why and do you think this situation will change in the short term?

2019 has been yet another year when growth stocks have simply trounced value shares. The outperformance was consistent across all market capitalizations. The most expensive stocks continue to get more expensive, while the cheapest companies utilizing any acceptable metrics keep getting less expensive. At some point this trend will reverse course, as it always does. We just can’t predict the timing. On an absolute basis, value shares (just like prior to the dotcom crash) have posted respectable numbers but compared to growth stocks they significantly underperformed. Value investors were rewarded for their patience after the dotcom bubble burst and value investing enjoyed a renaissance. We see no reason why history will not once again repeat itself.

In Spain in recent years, managers have emerged with this style of investment and a lot of talent (Cobas AM, Magallanes, azValor, Horos AM …): do you know Spanish talent? Do you have any Spanish manager value among your references?

These are certainly people I know of by reputation and I have spoken at conferences where they have also presented, but I unfortunately do not know them personally. I would welcome the opportunity to meet some of them.

In an environment of increasing competition and polarisation in the asset management industry (and where scale matters more than ever)… do you believe that alliances are a good alternative to mergers between entities?

Anytime two smart organizations are able to share knowledge, ideas and best practices it is a win for everyone involved.

Do you think we will see a lot of M&A in the sector? Is a strong consolidation necessary? Or will we see more alliances and cooperation as a way of joining forces in this scenario?

I think due to compressing margins there will certainly be consolidation in the sector. Scale certainly matters, but I also think investors appreciate boutiques like ours that are able to invest outside of the mainstream. They understand as the great Sir. John Templeton once said, “If you buy the same securities everyone else is buying, you will have the same results as everyone else.

Four Ways to Invest in the CleanTech Revolution

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Axa verde
Pixabay CC0 Public Domain. Cuatro formas de invertir en la revolución CleanTech 

As the impact of climate change takes its toll on the planet, consumers, governments and corporations are all assessing their environmental practices and developing new clean technologies, according to an analysis by Amanda O’Toole, a Senior Portfolio Manager of the AXA Investment Managers Framlington Clean Economy Strategy.

CleanTech refers to companies that seek to increase performance, productivity and efficiency by maximizing the positive effects on the environment. With the world’s population rapidly increasing and fixed resources in danger of running low, the need for CleanTech solutions has never been greater. In fact, demand is so strong, that the global CleanTech market is anticipated to reach US$3 trillion by 2025, significantly up from US$601bn in 2014.

What does this mean for investors?

O’Toole, who is also a thought-leader within AXA IM’s Thematic Equities team of investment experts mentions that there is a growing social awareness of the pressures on scarce natural resources and the need for greenhouse gas emission reduction. “Businesses that are prepared to respond to this paradigm shift in how we perceive our environment should enjoy a sustainable, competitive advantage by reducing their input costs over the long-term. These moves offer significant growth potential in the decades to come, along with exciting potential new opportunities for investors along the way.”

As a result of this changing dynamic, they have identified four key areas which they believe will provide innovative, new investment opportunities: sustainable transport, recycling and waste reduction, smart energy and responsible nutrition. “With this universe expanding at more than 10% per annum – a very attractive rate compared to other industries –the structural growth opportunities can be significant.”

Sustainable transport

Across the world, the demand for sustainable transport is increasing, providing investors with ample investment opportunities in electric vehicles, battery technologies and emission reduction systems.

“The benefit of investing in these companies is already evident. During the recent trade tensions, electrification as a secular trend outperformed the broader automotive industry and we believe this is on track to continue. Globally, electric vehicles are anticipated to grow at a rate of 33% by 2030 and with the cost of lithium-ion batteries falling by 35% over the past year, the potential for sustainable transport is on the rise.”

A stock they like in this area is Aptiv, a global technology company that develops safer, greener and more connected solutions. Headquartered in Dublin, Aptiv delivers the software capabilities, advanced computing platforms and networking architecture that makes mobility work.

Recycling and waste reduction

The plight caused by plastics and growing electronic waste has been dominating environmental headlines in recent years. With approximately 8 million metric tonnes of plastic entering the oceans each year and only an estimated 20% of electronic devices recycled per annum, consumers and governments are waking up to the need for change.

“This change is starting to take shape. In July 2018, Seattle became the first U.S. city to ban plastic utensils and straws, and its actions have now been followed by other cities such as San Diego, where Styrofoam food and drink containers have been banned. We believe that because of ongoing action, we are likely to see the investable universe for compostable materials continue to expand.” 

A stock they like in this space is Smurfit Kappa, a FTSE 100 company that is one of the world’s leading providers of paper-based packaging. Smurfit Kappa is perhaps best known for its Bag-in-Box products, which offer more sustainable packaging for many industries such as wine, juice, liquid eggs, dairy and non-food applications such as motor oil and chemicals.

Smart energy

The necessity and demand for greener homes is growing, helping to provide the impetus and resources for the development of energy efficient technologies. This is creating investment opportunities in renewables, greener homes and efficient factories.

Notably, there has been an acceleration of interest in offshore wind development in the U.S., which historically has lagged Europe in adopting this form of technology. Massachusetts, for instance, recently approved contracts for an 800 megawatt (MW) offshore wind project, while New York State announced in July it had reached an agreement for two large offshore wind projects off the coast of Long Island. Momentum in this area is clearly building.

Responsible nutrition

The impact of unsustainable food production has put the planet in a delicate position. However, as O’Toole mentions, attitudes are changing. Companies are exploring new ways to meet the growing demands of rising populations while limiting the use of scarce water and land.

This has led some experts to algae, with some believing it could soon become a major source of the world’s protein. Growing ten times faster than terrestrial plants, algae does not require fresh water, can provide more iron than beef, and does not compete with other crops for land. The potential for algae is still in its infancy, but with ongoing developments the algae products market is anticipated to reach $5.2bn by 2023.

Furthermore, they believe that companies that are innovating to help support sustainable business practices – such as specialist ingredients firms that are shifting towards more natural ingredients and reducing the use of artificial products – are in an optimal position to perform well, despite the broader economic slowdown.

“We live in an uncertain world which gives investors little confidence from a macro or geopolitical perspective. Against this backdrop, it gives us comfort to invest in high quality businesses that benefit from clear structural growth trends within the Clean Economy.” O’Toole concludes.

 

 

Jane Fraser Named President of Citi and Head of Global Consumer Banking

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Jane Fraser, courtesy photo. Jane Fraser

Citi CEO Michael Corbat announced that he “asked Jane Fraser to serve as President of Citi, a role that has been open since earlier this year. Stephen Bird has informed me of his decision to leave Citi to pursue an opportunity outside our firm, so Jane will also become CEO of Global Consumer Banking. Stephen will be available over the next few weeks to ensure a smooth transition.”

Ernesto Torres Cantu, currently CEO of Citibanamex, will succeed Jane as CEO of Latin America.  “Ernesto is well prepared to take on the role of CEO of the region.” Corbat added. According to him, an announcement about the leadership in Mexico will be made in the near future.

Jane has been at Citi for 15 years, since she joined from McKinsey to run Client Strategy in the Corporate and Investment Bank. “During the financial crisis, she led our Corporate Strategy and M&A group and, in many ways, Jane helped shape the company we are today. She subsequently ran two of our businesses, the Global Private Bank followed by U.S. Consumer and Commercial Banking & Mortgages”.

Most recently, Jane served as CEO of Latin America, where she and Ernesto have been overseeing Citi’s substantial investment in Citibanamex, which has strengthened their franchise as well as improved our products and services.

Ernesto is a 30-year veteran of Citi, having joined as a corporate banker in 1989. He was appointed CEO of Citibanamex in 2014. He has an excellent track record of driving business results while also prioritizing our culture and controls.

“Working together, we have made tremendous progress. I remain committed to leading our firm in the coming years and look forward to working even more closely with Jane in her new roles. We will continue to execute our strategy so we can deliver the results our stakeholders expect and deserve.” Corbat concluded.