AIS Financial Group has hired Artemio Hernández Salort as Head of its Fund Solutions Division. He will report directly to Samir Lakkis, founding partner of the company.
AIS currently distributes over 1billion dollars a year in structured products and is currently looking to expand in order to diversify its business offering. Artemio will focus on third party fund distribution, a new business line which will be offered to clients of AIS and he will be responsible for.
Artemio has a degree in Business Administration from CUNEF and he joins AIS with over 10 years of experience in the sector. He had previously worked in the Private Banking division at Credit Suisse in Madrid, Zurich and Panama where he focused on fund selection for the Iberian and Latinamaerican markets. His most recent position was as a private banker for the Iberian market at UBS, Geneva.
With offices in Madrid, Geneva, Bahamas and currently opening a fourth office in Panama, AIS will look to partner with those managers who want to outsource their sales force and benefit from the knowledge and experience that the company has in the region.
Deutsche Bank Wealth Management has made two senior hires to its Latin America investment teams, strengthening its offering to high-net-worth and ultra-high-net-worth individuals and institutions in the region. Karim Aryeh joins as Director and Investment Manager based in Miami with a focus on Mexico and the Andean region. Juan Pablo Egui joins as Director in New York in the Institutional Wealth Partners group, a specialized team delivering Deutsche Bank’s corporate and investment bank capabilities to family offices and ultra-high net worth individuals, including idea generation, lending, thematic private market opportunities and corporate finance advisory.
“We are thrilled to welcome Karim and Juan Pablo to help us serve the investment needs of our growing number of Latin America clients,” said George Crosby, Latin America Head of Deutsche Bank Wealth Management. “We continue to bring on top talent as we execute on our ambitious growth plans in the region.”
Aryeh joins Deutsche Bank Wealth Management from Lloyd Crescendo Advisors, where he was Chief Investment Officer since 2016. Prior to that, he was Senior Portfolio Advisor and Team Leader at Santander Private Bank International, and Senior Investment Consultant at UBS Wealth Management focusing on private clients in Latin America. He brings a holistic approach to investment solutions as well as a strong background in Alternative Investments including Hedge Funds and Private Debt. Aryeh graduated cum laude from Boston College with a bachelor’s degree in Philosophy. He has been a CFA charterholder since 2007 and has held the CAIA designation since 2006. He also is Co-Founder and Executive Board Member of CAIA Miami (Chartered Alterative Investment Analyst). Aryeh reports to Coley Jellinghaus, Head of Investment Managers at Deutsche Bank Wealth Management Americas.
Egui joins from Compass Group LLC where he was Head of Sales Trading for the firm’s brokerage operations specializing in Latin American Capital Markets. The role included oversight of registered representatives both in New York and Santiago, covering regional institutional, family office and ultra-high-net-worth clients’ investing across various asset classes. Prior to heading the division, he was the LatAm Fixed Income Specialist for the desk, trading both corporate and sovereign debt, with an emphasis towards the high yield and distressed segments. His broad experience in emerging markets and its investor base will provide valuable contributions to growing Institutional Wealth Partners’ presence across the Americas. Egui earned his bachelor’s degree from Boston College and an MBA with honors from NYU Stern School of Business. He holds Series 7, 63 and 24 licenses. He will report to Alan Brody, Head Institutional Wealth Partners’ Global Investments & Trading, and Dan Kaiser, Head of Institutional Wealth Partners for the Americas.
Deutsche Bank Wealth Management seeks to deliver a premium wealth management experience while leveraging the vast resources of Deutsche Bank for high-net-worth and ultra-high-net worth individuals, families and select institutions.
The Florida International Bankers Association (FIBA) hosted two senior Securities and Exchange Commission staff members and three senior industry lawyers to present a first-in-South Florida educational panel discussion on the Commission’s new Regulation Best Interest rules package.
Occurring on Tuesday, September 17 at the offices of Shutts & Bowen, the panel featured Lourdes Gonzalez, Assistant Chief Counsel for Sales Practices in the SEC’s Division of Trading and Markets, and Jennifer Porter, Branch Chief in the Investment Adviser Regulation Office within the SEC’s Division of Investment Management. Both played a central role in the design and drafting of the new rules package, which features new rules, a new form, and over 1100 hundred pages of analysis and regulatory guidance. Ms. Gonzalez and Porter were joined by Kim Prior, a partner with Shutts & Bowen’s Financial Institutions practice and FIBA General Counsel; Michael Butowsky with Jones Day’s New York office who focuses on investment adviser matters; and Sergio Alvarez-Mena, a partner in Jones Day’s Miami office and Financial Institutions practice who Chairs FIBA’s Law and Regulatory Affairs committee.
Regulation Best Interest enhances the standard of conduct for the nation’s broker-dealers and their associated persons when they provide personalized investment advice about securities to retail customers. While stopping short of articulating a fiduciary duty for stockbrokers, the rule package requires extensive conflict assessment and disclosure by broker-dealers to their clients, and in some instances requires either mitigation or elimination if the conflicts are so grave as to require more than full and fair disclosure. Additionally, the new conduct standard requires broker-dealers to act in their customer’s best interest by not placing the brokerage’s interests ahead of those of the customer and prescribes significant new requirements in the care brokers should exercise in making recommendations to their customers, including assessing the costs of investments and the examining of reasonably available alternatives to any recommendation.
In commenting on the panel program, David Schwartz, FIBA’s President and CEO, said, “FIBA is thrilled and thankful to have been able to present this first-in-South Florida panel putting together important authors of the Commission’s rule-making with top industry lawyers in order to address the many questions our members and the local private wealth industry had. FIBA has been at the forefront of thought leadership on Reg BI’s impact on the cross-border private wealth industry and highly involved in the Commission’s rule-making process including authoring a significant comment letter on the Regulation’s unique impact on the cross-border private wealth business. We were grateful to see many of those concerns addressed and reflected in certain provisions of the Final Rule. Nonetheless, many questions remain unanswered and we will continue to engage with the Commission and staff on Reg BI.”
FIBA is celebrating its 40th anniversary and is the nation’s leading advocacy and educational organization for the promoting of international banking in South Florida, our State and nationally. It has over 120 financial industry members and is internationally recognized for its prominence in legal and regulatory affairs concerning the international banking industry.
Mora Wealth Management announced today that it is changing its corporate name to Boreal Capital Management (BCM). The name change reflects the company’s broader investment commitment and its global presence in Europe and America. Boreal is an independent multi-disciplinary wealth management services firm. It is a true fiduciary with a clear goal of providing its clients with a full array of financial and wealth planning solutions.
Founded in 2009, Boreal operates as a fully independent unit offering a Multi-Custody, multi-jurisdiction, multi-disciplinary model with independent financial advice as a code of conduct. Boreal Capital Management has a well-established tradition in private banking and Wealth Management.
According to the company, “BCM’s mission is to offer a risk-based investment approach to individuals and families across multiple custodian banks and jurisdictions. BCM strives to offer an independent platform with the only objective to minimize risk, preserving capital to achieve consistency in the rate of wealth appreciation.”
The new name is effective immediately, and will be implemented across the company’s product and services throughout the calendar year 2019.
Pixabay CC0 Public Domain. Catalizar la inversión ASG en Asia
In order to meet the demands of urbanisation, population growth and moving to a more sustainable use of scarce natural resources and a lower carbon future, most analysis suggests developing countries in Asia will need between 20 and 30 trillion dollars in infrastructure investment over the next 15 years, says Aberdeen Standard Investments in a recent publication.
To put these numbers in context, between 1960 and 1973, the United States spent some 288 billion dollars (in today’s money) on the space programmes that put men on the moon. The upper end of that range is around the same as the current forecast for all assets under management in Asia-Pacific in 2025.
“These are huge sums of money well beyond the capacity of the public purse on its own. In fact, Asia will have to attract significant amounts of private capital, including from outside the region. What’s more, this investment has to fund growth in a sustainable way or the region risks repeating the mistakes of the past; expensive mistakes to rectify and with global implications”, points out the global asset manager.
In that line, ASI maintains that despite rapid urbanisation and the rise of a middle class, Asia has still to address some of the most serious development issues: a significant number of people still live at a subsistence level; in many countries there is insufficient and inefficient infrastructure; and some 70 of the 100 most polluted cities in the world are in Asia.
The good news is there is increasing momentum towards getting this right. For example, the Asian Infrastructure Investment Bank (AIIB) has a mandate to develop infrastructure as an asset class; develop bond markets for infrastructure investment; and promote the integration of environmental, social and governance (ESG) principles into fixed income investments in emerging Asia.
“This should serve as a catalyst for mobilising additional private capital from institutional investors”. he China-led ‘Belt and Road’ Initiative has similar objectives with a broader footprint.
Supporting this, institutional investors around the world have now also adopted ESG analysis as a mandatory, rather than optional, component of their investment process. “Sustainability is now irrefutably recognised as an issue of global importance. Influential asset owners are leading the call for change and allocating capital to fund managers who can demonstrate ESG sensitivity and tangible action”.
Regulatory pressures are also supportive by pushing for greater ESG transparency. ASI emphasizes that there is growing evidence that ESG integration does not imply lower investment performance. What used to be seen as a trade-off – doing the right thing meant lower returns – is no longer the case. The performance of selected sustainability indices has been largely on par with benchmark indices over different investment horizons.
This is why the asset manager thinks that Asian infrastructure investment offers “a real opportunity to embed ESG principles to enhance the long-term social and economic value that such infrastructure investment can deliver to far-sighted Asian countries and communities”. Beyond fund managers incorporating ESG analysis into their investment process, Asian demographics and the growing democratisation of savings will play important roles in driving assets towards these strategies.
“The younger generation is venturing into financial markets with different priorities from its predecessors. These changing preferences, combined with public policy shifts and technology facilitation that place greater control into the hands of underlying beneficiaries, will help propel the shift towards ESG-friendly investments“, says ASI.
In Asian markets, these changes will be felt in three key areas. The first area relates to climate change mitigation: sustainability-linked infrastructure will transform how governments finance and build power infrastructure, energy efficiency, sustainable transport and waste management.
The second relates to air quality improvement: East Asia has the world’s highest mortality rate from air pollution. Industries involved in the development and manufacturing of clean-air related products will have important roles to play.
The last relates to ethical and sustainable palm oil and natural rubber: the Association of Southeast Asian Nations is the largest producer of palm oil and natural rubber in the world. However, this industry has been linked to deforestation, biodiversity loss, land grabs and forced labour. “Clearly, this has to change and the leading companies are doing so”, asserts ASI.
“By incorporating ESG principles into Asian development finance, we have a once-in-a-lifetime chance to build a market ecosystem that will benefit investors, issuers, the people of Asia, and the rest of the world. We must not let this historic opportunity slip away”, assures ASI.
Aberdeen Standard Investmentshas been investing in Chinese equities since 1992. It has been a journey punctuated by caution and careful consideration during which the asset manager had to overcome significant reservations along the way, contending with government interference across sectors; the inexperience of Chinese entrepreneurs; a legally ambiguous fund structure; and poor corporate governance. Nonetheless they found, and continue to find, good companies to invest in, points out ASI in the first part of its analysis about this market.
Starting point
For almost two decades ASI preferred to invest in Hong Kong-based companies, mostly privately owned firms whose management teams were subject to strict regulatory oversight and demonstrated high standards of governance. Increasingly this included ‘China plays’: businesses which benefitted directly or indirectly from rising prosperity and strong economic growth in mainland China. “This approach afforded us both comfort as an investor and access to strong potential growth”.
State ownership
Backed by rigorous research, frequent company meetings and engagement with managements, ASI gained sufficient comfort to invest in mainland-headquartered companies listed in Hong Kong known as H-shares and red chips. Initially they favored well-run state-owned enterprises (SOEs) exposed to secular growth trends that we considered less susceptible to government policy and interference.
Hong Kong listing requirements ensured their reporting and disclosure standards aligned with international norms. Intuitively, investors may think to avoid SOEs on the assumption that privately run firms have superior execution capabilities and profitability. “But, in practice, some SOEs have sound management teams and operate in high-growth industries where they enjoy ‘protective moats’ against competition”, says the asset manager.
In China’s property sector, for instance, there are a range of SOEs and private companies. ASI invested in one state-owned developer which focuses primarily on first- and second-tier cities. It was one of the first Chinese developers to diversify into shopping malls, where rental payments offer steady and recurring income streams. As an SOE it enjoys one of the lowest borrowing costs in the sector, helping it to maintain one of the healthiest balance sheets.
As such it is better positioned to weather a downturn or consolidate opportunistically. By contrast, we have steered clear of privately owned developers that have excessive leverage, weak balance sheets and extensive investments in non-core assets.
Structural integrity
Over the past decade there has been an explosive growth of China’s internet sector in segments such as gaming and e-commerce, which presented promising new opportunities to invest in growth stocks listed in Hong Kong and the US. But, assures ASI, it came with a snag: “direct foreign ownership is restricted by law because China treats its internet technology sector as sensitive”.
As a result, many of these companies were structured as Variable Interest Entities (VIEs), which consists in a contractual agreement with the company’s domestic entity designed to circumvent domestic laws on foreign ownership. “We viewed it as a risky legal structure from a shareholder’s point of view. Licences, and in some cases operating assets, are held by a VIE rather than by the listed entity. They also offer weighted voting rights, which we are not in favour of”.
After a huge amount of due diligence on the structure over many years, ASI concluded that the government was unlikely to declare VIE structures illegal or impose disruptive changes that would be negatively perceived by global investors. Already VIEs had become such an integral part of the domestic stock market and economic activity.
“Moreover, we discovered that not all VIEs were the same. Some were friendlier to minority shareholders than others. At the same time, relative comfort with one VIE structure does not equate to comfort with all of them”, notes the asset manager. But by taking account of the ownership structure, country of incorporation and listing, voting structure and person in charge, we felt able to discern quality among VIEs.
In 2017 ASI invested in a Chinese internet technology company that, while it operated as a VIE, it had a one-share, one-vote structure. Over time they grew more comfortable with its management team, plus it was listed in Hong Kong, which historically has provided strong regulatory safeguards for minority shareholders. “In the end we felt confident enough to invest .Of course, we continue to monitor the regulatory environment closely. But our familiarisation with the VIE structure offers a salient example of the need for adaptability in this market”.
In the second and final instalment of this series, ASI will explore the evolution of our investment into Chinese A-shares, from its earliest steps to today, in conjunction with the market’s increasing accessibility and incremental improvements in corporate governance.
Goldman Sachs Asset Management (GSAM) has launched its European ETF business on Thursday. Its debut product, is the Goldman Sachs ActiveBeta U.S. Large Cap Equity UCITS ETF, a European version of their $6.5 billion flagship U.S. product, the largest milti-factor equity ETF in the world.
To complement the product that launched today on the London Stock Exchange and will be cross listed in various other European stock exchanges, the company plans to launch a range of ETFs providing access to a number of markets, asset classes and investment styles over the next six months.
The ETFs are designed to be complementary to GSAM’s active fund range and used as part of broader, diversified portfolios.
GSAM started offering ETFs in 2015 in the U.S. and currently has 19 products with $14 billion in assets under management.
Pixabay CC0 Public Domain. Los activos financieros globales caen en 2018 por primera vez desde la crisis financiera
The tenth edition of Allianz‘ “Global Wealth Report”, which puts the asset and debt situation of households in more than 50 countries under the microscope, presents a sad premiere: in 2018, financial assets in industrial and emerging countries declined simultaneously for the first time; even in 2008, at the height of the financial crisis, this was not the case. Worldwide, savers were in a bind: On the one hand, the escalating trade conflict between the US and China, the endless “Brexit saga” and increasing geopolitical tensions, on the other hand, the tightening of monetary conditions and the (announced) normalization of monetary policy.
The stock markets reacted accordingly: Global equity prices fell by around 12% in 2018. This had a direct impact on asset growth. Global gross financial assets of households1 fell by 0.1% and remained more or less flat at EUR 172.5 trillion. “The increasing uncertainty takes its toll”, said Michael Heise, chief economist of Allianz. “The dismantling of the rule-based global economic order is poisonous for wealth accumulation. The numbers for asset growth also make it evident: Trade is no zero-sum game. Either all are on the win- ning side – as in the past – or on the losing side – as happened last year. Aggressive protec- tionism knows no winners.”
Convergence between poorer and richer countries comes to a halt
In 2018, gross financial assets in emerging markets not only declined for the first time, but the decline of -0.4% was also more pronounced than in the industrialized countries (-0.1%). The weak development in China, where assets fell by 3.4%, played a key role in this. However, other important emerging markets such as Mexico and South Africa also had to absorb significant losses in 2018.
This is a remarkable trend reversal. Over the last two decades, the growth gap between poorer and richer regions of the world still stands at an impressive 11.2 percentage points on average. It seems that the trade disputes have set an abrupt stop sign for the catching-up process of the poorer countries. Industrialized countries, however, did not benefit either. Both Japan (-1.2%), Western Europe (-0.2%) and North America (-0.3%) had to cope with nega- tive asset growth.
The price of low yields
At the same time, fresh savings set a new record. They increased by 22% to more than EUR 2,700 billion. The increase in the flow of funds, however, was solely driven by US households, who – thanks to the US tax reform – upped their fresh savings by a whopping 46%; two thirds of all savings in industrialized countries thus originated in the US.
But the analysis of fresh savings in 2018 reveals another peculiarity: Savers seemed to turn their backs on the asset class of insurance and pensions. Its share in total fresh savings has fallen from more than 50% before and immediately after the crisis to a mere 25% in 2018. And while US households increased in return their demand for securities, all other households preferred bank deposits (and sold securities): In Western Europe, for example, two thirds of fresh sav- ings ended up in bank coffers; worldwide, bank deposits remained the most popular destina- tion for fresh savings, for the eighth year in a row. This penchant for liquid and supposedly safe assets costs savers dearly, however: Losses suffered by households as a result of inflation are expected to have risen to almost EUR 600 billion in 2018.
“It is a paradox savings behavior”, said Michaela Grimm, co-author of the report. “Many people save more because they expect a longer and more active life in retirement. At the same time, they shun exactly those products that offer effective old-age protection, namely life insurances and annuities. Seemingly, the low yield environment undermines the willingness for long-term saving. But the world needs nothing more than long-term savers and investors to deal with all the upcoming challenges.”
Growth in liabilities stabilize at high level
Worldwide household liabilities rose by 5.7% in 2018, a tad below the previous year’s level of 6.0%, but also well above the long-term average annual growth rate of 3.6%. The global debt ratio (liabilities as a percentage of GDP), however, remained stable at 65.1%, thanks to still robust economic growth. Most regions saw a similar development in that respect. Asia (excluding Japan) is a different story. In the last three years alone, the debt ratio jumped by al- most ten percentage points, driven mainly by China (+15 percentage points).
“Debt dynamics in Asia and particularly in China are, at least, concerning”, commented Patri- cia Pelayo Romero, co-author of the report. “With a debt ratio of 54%, Chinese households are already relatively as indebted as, say, German or Italian ones. The last time, we had to witness such a rapid increase in private indebtedness was in the USA, Spain and Ireland shortly before the financial crisis. Compared to most industrialized countries, debt levels in China are still markedly lower. Supervisory agencies, however, should no longer stand by and watch. Debt-fueled growth is not sustainable – even China is not immune against a debt crisis.”
Because of the strong growth in liabilities, net financial assets i.e. the difference between gross financial assets and debt fell by 1.9% to EUR 129.8 trillion at the close of 2018. Emerg- ing countries in particular suffered a drastic decline, net financial assets shrank by 5.7% (in- dustrialized countries: -1.1%).
Just a bump in the road?
For the first time in over a decade, the global wealth middle class did not grow: At the end of 2018, roughly 1,040 million people belonged to the global wealth middle class – which is more or less the same number of people as one year before. Against the backdrop of shrink- ing assets in China, this does not come as a big surprise. Because up to now the emergence of the new global middle class was mainly a Chinese affair: Almost half of their members speak Chinese as well as 25% of the wealth upper class. “There are still plenty of opportuni- ties for global prosperity”, said Arne Holzhausen, co-author of the report. “If other heavily populated countries such as Brazil, Russia, Indonesia and in particular India would have had a level and distribution of wealth comparable to China, the global wealth middle class would be boosted by around 350 million people and the global wealth upper class by around 200 million people. And the global distribution of wealth would be a little more equal: at the end of 2018, the richest 10% of the population worldwide owned roughly 82% of total net financial assets. Questioning globalization and free trade now deprives millions of people around the world of their opportunities for advancement.”
When analyzing the movements between the wealth classes, the scars of the financial and euro crisis become visible again. Whereas emerging countries – particularly in Asia – can look back on two decades of mostly social rise, the picture for Western Europeans and Americans is bleaker. In fact, it’s only in these two regions that the ranks of the low wealth class have increased since 2000 – by 4% of the population in Western Europe – and those of the high wealth class have decreased – by 6% and 9% of the population in Western Europe and North America, respectively –, when adjusted for population growth. In Germany, on the other hand, the situation remained relatively stable.
Pixabay CC0 Public Domain. Azimut continúa reforzando su presencia en la región con la adquisición de MZK Investimentos en Brasil
UBS and Banco do Brasil have entered a non-binding Memorandum of Understanding, with the intent of establishing a strategic partnership that would provide investment banking services and institutional securities brokerage in Brazil and in select countries in South America.
If a partnership agreement is executed, the intention of both UBS and Banco do Brasil is to jointly provide investment banking services in Brazil, Argentina, Chile, Paraguay, Peru and Uruguay through the partnership, which will have access to Banco do Brasil’s corporate clients and UBS’s global execution and distribution capabilities.
Both UBS and Banco do Brasil believe that the formation of a strategic, long-term partnership would create a leading investment bank platform in the region with global coverage by building on the complementary strengths of UBS and Banco do Brasil. The partnership is expected to provide its clients with comprehensive solutions and would provide additional benefits for its stakeholders.
It is envisaged that UBS would be the majority shareholder (50.01%) of the partnership, which would be established by the contribution of assets by both parties in accordance with the definitive terms and conditions of the partnership agreement, which is still under negotiation.
The effective implementation of the partnership is subject to the successful conclusion of the negotiations between the parties, on the execution of any binding transaction documents, as well as the relevant internal and external approvals.
Pixabay CC0 Public Domain. Ardian Infraestructura adquiere dos plantas fotovoltaicas en Perú a Solarpack
Ardian, a world leading private investment house, has acquired a 49% stake in two photovoltaic (PV) plants in Tacna and Panamericana, in southern Peru, from Solarpack, the Spanish multinational integrated management company. The deal is part of Ardian’s ongoing commitment towards investing in renewable energy.
The plants have a combined capacity of 48.6MW after repowering. The transaction is the latest development in Ardian’s successful partnership with Solarpack since 2016, when Ardian acquired four other Solarpack photovoltaic plants in Chile and Peru. Solarpack will continue to handle the plants’ operations and management services.
The investment cements Ardian’s position as a leading player in the renewable energy sector and will bring Ardian Infrastructure’s total installed renewable energy capacity to nearly 3GW across wind, solar, hydro and biomass in Europe and the Americas. Investing in energy renewable assets is part of Ardian commitment to fighting against climate change and building a sustainable economy.
Juan Angoitia, Senior Managing Director at Ardian Infrastructure, said: “This investment is a significant milestone in strengthening both our commitment to sustainability and our presence in Latin America, an increasingly important global hub for renewable energy. Our investment in Tacna and Panamericana expands our portfolio of renewable energy assets and strengthens our partnership with Solarpack and the high-quality assets investment opportunities they provide.”
Pablo Burgos, CEO of Solarpack, added: “The global need for renewable energy sources is increasing day-by-day, so our ability to continue to build, develop and operate solar plants at pace is more important than ever. Our ongoing industrial partnership with Ardian has been beneficial with a long-term investment approach and we look forward to continue working closely with Ardian.”
Ardian is a world-leading private investment house with assets of 96 billion dollars managed or advised in Europe, the Americas and Asia. The company is majority-owned by its employees. It maintains a truly global network, with more than 620 employees working from fifteen offices across Europe (Frankfurt, Jersey, London, Luxembourg, Madrid, Milan, Paris and Zurich), the Americas (New York, San Francisco and Santiago) and Asia (Beijing, Singapore, Tokyo and Seoul). It manages funds on behalf of around 970 clients through five pillars of investment expertise: Fund of Funds, Direct Funds, Infrastructure, Real Estate and Private Debt.
Solarpack is a Spanish multinational company specializing in the development, construction and operation of solar PV plants. The company’s team of more than 100 professionals is developing a pipeline of more than 1.2 GW. The company has commissioned 35 MWp in five sites in Spain, 37 MWp in Chile, 26 MWp in Uruguay and 62 MWp in Peru. Solarpack performs the operation and maintenance of the plants it develops, and manages own and third-party assets for a total of 230 MW.
