CC-BY-SA-2.0, FlickrBill Miller, foto youtube.com. Bill Miller rompe lazos con Legg Mason tras 35 años en la entidad, al comprarle su participación en LMM
Legg Mason, announced on Thursday that it has reached an agreement with Bill Miller for the acquisition by Miller of all of Legg Mason’s interests in LMM LLC.
Miller will be no longer tied to Legg Mason and as a result of the operation he, together with companies he controls, will own 100% of LMM. The firm provides investment management services to Legg Mason Opportunity Trust, Miller Income Opportunity Trust and related strategies. There will be no changes to the investment team or portfolio management responsibilities as a result of the transaction, company said in a press release.
Bill Miller, Chief Investment Officer of LMM, said: “This transaction affirms my ongoing commitment to managing our funds and to our investors. I am excited about the future of LMM, and our team is dedicated to our long-term, value-driven approach and to true active management. I am thankful to Legg Mason for our 35-year relationship and to the many great people I’ve worked with along the way.”
“Bill has been an important part of the growth and success of Legg Mason over the years and we appreciate his many contributions. We wish Bill and his team continued success in the future. Today’s announcement is consistent with Legg Mason’s strategy of focusing on our nine diverse managers with size and scale that can be leveraged across global distribution,” said Joseph A. Sullivan, Chairman and CEO of Legg Mason.
Terms of the transaction were not disclosed.The transaction is expected to close on or around the calendar year end, subject to customary conditions and regulatory approvals.
LMM LLC is a registered investment advisor founded in 1999. LMM’s long-term, value-driven investment approach produces flexible strategies with high active share. LMM is headquartered in Baltimore, Maryland, and has $1.8 billion in assets under management as of July 31, 2016
The global private credit market, an alternative source of financing for small and medium sized enterprises, is flourishing, with institutional capital supporting increased lending in Europe in particular, according to a report by the Alternative Credit Council (ACC), a private credit industry body affiliated with the Alternative Investment Management Association (AIMA), and Deloitte, the business advisory firm.
The private credit market has grown from $440 billion last year, to $560 billion today. The research, Financing the Economy 2016, found that institutional capital is boosting lending in Europe and much of this growth has been driven by demand from European businesses. However, the US still remains the largest private credit market, both in terms of overall assets under management, and new assets raised in 2015.
The research is based on a survey of alternative lenders, representing assets under management totalling $670 billion, of which $170 billion is allocated to private credit strategies.
Stuart Fiertz, the Chairman of the ACC and President of Cheyne Capital, said: “As the recovery from the financial crisis continues, business innovation and demand for credit shows no signs of slowing. Alternative lenders are primed and ready to continue to fill the lending gap, but this is not necessarily at the expense of the traditional lenders. We see a cooperative relationship occurring between banks and alternative asset managers.”
Floris Hovingh, Head of Alternative Capital Solutions at Deloitte, said: “In the last couple of years, alternative lending has seen huge growth in Europe and is likely to accelerate over the next 24 months as a result of Brexit. As trade negotiations get underway, alternative lenders could be well positioned to navigate the increased risk in the market and price this accordingly.”
87% of global alternative lenders surveyed prior to the UK’s referendum said that the best lending opportunities are currently in the UK. This is followed by France (62%), Germany (54%), Spain (54%) and the US (50%).
Pension funds were cited by 57% of respondents as the biggest investor category, while a further 30% said pension funds were their second biggest source of capital. Insurance companies, endowments, foundations and sovereign wealth funds were other investor types cited as sources of capital for private debt funds.
The research found that most financing is going to businesses with pre-tax profits of $10 million or more. Most loans are greater than $5 million in size and half are in the $25m-$100m range. In comparison, bond market financing, a common form of non-bank finance for larger corporates, is in the $100m-$300m range.
The research also found that most private credit funds use little or no leverage, have low default rates and are structured in a way to prevent liquidity mismatches, bank-style runs and other financial stability problems. Fund managers said growing demand was partly driven by the flexibility, responsiveness and expertise of alternative lenders.
CC-BY-SA-2.0, FlickrFoto: AedoPulltrone, Flickr, Creative Commons. Jupiter ficha a Magnus Spence para su nuevo puesto de responsable de Inversiones Alternativas
Jupiter has announced the appointment of Magnus Spence as Head of Investments, Alternatives. In this newly-created position, Magnus, who joins on 30th August 2016, will be responsible for developing and expanding Jupiter’s capability in this strategically-important asset class.
Magnus will focus initially on the current range of Jupiter long/short equity UCITS products: Sicav funds Jupiter Europa and Jupiter Global Absolute Return, and a UK domiciled absolute return unit trust fund. In the medium term, Magnus’ focus will be on broadening Jupiter’s alternatives product range across asset class, region and country. He will report into Stephen Pearson, Chief Investment Officer, and work closely with James Clunie, Head of Strategy, Absolute Return as well as the rest of the investment team.
Magnus has 15 years’ experience in the alternatives asset management industry. Most recently, he has worked as Head of Product at Fidante Partners (formerly Dexion Capital plc) since early 2015. His role there involved the development of a liquid alternatives investment management platform. Prior to this, Magnus was Chief Executive and Managing Partner of Dalton Strategic Partnership LLP from 2011-2014, a specialist equity firm which he co-founded in 2002. In this position, he was instrumental in the development of the firm’s hedge fund, specialist equity fund and segregated account business aimed at both UK and international clients.
Stephen Pearson, Chief Investment Officer said: “We are very much looking forward to welcoming someone of Magnus’ experience and calibre to the investment management team we are building at Jupiter. Magnus will be working closely with me, James and the fund management team to strengthen and broaden our presence in the alternatives sector. This is an asset class which is highly sought after and important for the future development of our investment proposition’’.
Magnus Spence said: “This is an exciting time to join Jupiter. There is great potential for growth in the alternatives space both domestically and internationally. Jupiter, with its reputation for investment excellence, has the right ingredients to become a leading player in alternatives and I look forward to the opportunity of working with the entire team to meet this objective.
CC-BY-SA-2.0, FlickrFoto: LinkedIn. Thomas Zanios se incorpora a Gemspring Capital como managing director
Thomas Zanios has been appointed Managing Director at Gemspring Capital. Over the last 12 years, Thomas has invested in leverage buyouts, corporate divestitures, founder recaps, asset acquisitions through bankruptcy and growth equity investments across a range of industries including healthcare services, business services, insurance services, industrial services, manufacturing and localized rental businesses. Thomas has been involved with over 25 acquisitions over the course of his career including both platform investments and add-on acquisitions.
Prior to joining Gemspring, Thomas was a Principal at Odyssey Investment Partners. During his nine years with Odyssey, Thomas was involved in all aspects of the investment process including origination, due diligence, transaction structuring, financing, and working with management to execute key value creation initiatives for each investment. Thomas served on the boards of Safway Group Holdings and One Call Care Management during his tenure at Odyssey. Prior to Odyssey, Thomas worked as an Associate at H.I.G. Capital and was actively involved in a number of successful transactions.
Thomas began his career in the healthcare investment banking group of Banc of America Securities, and also spent time as at Ramius Capital, where he focused on private investments in public entities.
Thomas received a B.A, summa cum laude, from Tufts University.
Foto: Elliot Harmon
. Uno de cada cuatro de los mejores RIAs prevé realizar adquisiciones antes de año y medio
While the majority of advisory firms have seen their revenue levels stall, a group of “Elite” registered investment advisors have experienced significant growth as the result of superior and strategic management, according to the 2016 Elite RIA Study from InvestmentNews Research and BlackRock.
The 2016 study finds that the industry’s largest and most productive RIAs increased their revenues by 23% over the last year, while the typical independent firm’s business remained flat.
This year’s study specifically highlights the primary drivers of this exceptional growth for industry’s Elite RIAs, and also looks ahead at strategies that will likely drive future success in the business.
“While the regulatory environment and markets have created headwinds for most firms, the truly Elite RIAs are starting to pull away from the pack,” said Mark Bruno, associate publisher of InvestmentNews. “They see an opportunity to differentiate their business right now – whether it’s through the services they deliver, or their internal operations – and they are making aggressive moves to increase their market share.”
In particular, the study notes that Elite RIAs are highly focused on going upstream with their client base, placing a clear emphasis on pursuing ultra-high-net-worth and institutional clients. At the same time, they are also strategically leveraging technology, and employing unique and scalable organizational structures that allow for superior client service and support – as well as the potential to absorb new advisers and clients through mergers and acquisitions.
Over the last year, the percentage of Elite RIAs that rely on teaming increased from 44% to 56%. Also the study states that Elite RIAs are investing in dedicated operations and compliance specialists: Nearly twice as many Elite RIAs support a dedicated compliance role compared with all other firms (58% vs. 34%). Another key point is that 73% of Elite RIAs build and manage custom investment portfolios for each client, compared with 54% of all other firms – a core part of their value proposition and competitive differentiators. “Effective use of technology” (57% reporting) and “Growth and retention of existing clients” (51%) are the two factors most cited by Elite RIAs as the drivers of future success over the next 12-24 months.
One in four Elite RIAs are considering an acquisition in the next 12-18 months and 48% of advisers view robo technology as an opportunity, up from 39% just a year ago.
“The 2016 data is particularly noteworthy with regard to the deployment of technology and compliance,” said Hollie Fagan, head of BlackRock’s dedicated Registered Investment Advisor and Retail Investor Platforms. “Elite advisers have paid attention to an important lesson implicit in the continued emergence of robo-advisory: that technology, thoughtfully configured and deployed, can enhance the client experience and provide a critical tool with which to segment and scale a book of business.”
“At the same time, Elite RIAs view the renewed focus on compliance resulting from the DOL’s fiduciary rule-making as a significant opportunity, understanding that working with greater transparency and alignment is good for both their clients and the growth and vitality of their business,” Fagan said.
According to Detlef Glow, Head of EMEA research review at Thomson Reuters Lipper, and considering the rough market conditions during the first half 2016 and the concerns about a possible “Brexit” vote in the United Kingdom, it was not surprising that the assets under management in the European mutual fund industry decreased from the record level of €8.88tr (December 31, 2015) to €8.76tr at the end of June 2016.
This decrease of €126.7bn was mainly driven by the performance of the underlying markets (-€156.2bn), while net sales contributed net inflows of €29.5bn to the overall change in assets under management in the European fund industry.
Other findings include:
Bond funds enjoyed the highest net inflows (+€38.8 bn) during first half 2016.
Bond Global (+€7.1 bn) was the best selling long-term mutual fund category over the first half 2016.
BlackRock (€593.8 bn) at the end of June accounted for more assets under management than the following two fund promoters together.
BlackRock led the sales table for first half 2016 with net sales of €18.1 bn.
Foto: 401(K) 2012
. ¿En qué ciudades se gestiona mejor, y peor, el dinero?
Los Angeles metro area residents are the best at managing money and Baltimore residents are the worst, according to a new CreditCards.com report.
The study compared the average credit score in each of the 25 largest U.S. metropolitan areas with an expected credit score which CreditCards.com generated by analyzing local income, age, unemployment and education data. The hypothesis was that locations with higher median household incomes, median ages and educational attainment – along with a lower unemployment rate – would have higher credit scores.
It didn’t always work out that way. The average Los Angeles-area resident’s credit score is 16 points better than expected. That’s despite significant headwinds: for example, among the 25 metros, the L.A. area has the lowest percentage of high school graduates (79%) and its median household income ranks 12th. Given that context, L.A.’s average credit score (664, which ranks 16th according to Experian) looks much more impressive.
Minneapolis/St. Paul placed second for a very different reason. That metro area has the highest average credit score in the nation. The Twin Cities benefit from several economic advantages, including above-average income and education and a low unemployment rate. Area residents are making the most of those advantages; their average credit score is 15 points better than anticipated.
New York City, Chicago and Bostoncame in third, fourth and fifth, respectively.
Baltimore and its neighbor Washington, D.C. occupy the worst positions on the list.Both metro areas have very high median incomes and above-average educational attainment. However, Baltimore and D.C.-area residents aren’t maximizing these perks. Baltimore’s average credit score is 17 points poorer than expected and D.C.’s is 14 points lower.
The Tampa, Miami and Atlanta metro areas comprise the rest of the bottom five.
“Good credit has a lot more to do with discipline than income,” said Matt Schulz, CreditCards.com’s senior industry analyst. “Use technology to your advantage: review your account information at least once a week and your credit report at least once a month to catch errors and avoid late payments. It’s an easy habit to establish, especially considering how much time we spend on our phones checking Facebook and playing Pokémon Go.”
Foto: Paulo Valdivieso
. El 62% de los clientes "promotores" seguiría a su advisor a otra firma
Nearly two-thirds of millionaire investors (62 percent) rely on financial advisors to help them manage and protect their wealth. Similarly, advisors rely on their current clients to drive referrals, which generate nearly half (48 percent) of new business for advisors and help drive organic growth.
In its 8th release, Fidelity Investments’Millionaire Outlook Study looked at the state of the investor-advisor relationship. For the first time, the study calculated a Net Promoter Score (NPS), a commonly used tool that measures the likelihood that millionaire clients will recommend their advisors to colleagues and friends. The study found that 55 percent of millionaires are “Promoters”—meaning they are loyal to their advisors and likely to recommend them to others; in fact, of those Promoters, nearly two out of three (65 percent) would call their advisors their friends. That’s good news for advisors and those they serve.
However, despite seeing the value in hiring professional financial advisors, 45 percent of millionaires would not recommend their financial advisors to friends or colleagues. In fact, one in five (20 percent) millionaires are “Detractors”—unhappy enough that they may leave their advisor or discourage others from working with them.
“We have entered a ‘referral economy’ – where we, as consumers, thrive on sharing the people and things we value with those in our social and professional networks,” said Bob Oros, head of the registered investment advisor (RIA) segment, Fidelity Clearing & Custody Solutions.
“While this presents a tremendous opportunity for advisors, the challenge is uncovering the formula that drives millionaire clients to recommend them rather than remain silent — or worse — leave,” continued Oros.
Other findings include that 69 percent of loyal millionaires gave a referral in the last year.Promoters have 71 percent of their assets with their primary financial advisor, while detractors have about half (48 percent) of their assets with one; And promoters are ahead of their financial goals: 25 percent of promoters feel they are ahead of their financial goals, while only 7 percent of Detractors feel that way.
Three out of four millionaires who would recommend their advisor would also consult with them on what to do with a sudden and significant financial gain, while only 36 percent of detractors would do the same. In fact, 45 percent of detractors would invest it on their own, without consulting their advisor.
Promoters follow their advisors: 62 percent of promoters would switch firms with their financial advisor, while that cannot be said for detractors (only 17 percent would switch).
The global, sustainable corporate bond fund ERSTE RESPONSIBLE BOND EMERGING CORPORATE has clearly passed the threshold of EUR 100mn of assets under management. A perfect occasion to take stock. Christian Schön, member of the board of directors of Erste Asset Management, explains what role sustainable investments play in emerging markets, especially in the corporate bond segment.
Question: How do sustainability and emerging markets go together? Schön: Very well, actually. Responsibility and growth are not mutually exclusive. Let me take China as example: between 2006 and 2012 energy consumption per unit of GDP was reduced by almost a quarter. By 2020, CO2 emissions are to be cut by 40 to 45% per GDP unit. On top of that, the government plans to increase the share of non-fossil fuels in energy consumption to 15%. The entire industry benefits from this green policy. In China alone, more than EUR 500bn have been invested in renewable energy and measures to cut greenhouse gas emissions over the past five years. In South America, too, we can see enormous progress as far as sustainable business practices are concerned. At the same time corporate bonds from emerging economies continue to pay significantly higher yields than their peers from developed countries. This scenario holds opportunities for sustainable investors, especially in the emerging markets corporate bonds segment.
Q: From your point of view, what is the added value of an emerging markets bond fund that is managed on the basis of sustainable criteria? S: The application of sustainable criteria in company research facilitates an improved risk assessment, particularly for emerging economies. Imagine that in addition to traditional company valuation, you are using another magnifying glass that provides you with new insights into the respective company and its governance. This is particularly essential for the assessment of corporate governance criteria including the risk of corruption. This expanded analysis is done against the backdrop of the stringent ethical criteria, which we as sustainable investors apply with regard to the upholding of human rights or in connection with the problem of child labour.
Q:What criteria play a role in the investment process for emerging markets bonds? S: Especially in a dynamic environment such as emerging markets, an ongoing research process is a crucial element of success. We have been developing our approach for 15 years. It combines all methods of analysis and selection that are available to sustainable investors into one integrated management approach. In addition, we complement our in-house expertise with the know-how of renowned research partners. On the basis of this method, we develop an initial ESG investment universe, which is then used for the individual investment process of the individual funds. The ERSTE RESPONSIBLE BOND EMERGING CORPORATE fund for example invests in the bonds of emerging markets companies that have successfully gone through our ESG screening. It also taps the high-yield segment while requiring a rating of at least B-. However, BBB bonds account for the biggest share of the portfolio. Foreign exchange risks are largely hedged against the euro. This multi-step process ensures the compliance with criteria of sustainability and the opportunity of surplus return.
Q: How has ERSTE RESPONSIBLE BOND EMERGING CORPORATE fared since its launch, and what is its outlook? S: Since the launch of the fund in December 2013 we have recorded a compound annual growth rate of 4.25% in spite of a relatively difficult market environment. We have seen investors return to the emerging markets segment especially as a result of the current low interest rates. The capital inflow into our funds testifies to the fact that sus-tainable criteria play an ever-greater role in this area as well.
Earnings disappoint again, but markets stay resilient. With the U.S. party conventions out of the way and Hillary Clinton polling more strongly, investors may divert their attention, at least for a while, away from politics to focus on economic and company fundamentals.
If they do, will they subscribe to Republican presidential candidate Donald Trump’s view that they should follow him and sell out of equities?
Markets Have Been Remarkably Resilient They’d have to reckon with just how resilient markets have been lately. Equities bounced back from Brexit at the end of June. They even sailed through July’s bear market in oil, which briefly slipped under $40 per barrel last week.
At the beginning of the year, the oil price was one of the major factors driving extreme risk aversion. This time, the impact has been muted. Even energy sector high-yield spreads are pretty much where they were when oil hit its recent high at the beginning of June.
Still, underneath these low yield-supported valuations the economy remains sluggish. As last Friday showed, the U.S. continues to post healthy jobs data. And yet the second quarter U.S. GDP print seriously undershot expectations at 1.2% real and 2.4% nominal growth. You have to go back to the first quarter of 2010 to find a report that weak. Household spending was strong and a lot of the weakness came from inventories being run down, but it wasn’t so long ago that economists were forecasting 3% real GDP growth for the second half of this year.
Three-quarters of the way through the second quarter reporting season, we can see that this is a tough environment in which to eke out earnings growth.
Another Weak Earnings Season Year-over-year, we are on course for a 2% drop in earnings. Take out the energy sector and earnings are up around 2%-3%. That would be false comfort, however. A year ago, the consensus estimate for 2016 S&P 500 earnings per share was $130. Three months ago it was around $123. Now, we’ll be lucky to make $118. That was what U.S. equity investors got in 2014 and 2015, too; three years of flat earnings suggests this isn’t just about oil, but low investment across industry in general.
It’s a similar story in Europe. We’ve pointed to the quiet outperformance of European macro data over recent months, and both second quarter GDP growth and July inflation data came in ahead of expectations. Corporate earnings have been even weaker than in the U.S., however. We are looking at double-digit year-over-year declines for the second quarter.
It’s true that, if we strip out Europe’s banks, we might expect earnings growth of 3%-4% overall. However, stripping out banks in Europe is even more questionable than stripping out energy companies in the U.S. These banks lost a third of their value between the two stress tests of 2014 and 2016 and remain poorly capitalized, weighed down by nonperforming loans and overexposed to sovereign credit issues, which, in an economy as dependent on bank credit as Europe’s, is a serious impediment to growth.
Mixed Signals Create ‘Confused Apathy’ To sum up, the slight improvement in corporate earnings over the last couple of quarters cannot disguise how disappointing the figures are, given the easing off of the China, oil and, for U.S. companies, strong-dollar headwinds that we have been describing since the spring.
A phrase I have heard to describe investment psychology at the moment is “confused apathy.” Active managers struggle to generate alpha; beta looks tired, stretched and expensive; bond yields are incredibly low; the political environment is unpredictable. But wasn’t that what we were saying two years ago when the S&P 500 was 15% cheaper and earnings were exactly the same?
In other words, this is not an ideal way to invest, given the long-term, common sense correlation between earnings and market valuations, but ordinary investors that are patiently trying to grow their wealth arguably can ill afford to ditch equities, especially with bond yields so low. Monitoring risk is sensible, but trying to time this market makes about as much sense as, let’s say, building a wall around Mexico.
