The European Fund and Asset Management Association (EFAMA) has responded to the European Commission’s Call for Evidence on the EU regulatory framework for financial services. EFAMA welcomes the far-reaching debate launched by the European Commission with its Call For Evidence and wholly acknowledges its challenging nature. They believe “it will provide an excellent opportunity to address and resolve remaining regulatory inconsistencies and unintended consequences.”
With over 40 examples, the European asset management industry argues why existing barriers, inconsistencies and duplications that still exist in the current EU regulatory and policy framework need to be addressed. The examples are wide-ranging and include the regulatory framework built by the European institutions (European Commission, European Parliament and Council), but also regulatory and policy trends stemming from the European Supervisory Authorities.
In its response, EFAMA expresses a desire to ensure a certain degree of regulatory stability for the period to come. Much has been done in recent years in the regulatory field, setting a state-of-the art benchmark for global regulators, many of whom look at EU legislation for inspiration. However, some work remains to be done in terms of implementing and applying these new regulations.
In this regard, EFAMA calls for a realistic implementation timeframe. Too short or unrealistic implementation deadlines lead to legal uncertainty and cause serious challenges for European asset managers in the implementing phase of EU financial legislation.
Alexander Schindler, President of EFAMA, commented: “There are currently many examples of fundamental directives affecting our industry (MiFID II, UCITS V, PRIIPs) where it is extremely difficult to be prepared within the prescribed timetables”.
EFAMA equally supports the so-called “ better regulation” approach to European legislation.
Peter de Proft, Director General of EFAMA, commented: “Better regulation relies on constructive and efficient dialogue with all stakeholders, to obtain the necessary industry and technical expertise of those impacted by regulation. It also relieson the European co-legislators and the Commission to properly assess the potential consequences of a given piece of legislation”.
EFAMA also encourages further consistency and coordination within the European Commission services, between the European Commission and the European Supervisory Authorities (ESAs), but also among the latter (ESMA, EBA and EIOPA) as well as the European Systemic Risk Board (ESRB).
Foto: Tom. ESMA reanuda el proceso de reconocimiento de las entidades de compensación (o CCPs) estadounidenses
The European Securities and Markets Authority (ESMA) welcomes the common approach announced on February 10th by the European Commission and the US Commodity Futures Trading Commission (CFTC)on the equivalence of CCP regimes. This is an important step towards market participants being able to use clearing infrastructures in both the US and Europe, and for the proper functioning of the global derivatives markets.
Once the equivalence decision by the European Commission on the US regime for CFTC- supervised CCPs is adopted, ESMA will rapidly resume the recognition process of specific CFTC-supervised US CCPs that had applied to ESMA to be recognised in the EU.
While the European Market Infrastructure Regulation (EMIR) gives ESMA up to 180 working days to conclude that recognition, ESMA intends to do everything within its powers to shorten that period to the maximum extent and proceed with recognition as soon as the US applicant CCPs meet the conditions contained in those equivalence decisions.
Given the 21 June 2016 deadline for the start of the clearing obligation in the EU, ESMA understands that US CCPs will have a strong interest in becoming fully compliant with the EU equivalence conditions in order to be eligible to fulfill the EU clearing obligation requirement, which should help in shortening that period. ESMA cannot commit to any specific dates for the recognition decisions, given that such decisions mainly depend on the compliance by CCP applicants.
ESMA will also consider as a matter of priority the next steps on its consultation on the amendment to its Regulatory Technical Standard (RTS) regarding the minimum period of risk for different types of clearing accounts in EU CCPs.
From this moment forward, a U.S. taxpayer ought to recognize that IRS will have knowledge of a taxpayer’s financial assets outside of the U.S. that it did not previously have. Before passage of Internal Revenue Code Chapter 4 (FATCA), a U.S. taxpayer faced little risk of discovery, income tax liabilities and sanctions, or a penalty from I.R.S. for not reporting his foreign financial assets or income. So, a U.S. taxpayer making a 10% return on an investment was actually keeping the 10% return.
The United States has always taxed its U.S. taxpayers’ taxable income on a worldwide basis. Thus, absent a treaty or Internal Revenue Code benefit, there is no tax advantage for compliant U.S. taxpayers to investing offshore if the same pretax internal rates of return are obtainable in an onshore U.S. investment. Now that FATCA reporting by Foreign Financial Institutions is occurring, the previously untaxed internal rate of return from an unreported passive investment in an offshore structure will no longer be the actual rate of return. U.S. tax and reporting requirements applied to foreign financial assets and offshore passive investment will reduce an offshore structure’s return on investment. To explain further, given that the current highest effective U.S. tax rate on ordinary income is 39.6%, the long term capital gains or qualified dividend income rate is 20%, and the estate & gift tax rate is 40%, when they are factored into an investment decision, it can dramatically change the tax landscape for a U.S. taxpayer.
Part of the rationale behind the activity of investing overseas has been asset protection; and in some cases – U.S. income tax non-compliance to maximize investment returns. Certain offshore jurisdictional confidentiality laws and rules have historically helped protect assets and increase effective rates of return in those jurisdictions.
FATCA significantly increases the risk of IRS becoming cognizant of assets and reportable income amounts that have not been compliantly reported. Furthermore, U.S. taxpayers should be aware of some of the potentially punitive nightmare scenarios involving offshore investments including but not limited to:
Passive Foreign Investment Companies (PFIC),
Unreported Foreign Financial Accounts,
Unreported Foreign Trusts, and
Non-US Businesses.
It is a reality that tax transparency will have a negative impact on actual returns from offshore investments. A U.S. taxpayer with offshore investments ought to consider whether asset protection structures with the potential for causing punitive taxpayer treatment in the absence of compliance merits increased costs associated with compliance, as well as the latent penalties associated with non-compliance. Finally, FATCA is here to stay, and the era of secrecy has ended.
Foto cedida. Neuberger Berman nombra a David Rowe responsable de Marketing para EMEA
Neuberger Berman, one of the world’s leading employee-owned investment managers, announces the appointment of David Rowe to the role of Head of Marketing – EMEA, effective immediately.
David is responsible for developing and implementing marketing strategy to support Neuberger Berman’s growing EMEA business across all client channels, based in London.
Dik van Lomwel, Head of EMEA and Latin America, commented: “We are excited about David’s addition to the firm at a time when communication with our clients is more important than ever. His deep understanding and experience of marketing across EMEA will play a key role in tailoring our capabilities to each diverse market and supporting our dedicated client teams.”
David has over 17 years’ experience in the asset management industry. He joins from PIMCO where he was Head of MarComms EMEA since 2012 and additionally responsible for APAC since 2014. Previously, he held several senior marketing roles at Threadneedle (now Columbia Threadneedle) including Head of Wholesale & Institutional Marketing and latterly Head of Marketing. Prior to this he was Marketing Director – Funds at GAM.
David commented, “I am delighted to be joining one of the few privately owned investment firms of true scale. With the breadth of product range across asset classes the firm is well positioned to partner with clients in the short and long-term.”
At the time of writing, crude oil is trading at USD 32.51/bbl and USD 29.04/bbl on the Brent and WTI spot markets respectively. Both oil benchmarks have lost around 14% and 22% respectively year to date and have dropped to their 2004 levels.
Towards the end of January and in early February, oil markets registered a brief rally. It has now expired despite the encouraging news that US unconventional oil production is falling and discussions between OPEC and Russia to reduce oil supply, with the publication of new OECD data showing higher oil & distillates inventories and rising risks of global recession. This sent spot oil markets plummeting 8% in London and 12% in New York in the first two weeks of February.
The oil market imbalance is set to persist throughout the year, though easing gradually in the second half of 2016.
The latest news of the talks between Saudi Arabia and Russia is that they have agreed to freeze their oil production if they are joined by other major producers. Subject to a broader and more definite agreement, we forecast that Brent crude oil will average USD 40/bbl in six months’ time.
In terms of demand, despite mounting concerns surrounding Europe and emerging markets, the three forecasters (EIA, AIE, OPEC) that the market follows stand by their expectations for 2016. Global demand should increase by 1.2 MMbbl/d to 95.6 MMbbl/d following stellar growth of 1.9 MMbbl/d in 2015.
Emerging countries represent more than 52% of global demand. They have been the drivers of global demand for the last ten years, and should remain so despite the weakness of China’s demand. The IEA expects oil demand to increase in 2016 by 1.1 MMbbl/d (2.3%) to 49.4 MMbbl/d for non-OECD countries and by 3.1% (vs. 5.6% in 2015) to 11.6 MMbbl/d only for China.
The IEA expects OECD demand to remain flatwhile the EIA and OPEC are forecasting a rise of just 0.2% y/y. In the US, total liquid fuel consumption is forecast by the EIA to increase by 0.8%, compared to 2015.
As for the supply, after expanding by 2.6 MMbbl/d in 2015, global oil supply should increase only slightly, by 0.5 MMbbl/d to 96.8 MMbbl/d, in 2016.
In 2016, non-OPEC supply should decline by around 0.7 MMbbl/d to 57 MMbbl/d. The global downside will be driven by lower US unconventional supply and complemented by decreasing production in China, Norway and the North Sea area. Crude oil production by the seven major US shale players is expected to fall in February by 116,000 bbl/d to 4.83 MMbbl/d, according to the EIA.
Lastly, OPEC production in 2016 should increase by 0.9 MMbbl/d to 32.9 MMbbl/d, up from 30.9 MMbbl/d in 2015. Iran might also increase its supply by 0.5 MMbbl/d following the lifting of the sanctions.
Opinion column by Erasmo Rodriguez, Equities Analyst at Union Bancaire Privée (UBP), specialiced in Energy and Utilities sectors.
Pixabay CC0 Public DomainFoto: Andrew. Sube la marea, llegan nuevas noticias, ¿debería cambiar mi visión de mercado?
While market volatility will continue to fuel the growing popularity of multi-factor smart beta strategies in 2016, there will be greater focus on diversification than trying to predict which factor will dominate, according to the latest issue of The Cerulli Edge – Europe Edition.
“For delivering alpha, multi-factor strategies that tip-toe the line of active investing will gain favor,” says Barbara Wall, Europe managing director at Cerulli Associates, a global analytics firm.
In a Cerulli survey conducted in mid-2015, when asset managers were asked which smart beta products would see the strongest institutional sales over the next 12-24 months, 50% of UK managers said multi-factor, with 30% of Nordic managers answering the same.
“Over the past year as market uncertainty has reigned, multi-factor smart beta strategies have garnered greater interest. We expect total assets under management (AUM) to continue to increase not only in Europe but in the US and Asia as well,” says Justina Deveikyte, a senior analyst at Cerulli.
Big data platforms and improved off-the-shelf analytics that better understand how different factors work is also growing the market by broadening the investor base beyond sophisticated institutional clients, says Cerulli.
It estimates that total AUM for smart beta portfolios in Europe has grown from EUR 9.5 billion (US$ 10.6 billion) in 2011 to EUR 32 billion by the close of 2015. Return-oriented AUM increased from EUR 5.7 billion to EUR 23.5 billion over the same period.
“Investors sitting in more cap-weighted passive implementations or classic active management strategies will be looking at the multi-factor smart beta strategies as suitable alternatives because they are cost effective, transparent, and are more likely to live up to potential,” says Deveikyte.
Natixis Global Asset Management has recently hired Ted Meyer for the role of Senior Vice President of Global Public Relations and Communications. Meyer joins Natixis from Reality Shares, where he was the director of communications.
Meyer will assume a key role in the development of the global public relations and communications strategy and will be responsible for overseeing activities in the U.S. and Canada. He will work closely with international counterpart Wesley Eberle and his UK-based team to provide support at the corporate, distribution and affiliate levels of Natixis.
The Boston-based public relations team will report to Meyer who will report to Caren Leedom, Executive Vice President of Global Communications and Public Relations. “With more than 20 years of experience Ted’s background makes him a great addition to the global public relations and communications team,” said Leedom.
Meyer joined Reality Shares, Inc., an innovative start-up asset management company, in February of 2015 and led their communications and marketing efforts. Among other accomplishments, he helped the firm develop and launch a new series of exchange-traded funds (ETFs) based on proprietary market strength and dividend health indicators, and he structured and implemented a content marketing and thought leadership program.
Along with Reality Shares, Inc., Meyer progressively expanded his experience in media relations and communications through positions at leading corporations. Meyer built the communications program at First Solar Inc., providing key support to executive management from 2010 – 2013. Prior to that role, he was the head of communications in the Americas for Deutsche Bank AG, where he worked for 10 years, and was responsible for internal communications, media relations and brand communications for Deutsche Bank’s operations throughout the region. Before his time at Deutsche Bank, Meyer worked in media relations at UBS and served as media relations and internal communications manager at General Electric Co.
Foto: riccardoPalazzani, Flickr, Creative Commons. Fondos en Europa: ¿existe un desajuste entre las tendencias de desarrollo de producto y las demandas reales de los selectores?
The European fund distribution consultant accelerando associates conducts regular surveys capturing the latest insights from both the buy as well as the sales side. In January 2016 accelerando reached out to 60 Global, European and Country Sales Heads across Europe in order to shed light into experienced and forthcoming opportunities and challenges in European fund distribution from the source.
The 2016 survey kicked off with questions on the fund selector’s takes on current product waves. Smart beta dominates headlines. Is the asset management industry smart enough without smart beta? While 53% of the interviewed fund sales people stated that fund selectors consider smart beta concepts to be potentially interesting, 33% said that selectors have a rather skeptical view on smart beta. Only 13% of the survey respondents believe that European gatekeepers consider smart beta funds as a clear value adding proposition.
Responses on multi strategy funds, which seem to be the product developer’s current darling, provided a very similar picture. 60% of the survey respondents said that fund selectors address multi strategy funds very selectively, while 20% believe the gatekeepers look at these funds rather skeptically. “With that, we witness a clear mismatch between product development trends and real demand from large fund selectors“ states Philip Kalus, managing partner of accelerando associates.
Passive and Active
The experienced and also expected growth of the ETF and passive fund space also provides regular industry headlines. However, how do European investors play out these funds? Cheap core exposure, tactical plays or cheap replacement for active funds? The survey outcome provides a mixed picture with leading scores for cheap core exposure (45%) and tactical plays (41%). Only 14% see ETFs as a threat to active funds based on replacements. “This demonstrates well again, that the question is not active versus passive, it is both. High alpha active funds will be always in demand. However, the picture is different for so called closet-tracker funds“ says Charles Velie, researcher at accelerando.
Covering the demand or doing the best?
Many asset managers roll out new products on a regular basis to ensure further asset gathering, while most fund selectors want asset managers to focus on what they are best in. So, is this creating a conflict of interest for fund sales staff? Interestingly, not for the majority of senior sales people interviewed. However, individual comments suggest that some sales people can afford to ignore product campaigns to a certain extent and that they only focus their activities on the very best offering. Nevertheless, for 38% it is a clear conflict.
Equity year?
2016 should be the year for equity funds – at least when it comes to the majority of early year asset manager statements. In stark contrast, 63% of the survey respondents believe that this is rather wishful thinking and that fund selectors will keep their powders dry.
There has also been a lot of talk about increased price pressure from European fund buyers recently. However, the accelerando survey suggests that price pressure in Europe has only increased moderately with a score of 53%, while 31% state that price dynamics have more or less stayed the same in recent years. “It is about adequate fee levels. Investors are willing to pay fees for quality“, concludes accelerando.
Fund selectors requirements
Most fund selectors have high minimum requirements in terms of assets under management in a target fund, which makes initial asset gathering outside captive channels hard for new fund launches and small boutiques.
Within the alternative world, in particular in private equity, club deals – investors joining forces to invest at early stage – are common. Within traditional fund distribution / fund selection this seems far from reality yet. 70% of the survey respondents have never witnessed it, while 27% have experienced fund selector club deals in a very limited amount only. “This is certainly something asset managers should promote more. It is a win-win. Selectors can access new funds and emerging talents at an early stage and promoters gain sufficient size“ states Philip Kalus.
Overcrowded?
Europe is overcrowded in terms of the number of fund promoters and funds available, says the study. Fund selectors have plenty of choice in any given asset class. At the same time operational and due diligence efforts have increased. A widespread move away from open towards guided / limited architecture has already been witnessed by the majority of accelerando’s survey respondents in the 2014 and 2015 surveys. 2016 does not come along differently. Only 7% stated that fund selectors do not intend to work with less funds / less fund providers.
The state of the industry
The asset management industry has increasingly come under pressure by troubling headlines. How about the perception of the state of the industry by European fund selectors? 63% of the senior sales people interviewed believe the perception is good, but not good enough, while 27% stated the perception is poor.The asset management industry has over-promised and under-delivered too often. Only 10% believe the perception is very good.
Digitalization
accelerando associates are firm believers that fund selectors want to access everything they need anytime from anywhere. Digitalization matters. 50% of the survey respondents believe that digitalization has nowadays a very high importance in marketing and communication to fund selectors, while 47% give it high, but early stage importance. Interestingly, 50% state that their employers do not encourage them to apply more digital contacts versus face to face meetings. “We expect this to change dramatically in the forthcoming years. Old-school sales models run high costs and a lot of unproductive time traveling to and in between investor meetings“ states Charles Velie from accelerando.
How about fund sales expectations for 2016? 67% of the survey respondents expect a good, but challenging year ahead, while 27% expect a challenging year indeed. Only 7% expect 2016 to be a good year indeed in terms of fund sales. Optimism looks different.
Foto: Z S. La Française toma una participación mayoritaria en Forum Securities
Two years after the announcement of their strategic partnership and the successful launch of the La Française Lux – Forum Global Real Estate Securities Fund, Forum Partners, subject to regulatory approval, will transfer an 80% interest in its wholly owned subsidiary, Forum Securities Limited, to La Française. The transfer is expected to close in the first quarter of 2016.
Forum Securities is an SEC registered investment advisor managing private investment accounts for institutions and family offices, with an investment focus on long-only and hedged global real estate public securities strategies. The business was established in 2009 and has seven full-time employees, six of whom perform investment, advisory and research functions. Employees represent seven nationalities and speak ten languages. Forum Securities has offices in Greenwich, CT (USA), Singapore and London. The team is recognized for its “out of the box” approach.
The new integrated platform will be re-branded La Française Forum Securities and will allow Forum Securities enhanced back office and reporting capabilities as well as stronger business development and client relations support. La Française will continue to expand its international footprint with a presence in the US and Asian markets. Together the firms will look to broaden their product offering to include: infrastructure/commodities, a Sharia compliant listed real estate investment fund, listed Green real estate funds, sector specific listed real estate funds and other customized strategies that meet investor demands.
The existing product line will continue to be managed by the Forum Securities team which will be reinforced to support the expected growth in offerings. Jana Sehnalova, Portfolio Manager within the Forum Securities Limited team, will be the Global Head and Managing Director of La Française Forum Securities and will report to Pascale Auclair, Global Head of Investments of La Française Global Asset Management.
Foto: Bullion Vault
. Old Mutual Global Investor lanza un fondo dedicado a la inversión en oro y plata
Old Mutual Global Investors has announced that it intends to launch theOld Mutual Gold & Silver Fundin March 2016, subject to regulatory approval.
The Fund, which will be a sub-fund of the Dublin domiciled Old Mutual Global Investors Series, will be managed by Ned Naylor-Leyland, who joined OMGI from Quilter Cheviot in September 2015. Ned will be supported by Analyst Joe Lunn and Investment Administrator, Amelia Bowyer, who previously worked with Ned at Quilter Cheviot.
The Fund will aim to deliver a total return by combining indirect exposure to gold and silver bullion, with selected precious metals mining equities, in order to target maximum diversification and potential for upside for investors. The management team will use a bottom-up stock selection process in order to identify companies that, they believe, will produce a good long-term return to shareholders.
Using a dynamic investment process the team will adjust the weighting of gold- and silver- related equity and equity-related securities, at various points throughout the market cycle, to create the optimal balance in the portfolio.
OMGI believes that the Fund will be suitable for clients looking to diversify their portfolio and benefit from the prospect of attractive long term growth in the gold and silver market.
Ned Naylor- Leyland comments:
“I’m delighted to be at Old Mutual Global Investors working on the launch of a new gold and silver fund. In times of market turmoil, monetary metals have consistently been turned to as a safe haven for investors. Gold and silver prices have fallen to levels from which they have rebounded strongly in previous bear market cycles and look set to rise again in popularity as an asset class over the course of 2016.”
Warren Tonkinson, Managing Director, Old Mutual Global Investors, comments:
“As investors increasingly look for alternatives to diversify their portfolios, now is the perfect time to launch the Old Mutual Gold & Silver Fund. Ned brings with him a wealth of experience and his appointment is another great example of how we are working with our colleagues at Quilter Cheviot to identify opportunities to utilise existing skills within the business to enhance our proposition and add value for investors.”
Ned Naylor Leyland joined OMGI from Quilter Cheviot in September 2015. Ned started at Quilter Cheviot in July 2008 and continues to run their Malta-domiciled precious metals fund. Ned joined Quilter Cheviot from Smith and Williamson. He started his investment career at Neilson Management in 2001 and has over 15 years’ experience working in the precious metals sector.
