Foto: Frank Lindecke
. ¿En qué 5 países habrá mayor transferencia de riqueza en los próximos 30 años?
Half of the world’s UHNW individuals with assets of at least US$30 million are expected to pass on their wealth in the next 30 years.This means that at least $16 trillion of wealth will be transferred to the next generation globally, marking the largest wealth transfer in history: In the next 10 years, a total of $4.1 trillion. In the next 20, the amount will reach 9.2 trillion. And in 30 years time, it will exceed the $16 trillion figure.
Where will it happen? According to the Wealth-X and NFP Family Wealth Transfers Report, The United States, with an expectation of over $6 trillion transfer hits the top position. Germany and Japan, with over $1.6 trillion each, United Kingdom, with $830 billion, and Brazil, with $560 billion, complete the top five.
“North America’s $6,350 billion of wealth expected to be handed down in the next 30 years represents 40% of the global total. In terms of global UHNW wealth, North America holds 35% of the total; this slightly higher amount being passed down to the next generation reflects the fact that North America’s UHNW population is older”, the report explains.
In Europe, things are different since it already has a higher proportion of inherited wealth -45% compared to only 25% in North America-, meaning that a large portion of wealth has already been transferred to the new generation.
The firms expect Asia´s UHNW population and wealth to become the largest in the world in the next 20 years. But the wealth creation is this region is so recent that there is not a big need to transfer yet. “Whilst we expect Asia to be at the center of wealth creation in the coming decades, it will still take a long time for the impact of this to affect wealth transfers to the next generation in the region”, the report says.
If we take a look at the countries with largest expected wealth transfers as proportion of UHNW wealth in the next 30 Years, we find that Malaysia, Taiwan, France, Japan and Brazil lead the ranking. The explanation offered by the Wealth-X and NFP Family Wealth Transfers Report for the presence of three Asian countries in the top five –with over or almost 70% of their wealth to be transferred- is that “in each of these countries some of the wealthiest billionaires are already in their 70s or 80s, and this has a disproportionate impact on the whole country.”
The latest Preqin research into infrastructure investment has found that the average deal size has risen 56% between 2013 and 2015 YTD. Transactions completed in 2013 had an average size of $401mn, compared to $626mn for deals done so far in 2015. The number of deals taking place each year has fallen notably in three years, from 1,056 in 2013 to just 325 so far in 2015. This comes alongside news that the majority of infrastructure investors now list valuations as their primary concern for the infrastructure market. Following a recent survey by Preqin, the proportion of investors concerned about current valuations of investments has risen from 13% in H1 2014 to 56% in H2 2015.
Average deal sizes in all geographic regions have hit record highs in 2015. In particular, deal size is up 42% in Europe and 13% in North America versus 2014. And, although average deal size has risen, aggregate deal value is not projected to meet 2014 levels by year-end. Estimated aggregate deal value reached $435bn in 2014, yet the aggregate deal value for 2015 YTD is only $204bn.
“Average infrastructure deal sizes have reached all-time highs so far in 2015, experiencing significant increases since 2013. However, this growth has not been completely linear across the industry. Transactions in the more developed infrastructure markets of North America and Europe have seen the largest increases in average deal value. Furthermore, the appetite for the favourable characteristics of brownfield sites among investors has driven prices for these assets up at a faster rate than infrastructure at both the greenfield and secondary stages. What worries investors is that capital committed now may not deliver the strong, stable returns to which they have become accustomed. Only time will tell whether large asset prices will have an effect on the overall performance of unlisted infrastructure funds currently investing capital”, comments Andrew Moylan, Head of Real Assets Products – Preqin.
Among other findings, according to Preqin, transport, telecoms and energy deals have all seen notable rises in average deal size over the past year, with the average transport deal size for 2015 YTD reaching $889mn, a 32% increase compared to 2014.
Since 2010, greenfield and secondary stage projects have seen average deal sizes rise by approximately 70%, while brownfield deals have increased by 148% in size. Since 2014, the average deal size for brownfield sites has increased by 35%.
Following valuations being named as the key issue for the infrastructure market by 56% of investors at present, 43% of respondents stated deal flow was a significant issue and 30% named performance.
The European funds industry faced estimated net outflows of €11.1 bn from long-term mutual funds for June. That said, mixed- asset funds enjoyed opposite flows with estimated net inflows of €12.1 bn during the month, followed by real estate products with €0.2 bn and commodity funds with €0.03 bn. However, bond funds faced estimated net outflows of €17.5 bn, bettered by equity funds (- €2.5 bn), alternative/hedge products (-€2.1 bn), and ”other” funds (-€1.3 bn). These flows added up to estimated net outflows of €11.1 bn from long-term investment funds for June.
“Despite these flows for June, the European investment industry enjoyed outstanding estimated net inflows of €296.5 bn into long-term investment funds for the first six months of 2015”, said Detlef Glow, Head of EMEA research.
Even money market products, an asset class that can be seen as a safe haven, faced massive outflows (-€34.7 bn) for June. Despite these outflows, money market funds still showed net inflows of €1.2 bn for the first half of 2015.
The flows for the money market segment brought the overall net flows for June to minus €45.8 bn and to a positive €297.8 bn for the first six months of the year.
The single fund market with the highest net inflows for June was Luxembourg (+€7.9 bn), followed by Switzerland (+€0.7 bn) and Denmark (+€0.2 bn). France (-€25.7 bn), Ireland (-€10.2 bn), and Italy (-€8.1 bn) stood on the other side.
Mixed-Asset EUR Flexible-Global (+€4.2 bn) was the best selling sector among the long- term funds, followed by Mixed-Asset EUR Conservative-Global (+€3.3 bn), Mixed-Asset EUR Balanced-Global (+€2.7 bn), and Equity Japan (+€1.9 bn) as well as Equity Eurozone (+€1.2 bn). At the other end of the spectrum Bond EUR suffered net outflows (-€5.0 bn), bettered somewhat by Absolute Return EUR (-€5.0 bn) and Bond EUR Corporates (-€3.5 bn) as well as Bond EMU Government (-€2.5 bn) and Equity Asia Pacific ex-Japan (-€2.3 bn).
Commerzbank has been authorized by the Brazilian Central Bank to set up a subsidiary in Sao Paulo. It is now expected that business operations for the target group of small and medium-sized enterprises as well as major and capital market companies will be launched in the first quarter of 2016, according to PR Newswire.
“Even though the growth momentum in Brazil has slowed recently, the country still remains the seventh largest economy in the world and is by far the most important economy in Latin America and thus a major economic partner for Germany and Europe. Even in times of volatile markets, it is important for our Mittelstandsbank, the market leader in Germany for SMEs, to have a local presence to support our customers outside Germany,” says Bernd Laber, Divisional Board Member International of the Corporate Banking segment (“Mittelstandsbank”).
Harald Lipkau will take on the position of General Manager of Commerzbank in Brazil. A native of Brazil, he started his career in his home country and, after progressing through various positions, was most recently responsible within Commerzbank for financial institutions in Asia.
Around 1,400 German companies are currently represented in Brazil, of which approximately 900 are located in the metropolitan area of Sao Paulo. The majority of these companies are already customers of Commerzbank in Germany. It is now planned to serve their local units through the new Commerzbank subsidiary in Sao Paulo. A total of around 50 staff will be available locally for these customers.
Commerzbank plans to offer its comprehensive range of corporate and investment banking services in Brazil. Commerzbank will serve European companies operating in Brazil, and also provide support for international companies aiming to do business in Europe.
Foto: juantiagues
. Los hedge funds captaron 76.000 millones hasta junio
The global hedge fund industry has seen a $76bn net inflow of assets through the first half of 2015, bringing the size of the industry to $3.22tn. The second quarter saw the greater amount of inflows from investors, with $48bn in Q2 compared to $29bn in first quarter. Single-manager hedge funds specifically saw net inflows of $52bn in Q2, three times as much as the $18bn net inflow of assets they recorded in the first quarter. CTAs, on the other hand, had a net outflow of $5bn in the second quarter, eroding the $11bn growth they had seen in Q1.
49% of multi-strategy funds saw net inflows in Q2, the highest proportion of all major hedge fund strategies. Conversely, only 29% of niche strategy funds saw net inflows, with 65% of funds in these niche strategies witnessing outflows.
Funds based in North America, Europe, and Asia-Pacific all had similar asset flows in Q2, with 41-44% of funds seeing inflows, and 38-39% seeing outflows. In contrast, funds based outside these regions had net inflows in only 33% of cases, while 62% of funds had outflows.
43%of all hedge funds have seen an increase in allocation from North American investors, and 20% have seen increases from Asia-based investors. Conversely, 14% of funds with Europe-based investors saw decreases from that group, the highest of any region.
60% of hedge funds with more than $500mn in assets under management had net inflows in Q2, almost twice the proportion that saw net outflows. Only 38% of funds worth less than $100mn grew in the quarter, with net outflows experienced by 43% of funds in this group.
57% of hedge fund managers reported increased allocations from high-net-worth individuals (HNWIs) and family offices respectively during H1 2015
Amy Bensted–Head of Hedge Fund Products at Preqin comments:“Despite recent Preqin research indicating that investors are growing impatient with the returns of hedge funds, the industry has continued to accumulate assets in the first half of the year. Hedge funds now manage over $3.2tn in assets, amassing net inflows of more than $76bn in the first six months of 2015. The largest funds continue to see the highest inflows, with approximately 60% of funds with more than $500mn in assets gaining net inflows in Q2 2015.
The growth of the hedge fund sector highlights the continued need for these products by institutional investors, despite any short-term concerns around performance and fees. In light of recent equity market turbulence, the ability of hedge funds to provide consistent and non-correlated returns may prove even more valuable to investors in the second half of the year and we could see continued inflows over the rest of 2015.”
With a new direct daily flight between Dubai and Orlando offered by Emirates Airlines from September 1st, “Florida Dubai Link:Lifestyle and Business Exhibition” will showcase the new business, lifestyle and travel prospects that this will open up. Capital Assured, a real estate investment, management and development firm, is to become the strategic partner for the exhibition to be held in Dubai, September 6-7th 2015.
The 2 day exhibition will bring together 15 leading international companies to share knowledge, build partnerships and develop investment opportunities. This Florida focused event will feature educational seminars and round tables on topics including real estate, international taxation, immigration, the US school system, business expansion to the US, health, leisure and travel. Other event partners and sponsors include Emirates Airlines, the Greater Orlando Aviation Authority, U.S.-U.A.E. Business Council, and Dubai Chamber.
“Emirates Airlines’ opening its wings to fly to Orlando directly will offer new, interesting opportunities and we are ready to merge deals and relationships,” explains Robin Titus, General Manager at Capital Assured. “We have also noticed substantial interest for Florida lifestyle opportunities from Dubai, and we want to provide the perfect platform to facilitate the opportunity to invest.” Headquartered in Miami, and with offices in Dubai, Capital Assured has strong ties with both communities and supports the developing relationship between these two major international commercial hubs.
Photo: Jorge Díaz Barros / Courtesy Photo. Credit Suisse Names Jorge Diaz Barros Country Manager for Chile
Credit Suisse announces that Jorge Diaz Barros joined the bank this month as the new Head of the Chile Advisory Office and Chile Country Manager, a role in which he will partner with representatives from across our fully integrated Investment Bank and Private Bank to ensure a coordinated approach to all of our activities in the country.
Jorge Diaz Barros, who brings nearly 20 years of experience in the financial industry to his new position, joined Credit Suisse from JP Morgan Private Bank, where he worked in Miami and Santiago de Chile as a Relationship Manager and a Business Developer for UHNW clients in Latin America.
Jorge holds an MBA in International Business from Gabriela Mistral University, Business School in Chile.
With the arrival of the new Country Manager, Credit Suisse confirms its commitment to Chile, reinforcing the bank‘s growth strategy with a priority focus on the global offerings of our integrated bank in the country and across Latin America.
Foto: ChemaConcellon, Flickr, Creative Commons. Casi un tercio de las entidades de banca privada en Suiza desaparecerán del mercado en los próximos 3 años
A recent study conducted by KPMG Switzerland and the University of St. Gallen has shown that the gap between Swiss private banks is widening. While many private banks are in the process of adapting their business models to the changing environment, very few have succeeded in increasing their profitability. Only a small group of private banks have been able to pull away from the rest of the industry and make lasting improvements to their managed assets, efficiency and profitability. Meanwhile, smaller financial institutions in particular have felt increasing pressure this year.
As the study «Clarity on Performance of Swiss Private Banks – The widening gap» shows, the pressure on smaller banks in particular continued to increase this year. For many, the decision is clear: either they must leave the market or they must make fundamental changes to their business model so that they can continue to operate their business profitably and sustainably. «However, they don’t have much time left to make the necessary changes», warns Christian Hintermann, Head of Advisory Financial Services at KPMG Switzerland. «In general, many banks still appear to be undecided on which path to choose. We can expect the face of the industry to change significantly over the coming years.»
Banks must decide: Flight or fight?
According to the study, smaller financial institutions in particular have felt increasing pressure this year. They face a stark decision: either leave the market or adapt their business models. However, not much time remains to make the necessary changes. In general, many banks still haven’t decided and lack a clear strategy despite the continued decline in their development. The further decrease in the number of banks in Switzerland can be attributed to M&A transactions and – to an even greater extent – liquidations and the withdrawal of primarily Anglo-American private banks from the market. “We anticipate that around a further 30% of Swiss private banks will disappear from the market over the next three years through acquisitions and liquidations. This will reduce the number of private banks from 130 at the last count to fewer than 100″.
The study also shows a pause in mergers and acquisitions for 2015 despite driving forces remaining strong: The first seven months of this year saw a pause in M&A transactions, in contrast with 2014’s flurry of activity. This is largely due to a lack of sellers as well as potential buyers’ concerns about unforeseeable risks related to undeclared client funds and business practices that are no longer accepted. However, we expect M&A activities to regain momentum, in part thanks to the increase in settlements between banks and the US Department of Justice. The study shows that, even within the first two years of undertaking a major acquisition, banks see a significant increase in return on equity and revenue per employee.
The gap
«While private banks are attempting to adapt their business models, only a small group of very strong institutions have managed to increase their profitability», says Philipp Rickert, Head of Financial Services and Member of the Executive Committee at KPMG Switzerland, summarizing the results. He also points to the falling number of banks that still rely on undeclared legacy assets, predicting that «this concept will not survive in the medium term.»
Market drives growth in managed assets while net new money inflows remain negligible: The 7.3% growth in managed client assets last year is attributable to positive market developments and a strengthening US dollar. In contrast, net new money inflows made up a modest 0.5% of assets. There were marked differences between the various banks: those in the groups «Strong Performers» and «Turnaround Completed» achieved net inflows of 24.9 billion Swiss francs in total in 2014. Meanwhile, banks in the groups «Decline Stabilized» and «Continuing Decline” saw net outflows amounting to 17.9 billion Swiss francs. Overall, the median for managed assets among the «Strong Performers» group has increased by 146% since 2008 thanks to higher net new money inflows, inflows from mergers and acquisitions, and returns on managed assets. Consequently, the ability to grow is a critical success factor.
«Strong Performers» stay in the fast lane while the rest grapple with poor returns on equity: The private banks in the study had more to contend with than just weak growth. With a median value of 3.5%, returns on equity stayed at modest levels and saw little improvement in 2014. 80% of the private banks surveyed achieved returns of below 8% for the year. Only «Strong Performers» generated returns of above 9%, while most banks in the «Continuing Decline» group posted operating losses. Smaller financial institutions with less than 10 billion Swiss francs in managed assets are feeling the pressure in particular, with 41% of these falling into the «Continuing Decline» group. Returns on equity for the smaller banks were less than half those achieved by banks with more than 10 billion Swiss francs in managed assets.
Significant differences in efficiency within bank clusters
Increased operating efficiency and economies of scale have a positive effect on returns. Last year, «Strong Performers» achieved revenues of 585,000 Swiss francs per full-time employee, with this figure only reaching 357,000 Swiss francs for banks in the «Continuing Decline» group. The «Strong Performers» had just under 15 full-time employees per billion Swiss francs of managed client assets, with other banks had almost twice as many at 26 full-time employees. The «Strong Performers» appear to owe their success to their stronger focus on core markets, their increased operating efficiency thanks to outsourcing and economies of scale, and their strong growth rates.
A new CEO does not improve financial results
More than one third of the private banks in the study have replaced their CEO at least twice in the last nine years. In many cases, this has done nothing to improve their financial position in the two years after the changeover. Therefore, there is little to suggest that private banks can improve their results only by making changes to the upper echelons of management. Financial institutions that had kept the same CEO for the last nine years or only changed CEO once achieved higher returns on equity than banks that changed CEO two or more times.
Foto: Luis, Flickr, Creative Commons. ¿Falsas promesas? Dudas en Europa sobre la protección de los UCITS
The ‘protection’ afforded by the rapid redemption rights of a UCITS-compliant structure is of limited value, if the fund’s investments cannot be easily liquidated or only at fire-sale values, according to the latest issue of The Cerulli Edge – Europe Edition. With illiquidity fears mounting, Cerulli Associates, a global analytics firm, says the UCITS brand faces a denting if the professed safeguards of regular and speedy withdrawals prove of limited worth to redeemers if markets dry up.
One Genevan house directing insurers’ cash into UCITS-compliant hedge funds, told Cerulli that illiquidity risk is already evident in the investments of some liquid vehicles. It contends that given some of this sector’s largest portfolios grew so rapidly, and bought into mid- and small-caps, some of their equities positions “could take up to two years to unwind.” This, says Cerulli, could make it very difficult to sell some holdings at reasonable prices, to honor redemption requests in a matter of days.
It seems that portfolio managers in the UCITS hedge fund sector are not blind to the illiquidity risks sometimes attached to their strategies. At periods during last year, for instance, up to 40% of assets in onshore directional equities hedge funds were in portfolios that were closed to new business.
“It seems somewhat contradictory to deploy a liquid hedge fund vehicle, but then to restrict investors’ entry to it in any way,” says David Walker, European institutional research director at Cerulli. “However, limiting subscriptions to a fund makes good sense overall for the manager and clients, if the manager’s ‘alpha’ is threatened by fund size, or if shallow markets would stop significant withdrawals being met readily.”
Many European institutional investors Cerulli Associates speaks with at present express concerns that fixed income instruments right across the spectrum of credit worthiness could face illiquidity problems if holderstake flight.
Institutions are faced with a conundrum, says Barbara Wall, Europe research director at Cerulli. “Not only is the fixed-income complex they are most familiar with worthless as anything but a cushion or safe harbor. Now it threatens to turn illiquid.”
Threadneedle Investments has appointed Chris Wagstaff as Head of Institutional Marketing.
Chris will be instrumental to Threadneedle’s effort to further cement its presence in the institutional market and enhance its DB and DC client propositions, through educational & thought leadership initiatives and the development of investment strategies for a post-annuities world. His appointment follows the recent addition of Craig Nowrie to Threadneedle’s Multi- Asset Allocation team, in an effort to expand the firm’s proposition in the multi-asset and solutions space.
Chris joins from Cass Business School Executive Education, where he was Client Director with responsibility for the development, design and delivery of bespoke pensions and investment programmes. Prior to this, he was Head of Investment Education at Aviva Investors.
Dominik Kremer, Head of Institutional Sales at Threadneedle Investments, said: “The fact that the institutional market is a key focus for Threadneedle is perhaps one of our best kept secrets. We are the fourth largest manager of UK retail assets, yet 67% of our global investments and mandates across equities, fixed income, multi-asset and real estate are managed for institutional clients.
Chris is the co-author of “The Trustee Guide to Investment”, published in 2011. He has an Economics degree from Cardiff University and is a graduate of the London Business School Investment Management Evening Programme. Chris holds several certificates and diplomas, including the Chartered Institute for Securities and Investment Diploma, the Chartered Insurance Institute Personal Finance Society Diploma, the UK SIP Investment Management Certificate and the Pensions Management Institute Award in Trusteeship.
