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Trinidad & Tobago Set to Become a Premier Financial Centre

Trinidad & Tobago continues to make great strides towards becoming a recognised international financial centre. To be a successful financial centre these days there are a number of factors that a location simply must get right. Factors like a strong regulatory environment, the rule of law, transparency and co-operation with the international community are all in the news at the moment and are vital in becoming a successful centre. They are also critical in building a strong reputation. In order to get these factors in place, Trinidad & Tobago has forged some strong international partnerships which are informing the country’s development as an international financial centre.

In 2015 Trinidad & Tobago signed a memorandum of understanding with the Toronto Financial Services Alliance (TFSA) to help work collaboratively with other international financial centres to promote robust and transparent regulatory frameworks. Janet Ecker, President and CEO of the TFSA said that amongst other benefits “The memorandum will help strengthen Trinidad & Tobago’s position as an emerging financial centre and will support increased investment from international financial companies.”

Trinidad & Tobago has also been working closely with the widely respected international law firm Herbert Smith Freehills (HSF). Andrew Roberts, a partner at HSF, said: “We are delighted to be helping Trinidad & Tobago ensure that their regulatory systems meet the expectations of the international community. Trinidad & Tobago’s commitment to offer the highest standards of regulatory oversight is very encouraging.”

Trinidad & Tobago has recently become a member of the Commonwealth Enterprise & Investment Council (CWEIC) a membership organisation based in London that promotes trade and investment by facilitating engagement between Government and the private sector throughout the Commonwealth. John Pemberton-Pigott, the CWEIC Director of Programmes, remarked that “Businesses require a set of values under which trade and investment can take place – transparency; good governance; respect for the rule of law; enforceable physical and intellectual property rights; equal opportunities and a diverse workforce. Lord Marland, Chairman of the CWEIC said that “our relationship offers Trinidad & Tobago a great opportunity to reach out to the Commonwealth financial community to promote itself as the premier financial centre for Latin America.”

Trend-Following and Crisis Alpha

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Managed futures strategies have demonstrated the ability to maintain diversifying characteristics when most needed, in a market crisis. In this interview with Robert Sinnott, a portfolio manager at AlphaSimplex Group, subsidiary of Natixis GAM, he discusses crisis alpha, diversifying factors, daily liquidity, and fees. But first, he explains why “the trend” has been his friend during the first few months of 2016.

2016’s market environment has been bumpy. How has your managed futures approach behaved?

We follow a trend-following strategy across global stocks, bonds, currencies, commodities. So in 2016, where the S&P 500 has gone down more than 10% and then come back up, it has been a time when trend-following strategies have shown their diversification benefits. These gains have come from multiple asset classes, including going both long and short in global currencies and both European and U.S. fixed-income.

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How do you know when to get in and when to get out?

This systematic trend-following strategy is fundamentally a dynamic asset allocation strategy. We are figuring out when to go long markets and when to go short based on market momentum. We use a mix of quantitative models that track price trends in global markets over short-, medium-, long- and variable time horizons. When the models indicate an up-trend in a particular market, that signals a time to buy that asset; likewise, down-trend indicators will signal a time to sell and often go short these assets.

In terms of an investor’s overall portfolio, if you are thinking about when to enter and exit a strategy that itself is figuring when to enter into and exit out of a market, you are going to compound your challenge. What we find for managed futures, especially trend-following strategies, is that they serve as a long-term diversifier for overall portfolios. Also, I think having a strategic allocation approach rather than a tactical allocation approach makes more sense. If you try to time it, you have a good chance of missing the benefits, as we saw in January of this year. By the time you got in, most of that advantage was probably already experienced by the current holders.

Is liquidity ever an issue?

Because managed futures strategies generally trade liquid futures and forward contracts, they may not be exposed to the illiquidity costs and concerns of many other alternative assets or alternative strategies. Now, while it is possible that a futures market might become illiquid, this is much, much less likely to occur than we might see in other alternative strategies.

What is crisis alpha, and how important is it to ASG?

Crisis alpha is a very, very important concept. It’s actually a differentiating feature for managed futures relative to many other alternative asset classes. Some trend-following strategies have not only provided positive returns during most historical crisis periods, but they actually seem to provide additional positive return during these periods of crisis in excess of their average return in other market environments. This tendency is known as crisis alpha. I should point out that even strategies that have strongly documented historical crisis alpha may not provide positive returns in every crisis and that past results are not indicative of future results. Nonetheless, over the long term, we think strategies that exhibit crisis alpha may serve as a good diversifier in a portfolio, because they may provide returns when other investments are contributing to losses.

When we think of managed futures strategies as a group, it’s important to understand that not all managed futures strategies do the same thing. It depends on what approaches a particular strategy employs. Some focus in on very short-horizon trend signals, while others will only track very long-horizon trends. Still others, including AlphaSimplex, follow short-, medium-, and long-horizon trends, trying to get a more diversified approach.

Can you talk more about the diversifying factors of your strategy?

Because the ASG managed futures strategy considers global stocks, bonds, currencies and commodities, we have many different opportunities to follow throughout the world. We consider everything from the South African rand and the Mexican peso to the German Bund to the U.S. 10-year and beyond.

When we are looking at the positions and how the strategy moves, we get diversification from a broad asset set of liquid exchange-traded futures and currency forward contracts. Diversification also comes from being able to go both long and short in each of these contracts.

So this translates into a true diversifier for investors’ overall portfolios?

Yes, I believe so. A managed futures strategy has the potential to diversify investors’ portfolios in three ways. First, you have the potential for strong performance in down markets. Second, low to non-correlation with other asset classes. And finally, you gain exposure to more types of assets that may help your portfolio even in non-crisis periods.

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Higher fees are often associated with managed futures strategies. Why is that?

Well, first of all it’s important to think about what goes into these strategies in terms of infrastructure and trading. We have a 24-hour trading desk that trades in all of the global markets. In addition to that, you have to remember these strategies first came out in the hedge fund area, which has considerably higher management fees.

What type of allocation should investors have in their portfolio?

Obviously it is important for investors to work closely with an investment professional to arrive at the right amount for their portfolio. But, for investors with a large equity allocation, it might make sense to have a meaningful managed futures component in their portfolios because of that propensity of managed futures to provide crisis alpha, as well as diversification from equity risk.

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RISKS: Diversification does not guarantee a profit or protect against a loss. Managed futures strategies use derivatives, primarily futures and forward contracts, which generally have implied leverage (a small amount of money used to make an investment of greater economic value). Because of this characteristic, managed futures strategies may magnify any gains or losses experienced by the markets they are exposed to. Managed futures are highly speculative and are not suitable for all investors. Commodity trading involves substantial risk of loss. Futures and forward contracts can involve a high degree of risk and may result in potentially unlimited losses. Short selling is speculative in nature and involves the risk of a theoretically unlimited increase in the market price of the security that can, in turn, result in an inability to cover the short position and a theoretically unlimited loss.

In Latin America: This material is provided by NGAM S.A., a Luxembourg management company that is authorized by the Commission de Surveillance du Secteur Financier (CSSF) and is incorporated under Luxembourg laws and registered under n. B 115843. Registered office of NGAM S.A.: 2 rue Jean Monnet, L-2180 Luxembourg, Grand Duchy of Luxembourg. The above referenced entities are business development units of Natixis Global Asset Management, the holding company of a diverse line-up of specialized investment management and distribution entities worldwide. The investment management subsidiaries of Natixis Global Asset Management conduct any regulated activities only in and from the jurisdictions in which they are licensed or authorized. Their services and the products they manage are not available to all investors in all jurisdictions. This material is provided by NGAM Distribution, L.P. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. The views and opinions expressed may change based on market and other conditions. Past performance is no guarantee of, and not necessarily indicative of, future performance. 1483285.1.2

Is Gold More Productive Than Cash?!

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Is gold, often scoffed at as being an unproductive asset, more productive than cash? If so, what does it mean for asset allocation?

There are investors that stay away from investing in gold because it is an ‘unproductive’ asset: the argument points out gold doesn’t have an intrinsic return, it doesn’t pay a dividend. Some go as far as arguing investing in gold isn’t patriotic because it suggests an investor prefers to buy something unproductive rather than investing into a real business. In many ways, it is intriguing that a shiny piece of precious metal raises emotions; today, we explore why that is the case.

Investing is about returns…
Each investor has their own preference in determining asset and sector allocations. Some investors prefer to stay away from the tobacco, defense or fossil fuel industry. During times of war, countries have issued bonds calling upon the patriotism of citizens to support the cause. At its core, however, investing, in our assessment, boils down to returns; more specifically, risk-adjusted returns. The “best” company in the world may not be worth investing in if its price is too high. Similarly, there may be lots of value in a beaten down company leading to statements suggesting profitable investments may be found “when there’s blood on the street.”

Gold is not only unproductive, but has a storage cost and is expensive to insure. So what could possibly be attractive about gold?

Investors like nothing…
We wonder where all these patriotic investors are hiding. That’s because if we look at long-term yields, they are near historic lows throughout the developed world, with many countries showing near zero or even negative yields on governments bonds. Differently said, many investors rather get a negative yield on the safest investments available to local investors (disclaimer: U.S. regulatory point of view, foreign government bonds aren’t considered “safe”) than invest in so-called productive assets: a corporate bond may qualify as a ‘productive asset’ if a company uses the proceeds to invest in future ventures; yet, in today’s environment, corporations frequently issue bonds to buy back shares. Why do investors prefer “nothing” – as in no or negative returns – over investing in productive assets? And if investors really like negative returns, is gold – that doesn’t have an intrinsic return, suddenly attractive?

Productivity is king
On April 7, Fed Chair Yellen joined an “International House” panel with all living former Fed Chairs: Bernanke, Greenspan and Volcker. When Bernanke was asked whether we need more fiscal stimulus as monetary policy may have reached its limits, we interpreted Bernanke’s long-winded answer as agreeing to the basic notion that it would be helpful to ramp up fiscal spending. Little coverage was given to Greenspan’s response: “No!” Focusing on the U.S., he said unemployment is close to what’s historically considered full employment: if fiscal spending were to be ramped up, we might get a short-term bump in growth due to the induced government spending, but we would foremost get wage inflation and increased deficits that will come back to haunt us. Instead, he argued, we need policies that increase productivity: when you are near full employment, the way you grow an economy is to increase the output per worker. He suggested the best way to increase productivity is to encourage investments.

While we acknowledge that not everyone agrees with Greenspan’s policies over the years, we believe he is dead right on this one. So why the heck aren’t investors investing? Why are they buying bonds yielding just about nothing?

Investment is dead…
There may be many reasons why investors are on strike. Current low inflation, in our view, is a symptom, not a cause of that. At its core, we believe investors don’t think they get rewarded for their risky investments. Our analysis shows that investors in recent decades have – on average – focused on ever more short-term projects. That is, projects that require massive investments with an expected return in twenty years rarely happen these days.

In his book “Civilization: The West and the Rest,” economic historian Niall Ferguson makes the point that what differentiates the West from ‘the Rest’ is the rule of law. When there’s certainty over the future rules and regulations, i.e. when the rules of the game are clear, investors are more likely to invest. We believe that rule of law has been deteriorating, but not necessarily in the most apparent way:

Regulatory risks. We allege regulatory burdens have substantially increased in many industries. This increases the barriers to entry (stifling innovation), as only large players can afford to comply with the rules. If we take the U.S., gridlock in Congress, has caused regulatory agencies to increasingly change the path of regulations without legislative process. The cost of doing business has gone up in many industries, from finance to pharmaceuticals to energy, to name a few.
Government debt. We allege investments are at risk when governments have too much debt. That’s because the interests of a government in debt is not aligned with the interests of savers. A government in debt may be tempted to induce inflation, increase taxation or outright expropriate wealth. In our assessment, investors need to be convinced government deficits are sustainable for them to have an incentive to invest.

Neither government deficits nor regulations are new phenomena, of course. But we believe it’s concerns over trends like these that are key to holding back investments. It’s often argued that the U.S. can print its own money and, as a result, will never default. Possibly, but that doesn’t mean the U.S. won’t induce inflation or find other ways to tax investors. And while there are solutions to any problem, investors must be convinced that those that benefit risk takers will be embraced. Eurogroup chief Dijsselbloem, at the peak of the Eurozone debt crisis phrased it well, arguing that we cannot expect long-term investments if we don’t tell people where we want to be in ten years from now. While a crisis is apparent when Greek government bonds rattle global financial markets, the global strike by investors to invest in productive assets may be just as alarming.

Demographics
But aren’t demographics at least partially to blame for the low rates? It cannot be entirely a view about fiscal deficits and regulations? Sure enough, we agree that demographics put downward pressure on real rates of return. Yet, we see this as part of the same issue: we could introduce policies that encourage workers to be productive longer rather than retire at age 65. Instead, we have policies in place that have enabled many to go into early retirement by claiming disability benefits. With increased life expectancies throughout the world, we feel retirement at age 65 has become a major fiscal burden.

Is gold now good or bad?
As we have pointed out many times in the past, it’s not gold that’s good or bad. Gold doesn’t change – it’s the world around it that does. We believe an investment in gold should be looked at in the context of an overall portfolio construction. There, one should look at the expected risk and expected return of any asset one considers including in a portfolio. Please read our Gold Reports for more in-depth analysis of gold’s low correlation to other assets that might make it a valuable diversifier; you may also want to read our recent analysis Gold Now as to why we think gold might be good value for investors. For purposes of this discussion, however, we like to put gold in the context of productive assets. Our interpretation of the bond market suggests investors are shunning productive assets these days. Part of that may be concerns by investors that they will not be rewarded, with part of that due to what may be excessive government debt and regulations; another attribute may well be valuations, as we believe monetary policy has pushed many so-called productive assets into what may be bubble territory. Following this line of reasoning, reasons to hold gold in a portfolio may include:

We may be pushing the can down the road. A belief that policies in place have not put us on a sustainable fiscal path. Concerns of ballooning entitlement obligations come to mind. Namely, we are pushing the can down the road. Importantly, we don’t see a change in that trend for some time, if at all.
Regulatory uncertainty is only increasing. Regulations are strangling businesses, discouraging investments.

In contrast, reasons to reduce gold holdings in a portfolio may include, with respect to the above bullet points:

Recent government deficits have been improving; folks have always complained about the long-term outlook, but when push comes to shove, politicians will find solutions.
Both small and big business have always complained about regulation, there’s little new here.

Phrasing it this way, it’s not a surprise that an investment in gold often has a political dimension. We caution, however, that gold is anything but political. As such, it may be hazardous to one’s wealth to make investment decisions based one’s political conviction. Instead, investors may want to take a step back and acknowledge that investors in the aggregate give a thumbs down to investments as evidenced by the low to negative long-term yields in the U.S. and other countries.

Gold: cash or credit?
Before we settle the discussion on gold being ‘unproductive,’ let’s clarify that cash isn’t productive either: the twenty-dollar bill in your pocket won’t earn you any interest either. To make cash productive, you need to put it at risk, if only to deposit it at a bank. With FDIC insurance or similar, such risk might be mitigated for smaller deposits. Gold is no different in that regard: to earn interest on gold, one needs to lend it to someone. Many jewelers are only leasing the gold until they find a buyer for the finished product; to make this happen, someone else is earning interest providing a loan in gold. Many of today’s investors don’t like to loan their gold, concerned about the counter-party risk it creates. The price such investors pay is that they don’t earn interest on their gold, a price those investors think is well worth paying.

Gold more productive than cash?
The reason we started this discussion wondering whether gold may be more productive than cash also relates to the fact that real rates of return on cash, i.e. those net of inflation, may be negative in parts of the world. There are many measures of inflation and some argue that government statistics under-represent actual inflation. As such, each investor might have his or her own assessment where inflation may be. However, when real rates of return on cash are negative, it may be appropriate to say gold is more productive than cash.

In summary, anyone who thinks that we are heading back to what might be considered a ‘normal’ economy, might be less inclined to hold gold, except if such a person believes that the transition to such a normal economy might be a bumpy ride for investors (due to the low correlation of the price of gold to equities and other assets, it may still be a good diversifier in such a scenario).

However, anyone who thinks history repeats itself in the sense that governments over time spend too much money or over-regulate, might want to have a closer look at gold. There may well be a reason why gold is the constant while governments come and go.

For more information you can join Axel Merk’s webminar ‘What’s next for the dollar, currencies & gold?‘ on May 24th.

David Schwartz, FIBA: “Compliance. Compliance. Compliance”

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With FIBA’s annual Wealth Management Forum in Miami just a few days away, we interview David Schwartz, CEO, FIBA, about the industry landscape.

What are the biggest challenges facing the industry in 2016?

The challenge is always “Compliance. Compliance. Compliance”. Regulations continue to be more stringent while the cost of compliance becomes more expensive. This year, however, the theme of FIBA’s forum is “Transformation and Opportunities: The Consolidation Conundrum.” The challenges for 2016 relate to factors that are driving transformation of the industry. The large players are leaving the business, or reducing their involvement. This creates both new opportunities for smaller firms and problems for the industry. We are seeing, and will continue to see, growth in small family-owned wealth management companies. At the same time, we are also seeing more use of digital and the emergence of Robo Advisors. At the same time, the industry is undergoing a gender shift. Over the next few years, half of the world’s wealth will be owned by women. There is also a generational shift as the Millennials acquire their wealth. The industry has to adjust to all of these changes, while remaining compliant.

Addressing one issue at a time, why are the bigger players exiting the industry?

Compliance. There is a lot of due diligence required, and lots of risk involved if you don’t dig deeply enough to uncover the true owner of an asset. The Panama Papers show just how complex it is to see who really owns what. Tax transparency laws have big players questioning just how far they have to go in order to meet compliancy regulations.

Is compliance easier for smaller, family firms?

Smaller firms do not need all the infrastructure required by larger wealth management firms. They have the luxury of being able to concentrate more directly on their clients.

How is the industry responding to the trend towards Robo Advising?

The industry is embracing Robo Advising in two different ways. Some firms are creating their own robo management service in-house, and others are acquiring small, FinTech companies and bringing these in house. Still others are partnering with Robo Advisers. An excellent example is BlackRock, one of the largest global investment firms. BlackRock acquired FutureAdvisor, a small robo firm, and now RBC and BBVA., are partnering with BlackRock’s FutureAdvisor and integrating the service to digitally augment the advice given by their financial advisors.

That clearly demonstrates how digital is transforming the industry, and how quickly these changes can occur. How do industry professionals keep pace?

The goal and the mission of FIBA is to educate our members on the latest trends. We’ve established various groups to study the issues and present them to our members via webinars, conferences, workshops, seminars, forums and other channels. For example, we recently held a webinar on the Panama Papers, and although the advance notice was short, over a thousand members participated.

Can you elaborate on some of the educational programs you provide?

We provide a comprehensive program of learning opportunities, and professional certifications throughout the year. Our Anti-Money Laundering or AML conferences are the largest in the U.S., attracting on average 1,400 attendees from 40 countries around the globe. Our AML certification courses, which are available both online and in the classroom, are among the most respected in the country. To date, FIBA has certified more than 6,000 individuals in compliance and thousands more in technology, bank security, trade finance and related specialty areas. We also hold regular conferences and instruction on technology innovation, bank security, trade finance, and other areas critical to our industry.

Money laundering is an ever-present threat, and compliance a continuous challenge, do you work closely with the regulators?

To stay on top of developments, FIBA frequently meets with regulators in Washington. Our primary focus is on educating our members and helping them comply with new or changing regulations. As advocates for our members, we also work to influence policy. We submit comment letters and position papers to legislators and regulators, and are respected voice for the industry. In running so many varied programs, we invite the regulators to participate and share best practice ideas. As an example, Robert Villanueva of the US Secret Service will be one of the presenters at FIBA’s Wealth Management Forum in May. His topic, “How the Criminal Underground is Targeting the Financial Sector and our Brokerage and Retirement Accounts,” will help wealth planners understand and recognize cyber threats, and how to respond, the regulators have a job to do, and by collaborating we can all stay ahead of the criminal element.

In addition to the Wealth Management Forum, FIBA is hosting several other international conferences in May—plus AML certification courses and other programs, including a Women’s Leadership Program. How do you plan and execute so many events, and remain on top of new developments around the globe?

In keeping our members informed, we stay agile and flexible—and busy. Yes, this month FIBA is hosting our 32^nd CLACE conference on Foreign Trade May 22-24. From May 24-2, we will present our 19^th annual FIBA ATFA conference on Trade Finance and Forfaiting. We begin our planning about six months in advance, and revise topics as changes occur or new trends emerge. We stay flexible and adapt to the hot buttons. As mentioned earlier, we responded to the Panama Papers immediately with an informative webinar.

There are a lot of hot buttons for the industry right now. How did you land in the “hot seat” as CEO of FIBA?

I am a banker by experience, with more than 30 years as a senior banking professional within the international banking arena. And I am a lawyer by training. When the first and only CEO of FIBA stepped down, it seemed like a perfect fit for me to step into the position. And it has been exciting.

What is the composition of FIBA’s membership base?

We have about equal numbers international financial institutions, our core membership, and non-financial professionals who support or provide services to our industry in some way, including legal professionals, technology solution providers, consultants and others. We are always open to new members.

Michael Ganske, New Head of Emerging Markets Fixed Income at AXA IM

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AXA Investment Managers (AXA IM) appointed Michael Ganske as Head of Emerging Markets Fixed Income. He joins AXA IM in May 2016 from Rogge Global Partners where he was a Partner and Head of Emerging Markets (EM). Michael will report to Chris Iggo, CIO Fixed Income.

Michael has more than 15 years of experience in EM Fixed Income. Prior to his role at Rogge Global Partners, Michael was a Managing Director and Divisional Head of EM Research at Commerzbank (2007-2013) and a Director and Head of EM at Deka Investment GmbH (2004-2007), and Vice President and EM Fixed Income Portfolio Manager at DWS Investments, Deutsche Bank Group (2000-2004).

John Porter, Global Head of Fixed Income at AXA IM, commented: “We are pleased to welcome Michael on board and confident that his in-depth experience will further enhance our global emerging markets fixed income team and capabilities. We have invested heavily in this team with the hire of Sailesh Lad, Senior Portfolio Manager, and Olga Fedotova, Head of EM Credit Research, last Summer. Michael is a key appointment for our team and demonstrates the scale of our ambition in this space as well as our belief that investors will continue to find emerging market debt as an attractive asset class.”

Michael will lead a global team of 12 investment professionals based in London, Paris, Hong Kong and Mexico, managing approximately €5 billion of EM and Asian debt, across three flagship mutual funds and several segregated institutional mandates. The EM Fixed Income team is fully embedded in the AXA IM Fixed Income investment process. Michael’s appointment follows the decision in June to create a global emerging markets (GEM) fixed income team in support of the continued attractiveness of the EM asset class. Michael will be based in AXA IM’s London office.Michael is a German native, holds a Bachelor’s and Master’s degree in Economics from the University of Augsburg, and a Doctorate in Economics from the University of Hohenheim. Michael is also a certified Financial Risk Manager and Chartered Financial Analyst (CFA).

Goldman Sachs Announces Simplified Pricing Structure for ActiveBeta ETFs

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Goldman Sachs Asset Management recently announced that it will implement changes to its fee and fee waiver arrangements for its ActiveBeta Exchange-Traded Funds. Effective May 1, 2016, a unitary management fee structure, together with a reduction in the management fee rate, will be implemented for the US Large Cap, European, international and Japan equities ActiveBeta ETFs.

Under the unitary fee structure, GSAM will be responsible for paying substantially all the expenses of each Fund. The total annual Fund operating expenses will be of 0.09% for the U.S. Large Cap Equity and of 0.025% for the Europe, International and Japan Equity ETFs.

Additionally, the current expense limitation arrangement for the Goldman Sachs ActiveBeta Emerging Markets Equity ETF will be made permanent. Under this arrangement, the Fund’s expenses are capped, subject to certain exclusions, at 0.45%.

The Most Important Investment Lesson in the World for Warren Buffett is…

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At the annual meeting of his Berkshire Hathaway, Warren Buffett stated that the US, the economy and his company would continue to grow saying, is a “remarkably attractive place in which to conduct a business.” He also defended his favorite stocks, mentioning he has “not seen evidence that convinces me that it’ll be more likely I reach 100 if I suddenly switched to water and broccoli,” but not everything he said was positive. Besides mentioning that some of his holdings are hitting tough spots, the Oracle of Omaha did warn about the risk of derivatives, and against consultants and Hedge Funds.

In his opinion, and given several years of poor returns, “probably the most important investment lesson in the world,” includes ditching expensive money managers. “Supposedly sophisticated people, generally richer people, hire consultants. And no consultant in the world is going to tell you, ‘Just buy an S&P index fund and sit for the next 50 years,’” he said. “You don’t get to be a consultant that way, and you certainly don’t get an annual fee that way.” His bet that a Vanguard Group Inc. fund that tracks the S&P 500 Index could beat a basket of hedge funds from 2008 through 2017 is going strong, with a 21.9% return from the bundle of hedge funds picked by Protege Partners while the S&P 500 index fund soared 65.7% in the last 8 years. The profits of the bet will go to charity.

On a follow up interview, Buffett also mentioned that he might consider taking money out of banks if they charge for deposits. Charlie Munger and him also criticized Valeant Pharmaceuticals, and Buffett, a Hillary Clinton supporter, implied that any one president, even Trump, could not derail the US economy, or his company’s business completely. “We’ve operated under price controls, we’ve had 52% federal taxes applied to our earnings… I will predict that if either Donald Trump or Hillary Clinton become president Berkshire will do fine.” He concluded.

Banque de Luxembourg Investments (BLI) Strengthens its Multi-Management Team

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bli — Foto cedidaGuy Wagner, director general de BLI.. Banque de Luxembourg unifica sus unidades de gestión de activos

Banque de Luxembourg Investments (BLI), Banque de Luxembourg’s asset management company, has strengthened its multi-management team by recruiting Amélie Morel and Jean-Baptiste Fargeau as fund analysts. The team has now 5 people in charge of analyzing, selecting and monitoring an external fund list, as well as the management of the funds of funds multi-asset classes.

Amélie will be in charge of the follow-up of the asset classes European, SRI, sectorial and theme equities. Jean-Baptiste takes of the responsibility of the asset classes emerging equities and bonds and of high yield and corporate bonds.

“Following new recruitments in the past few years, mainly in the equities and fund distribution teams, we have also decided to strengthen our fund selection team”, says Fanny Nosetti, Head of BLI’s multi-management. “Amélie and Jean-Baptiste have gained first professional experience in other companies before joining us and they are an excellent addition to our asset management company. We are delighted to welcome them to the team!”

Amélie Morel (29) replaces Inès Buttet who left BLI. Following nearly three years auditing investment funds at Deloitte, Amélie worked as an investment analyst with a Luxembourg wealth structurer. Amelie holds a Master’s degree in Finance from Grenoble Ecole de Management and is a level 3 CFA candidate.

Jean-Baptiste Fargeau (36) has an engineering degree from Ecole Centrale de Nantes as well as a master degree in business administration from the IAE Paris. He started his career in Luxembourg in 2005 as a quantitative analyst within the management company J.Chahine Capital, and then became portfolio manager in 2007 in the same company.

FOMC Statement: A More Positive Tone

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As expected, and in keeping with the minutes from its March meeting, the Federal Open Market Committee (FOMC) decided to keep rates on hold. Importantly, the Federal Reserve Board cited several aspects of the US economy and global conditions that leaves the door ajar for another June or July rate hike.

The Federal Reserve indicated that it would maintain the current level of the target Fed Funds rate at 0.25% to 0.50%, in line with the minutes of the March FOMC meeting.The statement focused on US growth, rather than global conditions.
The statement underscored factors underlying a strong consumer – improved labor market conditions, rising household real income, continued strength in the housing market, and strong consumer sentiment – while acknowledging slower GDP growth, moderating household spending, soft business fixed investment and net exports.
The FOMC took the important step of excluding their prior observation that appeared in the lead-in sentence that “global economic and financial development continued to pose risks,” implying that this risk has abated. Instead, they indicated that they will continue to monitor global conditions and moved this statement to the end of the second paragraph. The outlook for global growth has improved, in the wake of more supportive global central bank policy, increased fiscal stimulus in China, recovering commodity and energy prices and increased inflation.
The statement continued to take a guarded view of inflation; the FOMC eliminated the comment that inflation had “picked up in recent months”; they maintained inflation would “remain low in the near term.” We would cite the recent uptick in core CPI and core PCE as indications of increasing inflation. Apparently, the Fed hasn’t completely bought into this upward trend.
We believe the statement confirms the Fed’s assessment that the futures market still reflects too shallow a trajectory for rate increases. The Fed does not want be forced to implement sharp rate moves that could jolt markets and have a negative impact on still relatively low GDP growth.
We believe this assessment opens the door for a June or July rate increase. We do not think any increase will occur, however, without continued strong employment data, coupled with improved household spending and stabilization in the manufacturing sector.

Column by Ken Taubes of Pioneer Investments

Preqin Wins 2016 Queen’s Award for Enterprise

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Preqin has been awarded a Queen’s Award for Enterprise in the category of International Trade. The award recognizes Preqin as an outstanding UK business, citing excellence in its field and sustained growth in its overseas business. This year the awards, which are announced annually on Her Majesty the Queen’s birthday, praise 243 UK companies for leading the way in business achievement.

The Queen’s Awards for Enterprise are the UK’s highest official accolades for business success. Operating in various forms since 1966, they recognize UK businesses for outstanding achievement in one of three categories:International Trade, Innovation and Sustainable Development. Entrants come from all parts of the UK, from city-located centers of commerce to the remotest of locations, and include organizations involved in a wide range of industries and sectors.

CEO Mark O’Hare said of the award:

“It is a huge honor to be included in this year’s list of Queen’s Award winners, especially so on the occasion of Her Majesty’s 90th birthday. Over the past 13 years, Preqin has strived to deliver excellent products to our customers, becoming the leading source of data and intelligence for the global alternative assets industry. We are extremely proud and grateful to have this hard work recognized by the Queen’s Award panel. I would like to add my deepest gratitude to all of our directors, staff and partners for creating the culture of excellence, integrity, and dedication which characterizes Preqin, and without which this achievement would not be possible. Most of all, we are grateful to our many customers around the world for their longstanding support.”