According to the latest BofA Merrill Lynch Global Research report, conducted from March 4-10, 2016, average cash balances are down to 5.1%, from a 15 year-high of 5.6% in February. While the three top most crowded trades are Shorting Emerging Markets, Long US dollar and Shorting Oil.
“With cash levels now slightly above their 3-year average, investors no longer are sending the unambiguous buy signal we saw last month,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch.
During March investors made a strong rotation of positioning into industrials, energy, materials and Emerging Markets, with the biggest monthly jump in allocation to commodities on record. Also, allocation to real estate/REITS experienced its second highest month in survey history.
The survey also noted that investors have flipped their views on credit, with a net 15% believing high yield will outperform high grade in March, versus a net 13% favoring HG in February. Net overweight positions in equities improved.
Regarding the US Monetary Policy, the vast majority of fund managers still expect no more than two Fed hikes in the next 12 months, while a record net 35% think global fiscal policy is still too restrictive, and “quantitative failure” is seen as one of the biggest tail risks.
According to Manish Kabra, European equity and quantitative strategist, “global investors are trimming their extreme regional views and cite ‘quantitative failure’ as the biggest tail risk. However, they remain the least bearish on Europe.” Europe is seen as relative winner as European cash allocations dropped to average levels, and the region remained the most preferred globally; EUR now seen as cheapest since April 2003. Japan has fallen further out of favor as allocation to Japanese equities declines to a 22-month low of net 15% overweight, down from net 24% overweight in February, whereas in Emerging Markets, Chinese growth expectations jump to 4-month highs but a net 26% of investors still expect a weaker Chinese economy over the next 12 months.
According to Detlef Glow, Head of EMEA research at Lipper, assets under management in the European mutual fund industry faced net outflows of €24.5 bn from long-term mutual funds during February.
The single fund markets with the highest net inflows for February were Switzerland (+€1.5 bn), Ireland (+€1.2 bn), Norway (+€0.8 bn), Germany (+€0.4 bn), and Andorra (+€0.1 bn). Meanwhile, Luxembourg was the single market with the highest net outflows (-€18.3 bn), bettered by the United Kingdom (-€2.8 bn) and Spain (-€0.8 bn).
Absolute Return EUR Medium (+€1.6 bn) was the best selling sector for February among long-term funds.
In terms of asset types, Bond funds (-€11.5 bn) were the one with the highest outflows in Europe for February, by equity funds (-€8.4 bn), mixed-asset funds (-€5.8 bn), and “other” funds (-€0.8 bn). On the other side of the table alternative UCITS funds (+€1.1 bn) saw the highest net inflows, followed by real estate products (+€0.6 bn) and commodity funds (+€0.3 bn).
BlackRock, with net sales of €5.4 bn, was the best selling fund group for February overall, ahead of Generali (+€2.9 bn) and Legal & General (+€2.7 bn). MMA II – European Muti Credit BI (CHF hedged) (+€0.7 bn) was the best selling individual long-term fund for February.
Signs of a global economic slowdown have impacted the US equity market this year and led to discussions about a possible recession in both the US economy and US corporate profits. Grant Bowers, vice president, Franklin Equity Group, says current conditions and the outlook for a key economic indicator don’t warrant such strong language. In this Q&A, Bowers maintains that, with the help of stronger consumer spending, the backdrop for the US economy and US companies should remain generally positive for the remainder of 2016.
Concerns about growth in emerging markets and collapsing energy prices have led many to fear that despite generally positive economic data in the United States, we may not be able to avoid lapsing into a recession. This has driven market pessimism to extremely high levels in the first few weeks of 2016. Despite these fears, Bowers continues to believe the US economy is performing well, “and 2016 will likely surprise many with modest corporate earnings growth, strong consumer spending and gross domestic product (GDP) growth in the 2%–3% range. These types of broad-based selloffs typically create opportunities for long-term investors to buy high-quality companies at attractive prices, and we have been actively seeking bargains for our portfolios in recent weeks.”
Despite a rough start to the year, he adds that they “don’t see a recession on the horizon, and believe the US economy is stronger than many believe. Every expansion since World War II has gone through periods of slow growth. I believe that when we look back in the rear-view mirror later this year, we will see this period as a growth pause in a longer expansionary cycle.” Bowers cites the strength of the US consumer as one of the reasons they remain constructive on US equities.
According to him, two key themes that emerged from earnings season. “First, a stronger US dollar was a headwind for many multinational companies, and the currency impact combined with slower global growth resulted in companies with high international exposure experiencing slower growth relative to more domestic or US-focused companies; second, lower oil and gas prices had a negative impact, where year-over-year earnings were down more than 70% for the energy sector, dragging down the average growth rate.” However he believes that “as consumers become more comfortable with lower energy prices, they will start increasing their spending on discretionary goods and increased consumption.”
Him and his team have a positive long-term outlook for technology and health care companies “with a tremendous amount of change likely to take place in the next few years… Some of the areas of technology that we are focused on are cyber security, Software as a Service (SaaS), cloud computing, digital payments, mobility and smart devices. In the health care sector, we continue to like the long-term outlook, where an aging population globally will drive increased consumption of health care services and demand for improved treatments and cures. This demographic tailwind combined with innovation in drug development and medical technology is creating numerous investment opportunities as well.”
Regarding the 2016 US presidential election, he believes the political uncertainty has contributed to some of the volatility we have seen year-to-date. And expects it to continue “until the presidential primaries are settled and we have a better understanding of who the major parties’ nominees are and what their policy proposals will be.”
Toscafund Asset Management and ML Capital are pleased to announce the restructuring and rebranding of the Pegasus UCITS Fund, the inaugural fund of the MontLake UCITS Platform. Launched in September 2010, the fund is now re-launching as the Tosca Micro Cap UCITS Fund. MontLake is a leading independent platform for UCITS funds that provides investors with access to a range of liquid, transparent and regulated investment products domiciled in Ireland.
The Fund will invest primarily in UK listed “micro cap” companies (defined as companies with a market capitalisation of up to £250m) and will seek to exploit inefficiencies in this sector of the market. This is a large universe of companies, many of which receive little coverage and are poorly understood in the market. Toscafund has a proven track record over the long term in UK mid-cap and small-cap investing, and the Tosca Micro Cap UCITS Fund is a natural extension of this same fundamental, value-orientated strategy, applied to the opportunity-rich UK micro cap sector.
The Fund will be led and managed by Matthew Siebert and supported by analysts Daniel Cane and Jamie Taylor. They work with and are supported by the team of investment professionals within Toscafund, many with over 20 years of investment experience. The Fund will capitalise on Toscafund’s mid cap expertise, employing the same core skill sets and doing deep dive research into companies, markets, sectors and peers, and benefitting from the existing relationships with analysts, brokers and companies.
The Tosca Micro Cap UCITS Fund’s capacity will be set at £50m, and Toscafund partners intend to invest a minimum of 10% in the Fund. The revised investment policy will also allow for investment of up to 20% of the NAV in companies that have a larger capitalisation, of up to £1bn. The Fund will have a diversified portfolio of 30 to 40 holdings, with risk limits governing position sizing.
According to Cyril Delamare, CEO of ML Capital: “Pegasus was the first fund to launch on the MontLake Platform, and it is exciting for us to see it develop as the Tosca Micro Cap UCITS Fund. Toscafund are a best in class manager and are committed to growing the fund to its full potential – we look forward to its progress in the year ahead.”
Martin Hughes, Founder and CEO of Toscafund said: “I look forward to investing in the Tosca Micro Cap UCITS Fund as the fund managers will uncover hidden gems, companies with high growth prospects that are neglected by mainstream funds as the valuations are deemed too small. This will be a very profitable strategy and an area where you find the acorns that then turn into oak trees.”
CC-BY-SA-2.0, FlickrAsa Norrie, responsable de Desarrollo de Negocio para Europa de Standard Life Investments. Foto cedida. SLI continúa su expansión mundial: el 67% de las suscripciones netas en 2015 llegaron ya de fuera del Reino Unido
Standard Life Investments, the global asset manager with Assets under Management (AUM) of €343.5bn, has reported strong growth for Europe during 2015 despite volatile markets. Assets managed on behalf of clients and customers in Europe have increased by 32% to €19.3bn (2014: €14.6) with net inflows across the region up 194% to €4.7bn, representing 32% of opening assets. These figures were released as part of Standard Life plc’s full year results for 2015.
The company has continued to expand globally and is now represented in 27 cities worldwide. In Europe during 2015, Standard Life Investments opened an office in Zurich along with expansions in Amsterdam, Stockholm and Frankfurt. The European Business Development team has now grown to a team of over 20 people based across Northern and Southern Europe and in Standard Life Investments’ headquarters in Edinburgh, with further expansion expected in the coming months.
Highlights of Standard Life Investments’ performance in 2015 include:
Total AUM worldwide is up 8% to €343.5bn (2014: €316.8bn); third party AUM worldwide up 17% to €177.1bn (2014: €151.3bn); strong third party net inflows worldwide of €14.2bn (2014: €2.1bn); 67% of net inflows from outside the UK as the company continues to expand its global reach; worldwide operating profit before tax up 48% to €471mn (2014: €319m); strong investment performance with 90% of third party funds ahead of benchmark over five years 95% ahead over three years and 88% over one year time periods; Europe net inflows up 194% to €4.7bn (2014: €1.6bn).
Asa Norrie, Head of European Business Development for Standard Life Investments, commented: “In this low and even negative interest rate environment in Europe, many investors – both Wholesale and institutional–are looking for capital efficient portfolios that offer true diversification. These figures demonstrate that Standard Life Investments is well positioned to meet the changing needs of investors in the region. We have been active in Europe for over a decade and continue to see ongoing demand for our range of investment solutions including fixed income and equity together with real estate, private equity and our innovative multi-asset solutions”.
“Looking forward into 2016, with difficult market conditions in Europe and globally, our expertise in risk management and our core Focus on Change investment philosophy will remain key in helping to deliver consistent performance and solutions for our clients and customers in the region”.
EFAMA strongly supports actions to deepen the European single market for retail financial products and services, and address its remaining barriers, for consumers and businesses to make full use of it.
Alexander Schindler, President of EFAMA, said: “Investment funds – UCITS in particular – are the best possible example to date of a well-functioning EU single market for financial services, and UCITS is often cited as a successful story to find inspiration from”. The share of funds distributed on a cross-border basis in Europe is regularly increasing and stood at 42% of total European investment fund assets in 2014 (from 29% at the end of 2004).
The UCITS cross-border distribution is working well, yet there is still room for improvement. EFAMA has identified a number of obstacles that are still hindering the cross-border distribution of investment funds. This mostly stems from the absence of an EU regulatory framework in certain areas, goldplating of EU legislation, fragmented marketing rules or discriminatory withholding of tax by EU Member States.
This should be addressed to further reinforce the merits of UCITS as a true cross-border financial product. In this sense, EFAMA is strongly in favour of building on the UCITS success factors and replicate these in other sectors, most notably in the area of personal pensions.
EFAMA has long advocated for the creation of an EU personal pension product as a solution to overcome the fragmentation of personal pension markets in the EU.
Peter de Proft, Director General of EFAMA, commented: “We feel very strongly about the need to address the current fragmentation of the market for retirement savings. This has to be done in order to foster portability, economies of scale to lower costs and generate better returns to consumers, and also to enhance transparency, competition and innovation. The creation of a standardised Pan-European Personal Pension product (PEPP) would allow progressing in that direction“.
The response to the Green Paper is also the opportunity for EFAMA to support the important work done by EIOPA on the PEPP, which would coexist with existing personal pension products and would be used on a voluntary basis.
EFAMA equally welcomes the broader debate about digitalisation and its impact on the retail markets launched by the Green Paper. The trend towards greater digitalisation of financial services promises to bring another dimension to the way fund products are to be marketed and sold.
. ¿Alguna vez se ha preguntado cómo comprar el diamante perfecto?
Most people have at least one diamond. In 1477 A.D., Archduke Maximilian of Austria presented a diamond ring to Mary of Burgundy as a sign of their engagement. They have since become the number one symbol of love and marriage around the world.
But what do we really know about them? Outside of being shiny, hard and expensive, very few people learn much about these stones. Be it for a gift, pleasure or as an investment, Karen Simmons a GIA Gemologist takes the mystery out of the topic in her new book, Perfectly Clear – Buying Diamonds for Pleasure and Profit.
“For decades”, Karen says, “people have been taught that the value of a diamond depends on how it is graded according to the 4Cs — Cut, Color, Clarity and Carat weight. But there’s really a 5th C and it makes all the difference. The 5th C stands for “character” which establishes and guarantees the integrity. And one of the best way to identify and establish the integrity of a diamond is to ask for proof that ensures the ownership of the diamond can be traced from its birth mine to the present owner or seller.”
Perfectly Clear offers up the fascinating history and amazing ins and outs of the diamond trade. It provides crisp advice on how to navigate the complex world of buying a diamond and how to minimize paying too much and getting taken advantage of, as well as a special section on gems and their ties to superstition, medicinal uses, and spiritual beliefs.
Included in Simmons’ recommendations for anyone who is interested in protecting their investment in diamonds are:
DO’s
Consider colored diamonds
Buy and grade diamonds as loose stones
Identify your diamond properly
Get to know your local jewelry professional
Determine a diamond’s real value
Learn the basics about diamonds
Broaden your diamond horizon
Enjoy the variety of diamond shapes
DON’Ts
Buy a diamond without an independent grading report
Foto: Dennis Jarvis
. iCapital Network compra HedgeFocus a Credit Suisse
iCapital Network, a financial technology platform that provides the high-net-worth market with access to alternative investments, and Credit Suisse on Tuesday announced that they have entered into a definitive purchase agreement pursuant to which iCapital has acquired the HedgeFocus business from the Swiss bank.
The HedgeFocus portfolio contains more than 20 hedge fund access vehicles representing approximately US$1.8 billion in assets in a combination of event driven, multi-strategy, directional, relative value and tactical strategies run by well-established managers. With the transfer of assets, iCapital will be responsible for the ongoing administration and servicing of the investments for all existing investors as well as marketing, administration and servicing for new investors subscribing through iCapital.
“This acquisition is a natural extension of our business strategy, helping us expand our footprint in ways that align with the critical investment priorities of the high-net-worth community for access, choice and transparency,” said Lawrence Calcano, Managing Partner of iCapital Network. “By any metric, this is a transformational deal for iCapital and an important milestone in our efforts to equip the independent wealth community with a leading-edge alternative investments solution.”
“This deal is the culmination of a highly collaborative and close working relationship with iCapital Network that dates back to the firm’s inception in 2013,” said Eileen Duff Blalock, Head of Alternative Investments, Private Banking North America at Credit Suisse. “We needed to be extremely thoughtful about who we could entrust these assets to, and, after reviewing the entire landscape carefully, we knew that iCapital was the right decision on behalf of our investors and relationship managers.”
iCapital offers a curated selection of alternative investments, including private equity, credit, real estate, venture capital and hedge funds, to its private network of registered investment advisors, broker-dealers, family offices and individual high-net-worth investors.
“Our investor base of independent wealth advisors, private banks and family offices has increasingly been asking for a full alts solution, which has been our objective from day one,” said Nick Veronis, Co-Founder and Managing Partner of iCapital Network. “The acquisition of HedgeFocus fits seamlessly with that goal and places the firm and our clients squarely at the technological forefront of the alternative investments landscape.”
CC-BY-SA-2.0, FlickrFoto: Ed Yourdon, Flickr, Creative Commons. Neuberger Berman pacta con Fideurman-Intesa Sanpaolo Private Banking la distribución de sus fondos UCITS en Italia
Neuberger Berman, one of the world’s leading employee-owned investment managers, has signed a partnership agreement with Fideuram – Intesa Sanpaolo Private Banking SpA, the top private bank in Italy and one of the leading companies in private banking in Europe. This partnership brings Neuberger Berman’s UCITS fund range to the Fideuram and Sanpaolo Invest networks.
Neuberger Berman’s comprehensive fund range will be made available to more than 5 000 Fideuram and Sanpaolo Invest private bankers and consists of Ireland-domiciled funds investing in equities, fixed income and liquid alternative strategies.
“This is a key milestone in our strategy in Italy which is a very important market for us” says Dik van Lomwel, Head of EMEA and LatAm at Neuberger Berman. He adds, “We have a meaningful collaboration with Intesa Sanpaolo that started last year in May when we established a strategic partnership in private equity.
“We are delighted to be extending that relationship now to become a fund provider to their extensive distribution network. We believe this rewards the quality of our range, with products that can help Fideuram and Sanpaolo Invest private bankers to pursue their clients’ specific goals with solutions aiming to generate income, manage volatility and protect capital.”
Paolo Molesini, CEO, Fideuram – Intesa Sanpaolo Private Banking, said, “The partnership agreement with Neuberger Berman allows us to further strengthen the quality of our product range and is an important step in our ongoing search for value both for private bankers and clients. We are delighted to reinforce the relationship with this asset manager which has been selected, as usual, also for the valuable support it offers to our private bankers to help develop the knowledge of the products available to clients.”
According to Marion Le Morhedec and Jonathan Baltora, managers of the AXA WF Global Inflation Bonds fund at AXA Investment Managers, central banks’ loss of credibility has been one of the major investment themes since the start of 2016. One of the main indicators has been the fall in inflation breakevens reflecting investor fears that we may be entering a deflation spiral that central banks would be unable to stop. However, the fall in oil prices has massively influenced inflation expectations and drawing the conclusion that central banks have lost credibility because of this is overblown.
“The oil price impact on inflation is significant. We estimate that 80% of inflation volatility may be explained by oil. However, food and oil price fluctuations only have a short-term impact on inflation. Assuming stable oil prices, headline inflation rates will gradually increase towards core inflation rates in the later part of the year.” Scenario the managers consider encouraging for the inflation linked bond market “as inflation expectations have become very sensitive to short term inflation developments. We now expect these to better reflect core inflation dynamics.”
They highlight that the US 10-year inflation breakeven, which is a measure of the average annual inflation over the next decade, is trading 0.7% below the current rate of core inflation. “We believe that this is excessively pessimistic. Since the Lehman fallout, this situation has been seen only twice and resulted in a sharp increase of inflation breakevens. The first time was in the exact aftermath of the Lehman failure and the second time in the darkest hours of the euro area crisis. Those two situations were followed by a strong rise in inflation expectations over the subsequent six months. Interestingly, the current situation in the inflation market is the exact opposite of what happened in 2012. In 2012, markets were pricing higher future inflation than current inflation, suggesting that central banks had lost control, facing the risk of high inflation. On this basis, we have added inflation-sensitive positions to our portfolios especially in the US Treasury inflation protected securities (TIPS) market where we see the greatest opportunities over the coming months based on the simple observation that inflation linked bonds do not really forecast inflation, but are instead attracted to the current core inflation rate. We do not sit in the camp of those thinking that central banks have lost control, but instead believe that a volatile start to 2016 may have led some investors to lose their nerve…”, they conclude.
