Some six and half years on from the onset of the global financial crisis, it’s not just Irish eyes that are smiling. With St. Patrick’s Day festivities in full swing, Ian Ormiston, manager of the Old Mutual Europe (ex UK) Smaller Companies Fund, celebrates the investment opportunities that abound the Emerald Isle.
“For the last 20 years Ireland has been a source of alpha for us. It is interesting that across those two decades Ireland has arguably seen the wildest fluctuations in its fortunes among European countries and yet we have been consistently able to find companies that have delivered returns to our investors”, said Ormiston. The reason for this, explained, is that “we focus on the micro, not the macro, and look to quality businesses with strong management teams to deliver returns to our investors”.
“If we think of the Irish story over this period it has been constantly evolving. We started with the macro domestic growth story of the Celtic tiger, through the debt fuelled property development binge culminating in 2008 with the collapse of the banks, to the austerity dominated recession post financial crisis and now back to strong domestic growth and international expansion”.
Layered on top of the economic cycles we have seen exaggerated market cycles which have provided even greater return opportunities. To capture these returns, one has had to seize a variety of growth drivers, explained the manager of the Old Mutual Europe. “At the time of the tiger, you could buy upstart smaller companies like Ryanair, CRH and Kerry Group who quickly outgrew their small, albeit fast growing domestic market to become multinational leaders in their sectors. During the bubble investors were largely passengers unless they chose to back the banks heavily, but growth and outperformance was available through companies like DCC, UDG Healthcare, Greencore and Grafton, all of whom eventually shifted their main listings to London reflecting the shifting emphasis of their operations. The bust and the austerity that followed saw all stocks becoming far too cheap and several of the companies that I have already mentioned enjoyed the benefits of a survivors party as many of their competitors withered or disappeared”.
Which brings us to today. Irish GDP grew by 4.8% in 2014 which is phenomenal by any standards, but is in stark contrast to the stagnation in the rest of the eurozone. Within the Old Mutual Europe (Ex UK) Smaller Companies Fund the most direct exposure to the recovery in the domestic economy is through real estate investment trust Hibernia, which has rapidly built up a portfolio of high quality, high yielding, and predominantly commercial property assets. Elsewhere in the portfolio, Old Mutual are approaching the end of the road for our investment in Smurfit Kappa as excellent execution of strategy by management has converted a debt-riddled basket case at the bottom of the cycle to a highly-rated international mid cap now. Where opportunity still abounds is in secular growth stories like Kingspan, which should see sales and margins augmented by the cycle, and Origin which is all about increased penetration and market share gains in the agronomy sector, explained Ormiston.
“So as the Irish celebrate St. Patrick’s Day we should congratulate them for surviving austerity and thriving now. We should also raise a toast to a small country with a disproportionately large number of quality businesses and hope that they will continue to deliver returns to us in the years to come”, concluded.
After a weak December the European mutual fund industry returned to its growth pattern in January, enjoying net inflows of €25.7bn into long-term mutual funds, according to Lipper Thomson Reuters data.
Single fund market flows for long-term funds showed a mixed but positive picture for January; 10 of the 33 markets covered in this report showed net inflows. The single market with the highest net inflows for January was Switzerland (+€4.1bn), followed by Germany (+€3.6bn) and Italy (+€3.3bn). Meanwhile, the United Kingdom (-€3.2bn), the Netherlands -€0.6bn), and Denmark (-€0.2bn) stood on the other side. BlackRock, with net sales of €6.1bn, was the best selling group of long-term funds for January, ahead of UBS (+€3bn) and State Street (+€2.2bn).
The majority of these flows (€25.7bn) were again seen into mixed-asset funds (+€15.6bn), followed by bond funds (+€7.6bn), equity funds (+€2.5bn), alternative/hedge products (+€1bn), and commodity funds (€0.7bn). In contrast, property funds (- €0.4bn) and “other” products (-€1.3bn) suffered net outflows for January.
In line with the long-term products money market products also enjoyed net inflows for January. In fact, money market funds (+€17.5bn) posted the highest net inflows of all asset types, while enhanced money market funds (+€0.8bn) also enjoyed net inflows.
These inflows lifted the overall net inflows for January to a healthy €44.1bn.
According to the overall net flows, asset allocation (+ €10.6bn) was the best selling sector with regard to long- term funds, followed by bonds EUR funds (+€4.7bn) and bonds EUR corporate investment-grade funds (+€3.7bn). At the other end of the spectrum equities emerging markets suffered net outflows (-€2.8bn), bettered somewhat by bonds USD corporate high yield funds (-€2.1bn) and bonds global high yield funds (-€1.7bn).
Early indicators for February activity
Looking at Luxembourg- and Ireland-domiciled long-term mutual funds, bond funds—with projected net inflows of around €24.3bn—should be the best selling asset class for February, followed by mixed-asset funds (+€12.1bn) and equity products (+€9.6bn). Even though these numbers are estimates, it seems European investors are again favouring bond funds.
Financial Express (FE) has rated Mansfield Mok ‘FE Alpha Manager’ for his exceptional track record, including investment management of the New Capital China Equity Fund. Mansfield is one of 181 managers recognised by FE as the top 10% of managers with funds registered in the UK. In the China/Greater China sector, Mansfield is one of only two managers with this rating. The FE rating is based on manager track record and three key components: risk-adjusted alpha generation; consistency of outperformance versus the benchmark; and outperformance in rising and falling markets. The New Capital China Equity Fund has beaten its benchmark, the MSCI China Index, by 28% since its inception in August 2012, and delivered a total return of 51.8% over the same period.
Hong Kong-based Mansfield, who has over 20 years of investment experience, joined EFG Asset Management (EFGAM) in 2012 to launch the New Capital China Equity Fund. He previously co-managed the $1.5 billion GAM Star China Equity Fund, which outperformed the MSCI China Index by over 72% during his five year tenure at the firm. In 2011, Mansfield was awarded ‘Best Fund Manager Over 3 Years’ and ‘Best Equity China Fund Over 3 Years’ by Professional Adviser and Lipper respectively.
Moz Afzal, Chief Investment Officer, EFGAM: “We are delighted that Mansfield has been recognised for his exceptional performance and expertise in this asset class. The exemplary performance of the New Capital China Equity Fund is the result of strong long-term macroeconomic fundamentals and Mansfield’s skill in selecting great companies. We believe the strategy will continue to be a great source of value for our clients.”
Mansfield Mok, Senior Portfolio Manager, New Capital China Equity Fund: “I am very happy to receive this prestigious award. China could easily be the leading economic superpower in the next five to 10 years but is hugely underrepresented in investors’ portfolios. Drawing on more than 20 years of investment experience in Asia, I look forward to building on our proven track record and continuing to deliver robust returns.”
LFF Real Estate Partners acquired the first German asset, a €20 million transaction, for an SCPI managed by La Française. The newly completed office building was purchased from Groß & Partner Grundstücksentwicklungsgesellschaft mbH. The building is fully leased on a long term contract to Saint-Gobain, a major French multinational corporation, for occupation as their German headquarters.
The 6,030 square meter building, comprised of six stories, is well located on the Main river in “Hafenplatz”, part of the new Hafen Offenbach development that borders Frankfurt. The asset offers both flexible office and storage facilities and includes a cafeteria that opens directly on to the river. A 120 car parking lot, recently built by Groß & Partner, is located within a short walk.
Jens Göttler, Managing Director-Germany, LFF Real Estate Partners, said that “We are delighted to be able to acquire such a Core asset, offering secure income leased to a strong tenant on a long term lease. We have a pipeline of further deals and will be looking to deploy over €160m of equity during the course of the next 12 months.”
Jens Hausmann, Groß & Partner, said that “We are convinced, that with the French investor LFF Real Estate Partners and its local team we found an excellent long-term-partner for our tenant Saint-Gobain, one of the leading French groups.”
LFF Real Estate Partners is giving new investment perspectives to La Française SCPIs (collective real estate investment vehicles). Active in the UK, German, French and Swedish commercial real estate markets, LFF Real Estate Partners is capable of sourcing unique diversification opportunities for parent company La Française and their French domiciled SCPIs.
PH REAL Peter Holtz Real Estate Services, Hogan Lovells and Turner & Townsend advised LFF Real Estate Partners, Groß & Partner has been advised by Hauck Schuchardt.
Foto: Michael Daddino. Una forma fácil de preservar tu patrimonio – y también de disfrutarlo
If you are reading this blog, you are most likely blessed to be wealthy, or advise someone who is. There’s plenty of money to live life to the fullest. For now. But how do you preserve that wealth?
One answer is real estate. It is said that 90% of the Forbes 400 index of the world’s wealthiest people either made or retain their wealth in real estate. But not just any real estate. These people own high-quality, income-producing real estate, like apartment communities and office buildings. The ultra wealthy hold real estate long term, because they know that is how to preserve their wealth.
Your luxury home, your Alpine ski chalet, and “investment” condos in New York and Miami may (if you are lucky) provide some asset appreciation when you sell them, but in the meantime, they are costing you more than you will recoup. My advice: Enjoy them, but do not count on them to preserve your wealth. Do not expect them to be long-term wealth enhancers.
I just read an ad for an exotic car rental company called “Lou La Vida.” (Rent Life.) What a great philosophy! Rent the things that add to your enjoyment of life. Whether it’s cars or boats or condos, you can rent them when you want them, and that’s a lot cheaper than owning. So Rent Life! But buy future security.
And now is the perfect time. I’ve been in the real estate business for almost 40 years and I’ve never seen a better opportunity to invest in multifamily (apartment communities) real estate in the US. Home ownership is at its lowest rate in years, and apartment living is soaring, both for renters by choice and renters by need. And US demographics point to continuing demand for rental housing.
Why? Just look at the traditional American first-time home buyers. They are not buying homes:
They are burdened with large student loans and other debt. Unable to find jobs after college, they go back to school.
They don’t have the money for a down payment on a home.
They are delaying marriage and starting a family, which is a major driving factor in home ownership.
They want flexibility for employment purposes to move to a new job.
So they are renting. And, interestingly, so are their parents and grandparents as they down size or retire.
There are many more reasons to choose multifamily real estate to supplement your investment portfolio: on-going income, asset appreciation, tax advantages. Plus, real estate has outperformed all other asset classes over the past 12 years, and its value does not rise and fall with the stock and bond markets.
And interest rates!!! Right now, with low interest rates, we can leverage funds to provide the greatest returns.
By the way, there are several ways to invest in real estate. At Lloyd Jones Capital, we offer direct investment (as opposed to a REIT which is like buying stock). We have funds that we co-invest with major institutional partners for maximum leverage; we have individual property investments, and we have funds that target specific categories such as workforce housing. Or we can help you acquire a property and become your asset manager to protect your investment.
Good asset management is one of the keys to successful multifamily investing. But the most important, after analyzing and choosing a property, is the day-to-day property management of the asset. Lloyd Jones Capital partners with its sister company, Finlay Management, Inc. to oversee the operations and maintenance. Finlay Management has been in the business since 1980 and is an Accredited Management Organization.
Let me leave you with this reminder: Rent lifestyle; but for wealth preservation, purchase a quality, US apartment complex.
One simple way to protect your wealth.
One easy way to preserve your wealth.
Best way to enjoy your wealth – and keep it.
Rent Lifestyle, but invest in real estate.
Opinion column by Christopher Finlay, Chairman and CEO of Lloyd Jones Capital
Foto: Steve Snodgrass . Santander firma el primer acuerdo con el Berklee College of Music
Santander Bank has recently signed an agreement with Berklee College of Music for its Santander Universities to provide scholarships to support the Berklee Study Abroad program.
“We’re delighted to support this program that will give Berklee students the opportunity to study at the school’s international campus in Valencia, Spain,” said Roman Blanco, CEO of Santander Bank. “Study abroad programs are life-changing experiences where students can immerse themselves in the culture and traditions of their host country. These enriching experiences give students a well-rounded education and a global perspective.”
Santander’s support of the Berklee Study Abroad program will provide scholarships to undergraduate students who participate in the study abroad program at the school’s Valencia campus. Berklee College of Music, which is based in Boston, opened its Valencia campus in 2012 at the iconic opera house Palau de les Arts Reina Sofia, to offer graduate programs, summer study, and professional education programs to a music community of peers and master musicians from around the world.
“With these scholarships, Santander is allowing our students to both further their expertise and broaden their experience in the global music industry, while immersing themselves the rich Mediterranean culture of Valencia, Spain”, said Berklee president Roger Brown. “Music technology and international music business will be their main focus, with plenty of opportunities to record in state-of-the art studios, perform in clubs around Valencia and Madrid, and network with students from Europe, South America, the Middle East, Asia and North Africa.”
For 70 years, Berklee College of Music has evolved to reflect the state of the art of music and the music business. The college’s national after school music program for underserved teens, the Berklee City Music Network, is in 30 cities and counting. With a diverse and talented student body representing nearly 100 countries, and alumni and faculty that have collectively won more than 300 Grammys and Latin Grammys, Berklee is the world’s premier learning lab for the music of today—and tomorrow.
CC-BY-SA-2.0, FlickrFoto: Kevin N. Murphy. Mujeres y minorías dominarán entre los millonarios del futuro de EE.UU.
New Fidelity research finds 55% of financial advisors plan to target emerging and mass affluent investors in the next five years. According to the results of the Fidelity Investments®7th Millionaire Outlook, emerging affluent investors are well positioned to attain – or even exceed – millionaire status. Most importantly, while these investors look very different than today’s millionaires, with more than two-thirds female and one-quarter non-white, they demonstrate many similar attitudes and behaviors.
For the first time, this year’s Millionaire Outlook study surveyed investors across the full wealth spectrum—emerging affluent, mass affluent, millionaires and deca-millionaires—to assess their ability to accumulate wealth. The study identified the emerging affluent as having the greatest wealth potential based on six wealth-building factors: time horizon, career, income, self-made status, long-term focus and investing style.
Referring to the next-generation of investors is, Bob Oros, head of the registered investment advisor segment, Fidelity Clearing and Custody, says: ”They exhibit many similarities to today’s millionaires—even the deca-millionaires. These should motivate advisors to broaden their client base beyond the traditional millionaire and give all investors confidence in their ability to move up the wealth spectrum.”
According to this research, the emerging affluent –media assets of $250,000- have six wealth-building factors on their side, many of which they share with today’s millionaires and deca-millionaires.
On average, emerging affluent investors are just 40 years of age with 27 years left before they reach the normal retirement age of 67; Many of the emerging affluent have pursued similar professions to today’s millionaires, including information technology, finance and accounting; At $125,000 the median annual household income for the emerging affluent is 2.5X the median U.S. household income and is nearing the income of today’s millionaires; Approximately 80% of emerging affluent investors have earned or increased their assets on their own, what we could call “self-made status”; They share millionaires’ long-term focus, with 75% of both groups focused on the long-term growth of their assets, and 30% focused on supporting the lifestyle they want in retirement; and the Investing Styleis also similar, since the emerging affluent display a willingness to invest aggressively to help maximize returns, as well as a willingness to set aside a significant portion of their portfolio for riskier investments that promise a bigger payoff.
The Pension Protection Fund (PPF) ‘the UK’s pension lifeboat fund’, has appointed Northern Trust to provide global custody, securities lending, collateral management and performance measurement services for its GB£20 billion (approximately US$31 billion) in pension assets.
The PPF offers compensation to eligible members of defined benefit schemes if their employer does not have sufficient assets to payout. It now has over 200,000 members and gives comfort to around 11 million people in the UK who belong to over 6,000 defined benefits schemes. It is a highly sophisticated asset owner, deploying multiple asset managers and investing across the full spectrum of asset classes.
This latest appointment reinforces Northern Trust’s leadership position in the UK pension fund market, where it now provides services to five of the top 10 pension funds in the UK, together representing more than GB£240 billion in assets and approximately one fifth of the entire UK pensions market.
“We are proud to have been appointed by PPF as they evolve in terms of scale and sophistication,” said Penelope Biggs, head of Northern Trust’s Institutional Investor Group in Europe, Middle East and Africa. “The retirement market in the UK faces dramatic change, particularly around defined benefit schemes, and our expertise and proven track record positions us to support the PPF with flexible and creative solutions tailored to their specific needs.”
Northern Trust currently provides solutions to 31 percent of the top 100 UK pension schemes, and 37 percent of the total local government pension scheme market in the UK.
Foto: Zaqqy. UBS lanza una nueva oferta filantrópica para sus clientes de Estados Unidos
UBS Financial Services wealth management clients in the U.S. are now able to make philanthropic donations to the UBS Optimus Foundation, dedicated to the health, education and protection of children around the world. Investors with an interest in improving the lives and potential of children will now have the opportunity to join UBS clients in other parts of the world in accessing the Foundation’s verified and focused network of community-based partner organizations as part of their own philanthropic giving and wealth management planning, via the recently-established Friends of UBS Optimus Foundation Fund.
Established in 1999, the Foundation is a charitable grant-making vehicle dedicated to ensuring children are healthy, safe and ready for their future. To date, it has received over 20,000 donations, totaling more than USD 250 million. The Foundation currently funds projects in 40 countries reaching 1.8 million children, and offers UBS clients a range of options to support causes and charities that are important to them without the burden of doing their own research, vetting and monitoring. The Foundation works with experienced partner organizations around the world to identify, track, and supervise the programs, and provides regular updates to clients to ensure that they remain properly informed of the impact of their support. Because UBS bears all administrative costs of the Foundation, 100% of client donations go directly to the intended service organizations.
“Clients are increasingly looking for advice regarding their philanthropic giving — both in directing and executing their social investments, as well as ensuring they are achieving their desired impact,” said Bob McCann, CEO of UBS Group Americas.
“By choosing to work with only the best-in-class partners — including the World Health Organization, Médecins Sans Frontières/Doctors Without Borders (MSF) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) in South Asia, a regional office of J-PAL Global based at the Economics Department at MIT— we are providing clients with a turnkey offering that will deploy their resources in ways that create meaningful and lasting impact,” said Phyllis Costanza, CEO of the UBS Optimus Foundation.
UBS was voted the Best Private Bank for Philanthropic Services by Euromoney 2014 based on the strength of its Client Philanthropy Services, which covers the complete value chain in philanthropy, providing giving, investing and networking resources to align clients’ wealth with their values.
This new philanthropy offering is being made available in the U.S. as the Friends of UBS Optimus Foundation Fund, through a collaboration with National Philanthropic Trust, which manages one of the largest donor-advised funds in the world.
Global analytics firm Cerulli Associates finds that nearly 30% of high-net-worth investors in the United States define themselves as self-directed investors, according to their High-Net-Worth and Ultra-High-Net-Worth Markets 2014: Addressing the Unique Needs of Wealthy Families report.
In the report, Cerulli analyzes the U.S. high-net-worth (HNW) (investable assets greater than $5 million) and ultra-high-net-worth (UHNW) (investable assets greater than $20 million) marketplaces. The report focuses on the three constituencies of investors, providers, and asset managers.
“This helps explain the dispersion of assets among providers, and although the direct channel’s surge in the high-net-worth marketshare gains have stemmed in more recent years, providers continue to boost their high-net-worth capabilities and presence among younger, tech-savvy wealth creators,” states Donnie Ethier, associate director at Cerulli. “For wealth managers, they represent increasingly worthy competitors that will likely test traditional managers’ willingness, and aptitude, to adapt to next-generation investors.”
The immense balances that many of these investors have within their self-directed accounts are further proof. This also helps explain where assets have flowed as investors have expanded their provider relationships. According to Cerulli’s research, more than half of high-net-worth investors have direct or online trading account balances between $500,000 and $1 million.
“The self-directed model becomes less favorable relative to other advice models as assets increase,” Ethier explains. “Logically, as assets increase, so does the complexity of portfolios, lending more credence to taking on an external advice sources and provider relationships. In addition to dealing with complex portfolios, advisors are an added expenditure, which can explain their lower use among retail clients.”
“High-net-worth and ultra-high-net-worth clients that are using a self-directed model represent a significant opportunity for asset managers that pass due diligence screenings. In the end, direct providers are yet another avenue for external managers to reach the pool of high-net-worth assets,” Ethier continues.
Opportunities to capture additional walletshare of these investors certainly exists for wealth managers and their advisorforces, although they should know going in that many high-net-worth investors use direct accounts to test their own investment ideas, provide liquidity, and even to shelter assets from their primary advisors.
