According to ING IM, the rally in peripheral bond and equity markets has not come to an end, as the fundamental picture is still sound. Yet, the recent rise in volatility and the increased short-term risks have made the asset manager decide to close their overweight positions in both bonds and equities of Eurozone peripherals.
One of the consequences of the risen interest of investors in the peripheral markets is that it has become a “crowded trade”. Investor positioning and in particular the concentration of active exposures have been very dominant drivers of market dynamics this year. The recent volatility in peripheral markets seems to be the latest reflection of the sensitivity of “consensus” trades for position squaring on the back of sudden mood swings over the direction of policy or politics.
Rally in Spanish and Italian markets since July 2012
Both bond and equity markets of peripheral Eurozone countries like Spain and Italy have been enjoying a strong rally, effectively since ECB President Mario Draghi held his famous “whatever it takes to save the euro” speech on July 26, 2012. The ongoing rally resulted in declining risk premiums and increasing investment flows towards these countries’ markets, as investors increasingly perceived the systemic risks surrounding the Eurozone to be fading, while at the same time economic data started to improve.
In the past months, the anticipation of additional stimulus provided by the ECB and upgrades of credit ratings by the rating agencies also led to a further tightening of credit spreads. The intensification of the search for yield by investors, combined with stretched valuations in other fixed income asset classes (like investment grade and high yield credits), have also contributed to the decline in risk premiums.
To view the complete story, click the attached document.
CC-BY-SA-2.0, FlickrJames Swanson, Chief Investment Strategist at MFS Investment Management. Three Things to Think About This Spring
Chief Investment Strategist, Jim Swanson, reviews why equity and fixed income prices have been going up, while China’s moderating pace of growth is a concern but not an immediate threat to the global economic expansion. Three things to think about this spring…
Photo: Romina Campos. Henderson Makes a New Appointment in Uruguay
Capitalising on its growing presence in Latin America, Henderson Global Investors has appointed John Philip Davies of Accurate Partners, as its representative in Uruguay based in Montevideo to work with global and local leading private banks. Commenting on the appointment Ignacio de la Maza, Director of Sales Iberia and Latin America, said “This strategic appointment aims to develop Henderson’s presence in Uruguay while enabling the firm to further deliver and re-enforce its commitment to better service for clients in the region.”
John has had a distinguished career to date having started his profession at Bank Boston in Uruguay and Argentina before working for Deutsche Bank in London, and then becoming the Regional Head Latin American for Dominion Funds, a niche Swiss Fund Manager. His previous position was Senior Sales Executive for MAN Group in Latin America. John has a BA in Business Administration from ORT University in Uruguay and Masters in Finance from CASS Business School in London.
Henderson Global Investors is already active in various Latin American markets with a diverse array of investment funds. All of these products are available to Henderson’s clients in Uruguay as well, including the principal Luxembourg based SICAVs.
Ignacio de la Maza added: “There is a clear and growing commitment on behalf of Henderson to work in the region and to this end the Latin American Sales Team will continue to be strengthened”.
Foto: lucianosilva, Flickr, Creative Commons. GVC Gaesco presenta su once titular para este Mundial
It is one of the questions of the moment: who will win the 2014 FIFA World Cup in Brazil? The theories are many; some point to tradition as paramount, others point to recent results as the best predictor, others maintain that fan support is always critical. But, among the many theories, Itau Unibanco, Latin America’s biggest bank and the official bank of the 2014 FIFA World Cup, believes there is a better way to find the winner.
Today, Itau presents its first soccer research report, offering a clear, quantitative way to help fans make sense of all the predictions and theories that are out there.
Putting personal footballing passions and biases aside, Itau’s macroeconomics research team has developed an econometric model that looks at the key quantifiable factors which it believes have been critical to determining success in World Cups: 1) the current quality of the team 2) the team’s historic world cup performance 3) the support of fans.
According to the bank’s model, this year’s World Cup will offer surprises from the outset with England not making it past the group stage, while Iran and Ivory Coast will be the only Asian and African teams respectively, to make it to the round of 16. This will lead to an extraordinary semi-final round with Brazil, Germany, Argentina and Spain, who have eleven World Cup titles between them, fighting it out for the ultimate prize. As to the winner, Itau’s macroeconomics research team has its own strong feeling but they let fans around the world decide for themselves.
Ilan Goldfajn, Chief Economist of Itau Unibanco, says: “It is only fitting that Itau Unibanco, as Latin America’s biggest bank, the official bank of the World Cup and with a Brazilian passion for football in its DNA, should offer its own predictions for the coming FIFA World Cup™. Putting aside our personal preferences and our usual focus on macroeconomics, we have developed a methodology that, if proven accurate, will produce two great semi-final play-offs in which Brazil, Spain, Germany and Argentina will vie to qualify for the final. Whatever happens, the 2014 World Cup hosted by Brazil has something to thrill and delight football lovers all over the world.”
Supporting sports is part of Itau’s DNA. The company believes that sport, along with culture and education, is key to a society’s sustainable development, especially at a time of change, such as that being experienced by Brazil currently. Itau’s involvement with football, Brazil’s great passion, began more than 25 years ago when it sponsored the broadcasting of various competitions including the National Championship, Libertadores Cup and FIFA World Cup™, among others.
In October 2008, Itau’s role as a patron of sport was reinforced when it became the official sponsor of the Brazilian national soccer team in all its categories: Professionals, Olympic Team, National Team U-23, National Team U-20, National Team U-17, National Team U-15 and the Women’s National Team. In November 2013, Itau and CBF renewed the sponsorship contract through to 2022, which will include the FIFA World Cup™ in both Russia and Qatar. In April 2009, the bank was the first Brazilian company to sign a contract for the sponsorship of the 2014 FIFA World Cup™. It has also, since early 2011, been a sponsor of the Brazilian National Beach Soccer Team.
Manchester Capital Management (MCM) announced that Daniel Goldstein has joined MCM as a Senior Managing Director based out of its Montecito office.
In his role, Daniel will be working closely with clients and Ted Cronin, CEO of MCM, to advise on wealth management and family office services. Daniel’s extensive experience with the many varied aspects of running a single family office will complement the skills of the MCM team, allowing the firm to offer a more comprehensive array of services.
Founded in 1993, MCM is a boutique wealth management firm with 33 professionals advising wealthy families across the United States. The firm maintains offices in Manchester, VT, Montecito, CA, Charlottesville, VA and New York, NY.
For twenty years prior to joining the firm, Mr. Goldstein was advising ultra high-net-worth families across Europe and in the United States on their liquid investments, businesses, structuring, direct real estate investments, family dynamics, yachts, concierge services and philanthropy. For 15 years he was a director of a global single family office principally located in Europe, with activities ranging across Europe, the U.S., Africa and India. Previously he was the investment analyst on a two-person team managing a $1.25B portfolio for a U.S. family foundation. He has spoken at and chaired numerous family office, investment, family business and philanthropy events around the world.
As a Board member, he has helped found and develop several international non-profit organizations. Before entering the family office field, Daniel worked in finance in both the private and public sectors in the U.S. He earned a B.A. in Fine Arts from Colgate University, as well as an M.B.A. in Finance and an M.S. in Science and Technology Studies from Rensselaer Polytechnic Institute, both with honors.
BNY Mellon announced it has reached an agreement to sell its One Wall Street office building in lower Manhattan for $585 million to a joint venture led by Macklowe Properties. The sale was brokered by CBRE. The sale is expected to be completed in the third quarter of 2014, subject to customary closing conditions.
“We’re pleased to have reached this agreement. Once finalized, it will advance our plan to consolidate office space in New York City, lead to a more functional and efficient work environment for our employees, and deliver a solid financial gain to the company,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon. “We expect to announce our decision for new leased space in the New York region in the next two months.”
BNY Mellon has occupied the 50 story, 1.1 million square foot building since 1989, when The Bank of New York acquired the Irving Trust Company. The company’s headquarters moved from 48 Wall Street to One Wall Street in 1998. The original lot was purchased by the Irving Trust Company in 1927 for $14.5 million and construction was completed in March 1931. The building, considered one of New York’s landmark Art Deco skyscrapers, was designed by architects Voorhees, Gmelin and Walker. Maine granite was used for the base, and the building is sheathed with Indiana limestone.
Macklowe Properties was founded in the mid-1960s by Harry Macklowe. For the past 40 years, the company has been an active and profitable developer, acquirer, redeveloper, owner, and manager of a diverse array of real estate investments. The company has successfully achieved a full level of vertical integration, combining design, planning, construction, management, accounting, and executive-level ownership and operation to provide for absolute responsibility and control over its assets. These investments, which have covered virtually every sector of the property market, have included the development, acquisition, and repositioning of office and apartment buildings, land assemblages, and conversion of industrial and loft properties. In the aggregate, these developments have totaled over 10 million square feet and have taken place in nearly every commercial and residential submarket of Manhattan.
Photo: Mattbuck. Horizons ETFs and Fiduciaria Bogotá Launch an ETF that Tracks S&P Colombia Select Index
Horizons ETFs Management (LATAM), a member of the Horizons ETFs Group, has announced the launch of its second Latin American exchange traded fund, the Fondo Bursátil Horizons Colombia Select de S&P, which provides investors with exposure to the S&P Colombia Select Index. The Horizons Colombia Select ETF began trading on Thursday on the Bolsa de Valores de Colombia (BVC) under the ticker symbol HCOLSEL.
The Horizons Colombia Select ETF will seek to replicate the returns of the Index. S&P Dow Jones Indices LLC designed the Index to provide exposure to the largest and most liquid domestic stock issuers in Colombia. S&P’s selection universe for the Index is based on all the securities in the S&P Colombia BMI that trade on the BVC.
The Horizons Colombia Select ETF was developed in association with Fiduciaria Bogotá S.A., one of Colombia’s largest mutual fund providers. Fidubogotá will act as the management company to the Horizons Colombia Select ETF and Horizons ETFs Management (Canada) Inc., an affiliate of Horizons LatAm, will act as portfolio manager.
“With a single investment, investors can now have efficient access to the Colombian equity markets,” said Federico Torres, Head of Latin American Sales for Horizons LatAm. “In our view S&P has developed a superior index strategy for Colombia which reduces the issuer and sector concentration risks that exist in current Colombian stock market benchmarks. Since no single stock will have more than a 15 per cent weight in the Index and no sector will have more than a 40 per cent weight, investors in the Horizons Colombia Select ETF can be confident they will be gaining exposure to a more diversified Colombian solution than what currently exists,” added Torres.
“The Horizons Colombia Select ETF is our second ETF launch in Latin America, and gives investors low cost exposure to a more diversified index than other benchmarks in the marketplace,” said Howard Atkinson, Managing Director of Horizons LatAm and the Global Head of Sales and Marketing for Mirae Asset Global Investments’ ETF business. “One of our strategic objectives is to take the best practices we’ve learned from our global ETF business and leverage them in local markets. We have a strong business relationship globally with S&P and are pleased to be able to offer their top-tier index strategies to Latin American investors.”
The Horizons Select Colombia ETF is the first ETF launched in the Colombian market and administered by Fidubogotá, the local pioneer of end-to-end custody and administration solutions for funds.
“We are very proud to bring this product to market in conjunction with Horizons ETFs. For us, it is essential that fiduciaries, especially Fiduciaria Bogotá, offer products that have been developed according to international standards,” said Cesar Prado, President of Fidubogotá. “We think the combination of our strong local presence combined with an adherence to global best practices puts us in a unique position to offer value to a capital markets sector that has been historically dominated by foreign competitors.”
Art Basel Miami 2013
. Wealth Management Industry Meets around Art Basel Miami 2014
In the heart of one of the world’s most important art happenings, DC Finance will host its second highly praised US wealth management conference, at W South Beacha day before the opening of Art Basel. During the rest of the week, thousands of the top UHNW Latin American families as well as collectors and families from all around the world meet in South Beach for this annual luxury art event.
Florida Annual Family Office & Wealth Management Conferencewill take place onDecember 2nd, at The W South Beach, and from 3rd to 6th there will be luxury events.
“Join the top high net worth Latin American community members in a unique new setting brought to you by the producers of the East Coast FO conference. Enjoy our first tier conference alongside a series of luxury Art and Life Style events throughout the Art Basel week”, says DC Finance.
The idea is provide the guests with a different kind of wealth management experience. They deliver first tier content, top notch, geographically varied and some never heard before speakers, with the opportunity for family members to meet new peers that one won’t meet anywhere else.
DC Finance manages one of the world’s largest family office events in Tel Aviv and a highly praised NYC event each fall in NYC.
Speakers include:
Profesor Uzi Arad, Former Head of the Israeli National Security Council and Advisor to PM, Director of the Intelligence Division at the Mossad – Israel’s Foreign Intelligence Service. Currently Professor of Government at IDC’s Lauder School of Government, Diplomacy and Strategy.
Mr. Yalkin Demirkaya, President Cyber Diligence Inc
Ms. Lisa Firestone Von Winterfeldt, Founder Firestone von Winterfeldt Family Fund
Mr. Jack Hidary, Co-Founder EarthWeb
Mr. Yaky Yanay, President & COO Pluristem
Ms. Candice Beaumont, Chief Investment Officer L. Investments
Mr. Scott Black Founder, President Delphi Management
Mr. Jim Warner, Advisor, author, speaker on Business Transitions and Personal Transformation Boulder, CO – USA
Mr. Walter O’Brien, Founder Scorpion Computer Services
Mr. Yalkin Demirkaya, Founder Cyberdiligence, Inc. and Former Head of NYPD’s Computer Crimes Investigation Unit
Mr. John Mcleod, TEP Director, International Solutions RBC
Ms. Kirby Rosplock, PhD, Author of The Complete Family Office Handbook
Mr. Erik Wachtmeister, Founder Best Of All Worlds
Countess Louise Wachtmeister, Founder Best of all Worlds
Ms. Lauren Berger, CEO The Lauren Berger Collection
Ms. Sylvia Earle, Founder Mission Blue
Ms. Wendy Craft, Executive Vice President and General Counsel MFR Equity
Mr. Guy Martinovsky, CEO Eden Gallery
Through a series of panel sessions and presentations, the conference expects to cover topics related to the following subjects as well as other areas of interest and concern facing your everyday life:
• The Global Macro Economy • Traditional and Alternative Investing (dedicated panels will cover investments in Oil & Gas, High Tech, Real Estate and Art) • Legal & Tax Issues • Personal & Financial Security and other Lifestyle Issues • Washington/Legislation/Fed Policy/Mid-Term Elections • International Trends and Developments for Family Offices • Family Office Governance • Successfully Managing Family Dynamics • Accounting and Tax Strategies • Philanthropy
Following the conference and throughout the art basel week, here is a glimpse of what attendees will enjoy:
• A dinner at the versace mansion • Cocktail party at the famous sls hotel – hyde lounge: hosted by some of the world’s leading luxury brands • Art basel / design Miami private guided tours: special vip guided tours at the miami’s best art events • Art brunch: special lectures by prominent figures in art world • Collection visits: meetings with some of the world’s top collectors
CC-BY-SA-2.0, FlickrFoto: cbaskin99. Seis consejos para maximizar el rendimiento en un entorno de tipos bajos
With interest rates still so low by historical standards, fixed income is potentially overvalued. In addition, low interest rates for a long period of time have led to stretched valuations in other asset classes such as equity and credit. Benjamin Nastou, CFA, and Natalie Shapiro, Ph.D., Quantitative Portfolio Managers at MFS, published recently an Investment Insight, highlighting that in this circumstances, a balanced portfolio of stocks and bonds can probably be expected to generate lower returns than such a portfolio would have delivered historically.
Therefore alpha — or return over the benchmark — that can be added through active management will probably be more important than it has been historically. For example, an extra 100 basis points of return represents a much higher percentage of expected total return at 4% – 5% than at 8% – 9%.
In this kind of environment, the quantitative portfolio managers at MFS would think about making a few sensible tilts to take advantage of investment opportunities that may help to improve risk-adjusted performance. Note that these suggestions are based largely on the valuation component of their quantitative process highlighting that while valuation works well in the long run, patience may be required over the periods when valuation does not work as an investment signal.
These are their suggestions:
Exercise caution overall. With the possibility that both stocks and bonds may be overvalued, we would expect to hold a little more cash than usual.
Avoid taking excessive duration risk. At such low interest rates, bond investors are probably not being compensated for the risk of rising rates.
Exercise caution with high-yield and high-grade bonds. We may not be seeing asset quality issues, but with discount rates and credit spreads so low, high-yield and high-grade valuations appear stretched. This suggests that bond investors are not being compensated for credit risk.
Exercise caution with respect to US equities. The United States has enjoyed stronger performance relative to most other markets, leaving US stocks looking expensive by historical standards.
Avoid emphasizing small-cap over large-cap equities. Within the US equity market, small caps have had the strongest performance and look the most stretched from a valuation perspective. For context, when small caps were more expensive than large caps in the early 1980s, large caps outperformed small caps by 6% annually over the subsequent decade, and the valuation gap between small caps and large caps is even greater now.
Consider non-US and emerging market equities. This may be challenging given the lingering economic problems in some emerging countries, but from a valuation perspective, we believe stocks in these markets appear priced to deliver returns that are more in line with their historical averages.
Of course, no investment strategy — including asset allocation — can guarantee a profit or protect against a loss. But according to MFS, these steps may help to make the most of a low-return environment. The authors conclude the report saying: “And we always advocate the importance of investing over a longer time horizon, establishing a broadly diversified portfolio and rebalancing regularly as the cornerstone of a disciplined investment process, and working with skilled managers who have demonstrated the ability to add alpha through superior security selection in stock and bond markets”.
The massive election process in India has just drawn to a close. Over 814 million voters were eligible to vote in the nine-phase election, which took place over five weeks, between early April and mid-May. As a point of comparison, the voter turnout is more than twice the U.S. population and larger than the population of Europe.
Let’s marvel at the management behind the world’s biggest democratic election exercise.
How expansive was the polling station network?
Given the premise that no one should have to travel a long distance to vote and no single polling station should manage more than 1,500 votes, India established over a million polling stations.
Why do elections take such a long time?
This is mainly due to the massive scale required in managing such an extensive exercise, including the deployment of more than 200,000 security personnel to facilitate peaceful elections. Mobile security units are ferried across locations as the election phases progress, ensuring the sanctity of the process.
How are all the votes counted?
To me, this is one of the most fascinating aspects of the election process. Although more than 350 million Indians still live in poverty, ballots have been cast electronically, rather than by paper, since 2004. In fact, electronic voting had been tested in local Indian elections for more than 20 years before it was rolled out nationally. Electronic Voting Machines (EVMs) were designed as a technological solution to count large-scale voting accurately and transparently. Close to 2 million machines were estimated to have been used in this year’s election. This has been an improvement from the older system of paper ballots that were rubber stamped.
The EVMs are specialized adding machines that feature the names and symbols of candidates or political parties (symbols are required due to the significantly high percentage of illiterate constituents). Software is hard-wired into the mechanism’s microprocessor so that it cannot be reprogrammed. Each machine is programmed to record just one vote every five seconds, hold a maximum of 3,840 votes and automatically shut down should it detect any tampering. Additionally, machines are deliberately not networked to limit opportunities for further tampering on a mass scale, i.e. thousands of machines must be fiddled at a time to alter the results in a meaningful way. EVMs run on a single 6-volt alkaline battery so they can be operated in rural areas where more than 68% of Indians live. Finally, these machines cost less than US$200 each and are small enough for officials to carry in briefcases.
India is a land of contradictory possibilities. Despite being a poor country with annual GDP per capita on the lower end of Asian economies (at US$1,527), it is home to some of the world’s best IT and generic pharmaceutical companies. Electronic voting is one illustration of the dichotomies that are present in the rapidly changing nation. The management of the country’s large, complex democratic election sparked the need for innovation and India has produced a cost-effective, fair and transparent system that can perhaps benefit other parts of the world. Despite the big macro and microeconomic challenges India may face, this is the kind of product and process innovation that keeps us excited about the potential India holds overall.
Rahul Gupta, Senior Research Analyst at Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
