Foto: Phillip Maiwald (Nikopol). Obligaciones convertibles: mantener un enfoque defensivo sin renunciar al potencial de subida
Convertible bonds combine the defensive qualities of straight bonds with the upside potential of equities, which gives them an asymmetric risk/return profile. This characteristic is a considerable advantage in the long term, as it enables this asset class to deliver equity-like performances with significantly lower volatility. The convexity of the asset class thus represents its main advantage and the reason clients add convertible bonds to their portfolios, as they provide an excellent way of diversifying a portfolio.
Union Bancaire Privée, having been an early believer in the many opportunities offered by the asset class, has been a forerunner in managing convertible bonds in Europe. The team has worked with a consistent approach to convertible bonds since 1999, basing its strategies on three key differentiating features that lie at the heart of its investment approach: an investment-grade bias, which strengthens the bond floor and reduces the overall credit risk; a focus on cheap options to maximise convexity; and discretionary delta management to quickly adapt the equity sensitivity, when needed.
The investment team is known for its long-term views, one of which is that they believe there is still strong value in Europe. The re-pricing movement that has been operating in the European convertible bond space, following the market dislocation in early 2012, is currently producing its positive effects in pushing European convertible bonds’ value upwards.
Through a set of distinctive convertible bond strategies primarily defined by clear equity sensitivity ranges, UBP provides an alternative to bonds and equities. The defensive strategy for example offers convertible bonds with low equity sensitivity as an alternative to bonds. The appealing long-term risk/return profile of the strategy, which places it in top-position in terms of size in Europe, is based on its positioning: by deliberately limiting the expected upside to equities it enables its holders to benefit from positive yields in a traditionally negative yield environment, strong asymmetry, as well as low volatility.
At the higher delta side of the convertible bond range, UBP’s dynamic European strategy has demonstrated its capacity to stand as a strong alternative to an investment in European equities. Its dynamic positioning – an equity sensitivity varying from 20% to 80% – combined with a pure bottom-up investment process focused on convexity have provided investors with an enhanced risk/return ratio over the long run, characterised by equity-like returns and contained volatility.
Fifteen years after the first strategy was launched by Jean-Edouard Reymond, the team of six manages about EUR 3.5 billion, making UBP one of the major players in the field. At the end of 2013, the dynamic European strategy had delivered a 15.3% gross performance, ranking in the 1st quartile of its peer group in terms of performance (on a 1- and 3-year basis).
Nearly 150 women gathered last month in Charleston, South Carolina for the 13th annual Women’s Retreat hosted by GenSpring Family Offices, a leading wealth management firm for ultra-high net worth families. The weekend symposium brought together multi-generations of female clients ranging in age from 17 to 87. The group convened around topics dedicated to preparing them for decisions about the management of their wealth and the impact it will have on their lives and those of family members. Five themes emerged as participants from 23 different states representing over $2 billion of collective wealth discussed both the emotional and financial aspects of a woman’s life.
Five areas of interest emerged as key themes for discussion:
1. The importance of effective family communication 2. Enabling versus providing opportunity to next generation family members 3. The implications of equal versus unequal inheritance 4. Best practices for communicating wealth transfer intentions 5. The impact money has on relationships
As a family office, GenSpring recognizes the importance for all family members to live an informed and fulfilled life with wealth. Since the firm’s founding 25 years ago, learning programs designed just for women have been an integral part of the overall service offering. In more recent years, GenSpring’s focus on women has been organized into a dedicated effort known as the Women & Wealth Initiative which is co-chaired by GenSpring executives Patricia Soldano and Carolann Grieve.
“I am thrilled with the level of engagement and enthusiasm participants demonstrated throughout this year’s Women’s Retreat,” said Ms. Soldano. “Given the statistics that women will control 2/3 of the consumer wealth in the U.S. within the next 10 years, financial education tailored specifically to women is a critical component of our role as a family office to prepare family members for the responsibilities and challenges that come with a life of wealth.”
“The work we conduct with women centers around helping them to discover their voice – empowering them to find a comfort level within their personal situation and then teaching them how they can thrive within those circumstances,” added Ms. Grieve. “The Women’s Retreat provides an opportunity for us to focus on those challenges that resonate with them. If you are going to connect with women, you have to speak their language. They relate to the world differently than men and have different perspectives, concerns and priorities.”
Today, the Women & Wealth Initiative uses GenSpring’s collective expertise and experience serving women clients to create meaningful and relevant learning programs, which are offered to women on both a small and large scale to encourage the sharing of information, networking and problem solving. The purpose is to create a welcoming environment emphasizing a holistic approach to financial stability, which in turn enables women to live an informed and responsible life with wealth, to feel fulfilled and empowered to achieve their goals.
CFA Institute, the global association of investment professionals that sets the standard for professional excellence, will recognize May as Putting Investors First Month. The global initiative aims to build awareness and unite financial professionals in a commitment to place investor interests above all others. Putting Investors First Month will feature a series of events and outreach throughout the month of May, hosted by hundreds of CFA Institute members and many of the organization’s 143 member societies worldwide.
“Putting Investors First Month is an ideal time to call attention to the needs and rights of investors and spotlight those in the investment profession who are committed to serving the interests of investors,” said John Rogers, CFA, president and CEO of CFA Institute. “The financial industry is dealing with a crisis of public trust, and despite signs of recovery in markets around the world, many investors still do not believe that their interests are the primary concern of those responsible for managing and growing their savings and investments.”
The CFA Institute 2014 Global Market Sentiment Survey of investment professionals worldwide indicated that the most needed action to boost investor trust and confidence is improved ethical culture that is established and encouraged by top management and executives. The survey also explores issues critical to investor trust, including fair treatment and the information investors need to properly evaluate products and services to make informed decisions.
“The global financial industry can be an extraordinary force for good, but there is still work to be done to shape the industry for future generations,” continued Rogers. “Through Putting Investors First Month, CFA Institute aims to inspire the industry to ensure that investors’ rights to information, fair and honest advice and accurate assessment of risk and reward is at the core of client service. A commitment to uphold the highest standards of investment practice and to serve investors and the global economy can affect positive change in finance, but change starts with all of us.”
Putting Investors First Month Slate of Global Events Kicks Off May 1
Putting Investors First Month activities will be held in more than 50 cities around the world by CFA societies representing more than 35,000 investment professionals. It kicks off on May 1 in New York with a free live-streamed event covering best practices for individuals, firms, and policymakers to improve the future of finance, and in Chicago, where the local society will hold its annual conference to help financial professionals adapt investment strategies to a changing world.
Other events include: a series of events in Florida featuring CFA Institute president and CEO John Rogers; a declaration by the Governor of Georgia of May 19 as Putting Investors First Day throughout the state; a future of finance symposium in Amsterdam; a conference in Istanbul featuring the Minister of Economics; the Philippine Retail Investment Conference in Manila; a conference for financial professionals and students in Mexico, and a presentation in Toronto to explore industry reforms.
For information on all member society events, visit this list on the CFA Institute website.
Putting Investors First Month is part of the CFA Institute Future of Finance initiative, a global effort to shape a trustworthy, forward-thinking financial industry that better serves society. The initiative sets the stage for the 67th CFA Institute Annual Conference, to be held May 4-7 in Seattle, which will bring together up to 1,800 of the world’s leading financial professionals to focus on shaping the future of finance. More than 30 scheduled sessions, including presentations from Shelia Bair, Nate Silver, and Bill Sharpe, will examine market trends and deliver practical advice to shape the future of finance for generations to come.
For more information about the Future of Finance initiative, Putting Investors First Month, and the Statement of Investor Rights, a declaration of the conduct investors are entitled to expect from financial service providers, visit this link.
Wikimedia CommonsJoe Gold will replace Hugh (Skip) McGee. Picture courtesy of Barclays. Barclays Americas CEO to Step Down from His Role as the Bank Prepares for Transition
As a result of Section 165 of the Dodd-Frank Act, Barclays will be required to establish an Intermediate Holding Company in the US, incorporating all of its subsidiaries in the region, by 1 July 2016.
Barclays has announced changes to the leadership of its Americas operations to prepare for this significant transition, one which will require a great deal of management focus over the next two years on regulatory relations, compliance, and the very significant legal and operational ramifications associated with the creation of the new entity.
Given this focus, Hugh (Skip) McGee III, currently CEO of Barclays Americas, has decided to step down from his role, and from the Barclays Group Executive Committee, on 30 April 2014.
Joe Gold, currently Global Head of Client Capital Management, will be appointed on 1 May 2014 to a restructured role as CEO of the Americas, reporting to the Co-CEOs of the Corporate and Investment Bank, Tom King and Eric Bommensath. Mr Gold will be a member of the CIB Executive Committee. As well as leading the transition to an Intermediate Holding Company, Mr Gold will also lead the governance of all of Barclays’ American businesses, and oversee the implementation of Barclays’ Group strategy in the region.
Stephen Thieke, a Non-Executive Director of the Barclays Group, has agreed to provide strategic advice and guidance, specifically on the transition to the Intermediate Holding Company, to Mr Gold and his team. Mr Thieke has over four decades of experience in financial services, both in regulation and investment banking, including 20 years working for the Federal Reserve Bank of New York.
Commenting on the changes, Antony Jenkins, Group Chief Executive, said: “Skip McGee has delivered outstanding service over the last 21 years, both at Barclays and previously at Lehman Brothers. He has been the longest-serving Head of Investment Banking on Wall Street, and our most senior client-facing executive, responsible for driving some of the industry’s highest profile transactions. Skip has made a significant contribution over the last year as CEO of the Americas, and he has been a valued member of my Group Executive Committee.” And he adds: “Our Americas operations are a successful and important part of the Barclays Group. Joe Gold is a proven leader and has a track record of strong execution, having led the strategic development of a number of key businesses while at Barclays. He understands the rapidly-changing regulatory landscape and will ensure that our American interests are well-positioned to deliver great solutions for our clients and customers, as well as improved returns for shareholders in an evolving market environment.”
Commenting on his decision to step down, Mr McGee said: “After 21 years with Lehman Brothers and Barclays, I have made the difficult decision to leave. Banking is a ‘team sport’, and I am incredibly proud of the team we assembled here. It has been a true honor and privilege to work with so many talented people over the last two decades. We have accomplished a great deal since the combination of Barclays and Lehman in 2008. As for me, I am looking forward to my next challenge.”
Joe Gold is currently Head of Client Capital Management at Barclays, based in New York. Joe has led the strategic development of the Client Capital Management group since March 2010, creating a centralised function responsible for the management of credit risk and capital across the loan and derivatives portfolios, as well as the optimisation of related collateral. He joined Barclays in London in 2002. A native of Chicago, Illinois, US, Joe holds a BA in Finance from Marquette University and an MBA from the University of Chicago. He is a board member of the Komen Foundation of Greater New York City. Joe is married with two children.
Wikimedia CommonsFoto: che. Robeco BP Global Premium Equities Wins Record Ninth Morningstar Award
Robeco is pleased to announce that Morningstar has named Robeco Boston Partners Global Premium Equities fund as the best of its class in a record nine European countries. The award – recognizing the fund’s one, three and five year performance in the Global Equity category – is a unique achievement for any equity fund. The fund’s long-time portfolio manager Christopher Hart picked up the latest award on the evening of 16 April at the Grand Hotel Krasnapolsky in Amsterdam.
Commenting on the award, Christopher Hart, portfolio manager of Robeco BP Global Premium Equities, said: “This award is warmly received. We are thrilled that we have won nine Morningstar awards across Europe in 2014. This is unprecedented recognition. We are delighted that adhering to our Three Circles approach focusing on Valuation, Fundamentals and Momentum has paid off for our clients and has been recognized in the industry”
Robeco BP Global Premium Equities currently has AuM of EUR 212m (as at 31 March 2014) and returned 20.19% annualized over the last five years. Its benchmark, the MSCI World Index (Net Return) (EUR), gained 17.24% over the same period.
The fund received Morningstar awards in France, Austria, Belgium, Germany, Luxembourg, Finland, Switzerland, Spain and the Netherlands in 2014.
Foto: Mario Cabral de Moura. BlackRock lista en Brasil el primer ETF local con exposición internacional
BlackRock has launched the first locally-listed exchange traded fund (ETF) in Brazil with international exposure. iShares S&P 500 began trading on the BM&FBOVESPA in São Paulo with the ticker IVVB11. iShares S&P 500 will be managed by BlackRock.
For the first time today, Brazilian investors can diversify their investments to international equities while enjoying the advantages of an ETF. ETFs provide investors with a diversified portfolio of securities which can be traded throughout the day, on an exchange. Investors have increased their usage of ETFs in Brazil due to the convenience, cost-efficiency and transparency that ETFs provide.
iShares S&P 500 is the first locally-listed ETF in Brazil that will provide exposure to US equities. IVVB11 will be denominated in Brazilian reais, and will invest directly in iShares Core S&P 500 ETF (IVV), BlackRock’s leading US-listed product. IVV provides exposure to large-cap US stocks. Investors of all sizes use IVV due to its cost-efficiency and liquidity. IVV has grown to over $53bn in AUM since it launched in May 2000.
Armando Senra, Head of BlackRock’s Latin America & Iberia Business, commented: “Launching iShares S&P 500 represents another critical step in delivering local and global investment solutions to investors in Brazil. We are committed to continuing to build our presence in this important market. In addition to our longstanding commitment to Brazil, we want to create investment solutions that allow Brazilian investors to take advantage of our global reach. We would like to thank the CVM, BM&FBOVESPA, Citibank and Credit Suisse for their partnership in bringing this product to Brazilian investors.”
Bruno Stein, Head Business Development for BlackRock in Brazil, commented: “BlackRock has deep experience in developing innovative solutions for investors in Brazil. We launched the first local ETF in Brazil in 2008. We recently partnered with Banco do Brasil to deliver the first local international investment solution to Brazilian pension funds through a local feeder fund into BlackRock’s Global Equity Income Fund. Our partnership with Banco do Brasil and the launch of iShares S&P 500 demonstrate BlackRock’s continued commitment to delivering our global platform through various investment strategies to clients locally in Brazil.”
Karina Saade, Head of BlackRock Product for Latin America and Iberia, commented: “iShares S&P 500 is a very important development for Brazilian investors. It provides investors with a greater range of options as they increasingly explore a more diverse range of strategies – including investments beyond their own borders – in response to changes in local market conditions. As Brazilian investors take hold of new opportunities, BlackRock has an active role to play in delivering solutions that minimize investor costs and the complexities of allocating abroad.”
The HartfordFinancial Services Group has announced it has entered into a definitive agreement with ORIX Life Insurance Corporation, a subsidiary of ORIX Corporation, to sell 100 percent of the outstanding shares of Hartford Life Insurance K.K. (HLIKK), Hartford’s wholly-owned Japanese annuity subsidiary.
“Today’s announcement is a significant accomplishment in our efforts to transform Hartford and create value for shareholders,” said Hartford’s Chairman, President and CEO Liam E. McGee. “This transaction materially reduces Hartford’s risk profile by permanently eliminating the company’s Japan variable annuity risk. We are pleased with the economics of the transaction, both in terms of purchase price and expected capital benefit. In addition, ORIX Life Insurance Corporation is a financially strong, well-respected, diversified Japanese financial services company that will continue to provide high-quality service to our Japanese customers.”
Concurrent with closing, all reinsurance agreements between HLIKK and The Hartford’s U.S. life insurance subsidiaries will terminate, with the exception of an agreement covering about $1.1 billion of fixed payout annuity reserves. The transaction is expected to be approved by the Japanese Financial Services Agency and, subject to other customary closing conditions, to close in July 2014.
Hartford estimates that the March 31, 2014, pro forma effect of the transaction is a U.S. GAAP loss of approximately $675 million and a U.S. life statutory surplus loss of approximately $275 million. The company estimates a March 31, 2014, pro forma capital benefit from this transaction of approximately $1.4 billion. The estimated capital benefit includes the net sales proceeds of approximately $860 million, after-tax, and an estimated reduction in capital required in the company’s U.S. life insurance subsidiaries of approximately $540 million due to the termination of certain reinsurance agreements.
“This transaction is another step in The Hartford’s transformation which increases the company’s financial flexibility, and meaningfully decreases our market risk and net income volatility,” said The Hartford’s Chief Financial Officer Christopher J. Swift. “We will continue to execute our current 2014-2015 capital management plan. After closing, we will provide an update on incremental capital management actions that we will take as a result of this transaction.”
The final purchase price and associated financial impacts and capital benefit are subject to adjustment based primarily on the effect of changes in equity, fixed income and foreign currency market indices on the fair value of liabilities until date of close, and could differ materially from the estimates. Accordingly, The Hartford will continue to hedge its Japan variable annuity risks until closing.
The expected loss on sale and the results of operations of HLIKK prior to closing of the transaction will be reported as discontinued operations beginning in the second quarter of 2014. As discontinued operations, the results of operations of HLIKK will be excluded from income from continuing operations and from core earnings, a non-GAAP financial measure, for all periods presented in the financial statements.
HLIKK wrote annuity contracts for the Japan market from 2000 through 2009, when The Hartford placed its Japan annuity business into runoff. As of Dec. 31, 2013, Japan account values were $23 billion for 375,000 contracts. On close of the deal, all 150 HLIKK employees in Japan will remain employees of HLIKK.
Deutsche Bank served as financial advisor and Sidley Austin LLP served as legal advisor to The Hartford Financial Services Group.
Integrated Wealth Management, an independent wealth management firm, has announced that the financial advisors of The Cypress Group, formally with Morgan Stanley in Palm Desert, California, have joined the firm. This move establishes Integrated Wealth Management as the largest independent wealth management firm in the Coachella Valley.1
“I am excited to welcome the talented financial advisors of The Cypress Group to the team at Integrated Wealth Management,” said Jim Casey, Integrated Wealth Management’s President & CEO shortly after the announcement. “The continued growth of the firm’s advisory team has been a part of our long term strategic planning, and we look forward to continuing to serve our clients with integrity, transparency, and a high level of personalized service.”
The Cypress Group consists of Mark Thatcher, CRPC®, Shad F. Lamm, CRPC®, Chris Risenmay, CFP®, CRPC®, Ross Biesinger, David Thatcher, CFP®, Clark Penney, and Marc Koven, as well as their four client service associates. The team is focused on helping their clients understand the challenges and planning uncertainties they may face in the second stage of life. The group is committed to helping their clients by coming to a deep understanding of their financial DNA, addressing gaps that could pose long-lasting problems, implementing a blueprint to guide their individual income and legacy planning needs, and serving as a resource to continue the client’s further understanding of the financial world.
“We look forward to joining the Integrated Wealth Management team,” said Mark Thatcher, CRPC®. “This transition is the best decision for the continued service of our clients and ensures their best interests are met with the move to an independent firm.”
1Largest independent wealth management firm qualification is based on the number of financial advisors in the Coachella Valley, CA.
New York Stock Exchange. Photo: TomasFano, Flickr, Creative Commons. Schroders Appoints Head of Global Equities
Schroders announced the appointment of Alex Tedder as Head of Global Equities.
Alex will join the company in June 2014 from American Century Investments where he was Senior Vice President and Co-head of Global and Non-US Large Cap Strategies, managing US $21 billion of assets and a team of 15, as of December 31, 2013. Schroders saw its head of global equities Virginie Maisonneuve leave the group to join Pimco at the end of last year. Mr Tedder will be based in London.
As Head of Global Equities, Alex will assume responsibility for the Global and International Equities team’s business management and strategic planning. He will also lead the team and drive the development of the team’s franchise. Simon Webber will retain his investment focus and portfolio management duties, working with the team’s Global Sector Specialists to ensure that client portfolios benefit from the team’s proven research capabilities and high-conviction idea generation.
There will be no change to the team’s investment style or the main elements of the investment process. The approach utilizing global sector specialists will remain at the core of the team’s investment process.
Peter Harrison, Global Head of Equities, comments: “I am delighted to welcome Alex to Schroders. He is a strong investor with 20 years’ experience and is an excellent cultural fit with our existing Global Equities team, consisting of eight global sector specialists and two portfolio managers.”
“Global equities is a priority growth area for Schroders. Together, Alex and Simon will drive our existing strong business forward and make it world class, enhancing our portfolio construction process and delivering performance for clients over the long term.”
Wikimedia CommonsHAVAL H9, SUV by Great Wall Motors Company. Bedrock of Investment in China: Rising Domestic Consumption
The rise of domestic consumption is the bedrock of the investment case for China. As overall Chinese economic growth slows after years of rapid investment-led growth, consumers enjoying the benefits of compounding mid-teen income growth will become more and more important to the economy. Many investors believe that western multinational companies are the best way to tap these new consumers. We have sympathy with this view and recognise that some companies like Yum! Brands, which own fast food chain KFC, are well positioned. Yet we believe that investors are missing a huge opportunity to tap into local companies that really understand the dynamic, and often regional, consumer tastes. These strong brands often have superior long-established deep distribution networks that give them an enduring competitive advantage over foreign brands.
One example of a successful privately-owned home grown brand is the Great Wall Motor company. Coming from Baoding in Hebei Province, it has emerged as China’s leading sport utility vehicle (SUV) brand. Just as in the west, rising incomes lead consumers to want larger cars, so SUV sales have jumped from an annualised rate of 1m units in 2010 to over 3m in 2013. As the industry leader, Great Wall Motor has delivered strong growth in the expanding market as well as a strong five-year run for the stock. However, in the last six months the company has hit growing pains. Profit margins have fallen while research and development is stepped up, and the new H8 model launch was delayed. These hiccups have caused investor sentiment towards the stock to cool dramatically. Valuations are back to attractive levels for a strong brand, with proven home grown management, which is well positioned for a multi-year trend of growing SUV popularity.
Few Chinese companies have successfully taken their brands global, but PC and notebook company Lenovo has achieved this milestone. Lenovo has used a leading brand at home to generate strong cash flows to invest in savvy acquisitions of foreign brands, which combined with efficient manufacturing, has allowed it to consistently take market share in the global PC market. More recently Lenovo has developed the technology to benefit from the growth of smartphones in China. Furthermore, the new Yoga ultrabook has received good reviews, which makes Lenovo a competitor in the global tablet market. In 2014 the company has been busy announcing sizable merger and acquisition (M&A) deals to buy IBM’s server business and Motorola from Google. Given Lenovo’s excellent track record of integrating businesses we believe the company is now even better positioned to grow in China and abroad as a genuine technology brand.
The reform measures announced at the November 2013 Communist Party Plenum are a major change in philosophy for directing the economy. President Xi has embarked on an anti-corruption crackdown that has seen lavish government spending budgets dramatically cut and is now turning his attention to the waste and inefficiencies in state controlled businesses (SOEs). We are starting to see monolithic SOEs in the energy and telecom sectors cutting capital expenditure budgets and raising dividend payout ratios. In addition to shaking up SOEs, President Xi is introducing more market forces into the economy including the liberalisation of interest rates and financial markets. Private investors in the UK cannot access the local A share markets in Shanghai and Shenzhen, but they can buy shares in Citic Securities, which is China’s largest stockbroker. The company is also listed in Hong Kong, and stands to benefit from financial reforms and any pick up in sentiment in the local market
Opinion column by Charlie Awdry, portfolio manager of Henderson Global Investors’ China Opportunities strategy
