Old Mutual Global Investors will open an office in Edinburgh as part of the formation of a Fixed Income Absolute Return Team, which will launch its activities in 2015, including supporting a new range of absolute return fixed income products.
Russ Oxley has been appointed head of Fixed Income Absolute Return Team, and be joined by Huw Davies, Joshua Heming, Adam Purzitsky, Paul Shanta and Jin Wong. The new team members have previously worked at Ignis Asset Management.
Oxley will report to Julian Ide, CEO of Old Mutual Global Investors.
OMGI currently has a nine strong Fixed Income Team, headed by Christine Johnson, who reports to Stewart Cowley, investment director, Fixed Income and Macro. That team will remain in place.
Ide said: “This is a very exciting development for Old Mutual Global Investors. By adding the investment skills of this new team to our existing highly regarded team, we will have one of the asset management industry’s most powerful fixed income operations. I look forward to working with all of this invigorated team next year.”
The manager has made a number of appointments over the past couple of years as it targets a top five market position in the UK, as well as expanding into other markets.
CFC rules, Anti elusive legislation and Automatic Exchange of Information are game changers for the wealth planning industry of private clients. This is notorious in Europe already. In Latin America, we are just starting to see the tip of a huge iceberg.
Only 2 years ago, most private bankers in Latin America did not believe that the OECD was serious. The majority claimed that this whole transparency movement was just for the press and that local authorities were not prepared to handle this. All of them have now realized that “something” has changed and are now keen to listening and gathering information. Some go even further and are taking actions (incorporating new platforms, new legal structures, hiring experts, being proactive in speaking to their clients about this, etc.).
What has changed?
Local authorities from Latin America´s most sophisticated countries started to pass comprehensive CFC rules combined with Anti Elusive legislation. To date, all the most developed countries except Brazil* have abided to these rules (Mexico, Peru, Chile, Colombia, Ecuador Argentina, Venezuela…). Even in Brazil, local lawyers are convinced that their country will include them soon.
In addition, early this year the OECD announced that in 2017 the world would have automatic exchange of information. Since that announcement, more than 70 countries pledge to this initiative. The OECD already prepared various reports on how this exchange will take place and in October more measures are expected to be implemented. Some claim that 2020 is more realistic than 2017…this could be, but it´s irrelevant. The point here is that it is coming and will be here very soon.
Last, in order to comply with FATCA, Latin American countries have started to sign intergovernmental agreements (IGA) with the EEUU to exchange information automatically.
What do clients need?
First, to become aware, they need to stop believing that nothing has changed. Second, they need quality advice. Many family offices in Latin America are including local and international experts as key players in their business, to provide them with the most adequate tax and succession planning in order to provide the best advice to their private clients.
Third, act in consequence. Clients need to sit with their Family Office and experts to evaluate if the current legal structure (companies, trusts, foundations, private funds, etc.) that they have in place is still good enough to obtain the objectives they want. “Why do it now if you can do it later…”
As a Latin American I am fully aware that most of us wait until the last minute to solve various issues. All of us do. The truth is that in this particular aspect, the changes have been so big and will continue to be, that the last available moment is already here. Later is now. The good news is that there is good and serious planning available, fully compliant with the new world.
Pedro Vargas Head of Wealth Planning Aiva – A member of the Old Mutual Group
The Investment Banking division of Oppenheimer & Co. Inc., a unit of Oppenheimer Holdings, is pleased to announce six new executive hires to the healthcare, rental services and logistics, energy, technology and real estate teams.
The new hires include: Alexander Lim, Managing Director – Healthcare; Neha Motwani, Executive Director – Healthcare; Fred Larsen, Managing Director – Rental Services and Logistics; Ramzi Nassar, Managing Director – Oil Field Services; Blake Williams, Managing Director – Hardware and Emerging Technology; and Steven Cheng, Executive Director – Real Estate.
The recent hires underscore the firm’s recent growth, particularly in investment banking. Oppenheimer’s capital markets business segment, including investment banking, generated $150 million through the first six months of 2014, a 13% increase over last year, according to the company’s most recent quarterly release.
“We are very pleased that our multi-product, multi-sector focus is not only resonating with our clients, evidenced by our recent growth, but is also attracting such talented bankers to our platform,” said Bruce McCarthy, Managing Director, Co-Head Investment Banking and Head of Mergers & Acquisitions. “We are very excited with the addition of these senior bankers,” said Marc Thompson, Managing Director, Co-Head Investment Banking and Head of Technology. “They each bolster our ability to deliver our middle-market clients a combination of tremendous domain expertise and Oppenheimer’s best-in-class service offerings.”
About the profiles…
Alex joins the firm from Lazard Freres, where he was responsible for origination as well as leading client overage and execution for companies in the biotech, diagnostics and life science tools sector. He will continue his focus on the Healthcare Life Sciences sector and is based in Oppenheimer’s San Francisco office.
Neha joins Oppenheimer from Stifel, where she covered companies in the life sciences sector. During her 15-year career, she has been involved in more than 70 equity and financial advisory transactions. She continues to focus on Healthcare Life Sciences and works out of the company’s New York office.
Fred joins Oppenheimer from Henley Associates, an independent financial advisory firm that he helped found. Before that, he was at Piper Jaffray where he was responsible for global transaction origination, execution and client coverage for middle market transportation and logistics firms. He joins Oppenheimer’s Rental Services & Logistics group and is based in New York.
Ramzi joins the company from the Global Energy Investment Banking of Citigroup Global Markets. He previously worked at an engineering firm and was General Manager and President of eLinear Solutions Middle East FZ in the United Arab Emirates. Ramzi began his investment banking career at Morgan Stanley, and then worked at CIBC World Markets’ M&A Group. He joins Oppenheimer’s Energy group and will continue to focus on the Oil Field Services sector out of Oppenheimer’s Houston branch.
Blake joins Oppenheimer’s Technology group from Cowen, where he was responsible for client relationships with mid-cap domestic and international companies in the semiconductor, capital equipment, emerging technology and optical sectors. Prior to Cowen, Blake spent nine years with Piper Jaffray as a Managing Director in the Technology, Media and Telecommunications Group and as Head of Semiconductor, Component and Communications. He is now based in San Francisco.
Steve moves to Oppenheimer from Big Ocean, a boutique investment banking firm. He began his investment banking career at RBC Capital Markets in 2005. He will continue his focus on the Real Estate Investment Trust (REIT) sector and work out of the New York office.
Oppenheimer & Co. Inc. (Oppenheimer), a principal subsidiary of Oppenheimer Holdings Inc. and its affiliates provide a full range of wealth management, securities brokerage and investment banking services to high-net-worth individuals, families, corporate executives, local governments, businesses and institutions.
Janus Capital Group has announced it has agreed to acquire VS Holdings Inc., the parent company of VelocityShares, LLC, a provider of institutionally-focused exchange-traded products (ETPs), including exchange-traded funds. VelocityShares is focused on developing instruments that enable investors to manage risk and has been delivering innovative products for a wide range of global investors since its launch in 2009.
The transaction includes an initial upfront cash consideration of $30 million and is expected to close in the fourth quarter of 2014. Closing of the transaction is subject to certain conditions, including regulatory approval.
“This acquisition positions Janus within the rapidly growing rules-based and active ETF universe, enhancing the customized solutions we can provide to our clients and enabling us to work with the growing segment of financial advisors and institutions focused on these instruments,” said Richard M. Weil, Chief Executive Officer of Janus Capital Group. “Today’s announcement is a continuation of our strategy of intelligent diversification, adding new talent to support innovation and smart solutions for our clients. We are excited to have the VelocityShares team join our organization, and we are confident their expertise and product innovation capabilities will be beneficial to our clients and shareholders.”
VelocityShares was founded in 2009 and is managed by Nick Cherney, Richard Hoge and Steve Quinn. VelocityShares’ initial growth was driven by the development of exchange-traded notes in the volatility and commodity space. The company quickly developed a market leading position in tactical trading products serving short-term investors and traders by focusing on helping clients develop sophisticated trading strategies and volatility management solutions. These productswill continue to be distributed by the VelocityShares team through its existing distribution channels.
VelocityShares has more recently leveraged its expertise to launch a second business around innovative and intelligent ETFs for diversified long-term investment portfolios, currently focused on volatility hedged equities and equal risk weighted solutions. These ETF offerings, along with future product innovation, offer significant synergies between VelocityShares and Janus.
VelocityShares is headquartered in Darien, Connecticut and employs 11 professionals, many of whom are ETF industry veterans and have extensive product development, product structuring and sales experience. As of September 30, 2014, it has raised $2 billion in assets.
“Janus’ global distribution network and commitment to product development creates very unique opportunities to deliver institutional quality ETFs to a wide range of investors,” said Nick Cherney, Co-Founder and Chief Investment Officer of VelocityShares. “Our combined company will be well positioned to grow our ETP business and continue to be a leading provider in the market place.”
Janus Capital Group Inc. was advised by Wells Fargo Securities LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and VS Holdings Inc. was advised by Freeman & Co. Securities LLC and Stoel Rives LLP.
Ever since secondary market trading of Facebook shares began, various industry participants have debated whether the market would continue and how it would (or if it should) evolve. Three years later, the debate continues in the press, but investors continue to vote with their investment dollars for its growth. NYPPEX, a private equity advisor and research firm, has projected that the secondary market will facilitate $17.7 billion worth of transactions this year, up 43% from 2013.
The nature of the secondary market has also changed with an increasing number of investment company giants actively participating in an increasing number of transactions. Second Markets, once an active marketplace for individual investors, has changed its business model to execute these institutional transactions and reported a few weeks back that they had executed nearly $1 billion in private company stock transactions in the first half of the year.
While this has led some to think that individual investors are being shut out of this attractive market place, the truth is that as the market has grown, so have the alternative entry ways to participate. Clearly, the markets for Angel investing and crowdsourcing are well known and easy to find, but access to the growth and late stage companies with well-known names such as Palantir, DropBox and Uber can be found in a number of instruments for a range of investors:
Interval funds, mutual funds that offer daily purchase for investment but typically only quarterly liquidity, have been increasing in number as part of the Liquid Alternative movement. The SharesPost 100 Fund is perhaps the most familiar of this mutual fund type, which is open to all investors.
A large number of Closed-End Funds (CEFs) have also entered the marketplace in recent years, offering clients a variety of private company portfolios in which to invest. The investment stage of the underlying companies ranges from fund to fund, with some CEFs focusing on later-stage private companies and some investing across the entire venture capital range. Several have had good deal flow and have demonstrated a repeat ability to include marquee names within their portfolio.
Private Custom Portfolios are another option, although usually open only to Qualified Purchasers. These structures allow investors and their Advisors to select each investment in their portfolio at a specific price. These offerings, however, are more difficult to find as they typically cannot market themselves under the general solicitation guidelines of Rule 506(b) of Regulation D. NASDAQ Private Market, offers a similar investment opportunity into individual companies to Qualified Purchasers through their member Broker / Dealers.
Forward Purchase Contracts are also still used by many to invest in private companies, but are not for the faint of heart. In these contracts, the investor provides cash (typically to an existing or former employee of a private company) in exchange for the forward purchase contract. The contract obliges the seller to deliver a specific amount of their private shares after the company executes its initial public offering. The legal risk (usually spelled out clearly in the contract) is that the contract may be in direct violation to the seller’s employment contract with the company and the transaction itself is still subject to the company’s right of first refusal, which may not occur for several years out.
The secondary market is very likely to continue to grow, mature in its formal nature and increasingly win the favor of private companies themselves for a number of reasons:
Employee Recruitment and Retention are both improved by clarity in remuneration at private companies, just as they are in public ones. Companies that create liquidity plans to meet the internal demand to convert their paper wealth after an appropriate vesting period are likely to have more engaged employees and higher ratings in glassdoor.
Structured programs also lowerlegal and management expenses as they reduce the time and energy (and billable hours) of considering one-off secondary market sale requests.
Management control of insider liquidity also allows for control of the secondary market prices at which these trades are taking place, retaining the control of valuation communication to the management team and their VC-backers.
Another benefit to the company and its financial backers is that less money needs be raised if a greater percentage of the funding at the official rounds is funding company growth rather than meeting employee needs.
Reduction in the percentage of capital funding employee liquidity also reduces the perceived lack of commitment to the firm, which can be a significant depressant to a newly IPO’d stock price. Furthermore, Fenwick & West just released a report showing that VC-backed technology companies that went public in 2013 experienced a 24% reduction in stock price in the two weeks after the expiration of their waiting period compared with two weeks prior to the 180-day mark.
Finally, individual investors are increasingly driving market demand for access to alpha in their portfolios, which Family Offices, Pension Funds and Foundations have enjoyed for years. Not only is the desire for alpha driving this demand, but often a personal interest in a private company’s business model motivates the investment. After all, not only is an equity-interest in ZocDoc a good investment, it’s also fun.
Regardless of how an investor chooses to invest in secondary market shares of private companies, there is no doubt that demand will keep the market growing. And while the lion’s share of the market may continue to be the domain of large funds and endowments, Advisors and their investors, both accredited and not, are being given opportunity to invest alongside the behemoths. Where the jury is still out is how Private Companies themselves will choose to participate in these markets, despite the evidence that a structured approach is a win-win situation for all involved.
Michael Goering is a Managing Director at Buttonwood Group Advisors
Nicolas Walewski, fundador de Alken. Los mercados y la ampliación de equipo llevan a Alken a reabrir sus fondos a nuevos inversores
Alken AM, the fund management company founded by Nicolas Walewski, has informed to its clients an important decision taken by the Board of Directors with regards to the Sub-Funds “ALKEN FUND – Absolute Return Europe” and “ALKEN FUND – European Opportunities”.
After careful analysis and consideration of the Sub-Funds’ current situation and their relevant markets evolution, as presented to the Board by the Sub-Funds’ Investment Manager, the Board, making use of the powers conferred upon it in the Company’s prospectus, has resolved to re-open the Sub-Funds to subscriptions from new investors, and to no longer limit the possibility of further subscriptions from the Sub-Fund’s existing shareholders.
These resolutions will be effective as of 3rd of November 2014.
Bill Gates lidera la lista. Wealth X vuelve a revelar el Top 50 de los estadounidenses más ricos por estado
Wealth-X has released a list showing the richest person in each of the US states, and 35 of the 50 individuals on the list are entrepreneurs who made their own fortunes, demonstrating the importance of hard work and entrepreneurship in attaining the “American Dream”.
One such self-made entrepreneur is Microsoft co-founder and philanthropist Bill Gates who leads the list, maintaining his status as the wealthiest person in America with a fortune of US$81.5 billion, up from US$70.8 billion last year.
Other self-made entrepreneurs on the list include legendary investor Warren Buffett of Nebraska, the country’s second richest person; and media tycoon Michael Bloomberg from New York.
Others have inherited their wealth and subsequently grown it themselves, such as Forest Mars Jr. of Virginia, whose grandfather founded food processing company Mars Incorporated, and Micky Arison of Florida, who is the son of Ted Arison, co-founder of the world’s largest cruise operator, Carnival Corporation.
Only six women made it on the list. With a net worth of US$37.9 billion, Christy Walton of Arkansas has the distinction of being the richest woman in America – and the world. She is the widow of John T. Walton, one of the sons of Sam Walton, founder of Walmart. Anita Zucker, of South Carolina, has a net worth of US$2.7 billion. She is chairwoman and chief executive of the InterTech Group, assuming both positions in 2008 after the death of her husband, Jerry Zucker, the Group’s founder.
Below are the top 5 richest individuals on the list:
Name
State
Estimated Net Worth
(US $ billion)
Bill Gates
Washington
81.5
Warren Buffett
Nebraska
66.9
Lawrence Ellison
California
47.3
David Koch
Kansas
42.0
Christy Walton
Arkansas
37.9
Of the 50 individuals, 41 are billionaires and their combined wealth of US$594.1 billion accounts for 26% of the total billionaire wealth in America.
Utah, New Mexico, Mississippi, Maine, Delaware, Hawaii, South Dakota, Alaska and Wyoming are the only states whose wealthiest residents are not billionaires.
Foto: Lucky Cavey, Flickr, Creative Commons. Richard Pease dejará Henderson GI para sumarse a Crux AM, una nueva gestora
Richard Pease will be leaving Henderson Global Investors to join Crux Asset Management, a new fund management company.
The Henderson European Special Situations Fund, currently managed by Richard, will be transferred by a scheme of arrangement from Henderson to Crux’s nominated third-party authorised corporate director, subject to obtaining regulatory and client approval. Post transfer, the Fund will continue to be managed by Richard and his team at Crux Asset Management.
Henderson and Crux will work closely together over the next few months to facilitate a seamless transition. Clients will be kept updated on timings and progress.
With immediate effect, responsibility for the management of both the Henderson European Growth Fund and Henderson Horizon European Growth Fund will be given to the current co-manager Simon Rowe. Simon will be supported by the wider European equities team led by John Bennett.
Richard Pease will remain an employee of Henderson until the transfer of the Henderson European Special Situations Fundis given effect and throughout that period will continue to manage the Henderson European Special Situations Fund during the transfer of the fund to Crux.
Simon Rowe has worked alongside Richard Pease since 2001, and has been instrumental in developing and managing the European Growth strategy. Simon has 20 years of investment experience and has worked at Henderson for five and a half years. Prior to that he worked with Richard at New Star and moved to Henderson as part of the acquisition in 2009.
Simon began his career as a financial journalist joining the Investors Chronicle, part of the Financial Times Group, in 1986. In 1989 Simon moved to Germany as economics editor of a Munich-based radio station. He then worked as a German equity analyst at Kleinwort Benson and subsequently at Smith New Court. From 1993 until 2001 Simon worked as a freelance management consultant and private equity advisor. He joined New Star in 2001 as a European equities fund manager. Simon graduated from Cambridge University where he attained a BA in History.
Simon is part of Henderson’s highly regarded European equities team, which is responsible for £15.4bn in assets under management and includes 21 investment specialists at 30 June 2014.
Concerns over the imminent end of quantitative easing in the U.S. have left investors much less confident in the outlook for the global economy and corporate profitability, according to the BofA Merrill Lynch Fund Manager Survey for October. An overall total of 220 panelists with US$640 billion of assets under management participated in the survey from 3 October to 9 October 2014.
After a sharp fall of more than 20 percentage points from September, only a net 32 percent of respondents expect the global economy to strengthen over the next 12 months. This is the lowest reading in two years. Inflation and earnings expectations have slumped: recent consensus over the world experiencing both below-trend inflation and below-trend growth is even stronger this month at 77 percent.
Monetary policy underlies this shift in sentiment. Only a net 18 percent of fund managers now view policy as too stimulative, down 14 percentage points to the lowest level since August 2012 – just before the last QE initiative in the U.S. Perceptions of monetary risk have also risen, along with Emerging Market risk.
Investors’ response has been to reduce riskier exposures. Cash balances have risen to 4.9 percent, while investment horizons have shortened and equity overweights have fallen rapidly (down a net 13 percentage points month-on-month). Underweights in commodities have also risen, while sectors sensitive to the asset class like energy and materials have seen large moves to net underweight positions.
Respondents have lost their appetite for Emerging Markets and European equities. Both current positioning and intentions for the next 12 months have turned negative or neutral. Instead, they have regained faith in the U.S. market and increased their preference for Japan.
“Cash balances are high, but investors are retreating to benchmark positions rather than staging an exodus from markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research. “With the European Central Bank ‘hope trade’ gone, performance in European equities is reverting to fundamentals. As our view remains downbeat, we continue to favor defensive dividend yield stocks and expect any rallies in cyclical stocks to be short lived,” added Manish Kabra, European equity and quantitative strategist.
European enthusiasm fades
Following the European Central Bank’s press conference at the start of the month, respondents are uncertain over policy in Europe. Twenty-six percent of the global panel now does not expect the ECB to initiate a program of QE, up from last month’s 19 percent.
Expectations over Europe’s growth have declined markedly. Only a net 16 percent of regional fund managers now expect the continent’s economy to strengthen over the next year. This compares to a net 45 percent last month.
The outlook for corporate profitability is heavily affected by this. After a month-on-month decline of nearly 30 percentage points, a net 52 percent now does not expect double-digit earnings growth in the region, while an even high proportion of fund managers judge earnings-per-share estimates for European companies as too high.
Against this background, positioning in European equities has declined. Only a net 4 percent of global investors report overweighting the region now, down 14 percentage points from last month.
Moreover, the market has lost its appeal as investors’ top pick for overweighting in the next 12 months. Only a net 3 percent still view it so positively.
Japanese appetite grows
In contrast, appetite for exposure to Japan has increased further. A net 14 percent of asset allocators would most like to overweight the country’s equities over the next year – a reading that is some 10 percentage points more bullish than that for any other major market.
In contrast to other regions, Japanese fund managers’ inflation expectations are on the rise. A net 46 percent expect consumer price to climb in the next year, up from a net 18 percent last month.
Investors’ increasingly negative outlook for the yen contributes to these assessments. Global fund managers are now equally bearish on the Japanese currency and the euro. This marks a striking shift from last month, when the differential between the two was more than 20 percentage points.
Fiscal and monetary concerns climb
Besides their less upbeat stance on monetary policy, panelists are also concerned over fiscal policy. A net 19 percent of global fund managers now regard fiscal policy as too restrictive.
After a 12-percentage point rise in the space of two months, this represents the highest reading on this measure in more than a year.
La Fed está entre la espada y la pared, según SYZ AM. Foto: AndyCastro, Flickr, Creative Commons. Pekín y la Fed: "Yo te tengo, tú me tienes"
In a landmark research collaboration, Julius Baer and Bank of China Limited have jointly launched the 2014 annual report on wealth trends in Asia. The report finds domestic investors, High Net Worth Individuals (HNWI) in China have a positive stance on risky assets and are turning increasingly to private banks to meet their financial service needs.
This year’s Julius Baer – Bank of China Wealth Report: Asia provides a focused China Lifestyle Index of 12 mainland China cities. The report also examines pivotal shifts in the world’s second largest economy and how HNWI in China see private banking as well as the education for their next generation.
Shumin Zhu, Executive Vice President of Bank of China Limited commented: “Internationalization of the renminbi is a key element in China’s wider economic reform process and Bank of China is at the forefront of this development. As a bank, we are committed to contributing to supporting China’s businesses and entrepreneurs, who strive to further develop the country’s economy and contribute to the China Dream. We are very pleased to cooperate with Julius Baer in producing this landmark report. The findings confirmed that our clients, many of whom are entrepreneurs, are confident about the future of the Chinese economy and investment environment. As the leading wealth manager in China, sharing expertise with Julius Baer as new opportunities emerge in global private banking, is an exciting proposition for Bank of China.”
Boris F.J. Collardi, Chief Executive Officer of Julius Baer Group Ltd, said: “Our strategic partnership with Bank of China comes as the economies in the region are becoming increasingly synchronised and financially integrated. It is clear to us that the combination of these factors, together with the internationalisation of the renminbi, Asia’s growth drivers are evolving rapidly. These are important issues, and our partnership with Bank of China places Julius Baer in a prime, unique and privileged position to engage with our international clients on these matters.”
The Julius Baer – Bank of China Wealth Report: Asia features a unique survey of a representative sample of Bank of China’s onshore private banking clients across the nation. On the forefront of China’s economic transition, Bank of China’s private banking client base represents mostly entrepreneurs who cherish the services that Bank of China offers.
Internationalization is a key theme that echoes throughout the report. Be it from the perspective of High Net Worth Individuals (HNWI) as parents or investors, respondents to the surveys on private banking service and education planning for their next generation expressed clear interests in broadening horizons. This parallels with the joint Julius Baer and Bank of China stance on what is happening in China’s economy and broader policy making arena today.
Macro landscape
Among the key highlights of the 2014 Julius Baer – Bank of China Wealth Report: Asia, worries over ‘hard landings’ in China are unfounded, as these ignore the important progress already made in the context of evolving the economic model. Also, the Bank of China proprietary Cross-Border RMB Index (CRI) points to the continual internationalisation of the currency, echoing the shared view that reserve currency status is attainable in the medium term.
Private banking clients in China
In a landmark research enterprise, Bank of China has surveyed over 200 of its private banking clients in 30 branches across the country. The face-to-face interviews took place in mid-June 2014, gauging client preferences with regard to private banking products and services and their outlook on financial markets.
Structured products that offer capital protection remain the preferred investment vehicle, but foreign exchange-linked products, bonds and overseas equities were listed as being of interest over the coming 12 months.
In terms of cross-border investing, the top two interests over the next 12 months are to invest overseas financially (44%) and buy properties (40%). In terms of investment destination, the United States and Canada (61%) took the top spot, followed by Hong Kong (34%), Australia (21%), continental Europe (15%) and the United Kingdom (11%) tying with Singapore (11%) in fifth place.
The preferred long-term investment is real estate (53%). In terms of gold, survey respondents see the longer term value of holding gold (35%) in their portfolios, but have limited return expectations in the shorter term. Equities (14%) ranked last as a ‘long-term investment’.
The Julius Baer – Bank of China Lifestyle Index
2014 marks the launch of the Julius Baer – Bank of China Lifestyle Index, covering the cost of luxury goods and services as relevant to HNWI entrepreneurs across China. The data will be collected on an annual basis, in tandem with the enhanced Julius Baer Lifestyle Index.
There are twelve cities grouped into four regions. Bohai Economic Rim (Beijing, Tianjin, Dalian), Yangtze River Delta Zone (Nanjing, Shanghai, Wuxi), Pearl River Delta Zone (Guangzhou, Jiangmen, Huizhou) and the Western China Emerging Zone (Chongqing, Chengdu, Xian).
The items covered are: business registration fees, dental implants, first class domestic air travel, golf club memberships, hospital, hotel suites, luxury property and wedding banquets.
The highest average costs are found in the Bohai Economic Rim, with a significant gap between Beijing and the other two member cities (Tainjin and Dalian). The lowest costs can be found in the Western China Emerging Zone – as well as the gaps between the three cities (Chongqing, Chengdu and Xian) are the smallest. Investing in future generations
Within the Julius Baer Lifestyle Index, the education-related components (university tuition and boarding school fees) have shown the most consistent increases, double-digit increases since 2011. Taking this as a starting point, Julius Baer commissioned a survey of over affluent 800 parents across Beijing, Shanghai, Hong Kong, Mumbai and Singapore, to ascertain their attitudes, preferences and expectations in terms of investing for their children’s futures.
Parents in Beijing and Shanghai (98%) have the highest expectations that their children will achieve advanced degrees (Bachelor degree or above).
Singapore (64%) stands out for the strongest preference for local universities. Parents in China (66%) have the clearest preference for overseas education, in particular the United States and United Kingdom. Interestingly, this echoes the results of the Bank of China private banking survey in terms of desired overseas investment destinations.
Parents in Mumbai (91%), Beijing and Shanghai (88%) have the strongest expectation that their children will enjoy higher incomes than themselves.
In terms of generational transfers, parents in Beijing and Shanghai (62%) feel that passing on personal values to their children is simultaneously the most important and challenging aspect of being an affluent household. By contrast, for parents in Mumbai (39%), the most important qualitative aspect of generational transfer cited was ‘skill’. Thomas R. Meier, Region Head Asia Pacific of Julius Baer said: “Julius Baer and Bank of China have been working together to promote the exchange of wealth management experience and knowledge, as well as to enhance the understanding and confidence in the strong fundamentals of the Chinese economy and investment space for our international clientele.”
