Foto: Wallyg. AXA IM encarga a Tim Gardener la dirección global del nuevo Grupo de Clientes Institucionales
AXA Investment Managers (AXA IM) has announced the appointment of Tim Gardener as Global Head of the firm’s new Institutional Client Group, formed to reflect AXA IM’s focus on the investment needs of distinct client groups. Lisa O’Connor, currently European Head of Consultant Relations, succeeds Tim Gardener as Global Head of Consultant Relations.
Tim Gardener will lead the development of the firm’s offering and approach to institutional clients, including insurance companies, pension funds, and sovereign wealth funds. Elodie Laugel, previously Head of Solutions Development in AXA IM’s Multi Asset Client Solutions team, has been appointed Deputy Head of the Institutional Client Group. The global consultant relations team, led by Lisa O’Connor, is an integral part of the Institutional Client Group, representing the importance of consultants in both their traditional advisory role and as leading players in fiduciary management markets across the spectrum of institutional clients.
The Institutional Client Group is one part of AXA IM’s wider Client Group of 250 professionals led by Laurent Seyer. The division is in charge of developing AXA IM’s proposition by client segment (institutional, retail and wholesale), while coordinating and monitoring marketing and client relationship activities.
Commenting on the appointments, Laurent Seyer, Head of Client Group at AXA IM, said: “The leading asset managers of tomorrow will be those that are able to develop the strongest relationships with their clients. Our relationship with the AXA Group means that we are constantly challenged to stay at the forefront of financial innovation and that we have an in depth understanding of the needs of complex clients. The Institutional Client Group will ensure that we are leveraging this competitive advantage to the benefit of all of our clients. It will also support AXA IM in being as well positioned as possible to help its clients and consultants address the investment challenges facing them.”
M&G Investments, one of Europe’s leading asset managers, has reported record net retail fund sales of €8.9 billion in its established European markets and in Asia in 2013.
This marks a 46 per cent improvement on the previous year. Retail assets under management in Europe totalled €28.5 billion at the end of 2013, a 64% increase over the 12 months. They now represent 35 per cent of total retail assets under management.
Net retail fund sales were strongest in Italy, Spain, Switzerland and France.
At a group level, M&G posted total net inflows of €11.2 billion. M&G has attracted an accumulated total of €62.4 billion in net sales over the past five years.
Total assets under management were 7 per cent higher at the end of the year at €293.3 billion. External client assets rose 13 per cent to €151.4 billion, nearly treble their level at the end of 2008. Third-party clients now account for 52 per cent of the total assets under management at M&G, with the balance of the assets belonging to Prudential Group PLC, M&G’s parent company.
M&G’s most popular products were the M&G Optimal Income Fund, an international flexible bond portfolio, and the M&G Global Dividend Fund. During the year, 10 M&G retail funds attracted net inflows of at least £100 million (€117.8 million).
Ignacio Rodríguez, sales manager of M&G Investments for Spain, Portugal and Latin America says: “M&G enjoyed its most successful year yet in Europe. Measured by funds under management, our international business has grown at an annual compound rate of 79 per cent over the past ten years.”
Photo: Altavista 147. Thor Urbana Acquires Luxury Mall in Mexico City
Thor Urbana Capital, a real estate investment and development company based in Mexico City, recently acquired the luxury shopping center Altavista 147 which hosts several internationally renowned brands such as Louis Vuitton, Salvatore Ferragamo, Tiffany & Co., MaxMara, Carolina Herrera, among others.
“We are very happy to have acquired this gem in Altavista, situated in the southern part of Mexico City, an area in which culture, art, fashion and elegance are very present”, said Jaime Fasja and Jimmy Arakanji, Managing Partners at Thor Urbana. “This purchase reinforces our strategy of acquiring and developing fashion and lifestyle shopping centers with the best tenant mix, designs and in the absolute best locations in the country”.
Thor Urbana Capital is a real estate development firm formed by Thor Equities CEO Joseph J. Sitt and Mexican developers Jaime Fasja and Jimmy Arakanji. Based in Mexico City, Thor Urbana is a vertically integrated platform that specializes in sourcing, acquiring, developing, repositioning, leasing, managing, and disposing uniquely located retail, office, hotel and mixed-use assets in Mexico’s principal urban markets and main avenues.
With a management team that has over 120 years of experience developing triple-A real estate properties in Mexico, the United States, Europe and South America, Thor Urbana is uniquely positioned to capitalize on Mexico’s growing real estate market.
Wikimedia CommonsFoto: Tony Wills. El crédito con grado de inversión pierde su brillo
Yields on European investment grade credits have fallen so low that it is now time to sell securities in the asset class and look for a better deal elsewhere, says Lukas Daalder, Head of the Global Allocations team in Robeco.
Instead, the high yield, non-investment grade corporate bond market still offers a decent yield difference (spread) above sovereigns, and at relatively low default rates, he says.
Robeco Asset Allocation has subsequently decided to lower its exposure to investment grade credits by one percentage point and spend the money on high yield corporate bonds. The multi-asset fund is now underweight on investment grade, as it holds fewer bonds than the benchmark, and significantly overweight on high yield.
“European investment grade credits have shown a decent performance since 2009, leading to spread compression versus government bonds,” he says. “We see the corporate credit spread no longer as attractive, and a large part of the index spread is attributable to implicit country risk versus Germany.” Today, both investment grade credits and their sovereign bond peers yield around 1.5%-2%.
“However high yield bonds are still offering a decent credit spread, given their strong fundamentals, low default rates and the favorable regional mix, particularly in the US, despite the drop in high yield spreads in the last few years.”
Three reasons for the switch
Daalder gives three reasons why investment grade credits are not as attractive as they once were:
Both the non-financial corporates and the financial credits index yield have dropped significantly in the last years, and are now moving in tandem with European government bond yields. This can be seen in the chart below:
Source: Bloomberg
The index spread, measured against German Bund yields, is for a large part a compensation for the exposure to country risk against Germany. What people think is credit spread is actually country spread. For example, compared to the low German Bund yields, there still is a positive spread for various credits. However, if you compare it to national government bonds, which would be fairer, the spread is actually negative in many cases, as can be seen from the example of Unicredito in the chart below:
Source: Bloomberg
Although the credit fundamentals of European credits and financial bonds still look good thanks to strong balance sheets, conservative behavior and a low interest rate burden, we think that the solid fundamentals are discounted by the market by now.
US allocation helps spread buffer
Daalder says the spread buffer is higher and regional exposure is more favorable in high yield than in investment grade, thanks partly to a large allocation that his fund has made to the US.
“Sure, the yield and spread on high yield bonds have fallen as well, but the ratio between high yield and investment grade yields still looks attractive, while high yield fundamentals remain strong,” he says.
“We see the overall fundamental picture as still supportive for high yield bonds. The interest rate burden is at an all-time low, while default rates remain at very low levels.”
Photo: Martin St-Amant (S23678). Wall Street Bonuses Went Up 15% in 2013
The average bonus paid to securities industry employees in New York City grew by 15 percent to $164,530 in 2013, which is the largest average bonus since the 2008 financial crisis, and the third highest on record, according to an estimate released today by New York State Comptroller Thomas P. DiNapoli. The bonus estimate includes cash bonuses for the current year, supplemented by compensation deferred from prior years.
“Wall Street navigated through some rough patches last year and had a profitable year in 2013. Securities industry employees took home significantly higher bonuses on average,” DiNapoli said. “Although profits were lower than the prior year, the industry still had a good year in 2013 despite costly legal settlements and higher interest rates. Wall Street continues to demonstrate resilience as it evolves in a changing regulatory environment.”
After record losses during the financial crisis, the securities industry has been profitable for five consecutive years, including the three best years on record. The industry reported profits for the broker/dealer operations of the New York Stock Exchange member firms, the traditional measure of profitability for the securities industry, totaled $16.7 billion in 2013, which is 30 percent less than in 2012 ($23.9 billion) but still strong by historical standards.
The securities industry has undergone a major overhaul since the 2008 financial crisis. Regulatory reforms are changing the way the industry does business by requiring larger reserves, limiting proprietary trading and imposing other changes intended to reduce unnecessary risk and to enhance transparency. In response to compensation reforms, firms now pay a smaller share of bonuses in the current year and a larger share is deferred to future years.
Even though the securities industry has been very profitable in recent years, the number of industry jobs in New York City has not returned to the pre-crisis level. DiNapoli estimates the securities industry employed 165,200 workers in New York City in December 2013, which is 12.6 percent fewer workers than before the financial crisis. After large job losses during the recession, employment in the securities industry in New York City has stabilized.
DiNapoli’s office releases an annual estimate of cash bonuses paid to securities industry employees who work in New York City during the traditional bonus season. Bonuses paid by firms to their employees located outside of New York City (whether in domestic or international locations) are not included. The Comptroller’s estimate is based on personal income tax trends, which do not distinguish between cash bonuses for the current year and compensation deferred from prior years. The estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
DiNapoli also reported that:
The bonus pool for securities employees who work in New York City also grew by 15 percent in 2013 to $26.7 billion during the traditional December-March bonus season. The Comptroller’s estimate includes cash bonuses for the current year, supplemented by bonuses deferred from prior years. Over the past two years, the bonus pool has grown by 44 percent, driven by compensation deferred from prior years;
Although data are not yet available for 2013, the average salary (including bonuses) paid to securities industry employees in New York City ($360,700 in 2012) was 5.2 times greater than the rest of the private sector ($69,200 in 2012);
Despite its relatively small size, the securities industry is still one of New York City’s major economic engines. The securities industry, for example, accounted for 22 percent of all private sector wages paid in New York City in 2012 even though it accounted for only 5 percent of the city’s private sector jobs;
The securities industry generates a significant amount of tax revenue for New York state and New York City. DiNapoli estimates New York City collected $3.8 billion in taxes in fiscal year 2013 from activities directly attributed to the securities industry, nearly 27 percent more than in the prior year and the second-highest level on record. Although less than the prerecession peak (11 percent), the securities industry accounted for 8.5 percent of the city’s tax revenues;
New York state, which depends more heavily on Wall Street revenues than the city does, collected $10.3 billion in taxes attributed to the securities industry during SFY 2012-13. Last year, the securities industry accounted for 16 percent of all state tax revenue, less than the prerecession peak (20 percent); and
City tax revenues could be $100 million higher than anticipated in the city’s budget because it assumed a 5 percent decline in the bonus pool. The state budget assumes a 7.8 percent increase in bonuses for the entire financial sector. While there is the potential for some additional state tax revenue, the state outlook is more consistent with DiNapoli’s forecast.
. Consensus Might be Underestimating the Tightness of the Oil Market
OECD oil inventory levels, a proxy for global oil stock levels, fell sharply in November (the latest month for which there is official data). The 54 million barrel decline was the largest monthly fall since December 2011, and preliminary indications suggest a further 43 million barrel fall for December.
Looking in more detail at the OECD oil inventory levels by geography, the Investec Commodities & Resources Indicator report, finds striking that the large draws in November were across the board in the Americas, Europe and Asia. Despite the surge in US oil production growth, US oil stock levels are lower than last year owing to high refinery utilization and strong product demand and exports. European oil inventories fell by 13 million barrels in November, compared to an average 12 million build for the month, and Asian stock levels also fell further than the seasonal norm.
Oil demand across the developed world significantly exceeded analysts’ expectations in the second half of 2013: year-on-year (yoy) comparisons were strong for both the third and fourth quarters of 2013. Third quarter demand rose from 45.9 million barrels per day (bl/d) to 46.4 million bl/d yoy, while increasing from 46.2 million bl/d to 46.6 million bl/d yoy in the fourth. We had suggested that oil demand for 2013 would come in above consensus, driven by a combination of non-OECD growth and OECD recovery, and so it proved.
Investec is expecting a repeat in 2014: the current fear around emerging market currency weakness distracts from the structural demand growth story which is still on track, and the asset manager expects oil demand growth from the non-OECD region of 1.3-1.5 million bl/d in 2014, following growth of 1.1 million bl/d in 2013.
Strong demand and low spare capacity has tightened global oil inventory levels. Investec’s Commodities & Resources team should not be surprised by Brent crude oil ranging between $100-$115/bl: the only surprising aspect from their vantage point is that many commentators, mainly economists, continue to talk about $80/bl oil.
You can access the last Investec Commodities & Resources Indicator report lin the following link.
Daniel Canel, CEO of Advanced Capital.. Advanced Capital Consolidates Latin American Presence with Peru Acquisition
Advanced Capital Securities, a Latin American investment bank capitalizing on regional and international market synergies for its clients, has consolidated its Latin American presence with the acquisition of Andes Securities SAB and Andes Securities SAFI, a longstanding Peruvian brokerage firm and investment fund manager with an impeccable track record and extensive experience in managing investments and securities services in the domestic market.
“This acquisition forms part of our goal to grow as a regional investment company focused on an emerging segment of Latin American companies and institutions, and Peru is important not only for regional integration, but due to its location within the Andean corridor,” said Daniel Canel, CEO of Advanced Capital.
With its arrival in Peru, Advanced Capital will bring to the country’s banking sector its characteristic investment banking services and specialists who bring their vast experience to help customers make sound decisions. Advanced Capital intends to consolidate its current business model, grow within the national market and introduce new financial solutions from Advanced Capital offices throughout the region.
The Peruvian Experience
Andes Securities SAB (now Andes Advanced Securities SAB) boasts a 13-year tradition of offering sound financial services in Peru, with a portfolio of more than 2,000 clients that includes individual investors as well as legal and institutional clients.
For Jacobo Said, Andes Advanced Securities founding partner and CEO, “this integration serves as an opportunity to increase the availability of Andes Securities services as well as the quality of its services through Advanced Capital, and the company’s executives, with their extensive experience and knowledge, will bring expertise to the market”.
He ensures that Peru’s capital market has impressive growth rates compared to its neighbors;”Peru plays an important role in the region, which raises business expectations and allows for a more advanced distribution network. The country should become a foreign exchange hub, and macroeconomic policies improving the country’s capital markets should guarantee Peru’s position as an important player in the region’s capital markets,” Said added.
Andes Advanced Securities SAB will offer services including equity and fixed-income services for both institutional and individual clients, manage investment funds through Andes SAFI and underwrite, structure and distribute debt and equity in the country’s capital markets.
Michael Marquez and Alfonso Baigorri. Bessemer Trust Recruits Alfonso Baigorri as Managing Director and Appoints Michael Marquez as Florida Region Head
Bessemer Trust has recruited Alfonso Baigorri to head its Miami office as Managing Director. After five years at the helm of the aforementioned office, Michael Marquez now assumes the position of Regional Director for Florida at Bessemer Trust, which has offices in Miami, Palm Beach and Naples.
As Baigorri himself, who to date has worked as managing director for JPMorgan Private Bank, explained to Funds Society, he joins one of the largest family offices in the United States with great enthusiasm, since it is a new challenge in his career; which for the past 20 years has been focused mainly on wealth consultancy to international families with family and economic ties both abroad and in the United States.
From this moment on, Baigorri assumes the management of Bessemer Trust in Miami, where he shall be in charge of professionals who work primarily with U.S. clients, although in recent times the number of foreign clients abroad, and foreign clients who have moved to Southern Florida, have contributed to design a new structure in Miami for a family office which has 107 years of history in the United States.
In addition to JPMorgan, where he worked since January 2008, Baigorri has been a partner in companies such as Buchanan Ingersoll & Rooney and Katz Barron Squitero Faust, as well as holding various positions at Banco Santander, where he worked for 12 years both in Puerto Rico and in Miami. Baigorri, a graduate of Boston University, has a Law degree from the Faculty of Law at the InterAmerican University and an LL.M. in Estate Planning from the University of Miami. Baigorri belongs to the Florida Bar Association and is a member of the Society of Trust and Estate Practitioners (STEP).
Meanwhile, Marquez is responsible for all of Bessemer’s interests in Florida, including the management of client relationships and new business development for the firm’s three offices in the state.
Before joining Bessemer, Marquez worked as managing director for JP Morgan Private Bank, coinciding with Baigorri, and also served as a member of the company’s mergers and acquisitions division. Prior to this, Martin spent several years at PricewaterhouseCoopers, where he held the position of manager for the group’s Global Capital Markets division.
Marquez holds a Columbia Business School MBA with honors, and is a Boston College Magna Cum Laude graduate.
Bessemer Trust was founded in 1907 by Henry Phipps, a partner of Andrew Carnegie in the Carnegie Steel Company, and the company still holds and manages his property; the company has 95 billion dollars in assets under management and has a ratio of three customers per employee. It currently has more than 2,200 customers and 800 employees and their average client has a portfolio of 43 million dollars.
Bessemer’s headquarters are in New York. The firm has offices in major U.S. cities as well as in London and in the Cayman Islands.
Doug Orton, Buisiness Development at MFS Investments. Investors' Thoughts and Behaviors Don't Align
According to the latest MFS Investment Sentiment Insight survey, there is disconnection investors’ between thoughts and behaviors. Investors continue to remain sceptical about investing despite their self-stated optimism and belief that equities represent a good investment choice over the long term.
When asked about their asset allocation and their opinions about various asset classes, their attitudes and behaviors didn’t match. Cash had the lowest positive ratings of any asset class and also the highest negative ratings.
But investors had almost a quarter of their portfolio in cash. On the other hand, US equity had the highest positives and lowest negatives, but investors had only 39% of their portfolios allocated to US equity. They may know that this isn’t the right choice: Less than half were very confident they had the right allocation.
Investors seem to be reacting emotionally to what’s happening in the news cycle rather than focusing on how to meet their long term goals. Lengthening their time horizons will help them match their goals and investments, according to MFS.
Bill Gross is not the always affable, mild-mannered, yoga practitioner we have been led to believe he is. He is demanding of his staff, prone to hyper-criticism and a bit of a tyrant. Who would have expected that the King of Bonds was driven by a big ego and a tinge of nastiness?
An article, published in the Wall Street Journal last week, reveals a different view of Mr. Gross than what many readers of his monthly Investment Outlook have come to expect of him. Some of his colleagues and industry commentators are shedding light on a range of behavior that is inconsistent with the persona that Bill Gross himself has so masterfully developed over the last four decades. For those who had come to ‘know’ him through the stories he tells, the recent contradicting reports come as a surprise.
Is this is the new normal Bill Gross?
The catalyst for the WSJ article was the sudden departure of Mohamed El-Erian, the highly-respected former heir-apparent to Mr. Gross. Mr. El-Erian fled PIMCO’s offices in Newport Beach and left a reported $100 million annual salary behind. As power struggles go, this one was ferocious.
For a man overseeing $2 trillion dollars in assets and who is, according to one commentator, the Steve Jobs of bond management, few should be really surprised at what was hiding beneath the mild-mannered style Mr. Gross exudes in public. Indeed, a management consultant who had worked with PIMCO for three years likened the shop’s environment to a ‘pressure cooker’ with Mr. Gross as its Chef. Things have boiled over.
PIMCO is like no other firm in the history of asset management. One might argue that it is all but impossible to reach a level of royalty in this industry and create an enterprise of such scale without dishing out some ‘tough love’ every once in a while. Mr. Gross contends that he can indeed be demanding of others but no more so than he is of himself. Ultimately, its about results: AuM and performance numbers will be the ongoing measure of success.
Beyond the melodrama, these newly surfaced elements of Mr. Gross’s personality are important developments for investors to understand and monitor. Asset management is a people business. Success is dependent on attracting and retaining talented individuals who are able to execute as a team. Managing inter/intra-personal complexities, particularly within large firms, is integral to cohesion and growth. These are elements that investors must both be aware of and focus on. Their realities are often hidden from view.
In The Gross Recipe, an essay on Mr. Gross and the persona he has created through his monthly Investment Outlook, I wrote:
“[W]hat works so well for Mr. Gross is that investor-readers do not know everything about him. There is always something unknown remaining for the reader’s imagination to create for him/her self. Perhaps it is this ‘just enough’ status that, like properly managed Fed monetary policy, is the recipe for success.”
Perhaps now investors know too much.
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afterword: It is interesting to compare the public persona of Bill Gross to that of the other claimant of the title “King of Bonds:” Jeffrey Gundlach of Doubleline. Mr. Gundlach’s strongly expressed confidence and ego are similar is some ways with what is now very publicly being discussed about Bill Gross. Alas, it has not hurt Doubleline from being one of the fastest growing asset management companies in recent history.
* If you find this topic interesting and have not done so already, please read the essay, “The Gross Recipe.” It discusses the persona Bill Gross has created through his colorful storytelling in the monthly “Investment Outlook” essays he writes. The current essay is a direct follow up from that articles. See: http://propinquityadvisors.com/distribution/the-gross-recipe
[Thanks to Baldwin Berges for his pictorial contribution of Mr. Gross. See: www.baldwinberges.com & www.bd-insider.com.]
Article by Roland Meerdter, founder and managing partner of Propinquity Advisors
