Since the beginning of the year, in anticipation of the impending Warburg Pincus investment, Source has implemented an accelerated growth plan, increasing headcount by 20%, adding depth and expertise to key areas including investment content, regional coverage, legal and marketing. Already in 2014, through a combination of successful new product launches and growth in existing funds, Source’s assets under management have increased by 20%, twice the rate of growth seen in the European ETP market. As a result, Source has 35 ETPs with more than US$100 million in assets and 5 with more than US$1 billion in assets. With total AUM in excess of US$18 billion, as at 1 June 2014, Source is currently the fifth-largest European ETP provider by assets.
Further, Source is delighted that Lee Kranefuss is joining the company as Executive Chairman and will work alongside CEO Ted Hood and the management team to continue developing the business. Mr Kranefuss remains an Executive-in-Residence at Warburg Pincus. Preceding this, he was the architect and Global CEO of iShares, which under his leadership became the largest provider of exchange-traded funds in the world.
“The European ETP industry is nearing an inflexion point,” highlights Lee Kranefuss, “where there will be opportunities for both consolidation and expansion. Growth has been strong but from a low base and, similar to the US market, should accelerate as investors become more familiar with the investments. Source’s business model is built on innovation and delivering performance. This combined with a range of world-class partnerships makes Source uniquely placed for the years ahead.”
“This seems a perfect fit for all parties,” Ted Hood explains, “not only for Source and Warburg Pincus but also, and more importantly, for our investors. Our success has been underpinned by our commitment to finding innovative solutions to meet the ever-evolving needs of investors. The conclusion of this deal marks the beginning of a new chapter for Source, but our story remains very much unchanged. What this news brings is an assurance that we will be able to remain at the cutting edge of the industry and continue delivering on this award-winning strategy well into the future.”
Investment consulting and advisory firm Meketa Investment Group has opened a London office.
An independent, employee-owned firm, Meketa Investment Group provides general investment consulting and advisory services as well as specialized private markets consulting and advisory services to institutional investors including public, corporate and union employee benefit plans, university endowments, charitable organizations, insurance companies, and family offices on a discretionary and non-discretionary basis. Founded in the Boston area in 1978, the firm expanded to the San Diego area in 2003 and to Miami in 2011. Today, Meketa Investment Group employs more than 100 professionals and consults on more than $270 billion in assets for over 90 clients whose total aggregate assets exceed $600 billion.
Meketa Investment Group’s London office will provide research support to Meketa Investment Group’s U.S. offices on public market, private market and risk management strategies across Europe, the Middle East and Africa (EMEA). The office will formally open June 12th and will be staffed with three full-time investment professionals.
“London provides a platform to deepen our existing research coverage outside the Americas,” said Stephen McCourt, Managing Principal, Meketa Investment Group, who will open the London office. “Meketa Investment Group is well known for the depth and experience of its investment staff. We are pleased to establish a presence in Europe.”
“As a leading advisory firm with an ever more geographically diverse client base, establishing a presence in Europe is an appropriate and timely step in our evolution,” said James Meketa, Founder and CEO, Meketa Investment Group. “While continuing to grow our firm we remain committed to providing the highest level of client service. In serving the EMEA markets we will employ the same client-centered, research-focused approach that has served us so well since our founding.”
CC-BY-SA-2.0, FlickrCondoleezza Rice at INSITE 2014.. Condoleezza Rice Reviews Current Issues to Over 1,000 Professionals at Pershing’s INSITE 2014
On Wednesday, Condoleezza Rice, former U.S. Secretary of State and former National Security Advisor, shared her experiences and stories from her time in the Bush Administration with a captive audience at Pershing’s INSITE 2014, where she served as keynote speaker.
Speaking to an audience of over 1,000 professionals, in Hollywood, a city north of Miami (Florida), Rice pointed out that in recent years there have been three events that have marked the world: the 9/11 terrorist attacks, the 2008 crisis, and the Arab Spring. During the first two she was Secretary of State and then National Security Advisor to President George W. Bush, while she experienced the last of these events from the sidelines.
Likewise, she went over several current issues and the role of the Obama Administration in each of those; a role which, according to Rice, should be much more forceful and firm in some cases, such as the Ukrainian crisis, in which she believes Washington should strengthen its presence in the Baltic region, sending out a clear message to Russian President Vladimir Putin, whom she labeled as a “mental maniac” among other things, but not suicidal, so that if the United States strengthens its military presence in the Baltic states it would help to reduce tensions in the area.
President Obama, who is traveling through Europe this week, announced his plans, before landing in Warsaw, to increase military presence in the region as well as a package of 1,000 million dollars to boost troop deployments and exercises throughout Europe, a change after two decades in which the U.S. trend was to reduce its military presence in Europe.
As for her views on the current situation in Venezuela, Rice said that the late Hugo Chavez’s successor is very similar “but without the charisma, and not as funny as his predecessor.” She believes that Nicolas Maduro cannot retain power for much longer and also finds a stronger stance from the White House lacking in dealing with the situation which Venezuela has been suffering for quite a while now, and which has worsened since the opposition decided to take to the streets in February.
According to Rice, President Maduro, who has been in office for just over a year now, may not last much longer if the protests continue in the streets and the social unrest continues to spread. “Maduro cannot withstand an environment in which all of Venezuela’s Latin American neighbors are democratic; unfortunately, he will destroy the country in the meantime, making it much harder to progress,” she added.
Regarding her period as Secretary of State, she acknowledged that 9/11 was one of the hardest moments. She said that a Secretary of State must be firm and therefore cannot always display a cooperative nature; the role also requires maintaining a certain amount of optimism so as not to weary citizens with exposure to so much bad news.
Bahamas Government House. Biscayne Capital Launches Wealth Management Office in the Bahamas with Stephen Coakley Wells
Biscayne Capital, one of the fastest growing private banking firms in Latin America and the Caribbean, has opened an office in Nassau and has named financial services veteran Stephen Coakley Wells as Managing Director of its Bahamas operations.
As well as delivering investment management and advisory services for individual investors, the Bahamas office will offer- a variety of services for international businesses, including incorporation, registered office, agent and administration services, in addition to corporate officer and director nominee services.
Based in Montevideo, Uruguay, Biscayne Capital was founded in 2005 and established its Zurich office in 2012. The firm currently has over $1 billion of assets under management and a team of 41 financial advisors worldwide.
Mr. Coakley Wells, a citizen of the Bahamas, has been in the financial services industry since 1995. Before he joined Biscayne Capital, he was an International Financial Advisor at Merrill Lynch, providing financial solutions for high and ultra-high net worth clients in Latin America and the Caribbean region.
“Stephen brings a wealth of experience and great new dimension to our team,” said Roberto Cortes, co-founder and Director of Biscayne Capital. “His commitment to a personalized and strategic approach to help clients make informed decisions about managing, conserving and enhancing their wealth makes him a perfect fit at Biscayne Capital.”
Prior to joining Merrill Lynch, Mr. Coakley Wells was a Senior Wealth Advisor for Latin America and the Caribbean at a global top tier financial institution based in Switzerland. His experience is complemented by a comprehensive knowledge of Latin American tax and legal regulations.
Mr. Coakley Wells has earned advanced degrees in Law and Latin American and Caribbean Studies, concentrating on Economic Law. He speaks English and Portuguese fluently and is conversant in Spanish and French. He is also a proud alumnus of the United World Colleges movement.
“We have launched these new factor indexes not only in response to the increasing demand for indexes to serve as the basis for index-based investment products in Latin America, but also because of the global trend toward factor investing,” said Diana Tidd, Managing Director and Head of the MSCI Index Business in the Americas.
“This is the first full suite of factor indexes covering the Latin America market and is part of our ongoing commitment to provide our clients in the region with the tools they need to support their investment processes.”
Equity factor investing was pioneered in the 1970s based on research, data and analytics created by Barra – today an MSCI company. In recent years, MSCI has developed a range of indexes that provide institutional investors with a basis for implementing a transparent and efficient passive approach to seeking the excess returns historically obtained over long time horizons through active factor investing. In 2008, MSCI introduced the industry’s first Minimum Volatility Index. More than USD 90 billion in assets are benchmarked to MSCI Factor Indexes1.
1As of March 31, 2013 according to eVestment, Lipper and Bloomberg
CC-BY-SA-2.0, FlickrFoto: Maria Jose Bustamante. Chile, nubarrones a la vista
Chile is one of Latin America’s great long-term success stories, with fiscal rectitude and the strong savings culture, fostered by its pension fund industry, often cited as the roots of its success. In recent years though, it has underperformed most emerging markets including Brazil; its currency has proven vulnerable, and the stock of private sector debt has mounted. However, the country is undergoing some profound changes under the leadership of newly elected president Michelle Bachelet.
The changes reflect the nearly universal desire in Latin America to deal with the long-term issues of low public investment in infrastructure, sub-par education, and lack of social mobility. While dealing with these issues could help Chile break free from its ‘stuck in the middle’ status, it seems that few companies are prepared for the changes this will entail, and far fewer still, are able or willing to embrace the president’s vision.
Chile’s economy is slowing down rapidly as the spectre of tax and regulatory reforms from the new, more populist, Bachelet government have spooked corporations, both big and small. Chilean companies pay little tax on corporate profits provided they invest in practically anything; be it foreign acquisitions, company cars, groceries for employees or new plants — eventually it all counts as capital investment. This has led to widespread abuse and severe distortions in the economy, and a severe shortfall in tax revenue for the government. Reform means Chile could grow as little as 2.5% in 2014, which is well below its historic growth rate of 5‑6%. We feel this is a very similar situation to the impact that tax changes have had in Mexico but with perhaps more intense social repercussions.
The slowing economy should drive Chile’s interest rates lower; the central bank cut the policy rate from 4.5% to 4.0% in the first quarter. However, the differential in policy rates between Chile and Brazil has contributed to the peso’s 7.0% underperformance versus the Brazilian real in the last 12 months. Chile’s currency could be vulnerable as more rate cuts look likely in 2014.
Many companies are experiencing headwinds from areas as diverse as environmental protection, data protection, insurance/financial sales practices, and labour relations. Chile’s traditionally pro-business regulatory bodies are being transformed rapidly into much more progressive, proactive bodies. There is an unreal sense of denial amongst Chilean executives.
Meanwhile commodity markets are not particularly helpful for Chile. According to Deutsche Bank, the demand‑led commodity markets of 2002-08 have given way to the supply‑led markets of today. Only where supply is likely to be disrupted — as in the cases of nickel, coffee or platinum — is there likely to be much strength. Producers have excess capacity otherwise to provide rapid supply responses. Chile’s key commodity exports, copper and pulp, have been trendless but it is worth noting that Chile’s producers are generally right at the bottom of the cost curve.
To summarise, the new Bachelet government intends to use higher corporate taxation, stronger environmental protection, vigilance in consumer protection, and vastly higher spending on secondary and higher education to rebalance Chile’s unequal society. Few Chilean companies will see any immediate benefits — it will be particularly important to figure out which companies are getting ‘on side’. For example our research indicates that in Brazil companies such as Cielo and Smiles help the tax authorities with data collection, while Kroton is a beneficiary of big spending on education.
Opinion column by Chris Palmer, Director of Global Emerging Markets at Henderson Global Investors
CC-BY-SA-2.0, FlickrFrancisco Gonzalez preside el banco español BBVA. Francisco González recibe la Medalla de Oro de Americas Society
BBVA Chairman Francisco Gonzalez has been awarded the Americas Society Gold Medal in recognition for his important contribution to the growth and development of the Americas. He received the award on Wednesday night at a formal dinner in New York.
At the ceremony, Mr. Gonzalez expressed his gratitude for the award, adding that “in the Americas, BBVA has been guided by principles.” He affirmed that “our presence in the U.S., Mexico and South America gives us a clear perspective on the important interplay between the developed and emerging worlds. In many ways, our bank can be seen as a bridge between these worlds, working for a better future for people.”
The Americas Society Gold Medal is the organization’s highest award for people who have made significant contributions to economic development and social and environmental responsibility, and have promoted cultural, social and educational projects in the Americas.
“With a strong vision and an unwavering commitment to innovation and corporate social responsibility, Francisco Gonzalez has transformed BBVA into a truly international institution,” said Americas Society/Council of the Americas President and CEO Susan Segal. “The Americas Society is honored to be able to recognize him for his contributions to the financial sector and the communities in which BBVA operates.”
Since he was appointed Chairman in 2000, he has turned BBVA into a global financial group with a presence in 30 countries. It is now the top bank in Mexico and has leading franchises in South America and the Sunbelt region in the U.S.
BBVA’s current plans include a $6 billion investment in Latin America for 2013-2016. In Mexico, it plans to invest $3.5 billion in technology upgrades, branch office renovations and on the completion of its new headquarters. In South America, it intends to invest $2.5 billion to boost innovation and make BBVA the top digital bank in that region.
BBVA is also engaged in important social work. By the end of 2013, more than 1.5 million people had obtained financing from the BBVA Microfinance Foundation for entrepreneurial initiatives in Latin America. And since 2007, the bank granted 450,000 scholarships to people in the United States and Latin America.
Fitch Ratings has affirmed Andorra Banc Agricol Reig’s (Andbank), Credit Andorra‘s, and Mora Banc Grup, SA’s (MoraBanc) Long-term Issuer Default Ratings (IDR) at ‘A-‘ and Viability Ratings (VR) at ‘a-‘, and Banca Privada d’Andorra’s (BPA) Long-term IDR at ‘BB+’ and VR at ‘bb+’. The Outlooks on the Long-term IDRs of Andbank and BPA are Stable. The Outlook on Credit Andorra has been revised to Stable from Negative. The Outlook on Morabanc is Negative.
The banks’ Long-term IDRs are driven by their intrinsic credit profiles, reflected by their VRs. All four banks focus on developing their private banking and asset management franchises and had positive net new money inflows in 2013, which supported their continued assets under management (AuM) growth. Andbank, Credit Andorra and BPA focused on growing through their foreign subsidiaries, while MoraBanc’s international presence is more limited and its growth strategy lies in attracting private banking clients to Andorra. Fitch believes that the onshore nature of Andorran banks’ recent AuM growth reduces the potential impact from future automatic tax information exchange agreements that Andorran banks may be subject to.
Although Andorran banks concentrate on wealth management activities, they are also active in domestic retail banking. Their asset quality deteriorated during the recession of the Andorran economy. As GDP is expected to start growing moderately in 2014, Fitch expects pressure on banks’ asset quality to ease, but asset quality ratios are likely to deteriorate further, albeit at a significantly slower pace. Together with the banks’ generally healthy profitability, this should enable them to provide for impairment needs and build up capital through retained earnings.
Andbank‘s strong capitalisation has a high influence on its VR. Its Fitch core capital (FCC) ratio was 20.8% at end-2013. The acquisition of the Spanish private banking business of Inversis Banco, which is expected to be completed by end-2014, will initially have a negative impact on capital ratios as it will generate EUR120m goodwill. The VR is based on Fitch’s assumption that Andbank will recover its capital position within a short period of time through stronger internal capital generation, helped by a reduction in the dividend pay-out ratio. The bank’s VR also considers healthy profitability and cost efficiency, as well as its deteriorated asset quality. The ratio of problematic assets (defined as non-performing loans and loans in arrears plus foreclosed assets) was 6.5% at YE13 and problematic loans (non-performing loans and loans in arrears) were well covered by provisions at 56%.
The Outlook on Credit Andorra has been revised to Stable from Negative, supported by the bank’s increased problematic asset coverage levels and capitalisation, which in Fitch’s view largely outweighed the asset quality deterioration in 2013. The bank was able to increase coverage and capitalisation due to its strong and recurrent earnings generation capacity, which has relatively higher importance for its VR, combined with a conservative provisioning and earnings retention policy. Nevertheless, Fitch acknowledges that the bank’s relatively large exposure to the domestic retail market affects its asset quality. Credit Andorra’s problematic asset ratio was 8% at end-2013, with problematic loans 34% covered. The VR is based on Fitch’s expectation that the bank will continue to increase its impairment reserve coverage following the provisioning approach set in 2013.
Fitch considers capitalisation and leverage to have a high influence on MoraBanc‘s VR. The agency considers MoraBanc’s capitalisation is strong compared with its peers, with an FCC ratio of 28.5% at end-2013. Combined with a sovereign debt securities portfolio that has higher average ratings than those of its peers, this compensates for the weaker quality of the bank’s loan book. Its non-performing loans and loans in arrears represented 5.1% of loans, with a low 15% coverage, underscoring its reliance on the valuation of collaterals. Including foreclosed assets, its problematic assets ratio was 9%. MoraBanc’s growth strategy, which consists of attracting private banking clients to Andorra instead of incrementing its international footprint, has resulted in relatively lower business growth in recent years.
BPA‘s VR reflects its respectable domestic and growing international franchise, which is beginning to be reflected in profitability, and adequate liquidity. Capitalisation and leverage and asset quality have a high influence on BPA’s VR. Fitch considers capitalisation tight as BPA only maintains moderate buffers. The bank’s FCC/RWA ratio declined to 9.2% at end-2013 from 10.3% at end-2012.
More than five years after the 2008 financial crisis, financial advisors report that investors are still skittish, with three of their biggest priorities being “defensive” in nature: protecting wealth from market volatility, finding reliable income sources and minimizing the impact of taxes on portfolios, according to Eaton Vance’s “Advisor Top-of-Mind Index“. Capital appreciation ranked lower on the Index, signaling that many clients are less concerned about growing their portfolios.
Eaton Vance’s new quarterly Advisor Top-of-Mind Index, based on a survey of financial advisors, is calculated using a mathematical formula that incorporates the overall importance of each client issue, combined with how fast the issue is increasing in importance. Volatility measured 114.9 on the index, with income concerns ranking close behind at 106.6 and reducing taxes scoring 92.8. Growing wealth through capital appreciation came in at only 85.5.
“Despite five years of strong equity returns and fairly low market volatility in 2013, many investors are afraid of getting burned like they did in 2008,” said Bob Cunha, Managing Director, Marketing and Distribution Strategy for Eaton Vance. “On top of that, many are looking at the prospect of double-digit losses in their bond portfolios as interest rates rise, along with tax bills that have skyrocketed. They appear to be more focused on protection than growth.”
Rich Bernstein, CEO and CIO of Richard Bernstein Advisors LLC, agrees but sees a silver lining. “The fact that many investors are still fearful is actually a good sign. It suggests to me that the bull market in U.S. equities has not run its course. It’s when investors get complacent and overconfident that I start telling clients to expect a potential market reversal. That’s clearly not the case today.”
With a broad range of factors potentially impacting markets and triggering investor anxiety, the Advisor Top-of-Mind Index aims to articulate the most commonly raised concerns. It is part of an ongoing study developed to help identify the investment themes and concerns clients are raising with their advisors most often. The Advisor Top-of-Mind Index is similar to the U.S. Consumer Confidence Index (which is not affiliated with Eaton Vance) in that it calculates a weighted average of current perceptions and what advisors think about the trends. In future quarters, Eaton Vance will measure which of these factors increase or decrease on the Advisor Top-of-Mind Index to glean insights into what advisors perceive to be clients’ biggest financial challenges, along with how market volatility shapes client and advisor perspectives.
“The Advisor Top-of-Mind Index acts like a thermometer for the financial advisor community,” Cunha said. “We believe it will help us, and our industry as a whole, to develop the tools and resources advisors need so they will be equipped to address their clients’ most pressing needs. As sentiment changes over time, the index will help us identify evolving client concerns so that we can help advisors prepare their clients for the future and effectively navigate a still-uncertain investment environment.”
CC-BY-SA-2.0, FlickrJoel Peña, Managing Director for Latin America and U.S. Offshore at Robeco / Courtesy Photo. Robeco Strengthens its Expansion in Latin America and U.S. Offshore with Joel Peña’s Addition
Robeco has announced Joel Peña’s incorporation to its Latin American and U.S. Offshore team; Peña, CFA, will head the U.S. offshore / Latin American business growth from Miami and New York.
Joel Peña, a professional with 13 years experience in the asset management industry began his professional career at BBVA Bancomer in Houston and Miami, later to join Bank Hapoalim as Senior Private Banker. He joins Robeco after nearly six years as head of institutional and private clients in Latin America for Pimco. He graduated in economics from Tec de Monterrey (ITESM) and has an MBA from the Stern School of Business at New York University. He also has CFA and CAIA certifications.
Joel Peña will be Managing Director for Latin America and U.S. Offshore, reporting to Javier Garcia de Vinuesa, Robeco’s head for Offshore U.S., Spain and Latam. His main objective shall be to position Robeco amongst the leading investment fund managers in the Latin American market and to continue the management company’s successful growth within this sector. Amongst the main challenges he will face, will be to consolidate and expand Robeco in line with the firm’s strategic plan 2014-2018. His extensive knowledge of the markets and his experience within the industry will be critical in order to meet the growth objectives defined by Robeco for these markets.
Robeco has excelled in recent years both for its contributions in the “Factor” and “Quant” investing area within the pension funds industry, as for its ability in “American Value”, “Emerging Equity” and “Credit” strategies within the institutional sector. It currently manages US$250 billion from its offices in the Americas, Europe and Asia.
Javier Garcia de Vinuesa points out: “Joel Peña’s career within the asset management industry and his knowledge of Latin American and U.S. Offshore markets fits very well with Robeco’s criteria and with industry demands in Latin America: a market with highly filtered product, thorough in ‘best in class’, and based on excellence. “
