Direxion Launches Leveraged and Inverse Junior Gold Miners ETFs

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Direxion has launched two leveraged exchange-traded funds (ETFs) tracking the global equity performance of junior gold-mining companies.

The Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) seeks to achieve daily investment results, before fees and expenses, of 300 percent of the performance of the Market Vectors Junior Gold Miners Index. The Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) seeks daily investment results, before fees and expenses, of 300 percent of the inverse of the performance of the Market Vectors Junior Gold Miners Index.

The index is a market-capitalization-weighted total return index. It covers the largest and most liquid small-cap companies that derive at least 50 percent of their revenue from gold or silver mining, or have properties that do so. The composite includes companies based in the U.S. and other markets, including Australia, Canada and Singapore. As of Sept. 15, 2013, the index had average and median market capitalizations of $362.46 million and $294.74 million, respectively.

“At a time when a growing number of investors are expressing interest in exposure to companies engaged in the exploration and production of gold, we are offering liquid exposure to this sector with the benefit of added leverage,” said Eric Falkeis, President of Direxion. “These two Funds are designed for traders that wish to take a bullish or bearish stance on the gold-mining industry.”

Morgan Stanley IM Launches New Institutional Share Class

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Morgan Stanley Investment Management has created a new institutional share class aimed at increasing transparency and lowering fees for defined contribution plans and other institutional platforms. These Class IS shares have no distribution, shareholder service or sub-transfer agency payments and are intended primarily for retirement plans with more than $250 million in assets. Class IS shares are also available to eligible investors who meet an initial investment minimum of $10 million. Eighteen Morgan Stanley funds are now available through IS shares.

“At Morgan Stanley Investment Management, we look to offer all of our shareholders the right combination of funds, share classes and pricing. Now, we have refined our institutional offerings with the new IS, or super institutional, share class to help our institutional clients more easily meet their platform design needs. This new share class provides the greatest transparency for investors on the costs of investment management within their plan. We encourage plan sponsors to discuss with their record keepers or plan administrators whether the IS share class is suitable for the structure of their retirement plan,” said Paul Price, Global Head of Distribution for Morgan Stanley Investment Management’s Long-Only Business. “We are proud of the work we have accomplished to bring this state-of-the-art share class to our clients.”

“Morgan Stanley Investment Management has always offered a dynamic family of funds led by world-class investment managers. Our IS share class enhances flexibility and transparency and will create ease-of-use for institutional investment platforms, and these advances will ultimately benefit the plan participants who use Morgan Stanley funds to help meet their own investment objectives,” said Arthur Lev, Head of the Long-Only Business for Morgan Stanley Investment Management.

 

Shhh… the Macroeconomist is About to Speak

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Shhh ... el especialista en macroeconomía está a punto de hablar
Foto: Maik Meid. Shhh... the Macroeconomist is About to Speak

The world is hanging on the macroeconomists’ every word. Their analyses of US economic indicators had become almost totally irrelevant for investors – but now times have changed.

Economists were ignored last year because movements in the financial markets did not revolve around the classical economic pillars of consumption growth, employment, export and investments. Instead, they were driven by what we could call ‘technicalities’ – the Fed’s impressive bond-buying program.
 
It was these monthly purchases of USD 85 billion worth of government bonds and mortgages that determined market sentiment. In the same way as a conductor decides how his orchestra will play, the US central bank determined the rhythm and timing in the financial markets. However, conductor Ben Bernanke has now indicated that he will be taking a less prominent place on the podium.
 
It is worth examining the statistics again

This means that the members of the orchestra will have to get to grips with the music themselves once again. How should all the pieces be interpreted – allegro or fortissimo? What is the real state of the US economy? What are the indicators actually saying about the US economy? If the last meeting of the US central bank made anything clear it’s that the Fed itself is being influenced more than ever by the statistics reflecting the health of the US economy. Those numbers are of crucial importance to the question as to whether the central bank should gradually taper its stimulus policy. 
 
Excessive focus on consumers

So the macroeconomists’ narrative is once again gaining kudos among investment teams. However, it is striking that the macro analysis is in many cases now geared to the wrong part of the economy. The emphasis is on Joe Sixpack, the consumer side of the US economy, leading to fierce debate on the unemployment numbers. The question is, are these unemployment statistics an accurate reflection of labor supply? Have Americans perhaps become so somber about their chances of a job that they are giving up – the so-called discouraged workers? Important and interesting discussion though this is, it doesn’t get to the heart of the matter. 
 
Business holds the key to recovery

Where things really matter right now in the US economy is on the corporate side. After all, Mr. Average US Consumer reverted to his old spending patterns pretty soon after the credit crisis broke. And the predicted dramatic increase in savings levels has not materialized. This means that the United States has now reached the point where higher economic growth will have to come from companies. Without businesses, economic growth will not manage to rise above the somewhat tepid 2% mark. Are businesses going to earmark funds for investment in machinery and other capital goods and to expand their workforce? What’s the state of play? 
 
The corporate starting point is healthy

If you look at the current level of corporate investment as a percentage of national income, then this is rising but remains historically low. At the same time, the profitability of US corporates is quite frankly high.
 
Earnings are averaging some 12% of that same national income. Crucially, profitability has not been this strong in the last forty years. US companies are doing very well, thank you.
With such a favorable starting point, the key is to focus on forward-looking indicators, including the monthly survey among purchasing managers of large corporates. They recently reported real growth in their order books. Combined with the fact that inventories are pretty low, that is good news. 
 
But when will businesses dare to start taking risks again?

Every shred of new information on ‘corporate US’ potentially provides insight into the entrepreneurial ‘animal spirits’ that are so crucial to robust economic growth. And that’s why investors should once again be sitting on the edge of their chairs when the macroeconomy is being discussed.

Palm Beach’s Chilton Trust Welcomes Three Senior Wealth Management Professionals

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Chilton Trust Company, a trust company and wealth management firm serving high net-worth individuals, families, trusts, foundations, institutions and endowments, announced that it has welcomed three senior wealth management professionals to its team: Harry S. Grand, Senior Vice President and Head of Client Relations; David Phelps Hamar, Senior Vice President and Head of Wealth Advisory Services; and Benjamin Brewster, Senior Client Relations Advisor.   

Harry Grand, who joined Chilton Trust in January, oversees all relationship management activities for clients and is a member of the External Managers Investment Committee.  Before joining Chilton Trust, Mr. Grand served as a Senior Vice President and Relationship Manager at Lazard Wealth Management, where he was responsible for investment policy formation, asset allocation and client relationship management.  Prior to Lazard, he was a Client Advisor at Rockefeller & Co. He began his time there as the Chief of Staff to the President and CEO and as Manager of Marketing and Sales.  Mr. Grand earned a B.A. from Hamilton College and an M.B.A from Columbia Business School.

David Hamar will oversee wealth advisory services and coordinate family office services for various clients.  Before joining Chilton Trust, Mr. Hamar was a Managing Director, Member of the Management Committee, Portfolio Manager, Co-Chairman of Family Office Services and Director of Global Tax Services at Silvercrest Asset Management.  Prior to Silvercrest, he was a Managing Director, Portfolio Manager and Chairman of the Tax Services Group at Heritage Financial Management, LLC.  Mr. Hamar earned a B.A. from Old Dominion University and a J.D. from the University of Virginia School of Law.  He is a Certified Public Accountant and is admitted to the Virginia State Bar.

Ben Brewster will serve as a Senior Client Relations Advisor to various clients located throughout the U.S. and provide counsel to the firm’s strategic initiatives.  Mr. Brewster is a highly regarded wealth and investment professional with over 25 years of experience in the industry.  Before joining Chilton Trust, Mr. Brewster was a Managing Director at Silvercrest Asset Management Group, providing investment advisory and family office services to its clients.  Prior to Silvercrest, Mr. Brewster led Heritage Financial Management, a Charlottesville, Virginia-based investment advisory firm, which traced its origins to a family office started in 1929.

Chilton Trust also announced that Senior Vice President John C. Rau will assume the position of Head of Fiduciary Services and oversee all fiduciary and trust-related services.  Mr. Rau joined Chilton Trust in 2010 with over 25 years of experience in fiduciary wealth management.  He began his career as a trusts and estates attorney with Sullivan & Cromwell and later was a partner at Gunster.  Mr. Rau earned a B.A. from Hamilton College and a J.D. and LL.M. (in Taxation) from New York University School of Law, where he was a member of the Law Review.  He is admitted to the Florida, New York and Connecticut State Bars.

BNY Mellon Names Paul Nobile as Chief Marketing Officer for Investment Management

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BNY Mellon has named Paul Nobile as chief marketing officer for Investment Management. Based in New York, he will report to Peter Paul Pardi, global head of distribution and R. Jeep Bryant, executive vice president for marketing and corporate affairs.  Nobile was most recently at Eaton Vance in Boston, where he was chief marketing officer.

Prior to joining Eaton Vance, Nobile held a series of progressive marketing positions at Barclays Global Investors (BGI) in San Francisco from 1997 to 2009, culminating as Managing Director and head of Brand Marketing for the iShares Exchange Traded Funds.  In that role, he led the development of global positioning of the iShares brand across the Americas, EMEA and Asia Pacific.

“Paul has an excellent track record in positioning, activating and amplifying investment management brands and enhancing distribution efforts globally,” said Pardi.  “As we invest in expanding the BNY Mellon Investment Management enterprise in partnership with our 15 investment boutiques globally, we are confident that Paul can advance our leadership position through his outstanding experience and continued innovation.”

“BNY Mellon is committed to building a brand that reflects the client focus, investment expertise and global capabilities of our investment management business,” said Bryant.  “Paul’s marketing expertise and industry experience will accelerate our efforts.”

A graduate of Syracuse University with a B.A. from the S. I. Newhouse School of Public Communications and B.S. from the Maxwell School of Citizenship and Public Affairs, Nobile also has FINRA Series 7, 63 and 24 licenses.

Laura Pollock Launches Executive Search Firm for the Investment Management Sector

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Senior executive recruiter Laura Pollock announced the launch of Third Street Partners, a boutique executive search firm specializing in the investment management sector. The new company is located at 424 Madison Avenue, 7th floor, New York, NY, 10017. David Schumer has joined the firm as principal.

“Third Street is about leveraging best practices gleaned from more than a decade and a half of experience in investment management recruiting at both large and boutique executive search firms,” said Ms. Pollock. “David and I share the belief that focus, transparency and access enable Third Street Partners to optimally serve clients and candidates.”

Third Street Partners conducts retained searches and partnership consulting projects with a broad range of traditional and alternative investment organizations. Its core clients span institutional and intermediary distribution, insurance companies, investment subsidiaries, banks, high-net-worth firms, RIA’s, OCIOs, plan sponsors, endowment, foundations and family offices. The functional areas where the firm has expertise include senior business management, investments and distribution positions. Third Street Partners represents both global and regional investment management firms.

“It’s absolutely essential to me and to the members of my team that Third Street is a true partnership between our search firm, our clients and the candidate universe,” Ms. Pollock said. “That is why I named the firm Third Street – to encapsulate the urgency that all three constituents in a search be served by the highest standards. Only through a consistently hands-on, transparent process can a search be successfully executed.”

Bob Doll: D.C. Politics Holding Back Economic Growth

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Bob Doll: "La política de Washington está frenando el crecimiento económico"
Wikimedia CommonsBob Doll, Chief Equity Strategist and Senior Portfolio Manager at Nuveen Asset Management. Bob Doll: D.C. Politics Holding Back Economic Growth

Nuveen’s Bob Doll on how hot-button political issues like the debt ceiling debate and the Affordable Care Act are hurting the U.S. economy.

Brazilian Corporates Downgrades Expected to Outpace Upgrades for Next 12 Months

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Weak economic conditions are expected to spur more downgrades than upgrades for Brazilian corporates through the first six months of 2014, according to a new Fitch Ratings report.

Since the beginning of 2013, downgrades have outpaced upgrades by a ratio of 1.2x. Sixteen percent of the 108 Brazilian corporates rated by Fitch have a Rating Outlook of Negative, as opposed to six percent with a Rating Outlook of Positive.

“With Brazilian GDP at 1.5 percent during the second quarter, uncertainties abound about the ability of the Brazilian economy to grow faster after the Central Bank of Brazil’s four rates hikes,” said Debora Jalles, Director in Fitch’s Latin America Group. “While these measures may tame high inflation and bolster the battered Brazilian real, they are likely to further erode consumer demand and put additional pressure on operating margins and profitability.”

Leverage has risen since the start of the global economic crisis. As of Dec. 31, 2012, the median total adjusted leverage ratio for Brazilian corporates was 4.2x, while the median net leverage ratio was 2.9x. These measures compare unfavorably with 2008 when they were 2.9x and 2.2x, respectively.

Negative free cash flow has grown significantly in the last two years due to high capex levels, which are not expected to decline in the future. With dividend payouts minimal for most, only a few corporates can boost liquidity by lowering dividend outflows.

Robust liquidity is a bright spot with the median cash/short-term debt ratio 1.4x as of Dec. 31, 2012.

Default risk is low despite weak capital markets. Fitch does not foresee defaults approaching 2008 levels in the next 12 months due to low exposure to toxic derivative instruments, and relatively high cash balances in the riskiest sectors. The airlines, sugar and ethanol, and protein industries are among the riskiest.

Deutsche Asset & Wealth Management Expands its Real Estate Investment Team in the Americas

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Las visitas a compañías de EE.UU. confirman el buen momento de su economía
Foto: Tuxyso. Las visitas a compañías de EE.UU. confirman el buen momento de su economía

Deutsche Asset & Wealth Management (DeAWM) announced four hires to its real estate investment business (formerly RREEF Real Estate) in the Americas.

Matthew Jaffe joined as a Director and Alternative Investment Specialist in the Global Client Group, focusing on real estate. Based in New York, he reports to Laura Gaylord, Co-Head of Alternatives Investment Specialists for the Americas. Jaffe was most recently with Societe Generale, where he was a director in global markets, with responsibility for marketing across the Eastern U.S. Previously, Jaffe served as senior vice president of marketing and client services at Torchlight Investors (formerly ING Clarion Capital).

Peter Mette joined as a Director in the Real Estate Transactions team to focus on acquisitions in Southern California. Based in San Francisco, he reports to Tim Ellsworth, Head of Real Estate Transactions for the Americas. Mette brings more than 20 years of industry experience, most recently as a senior vice president and director of acquisitions and dispositions at KBS Realty Advisors. Prior to that, he held several senior transactions roles with Metropolitan Life Insurance Company, JPMorgan Mortgage Capital, Inc. and Meridian Industrial Trust.

Cheryl Charnas joined as a Vice President in the Real Estate Asset Management team as a Residential Asset Manager. Based in Chicago, she reports to Joe Senko, National Head of Residential Asset Management. Charnas brings more than 20 years of experience in commercial real estate, most recently as a project director of transitional assets and a vice president of asset management at Inland American Business Manager & Advisor, Inc.

Emily Zagorski joined as a Vice President to lead Product Development across the real estate investment platform in the Americas. Based in New York, she reports to Marlena Casellini, Deputy COO for the Americas, Alternatives and Real Assets. Previously, Zagorski was with JPMorgan Global Wealth Management where she led several initiatives, including global funds management and product development for the private bank and alternative investment investor relations.

“We are pleased to welcome Matt, Peter, Cheryl and Emily to the team. The addition of these experienced professionals reflect our commitment to further enhance DeAWM’s real estate investment offering as we continue to build out our alternative investment capabilities across products, functions and regions,” said Pierre Cherki, Head of Alternatives and Real Assets, which includes the real estate business at DeAWM.

United States Sees the Higher Gain in Total Wealth Followed by China

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United States Sees the Higher Gain in Total Wealth Followed by China
Wikimedia CommonsMichael O´Sullivan, CIO . Los emergentes contribuyen a aumentar la riqueza mundial, que alcanza un nuevo máximo

Despite a decade of negative real returns on equities, several equity bear markets and the collapse of housing bubbles, the 2013 Credit Suisse Wealth Report finds that global wealth has more than doubled since 2000, reaching a new all-time high of 241 trillion US dollars. Strong economic growth and rising population levels in emerging nations are important drivers of this trend. Average wealth per adult has also hit a new peak of 51,600 US dollars, but inequality remains high.

Despite the continuing challenges posed by the economic environment, the underlying factors this year have been broadly positive for global household wealth. For the world as a whole, we estimate that personal wealth increased by 4.9 percent during the year to mid-2013 and now totals 241 trillion US dollars. Aggregate total wealth passed the pre-crisis peak in 2010, and since then has set new highs every year. Average wealth also established a new high at 51,600 US dollars per adult, the first time that average global wealth has passed the 50,000 US dollar threshold since 2007.

A Tale of Two Countries: The United States and Japan

Looking in more detail at the global pattern, the story this year is a tale of two countries. The United States posted a fifth successive year of rises in personal wealth. Fuelled by a recovery in house prices and a bull equity market which drove the Dow Jones to new highs, the United States added 8.1 trillion US dollars to the global wealth stock, increasing wealth ownership by 12.7 percent to 72.1 trillion US dollars. This is 20 percent more than the pre-crisis high in 2006 and 54 percent above the recent low in 2008.

Aggressive monetary policy by the Bank of Japan (BOJ) spurred an even greater rise in equity prices – up 52 percent in the year to mid-2013. But equities in Japan are very low by international standards, accounting for less than 10 percent of household financial wealth, and the same aggressive BOJ policies drove the yen-USD exchange rate down by 22 percent. As a consequence, total household wealth in Japan has fallen by 5.8 trillion US dollars this year, equivalent to 20 percent of Japanese net worth. Japan suffered very little during the global financial crisis – in fact personal wealth grew by 21 percent between 2007 and 2008. However, in marked contrast to recent performance by the United States, total wealth is now just 1 percent above the 2008 level. In most other parts of the world, the economic environment has been generally favorable to wealth acquisition.

Winners and Losers Among Countries

The extent to which the United States and Japan dominate the world picture this year is illustrated by the figure, which shows the countries with the largest total wealth gains and losses. China (1.4 trillion US dollars), Germany (1.2 trillion US dollars) and France (1.1 trillion US dollars) are the only other countries where the change in wealth exceeded 1 trillion US dollars. Total wealth changed in a further eight countries by more than 200 billion US dollars (all gains): Italy, the United Kingdom, Spain, Mexico, Sweden, India, Korea and Canada. The equity price increase and the slightly favorable euro-dollar movement enabled the Eurozone countries to recover more than half of the very large wealth loss experienced 12 months earlier. The United Kingdom, India and Switzerland also managed to recover a significant portion of recent losses.

Wealth Per Adult Across Countries: Switzerland Remains On Top

As already noted, global household wealth equates to 51,600 US dollars per adult, a new all-time high for average net worth. This average global value masks considerable variation across countries and regions, as is evident in the figure. The richest nations, with wealth per adult over 100,000 US dollars, are found in North America, Western Europe, and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland, which in 2011 became the first country in which average wealth exceeded 500,000 US dollars. It dropped below this mark in 2012, but this year equity price rises resulted in a new peak value of 513,000 US dollars per adult. Australia (403,000 US dollars), Norway (380,000 US dollars) and Luxembourg (315,000 US dollars) all experienced an increase in wealth per adult and retain their respective second, third and fourth places from 2012. The United States, Sweden, France, Singapore, Belgium and Denmark are close behind, with average wealth per adult in the 250,000 to 300,000 US dollar range. A year ago, Japan moved up to fourth place in the table, but it has now been demoted and no longer ranks among the top ten countries.

Distribution of Wealth Across Individuals: Inequality Remains High

To determine how global wealth is distributed across households and individuals – rather than regions or countries – we combine our data on the level of household wealth across countries with information on the pattern of wealth distribution within countries. Our estimates for mid-2013 indicate that once debts have been subtracted, an adult requires just 4,000 US dollars in assets to be in the wealthiest half of world citizens. However, a person needs at least 75,000 US dollars to be a member of the top 10 percent of global wealth holders, and 753,000 US dollars to belong to the top 1 percent. Taken together, the bottom half of the global population own less than 1 percent of total wealth. In sharp contrast, the richest 10 percent hold 86 percent of the world’s wealth, and the top 1 percent alone account for 46 percent of global assets.

Further information on the pattern of total wealth ownership across regions and countries during the year to mid-2013 can be found in the full publication: Credit Suisse Global Wealth Report 2013.