Franklin Resources, which operates as Franklin Templeton Investments, announced that it has acquired the remaining 80% stake of alternative investments specialist Pelagos Capital Management, to become a 100% equity stakeholder. Franklin Templeton acquired its initial 20% equity stake in Pelagos in 2010.
William Yun, CFA, executive vice president, Franklin Templeton Alternative Strategies, said “We’ve developed a strong relationship with Pelagos since our initial investment in 2010 and after seeing growing interest from investors in alternative investment strategies, we are pleased to announce the completion of this acquisition.”
Pelagos, an independent investment advisor founded in 2005 by Stephen Burke and John Pickart, is based in Boston, MA. Pelagos’ mission is to create alternative investment solutions that seek to enhance overall returns and lower portfolio volatility. Pelagos manages three distinct alternative investment capabilities including a commodity strategy, a managed futures strategy, and a hedge fund replication strategy.The Pelagos team implements an investment process highlighted by a top-down approach to global macroeconomics, quantitative focused models based on fundamental analysis, disciplined multi-level risk controls, and institutional-quality implementation and transparency.
Pelagos’ commodities and managed futures strategies are currently available as underlying investments within the Franklin Templeton Multi-Asset Real Return Fund, the Franklin Templeton Allocator Fund Series (Conservative, Moderate, Growth), and Franklin LifeSmart Retirement Target Funds, all of which are managed by Franklin Templeton Multi-Asset Strategies.
Franklin Templeton Alternative Strategies oversees the company’s specialized and alternative investment businesses globally. In addition to Pelagos, these businesses include:
The multi-asset strategies and customized portfolios of Franklin Templeton Multi-Asset Strategies;
The integrated hedge fund product solutions of K2 Advisors, in which Franklin Templeton holds a majority stake;
The emerging markets private equity and mezzanine finance capabilities of Darby Private Equity;
The global property and real asset offerings of Franklin Templeton Real Asset Advisors; and the company’s asset management joint ventures in China and Vietnam.
Fueled by global recovery in the equity and real estate markets, the investable wealth of the world’s High Net Worth Individuals (HNWIs) rebounded in 2012, growing by 10 percent to reach a record high of $46.2 trillion, after declining 1.7 percent in 2011, according to the World Wealth Report 2013 (WWR), released today by Capgemini and RBC Wealth Management. One million individuals joined the global HNWI population, which reached 12 million, reflecting an increase of 9.2 percent.
North America reclaimed its position as the largest HNWI market in 2012 after being overtaken by Asia- Pacific the year prior. North America’s population of 3.73 million HNWIs surpassed Asia-Pacific’s 3.68 million, while its HNWI wealth reached US$12.7 trillion, above the US$12.0 trillion in the Asia-Pacific region.
Global investable wealth growth was led by HNWIs in higher wealth bands, with ultra-HNWI expanding in wealth and number by approximately 11 percent, following declines in 2011.
All regions experienced strong growth in HNWI population and wealth except Latin America, which led growth in 2011, but faltered in 2012 due to slow GDP growth and challenged equity markets.
Record wealth levels achieved despite cautious HNWI investing approach in 2012
HNWIs remained cautious in 2012, highlighting a pronounced focus on wealth preservation in the Global HNW Insights Survey introduced this year in the WWR3, based on feedback from over 4,400 global HNWIs. Despite recent market improvements, one-third (33 percent) of HNWIs are more focused on preserving, versus just 26 percent on growing, their wealth.
Global HNWI wealth is forecast to grow by 6.5 percent annually over the next three years
Asset allocation trends followed the preservation trend, with almost 30 percent of HNWI wealth held in cash and deposits. Regional differences were clear with equities taking up the largest portion of North American HNWI portfolios (37 percent), while HNWIs in Latin America and Asia-Pacific (excluding Japan) preferred real estate (30 percent and 25 percent of portfolios respectively).
HNWI trust in Wealth Management industry grows
Global HNWI confidence in the wealth management industry has improved, with 61 percent having a high degree of trust in both wealth managers and their firms in early 2013, up four and three percentage points respectively from last year. Increased trust and a cautiously upbeat economic outlook contributed to 75 percent of HNWIs feeling confident about generating future wealth. At the same time, HNWIs expressed a low level of confidence in markets and regulators, with fewer than half having a high level of trust in each (45 percent and 40 percent, respectively).
Future outlook cautiously upbeat, led by Asia-Pacific
Looking forward, with the ongoing economic recovery providing an environment of reduced risk and improving investor confidence, global HNWI wealth is forecast to grow by 6.5 percent annually over the next three years. This is in contrast to the sluggish 2.6 percent growth since the financial crisis in 2008. The Asia- Pacific region, which is projected to grow at one and a half times the global average at 9.8 percent, is expected to lead global growth.
By High Contrast. The biggest Contrarian Play in the Market Today is Assets Linked to China
Investors are returning to Europe as they retreat from emerging market and Japanese equities, according to the BofA Merrill Lynch Fund Manager Survey for June.
Equity Allocations Increased
Investor confidence has risen in the past month in spite of market instability and a 2.5 percent fall in world equities over the survey period. A net 56 percent of global investors believe the world economy will strengthen over the coming year, up from a net 48 percent in May. Equity allocations increased. A net 48 percent of asset allocators are overweight equities, compared with a net 41 percent in May.
Pobabilities of a Hard Landing in the Chinese Economy Grow Fourfold
But while allocations to the eurozone and U.S. rose, investment in global emerging market equities fell to their lowest since December 2008. A net 9 percent of asset allocators are now underweight emerging market equities – the first underweight reading since 2009 and down from a net 3 percent overweight reading last month. Investors now identify a China hard landing as the greatest tail risk – more of a concern than eurozone sovereigns or banks. A net 31 percent of regional fund managers say that China’s economy will weaken in the coming 12 months, compared with a net 8 percent expressing that view in May.
Allocations to commodities have also reached a record low with a net 32 percent of asset allocators holding underweight positions.
Optimism builds within the eurozone
Equity allocations increased month-on-month across 13 of the 19 sectors assessed in Europe. The greatest positive swings came in telecoms, financial services, banks and chemicals. A net 3 percent of European investors are now overweight Telecoms, compared with a net 24 percent underweight in May. A similar net underweight position was wiped out in financial services over the month. A net 18 percent of respondents are now overweight banks, after the market was net neutral a month ago.
Signs of great rotation from bonds resurface
Furthermore, expectation of higher long-term yields has reached the highest level recorded by the survey since 2004. The proportion of the global panel forecasting higher long-term rates in 12 months’ time leapt to a net 81 percent from a net 55 percent last month. Only 4 percent of the panel sees rates falling. At the same time, the proportion forecasting higher short-term rates also soared, up to a net 43 percent from a net 14 percent in May.
Fear that Abenomics – Japan’s three-pronged stimulus plan – will fail has become investors’ second-largest tail risk after China and interrupted the strong run in Japanese equities. The proportion of asset allocators overweight Japanese equities has fallen to a net 17 percent from May’s seven-year high of a net 31 percent.
Wikimedia CommonsBy Thomas Wolf. Terrafina Shareholders Approve Purchase of Industrial Properties from Kimco Realty
Shareholders from Terrafina, a Mexican real estate investment trust advised by Prudential Real Estate Investors, approved on wednesday the purchase of a portfolio of Mexican industrial properties from Kimco Realty and its joint venture partner, American Industries, for about $600 million, the company announced today.
Terrafina announced on May 23 that it had signed an agreement with Kimco to purchase the portfolio, which consists of 87 properties totaling about 11 million square feet that are occupied by a diverse range of multi-national tenants. The facilities are predominantly for light manufacturing in the automotive, aerospace and consumer goods sectors.
Terrafina, which expects the transaction to be completed by the third quarter of 2013, will pay for the portfolio through existing credit facilities and the assumption of the existing debt on the portfolio.
Terrafina is a Mexican real estate investment trust formed primarily to acquire, own, develop and manage real estate properties in Mexico. Terrafina’s portfolio consists of attractive, strategically-located warehouses and other light manufacturing properties throughout the central, Bajío and northern regions of Mexico.
Terrafina, which is advised by Prudential Real Estate Investors, owns 146 real estate properties, including 132 developed industrial facilities with a collective GLA of approximately 19.8 million square feet and 14 land reserve parcels. With the addition of this portfolio, Terrafina grows to 233 properties with more than 31 million square feet of industrial space, making it the largest owner of industrial assets in Mexico, based on gross lettable area (GLA).
Wikimedia CommonsPhoto by Ritz Carlton of Santiago in Chile. LarrainVial Setting up a Fund to Purchase Three Luxury Hotels in Chile
LarrainVial has been working with large investors since the last month of May, in order to present them with its new product, the Hotel Investment Fund. With it, the company hopes to raise US$100 million to buy three well-known hotels in Chile: the Ritz Carlton, Crowne Plaza and the Intercontinental, as reported by Diario Financiero newspaper, citing sources familiar with the matter.
Seemingly, according to the same sources, the agreements to buy the aforementioned hotels have already been closed, and thus the fund will need to have all the capital raised by the end of July, although 50% of the money has already been committed.
Furthermore, the newspaper adds that the project managers, the same currently controlling the Hotel Intercontinental, would put down US$20 millionwhilst 30 would come from other investors. The fund, which is looking to invest close to US$230 million, would therefore already dispose of 140 million in financing.
As far as the current valuation of the above-mentioned establishments is concerned, the Intercontinental is valued at US$112 million, whilst the Ritz and the Crowne Plaza would suppose a disbursement of US$63 and US$53 million respectively.
Apart from these three hotels, there may be interest in acquiring a fourth or even a fifthone, although this would take place in the second phase of the fund, which in turn would mean a further increase in capital. The names being whispered are Marriot and the W.
The Meridia Capital investment fund – which also has hotels in Paris, Mexico and Brazil – paid US$86 million when it bought both hotels in Chile five years ago; about 30 million less that what the LarrainVial fund now contemplates paying for them.
Finally, the newspaper highlights that 80% of the management company, which will additionally offer resources, will be in the hands of the current Intercontinental partners: Oscar Biderman, founding partner and the hotel’s Controller, as well as Jorge Breitiling, also a shareholder, and the current General Manager, Rolando Uauy. Alongside them will be the partners of the private equity boutique Gamma Capital, with 20% of the management.
Foto cedidaPicture by Rokk Miami. RokkMiami, the Seed to Turn Miami into a Technological Hub
For some time now, Miami has been working to turn itself into a first class centre capable of housing the numerous technology and innovation companies that seek, amongst other things, a more attractive fiscal environment and a cheaper real estate market where they can establish their businesses.
Businessmen, professionals from the education sector, political leaders and Miami associations have joined forces to create an ecosystem to attract entrepreneurs who might find the city’s surroundings ideal for establishing their operations. The group, meeting some weeks ago in the setting provided by RokkMiami, a LAB Miami project, is set on converting Miami into a city vibrant in ideas and initiatives, and into a new leading technology center.
At RokkMiami, held at the head offices of Lab Miami in the Wynwood neighbourhood, 140 business owners, including entrepreneurs and investors, met in order to put the city on the sector’s map. This initiative follows the path set out by Rokk3rlabs, founded 13 months ago by a group of 20 startups from Miami, which share the same long-term vision, precisely looking to build an ecosystem capable of attracting innovation and new companies to the city.
The group believes that the arrival of wealthy people from Latin America could also been benefitted from, as many are currently considering where to locate themselves. Competing with Miami are Atlanta, Dallas, Houston and Los Angeles, also in the arrivals’ sights, which is why RokkMiami calls for action to not miss out on the opportunity. “We must build an environment to attract them and to ensure that they stay in the city.”
The group has been working on this for months and is planning to invest more effort in it, even though there are others who believe Miami will not have sufficient power to attract all the necessary talent. They argue that, amongst other things, the lack of a strong university in the area will not favor the initiative, albeit that it gets the firm support of the Knight Foundation at Miami University.
On Friday, the Chilean Superintendency of Securities and Insurance (SVS) issued Circular No. 2108, repealing circulars Nº 1,862 and Nº 1,894, which until last Friday regulated the third-party portfolio management service offered by securities brokers and fund managers.
The new legislation standardizes and updates the requirements for securities brokers and asset managers who provide portfolio management services to third parties, thereby encouraging competition between them.
It also extends the wide range of financial products they can offer and improves the information they provide to their clients, stressing that the broker or manager shall at all times serve to the best advantage of each client and take the necessary measures to safeguard an adequate combination of performance and security of the client’s investment.
The new circular, which came into effect on Friday, allows investment in all types of financial instruments and contracts, amongst other things, thereby eliminating the restrictions which securities brokers have operated under until now, and eases the guarantee requirements to be constituted by fund managers.
Likewise, it strengthens the reporting requirements to be delivered to clients, primarily in regard to the explanation of the risks, conflicts of interest, fees and expenses to be borne by the client, and specifying what information must be provided to the client, in order that clients may be properly informed about the management of their resources.
It also improves the content of management contracts, easing some requirements for portfolio administration of institutional investors requiring explicit consent from clients for: related party investment, proprietary trading operations, commission rebates, if any; and operations that generate liabilities for clients as in the case of certain transactions with derivative contracts, amongst others.
The SVS has established a period of 12 months from last Friday, for brokers and administrators to bring portfolio management contracts already entered into with their clients, into conformity with the new regulations.
The circular in its entirety may be reviewed in the file attached.
Grupo Financiero Santander Mexico announced on Monday that its subsidiary, Banco Santander Mexico, has reached an agreement to acquire the equity stock of ING Hipotecaria, S.A. de C.V., Sociedad Financiera de Objeto Multiple, Entidad No Regulada, a subsidiary of ING Group.
ING Hipotecaria provides mortgage-related products and services to more than 28,000 clients and operates 20 branches throughout Mexico. As of March 31, 2013, ING Hipotecaria’s loan portfolio totaled Ps.12.3 billion.
The transaction, which is subject to customary regulatory approvals, is expected to close in the second half of 2013. If all authorizations for the acquisition are obtained, Banco Santander Mexico expects to purchase ING Hipotecaria for Ps.643 million, approximately US$50 million in cash. The purchase price is subject to adjustment based on ING Hipotecaria’s final pre-close financial statements. The acquisition is expected to generate operating synergies and contribute favorably to Banco Santander Mexico’s overall performance once ING Hipotecaria has been fully integrated.
Marcos Martinez, Executive Chairman and CEO of Banco Santander Mexico, commented, “We are very pleased to have reached an agreement to acquire ING Group’s Mexican mortgage business, ING Hipotecaria, which will further strengthen our core portfolio and make Santander Mexico the second largest mortgage provider in Mexico. Roughly three quarters of ING Hipotecaria’s client base consists of middle- to high-income segments, making this transaction complementary to our current client base. We see excellent opportunities for cross-selling our other banking products and also have identified operating cost synergies. We believe this acquisition will further strengthen our presence in the mortgage market in Mexico.”
Foto cedidaPhoto: Nicholas Cowley. Think growth potential: think Colombia & Peru
Colombia and Peru may be best known for being among the world’s largest producers of specialist coffee, but for more discriminating investors they have much more to offer. These two resource-rich countries have a collective population of around 76 million and demographic trends that point to strong population growth, declining dependency ratios, and a rising middle class. Independent central banks and relatively few populist policies by governments have meant that inflation has been successfully brought under control, in contrast to nearby Brazil and Argentina (figure 1).
Figure 1: Tamer inflation thanks to more effective government policy
Source: Bloomberg. Consumer prices inflation, year-on-year change. Monthly data from December 1993 to May 2013 (Peru to March 2013).
Strong economic growth has greatly improved government finances in both countries, enabling them to embark on ambitious and much-needed infrastructure investments. Befitting of emerging market countries, red tape will hold up some of these projects, but such is the volume of these plans that they should underpin growth for the rest of the decade. The creation of the Pacific Alliance, along with Chile and Mexico, will reduce trade barriers, enabling better integration into the global economy. A successful conclusion to peace talks with the FARC guerrillas would further reduce security concerns that have blighted Colombia’s recent past and prompt an additional catalyst for investment in the country.
Chile is often held up as the success story in the region and the policies of Colombia and Peru are aimed at replicating this success. With per capita gross domestic product (GDP) approximately less than half that of Chile, the potential of Colombia and Peru is clear to see. Encouragingly for investors, the capital markets in both countries are exhibiting improving liquidity and corporate governance. The first place to look would be the financial and consumer sectors, where low penetration of financial products and formal retail alongside rising income levels point to significant growth potential over the long term.
While we believe Colombia and Peru both offer attractive growth potential, we are currently overweight Peru and underweight Colombia in our portfolios, as we find more attractive valuations in Peru. In Peru our largest overweight is toconstruction & engineering services business Graňa y Montero (2.3%) and shopping mall and supermarket operator InRetail Peru (0.8%). In Colombia, we have an underweight holding in oil major Ecopetrol (1.1%) and an overweight position in oil and gas producer Gran Tierra Energy (0.9%).
By the Emerging Market Equities team at Henderson Global Investors
Threadneedle Investments has appointed Matthew Evans to the role of UK Small Cap Fund Manager, starting early October 2013. Matthew has 12 years of experience investing in UK smaller companies. He will work closely with James Thorne, UK Small Cap Fund Manager, and will report to Simon Brazier, Head of UK Equities at Threadneedle. The Threadneedle UK small and mid-cap team manage a total AUM of £1.44bn out of a total of £16.7bn in UK equities.
Simon Brazier Head of UK Equities commented: “Our UK equities investment team is one of the strongest in the industry. Our robust product range is supported by a proven track record, active idea sharing and teamwork. Matthew’s appointment further strengthens our UK small and mid-cap expertise and I am confident that with his experience and expertise in this asset class, the team will continue to deliver out-performance for our clients.”
Matthew was previously a senior UK Small Cap Fund Manager and worked within a team managing £950m at Legal & General Investment Management.
