Wikimedia Commons. Market Vectors Emerging Markets Local Currency Bond ETF supera los 1.500 millones de dólares
Market Vectors Emerging Markets Local Currency Bond ETF (NYSE Arca: EMLC), has surpassed $1.5 billion in assets under management (AUM). EMLC has seen an increase of more than $500 million in AUM in the last three months.
“Many local currency-denominated emerging market bonds are currently delivering more attractive yields than traditional fixed income investments, while at the same time offering currency and credit fundamentals that appear to be on more solid footing than fixed income investments denominated in U.S. Dollars, Euros or the Yen,” said Fran Rodilosso, fixed income portfolio manager at Market Vectors ETFs and one of two EMLC portfolio managers. “EMLC offers an excellent way to gain exposure to this space and the list of constituent countries in the Fund’s underlying index has been growing, with Romania and Nigeria having been recently added.”
When EMLC was brought to market in 2010, it was the first U.S.-listed exchange-traded fund designed to provide investors with exposure to an index that tracks a basket of bonds issued in local currencies by emerging market governments. The Fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of J.P. Morgan GBI-EMG Core Index. As of March 1, 2013, the Index tracked a selection of bonds issued in local currencies by 16 emerging market countries: Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Nigeria, Peru, Philippines, Poland, Romania, Russia, South Africa, Thailand and Turkey.
Guggenheim Partners announced the expansion of its real estate and infrastructure investment platform with the addition of a dedicated North American infrastructure investment team. Leading the initiative for the firm is Henry Silverman, who was appointed global head of real estate and infrastructure.
In the newly created role of global head of real estate and infrastructure, Silverman is responsible for managing and coordinating activity for all of Guggenheim’s real estate businesses, including Guggenheim Real Estate, Guggenheim Commercial Real Estate Finance, Pillar Financial, Generation Mortgage, and Guggenheim Retail Real Estate Partners.
Silverman joined the firm in early 2012 as vice chairman of Guggenheim Investments. Previously, he served as a director and vice chairman of the board and member of the executive committee of Apollo Global Management, and as its chief operating officer from 2009 to 2011.
The infrastructure investment team is led by William Reid, senior managing director, and includes Michael Madia, managing director and operating partner; Justine Gordon, managing director and head of acquisitions; Vince White, vice president, due diligence and asset management; and James Gabriel, vice president, acquisitions.
The infrastructure investment team will invest across the capital structure, including equity, structured equity and debt-related products, with an initial focus on core energy infrastructure assets, specifically power generation, midstream infrastructure, and electricity transmission, in the United States, Canada, Mexico, and the Caribbean.
Reid, Madia, Gordon, White and Gabriel have collectively participated in more than 30 transactions. Reid previously served as a managing director of North American energy infrastructure efforts at RREEF Infrastructure (RREEF).
Madia was formerly RREEF’s operating partner of infrastructure. Gordon previously served as a director responsible for business development and execution of energy investments at RREEF. White previously held project development, asset assessment and asset management roles for RREEF Infrastructure, International Power, GPU International and Con Edison Development. Gabriel previously served as an assistant vice president at RREEF responsible for identifying and executing investment opportunities.
Foto: Jnn13. The American Dream Goes International
As of June 30, 2012, 20% of total residential purchases in Florida were made by foreign buyers. They spent U$10.71 billion dollars according to a study by Florida Realtors. The City of Miami and its beautiful surrounding beaches remain the hot spot for international buyers, representing 31.3% of total sales. Buyers from Latin America and the Caribbean together made for 35% of all foreign purchases leading Western Europeans which represented 22%. Approximately, 82% of foreign sales were all cash in contrast to 87% of US buyers used mortgage financing [1].
In summary, foreign ownership of U.S. real estate has increased significantly in the last years because of the decline in US property values thus creating a lucrative investment opportunity for foreign investors. While many HNW foreign clients are tapping into these opportunities, are they fully aware of the tax implications made with these recent purchases?
When planning to acquire a U.S. based real estate, foreign individuals need to be aware that if purchased directly it is classified as “real property” and it is subject to U.S. Estate Tax and that as foreigners they are limited to a $60,000 tax exemption. Typical scenario – Brazilian national is seeking to purchase a $2,000,000 condominium on South Beach. Pressured by the Realtor he purchases in his/her own name and figures they can do the tax planning later. In doing so, the Brazilian would have an Estate Tax exposure of $679,000. If we advise the Client correctly and follow proper planning protocol this situation could easily be mitigated.
The Foreigner can consider various alternatives in planning for the purchase and how title should be held which may include:
Direct Ownership with Life Insurance funding the possible Estate Tax Implication: a common, low cost mechanism which is commonly utilized when clients prefer to purchase directly or those clients that may have purchased properties in the past.
Purchase via U.S. L.L.C. (Limited Liability Company): limits liability exposure to the individual but still bears the same U.S. income and estate tax burden.
Purchase via Foreign Corporation: Capital gain Tax rate could be jeopardized but individual will not be subject U.S. Estate Tax
Purchase via a combination of U.S. L.L.C tiered with a Foreign Corporation: The two – tiered approach is commonly utilized and can be very effective in limiting liability and tax exposure for the individual. The alternatives listed have advantages and disadvantages, but understanding the foreign investor’s wealth transfer planning goals, financial objectives and tax exposure will set the foundation to implement the optimal solution for the particular individual. The solution should not be standardized as we commonly witness in this area. The Wealth Protection Advisory team is equipped to provide both Clients whom have already purchased property and those considering the opportunity with a simple and cost effective solution that can avoid turning the American dream into a nightmare.
1. Miami Herald 8/27/12
If you want moreinformation about Mary Oliva Wealth Protection Advisory click here.
Wikimedia CommonsFoto: NASA/Crew of Expedition 22. Tapering
Morningstar, today published its first Global Fund Flows Trend Report. The research report examines the trends that drove 2012 mutual fund asset flows in five key markets—Australia, Canada, Europe, Japan, and the United States—and provides a worldwide overview that includes these regions as well as other markets in which Morningstar tracks fund performance and assets.
“Despite ongoing worldwide economic uncertainty, the global fund management industry grew at a 3.9 percent organic growth rate in 2012. Excluding money market funds, USD 565 billion flowed into mutual funds during the year. These massive inflows, though, fell short of 2009 and 2010, which saw inflows of USD 746 billion and USD 672 billion, respectively. Moreover, the average management fee that the industry gathers from investors has fallen dramatically since 2007 due to the cyclical shift to fixed-income products and a secular inclination toward less expensive funds,” Syl Flood, product manager, investment research for Morningstar, said. “The prevailing global trend in 2012 was investors’ hunger for yield and quest for the perceived safety of fixed-income funds. Worldwide, fixed-income funds gathered USD 535 billion in 2012, or nearly 95 percent of long-term net inflows.”
Highlights from Morningstar’s Global Fund Flows Trend Report include:
U.S. fixed income, which houses the intermediate-term bond category and American heavyweights PIMCO Total Return and DoubleLine Total Return, is by far the largest long-term global category, with nearly USD 2 trillion in assets under management (AUM). U.S. investors contributed USD 199 billion of the category’s USD 227 billion total inflow in 2012. The PIMCO fund is by far the world’s largest actively managed strategy, with USD 442 billion in assets (including assets managed for institutional clients).
In 2012, interest from cross-border investors propelled funds in the U.S. fixed-income category to a 47 percent organic growth rate. Many of the most popular offerings are tended by U.S.-based managers, including AllianceBernstein, Muzinich, Neuberger Berman, and PIMCO.
While 78 percent of worldwide mutual fund and exchange-traded fund (ETF) AUM still resides in actively managed funds, passive products captured 41 percent of estimated net flows—USD 355 billion—in 2012. With the exception of Australia and New Zealand, index funds grew faster than actively managed funds in every geographic region during the year, and the United States is leading the way in its appetite for low-cost, passive strategies.
Newer funds—those without a three-year track record—captured 87 percent of worldwide inflows in 2012.
The nation’s largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and are collectively in a much stronger capital position than before the financial crisis, according to the summary results of bank stress tests announced by the Federal Reserve on Thursday.
Reflecting the severity of the stress scenario–which includes a peak unemployment rate of 12.1 percent, a drop in equity prices of more than 50 percent, a decline in housing prices of more than 20 percent, and a sharp market shock for the largest trading firms–projected losses at the 18 bank holding companies would total $462 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 in the hypothetical stress scenario.
“Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty.”
The Federal Reserve’s stress scenario estimates are the outcome of deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or expected outcomes.
Despite the large hypothetical declines, the aggregate post-stress capital ratio exceeds the actual aggregate tier 1 common ratio for the 18 firms of approximately 5.6 percent at the end of 2008, prior to the government stress tests conducted in the midst of the financial crisis in early 2009. This is the third round of stress tests led by the Federal Reserve since the tests in 2009, but is the first year that the Federal Reserve has conducted stress tests pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Reserve’s implementing regulations.
“The stress tests are a tool to gauge the resiliency of the financial sector,” Federal Reserve Governor Daniel K. Tarullo said. “Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty.”
You may access the complete report (pdf file) on this link.
London and New York remain the top destinations for the world’s ultra-high net worth individuals to live and invest in but Asian cities are fast catching up, says Knight Frank’s seventh annual Wealth Report
Key Findings
The global number of High-Net-Worth Individuals (HNWIs is defined as someone with $30 million or more in net assets) increased by almost 8,700, or 5%, in 2012
Their number is set to increase by another 50% in the coming decade, according to forecasts prepared for Knight Frank’s Wealth Report
Fastest growth in wealth creation will be in Asia and Latin America over the next 10 years
London and New York are the top destinations in the world for wealthy individuals and will remain so until 2023, according Knight Frank’s survey of wealth advisors, whose 15,000 clients have assets worth US $1 trillion.
The 2012 results of Knight Frank’s index which tracks the performance of luxury property prices across 80 global destinations shows Jakarta and Bali recorded the highest growth
Monaco remains the most expensive location to buy prime residential property: a luxury home can range in value from $5,350 to $5,920 per square foot.
Classic cars have enjoyed the biggest uplift in value over last 10 years (395%), measured against other key collectable assets, such as fine wine and art, inKnight Frank’s Luxury Investment Index.
The total number of super-rich individuals increased globally by 5% in 2012, pushing an extra 8,700 people into the ultra-high net worth bracket, according to the seventh edition of The Wealth Report, produced by Knight Frank, a leading global property company.
The total wealth of HNWIs – those with net assets of US $30m or more – increased by $566bn to $26 trillion, an increase of 2% year- on-year, according to data produced exclusively for Knight Frank’s Wealth Report by Wealth X, a wealth intelligence firm. Over the next ten years another 95,000 individuals are set to break the $30m barrier in terms of personal wealth, and while Asia and Latin America will see the largest growth in the number of ultra-wealthy individuals, North America will still have the highest total number of HNWIs in 2022.
Inthis regard,the report notes thatin LatinAmericatheultrarich15,230recorded in2012toreach26,628, representingan increase of 88%,the same as inthe case ofthe asians ultra-rich, risingfromrecordedmore than 43,000last yeartomore than82,300in ten years.
Liam Bailey, Global Head of Residential Research at Knight Frank, said: “The largest concentration of wealth is currently based in the established centres of North America and Europe, but there is set to be rapid growth in Asia, Latin America and the Middle East. In the next decade we will see the biggest increase in ultra-wealthy individuals in cities such as Sao Paulo, Beijing, and Mumbai.”
“According to a survey of advisors with 15,000 ultra-wealthy clients, London and New York are still the most important destinations in the world. In ten years’ time they will still lead the way, but key Asian cities will have moved further up the list.”
The growing influence of Asian wealth creation is shown in the results of The Wealth Report’s Prime International Residential Index (PIRI) which tracks the value of luxury residential prices in 80 prime global locations in 2012. Price growth was strongest in Jakarta and Bali, with luxury property values rising by 38% and 20% respectively, boosted by a growing middle class in Indonesia.
The Chinese cities of Guangzhou and Shanghai also saw double-digit growth in the value of prime property, while the sheer weight of Chinese wealth pouring into Hong Kong resulted in an annual price increase of 8.7%, despite the Government cooling measures which limited the potential for similar increases in Beijing.
“Wealth creation has not been dented by the global economy slowing, nor has this affected the demand for prime property as the search for safe haven investments has continued,” Liam Bailey explained. “These factors will likely drive prime values higher in the short to medium term as HNWIs look to invest in tangible assets such as a prime property in the major global cities. But the results of our survey of advisers to the ultra-wealthy around the world shows that the appetite for some level of risk is returning, which in turn is opening up some property markets which have been moribund for several years.”
The super-wealthy, especially those in China, are also set to step up their interest this year in “investments of passion” such as art, fine wine, classic cars, coins and watches. Knight Frank’s Luxury Investment Index shows that classic cars have seen the largest appreciation in value over the last decade, with an average uplift in price of 395%.
The basket of collectable assets such as art, fine wine, classic cars, coins and watches within the overall luxury index has accrued cumulative gains of 175% over 10 years (with a 6% uplift in 2012 alone). The ultra-wealthy also increased their spending on philanthropic activities in 2012 compared to 2011, with the most significant increase in expenditure among those in Asia and Russia and CIS.
Christopher Palmer, Director de Mercados Emergentes Globales en Henderson Global Investors. What next for Venezuela?
Venezuelan president Hugo Chavez passed away on Tuesday, 5 March, at the age of 58, following a protracted period of illness. One of the world’s most influential socialist leaders, Chavez leaves behind a complex legacy that is certain to polarise opinion, and his death raises considerable questions about what the future holds for the oil-rich Latin American state.
Chavez took strongly nationalistic measures to redistribute wealth and improve living standards for the poor. From 2002 and 2010, poverty in Venezuela fell from 48.6% to 27.8% (Source: United Nations Economic Commission for Latin America), improving financial conditions for a fifth of the population. This came at a cost, however, with unaccountable centralised government control eroding democracy and freedom of speech.
Chavez was also instrumental in increasing Venezuela’s reliance on oil revenues. In 1998, the year before Chavez took power, oil represented 77% of the country’s total annual exports (ABC News, January 2013). The other 23% came from a range of goods and services, half of which was privately owned. By 2011, oil made up 96% of exports – meaning thatthe Venezuelan economy was almost entirely reliant on the price of oil and the generation of oil revenues to support government spending.
While Venezuela has the world’s largest proven oil reserves (around 296.5 billion barrels), the economy, characterised by excessive inflation, an overvalued currency, a high deficit and rising debt levels, badly needs rebalancing. But this is not something that will be corrected easily. Chavez’s policy of repatriation of foreign-owned assets ensured domestic support, but alienated investors and led to protracted compensation disputes. The move to expropriate oil company assets included major industry players Exxon Mobil and ConocoPhillips, which lost controlling interests in significant oil fields in the Orinoco Basin.
Although this ensured that primary control of Venezuela’s natural resources was returned to the state, through Petroleos de Venezuela (PDVSA) – the national oil company – it removed access to the technology, machinery, equipment and expertise that was vital to developing Venezuela’s oil reserves. Consequently, there has been no significant foreign investment in the oil sector in recent years, and oil output remains well below its peak in 1997.
Hugo Chavez’s death is unlikely to result in quick changes, but it could ultimately result in a political shift that would reopen the country’s energy industry to foreign investment. As heir-apparent to Chavez, Vice President Nicolas Maduro, who has the support of the country’s military, will look to tap into a strong following wind of socialist popularity, both domestically and elsewhere in Latin America, Eastern Europe and the Middle East. Chavez’s death could, alternatively, pave the way for the opposition, led by Henrique Capriles (who lost to Chavez in the presidential electionin October 2012), to win power and introduce more market-friendly policies.
Should Maduro win it seems likely that he will maintain Chavez’s popular stance against the US and its allies, continuing to offer Cuba oil at preferential prices (Venezuela currently fulfils approximately half of Cuba’s demand for petrol). He will also need to provide reassurances to China, which has developed a strong relationship with Venezuela in recent years, making loans to the government in return for oil.
PDVSA has, as yet, given no indication of any plans to open its doors to foreign investment – no surprise given the lack of clear instruction over future policy. It will take years to increase production and exports, but whichever party manages to establish a new government it will have a powerful economic incentive to make it a high priority.
What does this mean for our funds? We have taken care over the years to control exposure to economic hot spots (such as Venezuela and Argentina). As expected, due to the uncertain nature of the country’s stockmarket we have no direct holdings in Venezuela stocks and we have also been careful to ensure that indirect exposure remains very limited. High risk of currency devaluation, continuing fiscal imbalances, a legacy of nationalisation of private assets, and a lack of currency convertibility will persist as long as Venezuela’s leaders are committed to maintaining the unorthodox economic policies of former President Chavez.
Credit Suisse is pleased to announce the results of its annual Global Hedge Fund Investor Survey, in which we analyze responses from close to 550 institutional investors, representing $1.03 trillion of hedge fund investments, on a number of topics. These include investors’ current views on the growth and return prospects for the hedge fund industry; their preference and allocations plans across various strategies and regions and their views on key new trends and developments in the industry. This year’s survey also explored in closer detail preferences and investing trends amongst pensions and other institutional investors.
The title of this year’s survey, “Reaching New Heights”, reflects optimism expressed by institutional investors towards the prospects for industry performance and growth during 2013. Robert Leonard, Managing Director and Global Head of Capital Services at Credit Suisse commented: “Institutional investors are clearly expressing more confidence in risk assets in this year’s survey and appear less worried about left tail risk events or macroeconomic uncertainty. Given the backdrop of effective central bank policies, lower political uncertainty and positive performance last year, it is not surprising to see increased expectations for 2013.”
When respondents were asked to forecast total industry assets at the end of 2013, the average prediction was US$2.42 trillion. This would represent an industry growth rate of over 10% or $220B, comprising of positive performance and new capital inflows. If correct, this would represent an all-time high for hedge fund industry assets under management by the end of this year.
Respondents shared their insights into which hedge fund strategies they anticipate allocating capital to during 2013:
Long/Short Equity was identified as being the most sought after strategy in 2013
Emerging Markets Equity was the second most favored strategy
Event-Driven strategies moved up to 3rd place from 10th place last year
In terms of regional preferences, Emerging Markets and Asia-Pacific regions remained in the top two spots, though they traded places from last year’s survey. This seems in keeping with investors’ stated increase in risk appetite. Investors also exhibited a very strong bounce back (26%) in demand for Developed Europe, as they appear to have taken comfort in some of the political actions taken there in the latter half of 2012.
When asked about their preference for hedge funds from a size standpoint, investors indicated that those managers running between $500M and $2B in assets under management were in the best position to be considered for future allocations.
The survey also uncovered a number of other key new industry trends and developments for 2013:
Return expectations among institutional investors for hedge funds increased to 6.9% from returns expectations from a forecast of 5.4% last year. This appears to coincide with the ongoing reduction in correlations and the belief that this will create an environment for stock-picking strategies to outperform.
Respondents ranked crowded trades/herd behavior, additional regulatory changes and underperformance risk as the three greatest sources of risks facing the hedge fund industry this year. Sovereign default risk and credit/counterparty risk, which were both in the top three last year, dropped significantly.
Investors continue to show strong appetite for those new hedge funds launches deemed to be of institutional quality. However, in a new development, the survey results showed a large uptick in the number of investors who would require some level of reduced fees, including founder’s share classes.
A new section in this year’s survey covered trends and developments in the pension space. The results indicated that public pension funds were the most active in this segment and expect to increase their allocations going forward. Further, our findings identified risk-adjusted and uncorrelated returns as the primary investment objectives of the pension community, and also highlighted the continued significance of consultants.
Investors regard further hedge fund consolidations/liquidations this year to be a potentially significant development. They also expect to see additional fee compression this year, as well as the growth of alternate structures such as 40 Act Funds and long-only vehicles from hedge fund managers.
Leonard added: “We believe that pension funds represent a key element for the future growth of the hedge fund industry and therefore, wanted to take a deeper dive into the developing trends surrounding their investment preferences and requirements. We believe that this year’s survey provides some truly unique insights into those trends.”
The survey, produced by Credit Suisse’s Hedge Fund Capital Services Group, is the most comprehensive published to date, with more than 550 groups participating—including pension funds, consultants, family offices and funds of hedge funds—and with respondents diversified across all regions.
Wikimedia CommonsFoto: Victor Soares/ABr. The world without Chávez for Global Evolution
The dead of Chavez doesn’t come unexpected as he has been very sick for a long time…the important thing are the next steps that follows:
Constitutionally, Chavez’s death should result in snap elections to take place in 30 days. As Chavez has been physically unable take oath for his 2013-19 term (the prescribed inauguration date was January 10), Venezuela is being governed under a constitutional gray area based on the Supreme Court’s interpretation of “administrative continuity” in the case of a re-elected president. A new election is likely to be a contest between Vice President Maduro (who in December was formally endorsed by Chavez as the government candidate under any adverse scenario for Chavez’s health – Maduro is a former busdriver that made his political route through the labor union and later became foreign minister) and opposition leader Capriles (who won re-election to the Miranda state governorship on December 16).
Calls for internal unity are telling. Villegas’s call for unity underscores the fact that Chavez has never formally been sworn in to the current term, which barring another Supreme Court “interpretation” means that National Assembly President Diosdado Cabello, not VP Maduro, should in theory be the interim president during the electoral period and until the inauguration of a new president (a date which is not defined in the constitution). Although the former military officer Cabello and the former civilian labor leader Maduro have gone to great lengths to publicly demonstrate a united front, many commentators believe they represent different, potentially competing, factions within Chavismo. It will also be interesting to see what role Chavez’s family plays in shaping his legacy and bestowing legitimacy upon the new leader ship. The key figures are Chavez’s daughters (who have been increasingly visible) and his brother, Adan (who has been noticeably silent in recent months compared to a more prominent role in 2011-12). Despite these potential tensions, we think the political equilibrium remains anchored by the base-case scenario of new elections.
Market expectations are already braced for a transition scenario without undue expectations that the opposition can come to power in the near term.
As such we think volatility around upcoming events, though possible, should be limited. Market base-case view holds that a presidential election will occur between current Maduro and Capriles. The base-case scenario that has consolidated since the turn of the year would have Maduro win a relatively competitive election, riding a wave of sympathy for Chavez and superior government resources.
Foto: Julian H. . Schroders anuncia el lanzamiento del fondo ISF Global Unconstrained Bond
Schroders announce the launch of Schroder ISF1 Global Unconstrained Bond, a new fund which will take an unconstrained approach and aim to achieve an attractive risk adjusted return of 4-5% p.a. over the benchmark over an interest rate cycle, told in a statement.
The fund, which is set to launch in April of this year and will be benchmarked against the Barclays Capital Global Aggregate Bond USD Hedged Index over a rolling three to five year period, will be managed by the global multi-sector team, supported by over 100 investment professionals worldwide. The team, led by Head of Global Macro, Bob Jolly, and fixed income fund manager, Gareth Isaac, will use a diversified top-down approach and seek to generate consistent returns through the exploitation of opportunities across a range of alpha sources.
Schroder ISF Global Unconstrained Bond will be managed using a similar approach to the existing portfolios run by the Schroders global multi-sector team (Schroder ISF Global Bond, Schroder ISF Strategic Bond and Schroder GAIA Global Macro Bond). This approach aims to exploit the skill and experience of Schroders’ global resource within diversified portfolios.
