The investment world is defined by nuances that reflect local preferences, regulations, and the cultural characteristics of each region. Latin America is no exception, and operating in a market with such specific idiosyncrasies often means that clients of asset managers see the coordination between Iberia and Latam as an added value.
This brings significant advantages, as it allows for high-quality service with a strategic focus in the various countries where operations take place. Moreover, we hold a competitive edge over our European neighbors: a common language and a cultural connection that enable us to provide tailored service to meet each client’s needs.
However, when comparing the investment dynamics between Latin America and Iberia, clear differences emerge in both the nature of investors and the regulatory frameworks governing the markets.
Retail Preferences in Mexico, Brazil, and Beyond
In Mexico and Brazil, retail investors—including banks, independent advisors, and platforms—tend to favor local products with a conservative focus. In contrast, elsewhere in the region, as well as in Iberia, such investors predominantly opt for UCITs-compliant funds and ETFs.
Institutional Strength in Latin America
In the institutional segment, which includes insurers, pension plans, and family offices, Latin America stands out as one of the most advanced regions in the world. A prime example is the pension plans in countries like Chile and Mexico, where mandatory worker contributions have created a robust and sophisticated institutional ecosystem. In this ecosystem, pension funds play a fundamental role in asset management.
Regulation and Distribution: A Study in Contrasts
Regarding distribution, Latin America is characterized by the autonomy of its markets. Each country has its own regulations defining how financial products are distributed among investors. This heterogeneity contrasts with the uniformity in Spain and Portugal, where MiFID regulations unify financial market oversight across the European Union. While this facilitates cross-border operations, it may limit the personalization offered by the fragmented markets of Latin America.
Investment Preferences: Diverging Trends
Investor preferences, whether retail or institutional, also reflect these structural differences:
In US Offshore and South America, excluding Brazil, a significant portion of portfolios is allocated to U.S. assets, including fixed income, equities, mixed assets, and alternatives. There is also growing interest in diversifying beyond traditional funds into vehicles like ETFs or separately managed accounts (SMAs).
In Mexico and Brazil, the focus remains on local fixed income, supported by high interest rates, making this asset class a cornerstone of their portfolios.
Iberia’s Changing Landscape
In Iberia, the recent shift in European Central Bank monetary policy has influenced investor behavior. Investors are moving away from money market funds toward options offering greater added value, particularly in European fixed income, which now presents better prospects due to interest rate adjustments and inflation stabilization.
In equities, there is a trend toward diversification to reduce dependence on national indices often dominated by a few large companies. This strategy aims to mitigate risks associated with high concentration and improve returns by targeting sectors or regions less represented in traditional indices.
Investors are increasingly exploring active management strategies that prioritize companies with quality and value profiles. Simultaneously, thematic investments—such as technological transformation driven by digitalization and AI, or energy transition—are gaining traction. Additionally, emerging markets like India, often underrepresented in traditional portfolios, have captured the interest of Iberian investors due to their significant potential.
Shared Pathways and Future Opportunities
Despite their differences, Latin America and Iberia share a common path in fund management, as both regions lean toward products offering risk diversification and new sources of profitability. A shared vision can provide fertile ground for innovative investment strategies, supported by the commitment of global asset managers with strong local components. This approach enables the advancement of each country’s strategic plans.
Adapting to the specific characteristics of each market is crucial. Only in this way can asset managers in Spain deliver tailor-made services suited to the needs of clients on both sides of the Atlantic.
Authored by Javier Villegas, Head of Iberia & Latam at Franklin Templeton.
The U.S. Consumer Confidence Index by The Conference Board dropped 8.1 points in December, reaching 104.7, marking a decline compared to November, when Donald Trump won the elections.
Additionally, the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell 1.2 points to 140.2, according to the report.
“While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component experienced the most significant drop. Consumers’ views on current labor market conditions continued to improve, consistent with recent employment and unemployment data, but their assessment of business conditions weakened,” stated Dana M. Peterson, Chief Economist at The Conference Board.
On the other hand, the Expectations Index, which reflects consumers’ short-term outlook on income, business activity, and labor market conditions, fell 12.6 points to 81.1, just above the threshold of 80, which often signals a recession.
Compared to November, consumers in December were substantially less optimistic about business conditions and future income. Additionally, pessimism returned regarding future employment prospects after cautious optimism prevailed in October and November, Peterson added.
Adult Consumers Are the Most Pessimistic
Among age groups, the decline in confidence in December was led by consumers over 35 years old, while those younger than that range were more confident.
Among income groups, the drop was concentrated among consumers with household incomes between $25,000 and $100,000, while those in the lower and upper income brackets showed only limited changes in confidence. On a six-month moving average, consumers under 35 years old and those earning more than $100,000 remain the most confident.
In December, consumers were slightly less optimistic about the stock market: 52.9% expected stock prices to rise in the coming year, compared to 57.2% in November.
Similarly, 25% of consumers anticipated stock prices would fall, up from 21.7%. The proportion of consumers expecting higher interest rates over the next 12 months rose to 48.5%, but remained near recent lows.
The percentage of those expecting lower rates dropped to 29.3%, down from recent months but still relatively high, Peterson noted.
Merril Wealth Management announced the launch of its Ultra-High-Net-Worth Advisory Group, a team of over 25 specialists led by Rob Romano, Head of Capital Markets Investor Solutions. The group is dedicated to creating comprehensive wealth and investment solutions for UHNW clients. It will also assist advisors in drafting personalized portfolios, including custom asset allocation, multi-asset portfolio construction, and traditional and alternative investment manager selection according to the firm.
In addition to providing bespoke investment solutions, the team will serve as a point of contact for advisors, assisting them in tapping into the full range of Bank of America services stated by the firm. These services include custom lending, trust and estate services through Bank of American Private Bank, philanthropy, art services and family office solutions.
“The establishment of a dedicated group to better support ultra-high-net-worth client engagement is the latest example of how we are supporting our advisors as they serve clients and grow their businesses,” said Brian Patridge, Head of Investment Solutions Group Specialist.
The Kemper Foundation, a philanthropic partner of the Kemper Corporation, has announced the Read Conmigo School Impact Grants to support Spanish and English education in Title I elementary schools.
The program will provide up to 22 annual grants of $10,000 each to eligible schools in Los Angeles, Broward, Miami-Dade and Dallas. These grants aim to improve bilingualism, further academic achievement and promote multicultural understanding.
Eligible schools include Title I public and charter elementary schools in specific counties across California, Florida and Texas. Funds can be used for dual-language resources, technology upgrades, educator training and community engagement.
Applications are open through The Kemper Foundation’s grants portal from January 8 to March 9, 2025. This initiative builds on the success of the Read Conmigo Educator Grants. It emphasizes The Kemper Foundation’s commitment to closing opportunity gaps and equipping students with essential skills for a globalized world.
Asset and wealth management companies continue to face fines for communication failures with clients under SEC regulations.
An administration described as rigorous by its own chair, Gary Gensler, announced on Monday that it has fined twelve companies for failing to maintain and preserve electronic communications.
The SEC’s statement listed the companies by the value of the fines they must pay as follows:
Blackstone Alternative Credit Advisors LP, together with Blackstone Management Partners L.L.C. and Blackstone Real Estate Advisors L.P., agreed to pay a combined $12 million penalty;
Kohlberg Kravis Roberts & Co. L.P. agreed to pay a $11 million penalty;
Charles Schwab & Co., Inc. agreed to pay a $10 million penalty;
Apollo Capital Management L.P. agreed to pay a $8.5 million penalty;
Carlyle Investment Management L.L.C., together with Carlyle Global Credit Investment Management L.L.C., and AlpInvest Partners B.V., agreed to pay a combined $8.5 million penalty;
TPG Capital Advisors LLC agreed to pay an $8.5 million penalty;
Santander US Capital Markets LLC agreed to pay a $4 million penalty;
PJT Partners LP, which self-reported, agreed to pay a $600,000 penalty.
“The firms admitted the facts established in the SEC’s respective orders, acknowledged that their conduct violated the recordkeeping provisions of federal securities laws, agreed to pay combined civil penalties totaling $63.1 million as outlined below, and have begun implementing improvements to their compliance policies and procedures to address these violations,” the regulator’s statement said.
Each of the SEC’s investigations uncovered the use of unauthorized communication methods, referred to as off-channel communications, at these firms, the statement added.
As detailed in the SEC’s orders, the firms admitted that, during the relevant periods, their personnel sent and received communications through unofficial channels that were required records under securities laws. The violations involved staff at various levels of authority, including supervisors and senior executives.
The firms were accused of violating certain recordkeeping provisions of the Investment Advisers Act or the Securities Exchange Act. They were also charged with failing to reasonably supervise their staff to prevent and detect these violations.
In addition to the significant financial penalties, each firm was ordered to cease and desist from future violations of the relevant recordkeeping provisions and was censured.
The responsibilities of Rubenstein, who will be based in Naples, Florida, will include business development, relationship management, trust and estate planning, financial planning, and investment management, according to the statement accessed by Funds Society.
“With offices in Naples, Short Hills (New Jersey), and New York, The Matina Group has been advising clients in Naples and across the United States for more than two decades,” adds the information from UBS.
The multigenerational team of thirteen members focuses on providing clients with boutique-level services “through thoughtful advice, customized solutions, and a first-class client experience.”
Rubenstein previously worked as a senior trust advisor and brings more than 15 years of experience in the legal and wealth management sectors. He is licensed to practice law in both Florida and New Jersey.
“We are incredibly proud to welcome Michael to our exceptional team, The Matina Group at UBS,” said Joe Matina, Managing Director and Private Wealth Advisor at UBS.
Born in Southwest Florida in 1989, Rubenstein earned a Bachelor of Science degree from Vanderbilt University, a Juris Doctor, and a Master of Business Administration (MBA) with specializations in Tax Law, Trusts and Estates Law, and Finance from the University of Miami.
He also holds a Master of Laws in Taxation from Villanova University.
After working in Palm Beach for five years, he returned west with his family in 2017, where he worked for Akerman LLP as an attorney specializing in tax law, wills, trusts, and estates.
Currently, he serves on the board of the Jewish Federation of Greater Naples and the Starability Foundation. He has also been a board member of the Naples Therapeutic Riding Center, the Golisano Children’s Museum of Naples, and Ronald McDonald House Charities of Southwest Florida.
Photo courtesyRahul Bhushan, Managing Director in Europe at ARK Invest
Each month, Rahul Bhushan, Managing Director in Europe at ARK Invest, shares the standout data from the European thematic ETF market: key trends, changes in investor flows, and more. In his year-end 2024 edition, he chose to analyze November’s investment flows, uncovering several highly relevant insights.
The expert highlights three key areas of inflows:
1.- Artificial intelligence ETFs recorded inflows of $172 million in November, “highlighting investor enthusiasm as the AI boom shifts from hardware-driven infrastructure development to software applications that unlock real productivity gains,” says Bhushan.
2.- Uranium ETFs attracted $90 million, reflecting the anticipated growth of alternative energy sources. “Donald Trump’s reelection as U.S. president signals a return to pragmatic energy policies that position nuclear energy as a cornerstone of resilience and efficiency,” Bhushan explains.
3.- Infrastructure ETFs led inflows with $81 million in November, underscoring strong investor interest in domestic infrastructure. “Infrastructure stocks tend to perform well in election years and are bolstered by Trump’s plans to rebuild and reindustrialize America, signaling sustained growth in this sector,” the expert adds.
Bhushan also noted trends in the thematic ETFs that underperformed during the month:
1.- Clean energy ETFs recorded the largest outflows, with $152 million in redemptions. Investor appetite appears to be shifting beyond the capital-intensive renewable energy generation supply chain. “Instead, attention is increasingly focused on more profitable areas of the value chain, such as energy efficiency solutions and software-based grid infrastructure, where companies are better positioned to deliver short-term returns,” he notes.
2.- Cybersecurity ETFs saw outflows of $75 million, as investors took profits after a strong performance period. However, as cyber threats grow more sophisticated and AI transforms security environments, Bhushan explains that the need for robust digital defenses continues to drive long-term opportunities in the sector.
3.- China ETFs experienced redemptions of $64 million, “highlighting persistent investor concerns about geopolitical tensions and a shift toward more predictable growth opportunities in Western markets.”
Longer-Term Observations
The available data, covering nearly the entire year with only one month remaining, is sufficient to draw conclusions about investor preferences in 2024.
Among the highlights of the year are:
1.- Artificial intelligence ETFs, which have led investment inflows with $1.78 billion. AI continues to capture investor attention as a transformative force, with significant advancements and applications across all sectors bolstering confidence in this theme.
2.- Smart grid ETFs, with investment flows totaling $405 million, “highlighting the demand for infrastructure supporting energy efficiency and modernization of the power supply,” according to Bhushan, who adds that as digital infrastructure expands, “smart grids will be critical for managing energy effectively.”
3.- Uranium ETFs, which have accumulated $250 million in subscriptions, reflecting growing interest in nuclear energy within the broader energy transition. “Investors see nuclear energy as a reliable and scalable energy source for decarbonizing the energy mix.”
Key trends among the most lagging ETFs included:
1.- Robotics and automation ETFs have experienced the largest outflows, with a total of $996 million. As investors focus more on AI, interest in broader areas like pure industrial automation may be waning amid a shift in thematic preferences.
2.- Clean energy ETFs have recorded outflows of $834 million. This narrower focus within the energy transition theme appears to have seen cautious positioning, according to the expert, “especially ahead of the U.S. elections and potential regulatory changes.”
3.- Electric vehicle and battery technology ETFs have seen redemptions of $761 million, “likely reflecting caution in the lead-up to the U.S. elections.”
In early November 2024, under the watchful eyes of global markets, the U.S. electorate chose Donald Trump as its next president. Emerging markets were not immune to the effects of the “Trump trade” on international exchanges. The region saw positive net inflows overall, but with outflows in equities.
Figures from the Institute of International Finance (IIF) show that non-resident portfolio flows to emerging markets reached a net $19.2 billion in November. This result, they added, was marked by a strong divergence between fixed income and equities.
Emerging market debt markets attracted $30.4 billion net, “highlighting the persistent search for yield amid global uncertainties,” according to the entity’s economist, Jonathan Fortun. In contrast, equities saw net outflows of $11.1 billion, “underscoring the fragility of investor confidence in the face of evolving political and economic landscapes.”
According to Fortun, the U.S. elections—which resulted in the Republican Donald Trump becoming the next president—and their effects have cast “a long shadow” over global markets, deeply influencing the dynamics of flows into emerging markets.
“While October saw increasing uncertainty surrounding the election itself, November’s flows were shaped by market reactions to the election outcome and the implications of the new administration,” Fortun noted.
Latin America and China
Breaking down the international portfolio flows, IIF figures show a preference for Latin America in the penultimate month of the year. The region, according to the report, attracted the largest net capital inflow, totaling $6.5 billion.
This was followed by Emerging Europe with $4.8 billion net, and Emerging Asia with $4.6 billion. The most modest inflow in the category was recorded in Africa and the Middle East, which saw a net inflow of $3.4 billion.
Echoing the geopolitical concerns surrounding the Trump era, China was particularly impacted that month.
Chinese equities extended their downward trajectory, registering an outflow of $5.8 billion, continuing the trend observed in October, according to the IIF. “This sustained pessimism around Chinese equities is anchored in a confluence of factors, including regulatory concerns, a slowdown in economic growth, and persistent geopolitical tensions,” Fortun explained in the report.
In contrast to the $37.3 billion that flowed into emerging markets excluding China, the debt markets of the Asian giant saw net outflows of $7.5 billion.
That said, capital outflows from Chinese equities were not the sole source of negative flows in emerging markets. Excluding that market, outflows still amounted to $5.3 billion.
After reviewing the outlook published by international asset managers for 2025, we have extracted their key messages for the next twelve months. Undoubtedly, three ideas stand out: a clear emphasis on equities, the need to diversify and be selective, and staying invested in alternative assets. Managers agree that investors are at the starting point of a new investment paradigm: a shift toward a multipolar world, more proactive fiscal policies, and higher interest rates compared to the last decade.
BlackRock: AI and Geopolitical Fragmentation
“We have long stated that economies are transforming due to megaforces such as the rise of artificial intelligence (AI) and geopolitical fragmentation. This will likely result in greater performance dispersion between countries, sectors, and companies. Europe appears to benefit less from some long-term trends. Therefore, even with depressed valuations, we maintain a tactical underweight on Europe overall and prefer granular exposure to specific sectors and countries. We remain overweight in European high-yield debt and neutral on eurozone public and investment-grade debt,” BlackRock states.
Where does this leave them? According to BlackRock, they remain risk-positive. “We see the United States continuing to stand out among developed markets, thanks to stronger growth and its ability to better capitalize on megaforces. We are increasing our overweight position in U.S. equities and see the AI theme expanding. We don’t believe the high valuations of U.S. equities alone will trigger a short-term reassessment. However, we are ready to adjust if markets become overly exuberant. We underweight long-duration U.S. Treasury bonds both tactically and strategically and see risks to our optimistic outlook should long-term bond yields rise. Private markets are a vital way to allocate to megaforces, and we have become more positive about infrastructure in the strategic horizon,” they explain in their outlook document.
Fidelity International: Leveraging Divergences
According to Fidelity International’s 2025 Investment Outlook report, divergences in policies, economic evolution, and geopolitics present an attractive range of opportunities for market participants in 2025. For Niamh Brodie-Machura, co-head of investments in Equity at Fidelity International, macroeconomic and monetary policies should create a positive environment for equity markets heading into 2025. “The economic cycle will enter a new phase, but geopolitics will also resonate more strongly throughout the year. Trends we have observed suggest that recent price movements may have further to go, but new directions and expanded growth areas in markets should be expected. These are very exciting times for equity investors,” says Brodie-Machura.
When highlighting a specific region beyond the U.S., the Fidelity expert points to Japan: “We consider sentiment indicators and fundamentals to be favorable. The country continues on a reflationary path thanks to strong wage growth, while corporate investment and shareholder returns will steadily increase over time. The percentage of Topix companies outperforming the index has also risen, as investors search for beneficiaries of the country’s corporate governance reforms.”
Schroders: Equities and Private Markets
For Johanna Kyrklund, Chief Investment Officer of Schroders Group, the economic backdrop remains conducive to generating returns, but diversification will be essential to building resilient portfolios. “We believe there is potential for markets to revalue further in the U.S., especially given Trump’s focus on deregulation and corporate tax cuts. Consensus expectations point to improved earnings growth in most regions in 2025,” she argues.
Furthermore, Kyrklund states that divergent fiscal and monetary policies worldwide will also provide opportunities in fixed-income and currency markets, as well as noting that strong corporate balance sheets support credit market performance. “Private markets can also contribute to resilience through exposure to various asset types that tend to be more insulated from geopolitical events than listed equities or fixed income. Examples include real estate and infrastructure assets, which offer resilient long-term cash flows, or assets such as insurance-linked securities, where weather is the primary risk factor,” she adds.
Janus Henderson: The Impact of the Rate Cycle
According to Ali Dibadj, CEO of Janus Henderson, in the numerous conversations held with clients worldwide, one thing is clear: most expect increased market volatility in 2025 and beyond. “We share that view and acknowledge the complexity of positioning portfolios based on the macroeconomic factors shaping the world,” he notes. The firm sees the global economy remaining in the late-cycle phase, and any increase in risk-taking must be approached cautiously. “The increase in valuations of higher-risk assets following the U.S. elections reduces the margin for error. As global monetary policy diverges and the economic expansion affects sectors differently, investors must balance a security’s ability to benefit from the cycle extension with its valuation,” they comment.
In this regard, Adam Hetts, Global Head of Multi-Asset at Janus Henderson, believes in broadening exposure in a late-cycle economy. “Fed rate cuts and the resilience of the business sector have raised bond valuations, but within this space, high-yield issuance has the potential to provide additional carry and lower sensitivity to movements in a still-volatile interest rate market. Outside the U.S., economic and monetary policy divergences create opportunities. Europe, for instance, will likely have no choice but to maintain accommodative policy. However, higher U.S. rates and the resulting dollar strength would pose a challenge for emerging market issuers reliant on U.S. dollar financing,” he highlights regarding fixed income.
Allianz: More Risk Assets
Allianz GI also has a clear message for investors: “Our base case for the U.S. economy is a soft landing, where inflation slows, and a recession is avoided. This outcome benefits various risk assets, especially U.S. equities, which we still find attractive despite high valuations. “After the U.S. elections, the outlook for risk assets appears positive. A soft landing is expected for the global economy and, specifically, the U.S., even though volatility could increase. Risks remain, as markets have priced in a rate-cutting cycle that could be interrupted by an inflation resurgence. In our opinion, it is time for investors to rethink their portfolio composition, incorporating higher-risk and higher-return assets or adding investments in illiquid assets such as private debt or infrastructure. In the face of potential new trade conflicts, active management and caution will be key to adapting to a global economy where selectivity will be critical.”
Additionally, the firm emphasizes that investors could consider taking on more risk. “To do so, they could reallocate positions currently held in cash or low-risk money market funds. These positions could be directed toward ‘medium-risk’ opportunities in fixed income or private markets to balance higher-risk areas. Furthermore, private markets could be a key element for diversification at a time when European regulation seeks to boost retail investment flows into private debt and infrastructure,” they add.
Vanguard: Don’t Forget Fixed Income
According to Vanguard, the long-term outlook favors diversification, including fixed income. In their view, the greatest downside risk for bonds also applies to equities, i.e., an increase in long-term rates due to factors that could include continued fiscal deficit spending or the withdrawal of supply-side support.
For Vanguard, valuations in the U.S. are elevated but not as much as traditional metrics suggest. Despite higher interest rates, many large corporations have shielded themselves from a tighter monetary policy by securing low financing costs in advance. Most importantly, the market has increasingly concentrated on growth-oriented sectors such as technology, supporting higher valuations. International valuations are more attractive. This trend could continue as companies outside the U.S. may be more exposed to growing economic and political risks.
“The long-term attractiveness of bonds remains valid in the current interest rate environment. We believe long-term investors will continue to benefit from a diversified portfolio that combines fixed income and globally diversified equities,” concludes Joe Davis, Global Chief Economist and Global Head of Investment Strategy at Vanguard Group.
abrdn: Small Caps
The asset manager is now more positive about developed market equities, as strong earnings growth in the U.S. and the likely expansion of markets among winners in the technology and artificial intelligence sectors provide a solid basis for stock market performance.
“Looking ahead to 2025, there is great uncertainty about the exact characteristics of the upcoming political changes under Donald Trump’s presidency. There is a significant risk that the Trump administration will be far more disruptive than expected, both positively and negatively, in terms of economic and market outcomes. And there are scenarios where his political agenda proves even more favorable for growth and market confidence,” says Peter Branner, Chief Investment Officer of abrdn.
Additionally, he points to small caps: “The upcoming changes in U.S. policy create uncertainty but are likely to more clearly benefit U.S. companies, particularly small-cap companies. The Trump administration’s deregulation agenda will likely facilitate merger and acquisition activity by the Federal Trade Commission, while relaxing bank capital regulations and granting more energy exploration permits. Corporate tax cuts tend to benefit smaller companies more, whereas tariffs will disproportionately affect internationally exposed firms.”
