Wikimedia CommonsColfondos Tower. AFP Habitat announces the acquisition of AFP Colfondos in Colombia
Inversiones La Construccion (ILC) and Prudential Financial Inc., which together hold 80% of the ownership of AFP Habitat, announced on Friday an agreement to acquire, through AFP Habitat S.A., 100% of the ownership of Colfondos S.A. Pensiones y Cesantías, a Colombian pension fund manager currently owned by Scotiabank and Grupo Mercantil Colpatria.
Colfondos is the third largest pension fund manager in Colombia, with 1,916,000 clients and 27 years of history. The transaction involves the purchase, by Habitat, of 100% of the ownership of AFP Colfondos. As per an official communication of AFP Habital to the national regulator CMF, the price of the transaction in 585.000 million pesos ( 170 million dolars) that will be paid in cash.
Upon completion of this operation (subject to usual closing conditions, including regulatory approvals), AFP Habitat will consolidate its presence in three countries (Chile, Peru and Colombia), reaching a market of around 100 million inhabitants and over 850,000 million dollars of total GDP.
“This transaction consolidates the corporate relationship we have with Prudential and ratifies our vision regarding the potential of the Latin American market. Likewise, and if authorized by Colombian regulatory authorities, AFP Habitat will take a significant step in its expansion strategy, contributing in a new country its differentiating attributes such as its track record in investment returns, professionalism and leadership in the industry”, said Pablo González, CEO of ILC.
Additionally, Cristián Rodríguez, Chairman of AFP Habitat Chile said that “we are very happy with the decision to acquire AFP Colfondos, as it will allow us to consolidate a portfolio of about 5 million affiliates in the Andean Region (Chile, Peru and Colombia), capture the regional growth potential and work towards the goal of achieving better pensions for the people”.
The Manager of Prudential for Latin America, Federico Spagnoli, said that “our partnership with ILC is delivering the expected results, and this transaction is a concrete demonstration that the internationalization of AFP Habitat is being achieved in the right terms and conditions, responding to the spirit that drove our alliance in 2014”.
As reported previously, in October 2014 ILC -an investment company of which the Chilean Chamber of Construction is a majority shareholder- partnered with Prudential Financial Inc., a North American company, to control 80% of the ownership of AFP Habitat, which was an important step to strengthen the internationalization strategy of this company. Since then, AFP Habitat has consolidated its presence in the Peruvian market by becoming one of the main pension funds managers in the country.
Foto cedidaHenry Wong, CFA Managing Director Head of Asia Fixed Income. Henry Wong, DWS: "There are Currently More Interesting Investments than Chinese Fixed Income from a Risk Return Perspective"
Henry Wong, CFA Head of Asia Fixed Income, with close to 30 years of experience in the industry, has a management style that runs away from sentimentality, maintains its long-term investment strategy, seeks internal and external transparency. “My intention when buying an asset is to sell it and when I sell it, to buy it again at a better time market momentum” states Wong
Chinese Macroeconomic picture
For the manager, “after four decades of continued growth, the Chinese economy is tired and with significant excess capacity” . The adjustment of this excess capacity will be painful in terms of job losses and increased competitiveness by companies.
In his opinion, it is still premature to know if it will be successful or not, because this adjustment needs a change in mentality that has not yet occurred and that takes time. But “they have no choice but to do so, and the government must decide whether to do it gradually or faster,” says Wong.
In addition, Wong points out that the markets since 2007/2008 have been favored by an excess of liquidity that benefited more asset holders than ordinary people, so in his opinion, the political class, especially in the United States and Europe, has to rethink its strategy in this line to redirect this imbalance.
For Wong, the trade conflict between the United States and China is a “consequence of this money printing excess,” but to some extent this increase in protectionism is also related to sustainability policies by having to reduce the transportation costs of products to favor of local products. “I do not think we can foresee a specific termination date of the conflict, it is a global structural change that will take decades,” he concludes.
Bond Connect
From his point of view, China, like many other economies, faces a problem aging population that will lead to a reduction in income due to lower taxes collected from a depleted workforce and an increase in expenses derived from an older population,
In this sense, the Bond Connect project, which will include fixed income assets in local currency in the main world indexes, is an effort by the State to open its capital market and secure foreign financing sources.
Although Wong´s portfolio invests mostly in hard currency, the manager states that this process has just begun and that the supply of available assets is still reduced, limited to government bonds and state owned entities: “At this very initial moment the Investment alternatives are very limited for international investors, who can only move along the curve buying assets with different maturities, but the number of issuers is very limited and liquidity is reduced. I think this market will get bigger every day, but it will do so at a very gradual speed, ” concludes Wong.
Regarding the attractiveness of the Chinese fixed income market, the manager affirms that risk return ratio currently does not suggest putting too many resources in Chinese assets, or in other words: “There are currently more interesting opportunities from a risk/return perspective than China”, he points out.
India and Indonesia
Specifically, one of its current hard currency bets is Indonesia, since after the presidential elections it is one of the countries that can benefit the most from an exit from the factories of China in search of greater competitiveness. Preferably, they opt for companies that have already gone through a process of restructuring and sovereign or quasi-sovereign issuers for the good macro moment that the country is going through.
Additionally, India is also an overweight country in its portfolio, although they are very selective and avoid financial names.
Increase in portfolio duration
With regards to positioning within the curve, Wong explains that they have been extending the duration of the portfolio gradually since last October, reaching a duration of 5 years compared to the 2 years they maintained in August 2018.
This commitment responds to his conviction that global growth will be slower and less efficient affected by protectionist policies and capacity adjustments. This duration objective has been achieved through the purchase of high quality long term Asian corporate bonds and 10 year and 30 year US treasuries up to 10% of its portfolio.
Foto cedidaChris Kaminker (left) and Ebba Lepage (right) / Courtesy photo. Chris Kaminker and Ebba Lepage Join Lombard Odier
Lombard Odier further strengthens its commitment to sustainability with two strategic hires. Christopher Kaminker and Ebba Lepage have joined the firm.
Kaminker joins as Head of Sustainable Investment Research & Strategy, a newly created role within Lombard Odier Investment Managers (LOIM). He will lead on strengthening LOIM’s sustainability offering and research capabilities. He joins from Skandinaviska Enskilda Banken (SEB), a leading Nordic financial banking group, where he was Head of Sustainable Finance Research and a Senior Advisor. He is the author of over 30 publications on sustainable finance, and has held responsibilities for cross-asset research and strategy, as well as advising on and structuring sustainability financing solutions for investors, corporates and sovereigns.
Prior to SEB, Kaminker was the lead economist and policy advisor for sustainable finance at the Organisation for Economic Co-operation and Development (OECD) and represented the OECD as a delegate to the G20 and Financial Stability Board. Previously, he worked at Société Générale and Goldman Sachs.
Ebba Lepage will join as Head of Corporate Sustainability on 19 August 2019. Her experience in corporate business development and ESG strategy, assessment and implementation will be key assets to help drive Lombard Odier’s sustainability agenda forward.
Lepage has worked in a multinational environment, in New York, Montreal, Monaco, London, and Stockholm. She has spent her career in corporate finance, investment banking, asset management and for nearly five years in sustainable innovation. She joins from Stora Enso, a sustainability leader of renewable solutions in biomaterials for consumer products, where she was Group Vice President M&A and Corporate Finance. Here, she oversaw the Biomaterials Innovation group division’s sustainable investment activities.
Patrick Odier, Senior Managing Partner of the Lombard Odier Group, said: “I am pleased to welcome such experienced talents to Lombard Odier as we continue to strengthen our sustainability expertise and offering. Seeking to identify and provide the best solutions for our clients is at the heart of what we do, while always ensuring we have a positive impact on society, creating a better future for the next generation.”
Hubert Keller, Managing Partner of the Lombard Odier Group and CEO of Lombard Odier Investment Managers, said: “Investors and the corporate world are coming under mounting pressure to transition to a sustainable economy. Christopher’s extensive experience across the academic, financial and policy sectors will advance our integrated sustainability solutions and bolster our research capability within LOIM as we seek to give our clients access to companies which adopt sustainable business models and practices.”
Annika Falkengren, Managing Partner of the Lombard Odier Group, said: “Lombard Odier has a long heritage in sustainable investment and corporate sustainability. These appointments further demonstrate our commitment to continually innovate in these fields. Ebba’s experience in sustainable innovation will be crucial in helping us become an even more sustainable business as we continue to grow over the coming years.”
Foto: Dennis van Zuijlekom. In The First Half Of The Year Mexico Saw 7 New Ckds And Cerpis
A total of 7 CKDs* were issued in the first half of 2019, of which 5 were CERPIs. Together, they add up to 1.595 million dollars of which only 366 million dollars have been called.
The 7 issuers of the first half of 2019 were five CERPIs: Mexico Infrastructure Partners (energy); SPRUCEVIEW MEXICO (private equity), Blackstone (fund of funds), ACTIS GESTOR (fund of funds) and Harbourvest Partners (fund of funds). And two CKDs: Walton Street Capital (real estate) and ACON (private capital).
Of these issuers:
For Walton Street Capital, is its fourth CKD that issues individually to reach total commitments of $ 1.274 billion USD in the real estate sector without considering the CKD that they jointly issued with FINSA in 2015.
In the case of Mexico Infrastructure Partners, is its fifth issue (3 CKDs and 2 CERPIs) to complete total commitments for 728 million dollars in the infrastructure and energy sector.
For Blackstone is its fourth CERPI as an issuer in the fund of funds sector that allows it to add commitments for 717 million dollars.
Finally, the issuance of ACON, it is an option to acquire Series B certificates for AFOREs holding the previous CKD (ACONCK 14).
The number of issuers for the same period of 2018 (first half) was 10 (9 CKDs and one CERPI) out of a total of 38 that were issued throughout 2018. The total amount placed in 2018 was 1.649 million dollars and commitments for 6.869 million dollars. After the explosive offer of CERPIs observed in 2018 (18 in total), in the first six months of 2019 (5) it is observed that the offer takes a slower pace of growth.
The 13.098 million worth of the CKDs and CERPIs market through 133 issues represent 0.9% of GDP. The 109 CKDs in circulation are equivalent to 80% of the resources committed, while the 24 CERPIs in circulation represent 20% of the total.
The largest number of CERPIs issues continues to be funds of funds (13 of the 24 total CERPIs that have been placed), while 6 are private equity, 3 of infrastructure and the ones with the least supply have been those of energy and real estate of which only one of each has been placed. According to the quarterly publication of CKDs & CERPIs made by 414 Capital as of July 2019, ), there is a total of 38 CKDs in pipeline that have made the process as issuer with the Mexican regulator (National Banking and Securities Commission or CNBV) of which 7 are CERPIs. With the intention of issue since 2016 there is one, while there are 11 of 2017, 14 of 2018 and 12 of 2019 which reflects the interest of many to issue. Historically there are few CKDs and CERPIs that issue in the first year.
Although this year is the beginning of a new public administration, the offer of alternative investments has been maintained through CKDs and CERPIs.
Column by Arturo Hanono
*CKDs are private equity funds that are issued in the stock market through a trust, which allows institutional investors such as AFOREs and insurance companies, among others, to participate in this asset class. In 2009 the first CKD (RCOCB_09) was issued. CKDs only invest in projects in Mexico. Although the first CERPI arises in 2016 (MIRAPI_16) it is in 2018 when 90% of the projects in which they invest are allowed to be abroad and 10% in Mexico. This situation is what causes the rise of CERPIs.
Foto cedidaFrom left to right: Rafael Mendoza, CFA; Pablo Jaque, CFA; Magdalena Bernat; Luis Fernando Pérez y Diego Chomali, CFA. Oaktree Acquires Strategic Stake in Chilean-based Singular
Oaktree Capital Management announced on July 29th that it has agreed to acquire a 20% strategic stake in Chilean-based asset management firm and placement agent Singular. This is Oaktree’s first corporate acquisition in Latin America.
Howard Marks, Co-Chairman of Oaktree, stated, “We have worked with the people of Singular for seven years. We respect them; their work in the region has been excellent; and most importantly they embody Oaktree’s culture. We are very glad to take this next step in extending our relationship and deepening our commitment to Latin America.”
“I am pleased to continue our work with the Singular team,” said Daniel Saieh, a Managing Director at Oaktree specializing in distribution of funds in Latin America. “They have been great partners for Oaktree and our clients and I look forward to expanding this important relationship throughout the region.”
Singular will continue to operate independently. Oaktree will have the right to appoint one representative to Singular’s board of directors.
Singular Chairman Pablo Jaque said, “We are thrilled to partner ever more closely with Oaktree. We welcome the expertise and best practices Oaktree has to offer to our platform as well as their additional support as we continue developing our asset management business across Latin America.”
Oaktree is a leader among global investment managers specializing in alternative investments, with 119 billion dollars in assets under management as of March 31, 2019. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The firm has over 950 employees and offices in 18 cities worldwide.
Singular is an asset management company based in Chile bringing a long track-record in managing institutional money to the Latin American market and extensive experience as Oaktree strategies’ institutional distributor in the region.
Foto: MaxPixel CC0. Attributes And Inadequacies Of The New “Generational Funds” Of The Mexican Pension System
Target date funds (TDF), renamed “Fondos Generacionales”, Generational Funds (GF) by Consar, the Mexican regulator, involve more qualities than the Siefores Básicas (SB), those restricted regime pension funds. As is known, in the United States, TDF are considered for the “401 (k)” pension plans, as one, not the only one, of the good products to be chosen by the employees, who decide how to invest their savings.
To gauge how important they have become, we can see their weight in the balance of the accounts: 20% at the end of 2016, according to www.ici.org. It should be considered that they are the investment by default, the fate that is given to the money of those who do not choose any product, and that were enthusiastically promoted by the Obama administration.
How do the TDF work? What will the GF be like?
TDF are funds of funds to balance risk and return. At the beginning of the working life, when the employees are young, portfolios are 100% invested in equity (“E”) under the premise that, the younger, the more tolerance to risk and more time to recover from debacles. TDF point to a defined year, which usually carry by name, for example, Vanguard Target Retirement 2040 Fund, “VFORX”, for workers to retire between 2038 and 2042. Halfway through the cycle its composition reveals the pendulum or sense: the equilibrium of risks: 83% in “E” (index funds with more than 10,000 shares) and 17% bond funds (“FI”).
The GF of Mexican Pension System (SAR) will invest directly in equity, bonds and other assets. Its non-mandatory cap of “E” will be 60%. By adding structured assets (“SA”) and local Reits (“R”) could reach 90% in high risk. Yes, the non-mandatory nature means GF could be composed just with “FI” assets, 100%, all the time. New funds will be identified by the range of years –properly, the “generation” – in which the workers were born; for example, “Sociedad de Inversión Básica 75-79”, for contemporaries of the Americans of the 2040 target.
In a simple way: instead of moving the employee by age in a staggered way from SB4 to SB1, from higher to lower risk (from 45% to 10% maximum in “E”), his only GF will be the one that adjusts the equity parameters, from maximum of 60 % to limit of 15%, according to its productive stage. What is the disputable of the TDF?
The large load on risk assets, potentially the most profitable, is carried out over low balances. As the balance swells the load falls. Thus, the higher profitability is expected on sums that influence little to increase the savings. Several studies reveal that if the percentage of risk is not altered or if it is increased gradually (contrary to what is intended), better results are achieved.
The analysis and exercises of Javier Estrada (“The Glidepath Illusion: An International Perspective”, 2013) are enlightening: “simple alternatives… contrarian, equity-driven, and balanced strategies… provide investors with higher expected wealth at retirement and generally higher upside potential, than lifecycle strategies”. The uncertainty, concludes the meticulous Estrada, is “…about how much better, not how much worse, investors are expected to fare with these alternative strategies”.
“Generational Funds” of SAR: more controversial than TDF
Observations on the incidence of “E” and “FI” in TDF will apply to GF. The optional cap of 60%, without considering “SA” and “R”, of slow maturation, will influence a meager balance, given by few weeks of history and small/medium contributions; meanwhile, the “FI” will apply on a large balance, the result of years of accumulation and substantial contributions for higher salary, and consequently will weigh much more.
Those who are going to retire around 2040 could today have up to 30% of “E” in SB2. As of December of this year they could have 53% to 47% (without “SA” or “R”), if the Afores exploit the permitted ceiling, which seems difficult, considering the evolution of the system’s investments. Meanwhile, their US counterparts assume 83% of pure “E” with VFORX, and 66% broadly and weighted, according to 401 (k) *.
What remains unchanged: Investment in “E” and other highly risky assets will continue to be optional, contrary to the sense of the TDF and differentiated from Chilean pension funds that maintain high mandatory minimums.
See that Mexican pension system’s exposure to risky assets in May (“E” + “SA” + “R”) was 26.4%; that of SB4, the riskier, 33%. On the other hand, to March, the equity of the Chilean pension funds was 39.4%; that of the riskier, “A” fund, 80%.
** Calculated with the equity composition of VFORX and data from the table “Average Asset Allocation of 401(k) Plan Accounts. 2016”: [(83% x 11.90%) + 43.10% + 6.50%] = 66.07%
Following his G-20 meeting with Xi Jinping, Donald Trump went well beyond the trade truce I had expected, as he downplayed the national security tensions between the U.S. and China while describing the bilateral relationship as one of “strategic partners.”With that characterization of the relationship and his apparent decision to lift his administration’s recent ban on the sale of American technology to Huawei, Trump threw his national security team under the bus.
Returning to his transactional roots, Trump favored selling more goods to China over his advisers’ attempts to constrain the rise of that nation (and its leading telecom company). If the president sticks with this approach—which is not a sure thing—that would be positive for the future of the bilateral relationship and for the near-term health of Chinese consumer and corporate sentiment.
Partners rather than adversariesIn an article on our website last month, I wrote that “Far more than trade will be on the table when the two leaders next meet. . . In short, [Trump and Xi] will have to agree that rising competition between the two nations does not have to be a zero-sum game, and that it is cooperation and concessions, rather than confrontation, that will leave both sides better off.”
In his comments after meeting with Xi in Osaka, Trump seems to have opted for engagement over confrontation. When a reporter for Caixin, a Chinese financial magazine, asked if the two countries should view each other as strategic partners, competitors or enemies, Trump replied: “I think we’re going to be strategic partners. I think we can help each other.”
That was, for the moment, at least, a stark rejection of the more adversarial, “strategic competitor” approach that the president’s national security team has been advocating.Trump’s perspective was evident in his comments on two contentious issues: Huawei, a world leader in 5G technology and in mobile phone sales; and the status of Chinese students in the U.S.
“We’re letting them sell to Huawei”
The Trump administration recently placed Huawei on an “entity list,” limiting the company’s ability to purchase U.S. technology. But at Saturday’s press conference, Trump said he would roll back that restriction. “U.S. companies can sell their equipment to Huawei. I’m talking about equipment where there is no great national emergency problem with it. But the U.S. companies can sell their equipment. So we have a lot of great companies in Silicon Valley and based in different parts of the country, that make extremely complex equipment. We’re letting them sell to Huawei.”
The details of this decision are unclear, but Trump suggested that he may remove Huawei from the “entity list.” “We’re talking about that,” he said. “We have a meeting on that tomorrow or Tuesday.” Trump then raised the case of another Chinese telecom company which had been, briefly, sanctioned by his administration. “I took ZTE off, if you remember. I was the one; I did that. That was a personal deal. And then President Xi called me. And he asked me for a personal favor, which I considered to be very important. . . And they paid us a billion-two. $1.2 billion.”
The president’s comments appear to undercut his administration’s earlier statements that Huawei presents a national security threat and should be denied access to American technology, and should also be blocked from selling 5G networking gear to U.S. allies.
“We want to have Chinese students come”
The director of the FBI recently suggested that many Chinese students in the U.S. are spies, and the State Department has made it more difficult for Chinese citizens to obtain student visas, but Trump took a different tack at his Osaka press conference. Apparently, Xi raised this issue with the president, who told reporters:
“Somebody was saying it was harder for a Chinese students to come in. And that’s something if it were—it [sic] somebody viewed it that way, I don’t. We want to have Chinese students come and use our great schools, our great universities. They’ve been great students and tremendous assets. But we did discuss it. It was brought up as a point, and I said that will be just like anybody else, just like any other nation.”
“A brilliant leader and a brilliant man”
Trump, who is often reluctant to praise those across the negotiating table, called Xi “a brilliant leader and a brilliant man.” Trump added, without explanation, that Xi is perhaps the greatest Chinese leader “in the last 200 years.”In the same press conference, Trump described Xi as “strong” and “tough . . . but he’s good. . . I have a tremendous relationship with President Xi.”Trade talks “right back on track”In his G-20 press conference, Trump described the bilateral trade talks as “right back on track.” He didn’t lift the tariffs already in place on Chinese goods, but postponed additional tariffs he had threatened to levy.
Taking the same transactional approach as with Huawei, Trump told reporters, “China has agreed that, during the negotiation, they will begin purchasing large amounts of agricultural product from our great Farmers.”Signaling, perhaps, a link in his mind between concluding a trade deal and his re-election prospects, the president said, “(But) in the end, the farmers are going to be the biggest beneficiary. But I’ve made up for the fact that China was, you know, targeting our farmers. . . The farmers could not be happier…”
The following day, in South Korea, Trump added another optimistic note about a trade deal:“President Xi and I had a fantastic meeting. It was a great meeting. We get along. We also have a really, really good relationship. And he wants to see something happen and so would I. And I think there’s a really good chance of that happening.”
Cautiously optimistic
I remain optimistic about prospects for a trade deal in the near future, because Trump seems to recognize that a trade war with China would damage the U.S. economy and equity markets, and thus his re-election prospects.
All signs are that Xi also continues to want to reach a deal. While tariffs are not a huge problem, as China is no longer an export-led economy, failure to conclude a deal would open up the risk that a full-blown trade war leads to restrictions on China’s access to American tech, everything from semiconductors to research collaboration. That would be a setback to China’s economic growth, which Xi wants to avoid.
The future beyond a trade deal is less clear, but after listening to Trump’s weekend comments, I am less pessimistic than I was a week ago about prospects for the broader bilateral relationship. We will soon see if the president turns his recent rhetoric into actions which promote engagement over containment.
In the meantime, Trump’s words are likely to be received positively by Chinese consumers and investors. Remember that real (inflation-adjusted) retail sales rose 6.4% in May, and the Shanghai Composite Index was up 19% during the first six months of the year. The business community, however, felt pressure from the tensions with the U.S., leading to weaker corporate investment and industrial output during the first five months of 2019. The June macro data will be out soon, while the impact of the Trump-Xi meeting will register over the coming months.
Column by Matthews Asia, written by Andy Rothman, Investment Strategist
Wikimedia CommonsCourtesy photo. Michael Blank Joins a Canadian MFO, to Lead its US Expansion
Holdun Family Office, a 5th generation Canadian family with offices in Montreal, Bahamas and The Cayman Islands, has opened its first US Office. Located at 555 Washington Ave., in Miami Beach, and lead by industry veteran and former Managing Director of Andbank, Michael Blank, the new office is considered by the firm, “as a major expansion into the United States.”
Joining Holdun Family Office in Miami will be a team of professionals with over 100 years of banking experience. It includes: Giuseppe Mazzeo as Chief Investment Officer, Marc Bonorino as Head of Global Compliance, as well as Ileana Torruella and Adilia Lugo, as Senior Relationship Managers.
Global CEO Brendan Holt Dunn of Holdun Family Office commented: “Our extensive family history has served us well in managing our client relationships worldwide. We are looking forward to working in partnership with our new U.S. families and bringing our expertise to the domestic U.S. market.”
Stuart Dunn, Chairman of Holdun Family Office added: “The guiding principles of our family which comprise of honesty, integrity and accountability are never compromised. We pride ourselves on our ethics which is reflected in client loyalty.”
The Holdun vision and services includes: Family Office Services , Wealth Management, Trust and Corporate Services, Financial Services, Concierge Services and a full digital financial platform and ecosystem operating under the Holt brand.
Mariela Arana joins Insigneo as Head of Operations and Technology while the company embarks on a growth strategy with a laser-focused plan on digitalizing operations to provide an enhanced client experience.
Arana brings over a decade of experience in the financial industry along with a solutions-oriented mentality that will propel the successful implementation of key initiatives to automate workflows. She will be overseeing both the United States and Uruguay’s operations as well as the firm’s IT department.
With the client experience at the core, Insigneo has embarked on a journey of growth and expansion as it seeks to scale and automate their operations by leveraging state-of-the-art technology to be more efficient and continue to meet their clients’ needs in an increasingly digital landscape. These initiatives will streamline workflows, including the implementation of cutting-edge programs which will be spearheaded by Arana.
“We are excited to welcome Mariela to the Insigneo family and we are confident that with her experience and talent, coupled with her solutions-oriented mentality, she is the perfect addition to our team,” said Javier Rivero, Chief Operating Officer of Insigneo. “We are counting on her to bring a fresh perspective and the expertise to better our processes and enhance our client’s experience.”
An industry veteran, Arana brings extensive experience in project and time management with a profound focus on risk and compliance and third-party vendor management. Most recently, Arana served as Head of CPII Operations at Citi International Personal Bank and previously as an Investment Associate at Citi Private Bank. Arana started in the financial industry in 2005 when she joined Merrill Lynch.
“I am extremely excited to join such a passionate and energetic team,” Arana shared. “I believe in the power of communicating your purpose with passion and energy, keeping the team motivated and engaged to achieve a common goal. This is what I plan on bringing to my new Insigneo family.”
She graduated from Florida International University with a Bachelor of Business Administration and Finance, has completed Certified Financial Planning courses at the University of Miami and holds Series 7, 66, 9 and 10 in addition to a Life, Health & Variable Annuities License (215).
Pixabay CC0 Public Domain. Aberdeen Standard Investments: “Some Of The Political Risks Which Plagued The Markets In 2018 Appear To Have Softened, At Least In The Short Term”
Current global economic growth prospects remain subdued. However, according to Aberdeen Standard Investments (ASI), some of the political risks that plagued the economies and markets in 2018 seem to have eased, at least in the short term. This has been accompanied by the ‘dovish’ tone of the Fed, which has generated some relief for the markets and has been reflected in the asset prices’ moves.
Speaking to Funds Society, ASI claimed that its medium-term outlook for traditional asset classes (developed government bonds, corporate bonds and equities) remains intact: “We believe that they are facing a challenging return environment given current valuations.” Therefore, they feel “comfortable” with their relatively moderate exposure to equities and see attractive opportunities elsewhere.
Within traditional credit markets, however, they are somewhat concerned about the fact that the level of credit spreads on offer is not commensurate with the risk at this point in the cycle. They therefore have a negligible direct exposure to corporate credit and assure that they will “patiently” wait for a more attractive point to reinvest.
Likewise, they continue to see ABS as a good instrument for an “attractive risk-return trade off.”
The management company believes that local currency emerging market bonds are “the most attractive of the larger liquid asset classes” mainly due to the nominal and real yield they offer as compared to that of developed markets. This is supported by inexpensive currency valuations and “decent” underlying fundamentals.
Finally, they also see attractions across a broad range of niche alternative asset classes, such as litigation finances, healthcare royalties and aircraft leasing.
“Economics and politics are interconnected; they always have been and always will be,” claims ASI, before pointing out that, nevertheless, the nature of that connection “changes over time.” In that regard, the management company predicts that geopolitical uncertainty will continue to drive markets.
In particular, it sees a confrontation between Italy and the EU, a hard Brexit, and an escalation of the US-Iran conflict as increasingly likely.
The management company points out that future outlook analysis is a key part of its risk management approach, since it ensures that they look beyond simple quantitative measures of investment risk. In that regard, some scenarios that have been assessed include a trade war, the rapid increase in interest rates and a liquidity crisis.
According to ASI, their scenario analysis reinforces their focus on diversification through its multi-asset strategy – which includes products such as the Aberdeen Standard SICAV I – Diversified Income Fund – and, in addition, provides a useful basis for “challenging base case assumptions with respect to asset class correlations and individual market liquidity.”
The objective of this analysis is to consider how their funds could respond to different extreme scenarios, which include geopolitical (e.g. war in the Middle East), economic (e.g. China’s hard landing), political (e.g. protectionist policies), market (e.g. major US treasury sell-off) and environmental (e.g. cyberterrorism).
“Although a scenario analysis is a highly subjective exercise and there are no right answers, we believe that by taking the time to think through these scenarios we have a better sense of how our portfolios may perform in a range of market conditions and some of the key sensitivities around this,” says ASI.
