Pixabay CC0 Public DomainPhoto: NASA. BlackRock Completes Acquisition of Citi's Mexican Asset Management Business
BlackRock has completed its acquisition of Citibanamex’s asset management business. Citibanamex is a subsidiary of Citigroup. The transaction, which has received all necessary approvals from Mexican regulatory entities, involves fixed income, equity, and multi-asset funds holding approximately 34 billion dollars in AUM.
Prior to the acquisition, BlackRock’s business in Mexico, which will continue to be led by Samantha Ricciardi, focused primarily on offering international investment and risk management products and services to institutional clients, while Citibanamex Asset Management focused primarily on the retail segment.
This acquisition reaffirms BlackRock’s conviction in Mexico’s long-term growth potential and positions BlackRock to help more Mexicans build better financial futures. With 10 years of experience in the Mexican market, BlackRock will now offer a full range of local and international investment solutions for clients there. BlackRock’s presence in Latin America and Iberia has now grown to approximately 275 professionals across eight offices with $184 billion in assets managed on behalf of clients in the region.
Armando Senra, Head of the Latin America & Iberia region for BlackRock, said: “This transaction is transformative for BlackRock and the asset management industry in Mexico and the region. As an independent asset manager with local and global capabilities, BlackRock brings Mexican clients unparalleled investment solutions backed by our world-class risk management technology.”
The transaction is part of Citi’s emphasis on expanding access to best-in-class investment products, rather than on manufacturing proprietary asset management products. Ernesto Torres Cantu, CEO of Citibanamex, said: “BlackRock and Citibanamex are enhancing their longstanding institutional relationship and will offer, through a distribution agreement, BlackRock investment products to Citibanamex’s 21 million banking clients in its network of 1,500 branches in Mexico. Citibanamex clients can invest as little as 1,000 pesos (approximately $50 dollars) in products backed by BlackRock’s world-class investment and risk management platform.”
Pixabay CC0 Public DomainCourtesy photo. Janus Henderson Investors Hires Paul Brito As Director of Sales, US Offshore
Paul Brito has been appointed as the new Director of Sales, for US Offshore with Janus Henderson Investors. He will be based in Miami, Florida, with immediate effect.
Janus Henderson Investors has a strong commitment to the US Offshore market, with approximately €6.1 billion assets under management in the Iberian & Latin American region combined.
Paul will report to Ignacio de la Maza, Head of Continental Europe, Wholesale & Latin America and he will be responsible for strengthening and developing US Offshore and Latin American distribution.
Paul makes a welcome new addition to the team, and brings the headcount to total of nine sales people for the Iberia, US Offshore & Latin America region.
Fluent in English, Spanish and Portuguese, Paul has been in financial services for more than twelve years. Most recently he was at MFS Investment Management, where he worked for almost ten years, his last role was Distribution Director. He has a bachelor’s degree from Stonehill College, Massachusetts.
Commenting on the appointment, Ignacio de la Maza, said, “Paul is a great addition to the team. He brings an exceptional skill set of asset management and the US Offshore market. Paul has established and developed strategic partnerships, which combined with his deep understanding of client investment priorities; means Janus Henderson Investors will be able to increase our service and dedication to our clients in the US offshore market.”
Pixabay CC0 Public DomainPatricksommer. Loomis Sayles Appoints Succesors for the Global Fixed Income and Senior Loan Teams
Loomis, Sayles & Company, an affiliate of Natixis Investment Managers, announced that Kenneth Buntrock, portfolio manager and co-team leader of the global fixed income team, will retire in March 2019 after 21 years with the company. Kevin Perry, portfolio manager on the senior loan team, will retire in March 2019 after 17 years with the company and 37 years in the industry.
In preparation for Ken’s retirement, longstanding portfolio managers Lynda Schweitzer and Scott Service will assume leadership roles effective immediately, joining David Rolley as co-team leaders, while all senior loan portfolios will continue to be co-managed by portfolio managers John Bell and Michael Klawitter, who have been members of the team for 17 and 16 years, respectively.
Kevin Charleston, chief executive officer said of Buntrock retirement: “We are grateful to Ken for more than 20 years of service and leadership at Loomis Sayles. His dedication is reflected within the success and growth of the Loomis Sayles global bond capabilities over the past two decades, and we wish him the best in retirement.” Charleston said of Perry: “Kevin has embodied Loomis Sayles’ values of collaboration, humility and prudent risk-taking every day since he and John joined us in 2001. Kevin and John are considered pioneers in the bank loan market and their efforts have led to clients entrusting us with the management of more than $10 billion in bank loan assets. We are grateful for Kevin’s contributions to our firm, and to bank loan investing, and wish him the best in retirement.”
Until their retirement date, both executives will continue in his leadership and portfolio management roles to ensure a seamless transition and provide continuity for clients.
Pixabay CC0 Public DomainPhoto: Nile. Regulation, Monetary Normalization, Diversification, and More Cautious Investors: The Legacy of a Crisis
This past weekend marked the anniversary of the Lehman Brothers collapse, one of the most important milestones that marked the financial crisis of 2008. TwentyFour Asset Management, a boutique specialized in fixed income founded by nine employees, was born just 24 hours later and in the midst of that chaos; facing a fund industry that changed overnight.
“Over the past decade, we have witnessed an unprecedented global expansion in the role and power of central banks, whose combined balances now exceed $ 15 trillion. Yield curves are now lower and flatter than before the crisis, thanks to a combination of risk-aversion and QE. This has distorted the relationship between interest rates and inflation, and has destroyed the term premium, a sign which shows that markets have not yet normalized. In addition, we have seen a transformation in the volume and quality of capital in the global banking system, together with a radical change in the regulation of the sector,” points out Graeme Anderson, President of TwentyFour Asset Management.
Anderson recalls that, after the Lehman Brothers collapse and the outlook that they would not obtain mandates, they had to rethink their entire business model. “We said it was better to rethink everything we thought we knew about the financial markets, because this was a new chapter,” he recalls. Like him, the market and the asset management companies were never the same after September 15th, 2018.
“With each market crisis there are lessons to be learnt, and honestly, some have to be learnt twice. In 2007-2008, investors were taught the lesson of how housing prices can fall at the same time across the country and how, for better or for worse, the global financial system was interconnected. We learnt that banks were not sufficiently capitalized to support higher risk behavior or systemic risk. What many investors still have to learn is that good times don’t last forever,” points out Ed Walczak, Portfolio Manager, Vontobel Asset Management, on analyzing how things have changed after the collapse of Lehman Brothers.
According to Juan Ramón Casanovas, Head of Private Portfolio Management of Bank Degroof Petercam Spain, that collapse and the international crisis caused, firstly, a new regulatory framework for financial institutions. “The great excesses committed in the past have brought radical changes in legislation. In 2010, the Wall Street reform law came into force, stress tests for financial entities began and new supervisory bodies were created. In Europe and in the rest of the world, we have experienced large concentrations and mergers of financial entities, transforming the financial system in some countries such as Spain. Bailouts with public funds have brought strong criticism. Cases of fines to banks for non-compliance have escalated. Another consequence has been the strong legislation for the marketing and purchase of new products, a sample of which is the MiFID regulation,” explains Casanovas.
This increase in legislation has meant that the global banking system seems much stronger now than it was 10 years ago. “Many regulations have been established to ensure that banks are better capitalized for their business model. For example, leveraging was significantly reduced, on the one hand, by strengthening the capital base and, on the other hand, by significantly reducing dealing on own account. In this regard, banks would probably be currently facing a comparable situation,” said Thomas Herbert and Michael Blümke, Portfolio Managers at Ethenea Independent Investors.
Beyond Regulation
The sector hasn’t only seen change in terms of regulation or of the economic environment, but also, according to Amundi Asset Management, the way in which managers assign the assets has changed as well. “From a portfolio construction perspective, we currently see three main areas of development, since not all the lessons of the crisis have resulted in real solutions. First, a broader concept of risk is considered, which is not only limited to volatility but also to liquidity. Secondly, new risk profiles are taken into account in all asset classes, and finally, the diversification strategies are improved and gain relevance,” company sources explain.
The change in the way in which management companies assign assets and compose portfolios is also due to the fact that the investor has changed. At present, investors are more cautious and therefore are more likely to change their mind when volatility looms again. “Buy and maintain” has gone from being a reliable key principle to a sad commonplace that many investors can no longer sustain.
According to Dave Lafferty, Chief Investment Strategist at Natixis IM, as the attitudes of investors have changed, so have the markets. “Because Lehman’s failure was equally a credit and liquidity crisis, investors have come to demand better protection and more liquidity in their investments. The sector has proven to be more willing to develop new products and strategies that promise to reduce volatility, manage exposure to downside or reduce correlation with falling markets,” says Lafferty.
Current Risks
Despite everything that was learnt and improved on after the crisis, management companies agree that there are still aspects to be changed and challenges to face. “The ultra-expansive policies, both monetary and fiscal, that were needed at that time in order to avoid an economic depression, have not addressed the root of the problem. They are capable, in the best of cases, of smoothing the cycle, but they have had little effect on the trend, which depends on the political reforms and on the will to carry them out. On the other hand, given that some of these extraordinary measures are still underway, they are delaying the necessary adjustment even further,” advises Fabrizio Quirighetti, Head of Multi-asset at SYZ AM.
At Schroders they wonder where these imbalances are now, in order to identify the future failings in world economy. “We discovered that there have been significant changes in the global economy, so that any imbalances are minor, but they have changed in such a way that the risks are different from those of a decade ago,” says Keith Wade, Chief Economist and Strategist at Schroders. In this regard, Wade focuses on three elements: emerging markets are still vulnerable, the current US account deficit still persists and there will be an inevitable appreciation of the Euro.
Pixabay CC0 Public DomainGraham Ray, Linkedin. BNP Paribas Securities Services Hires Graham Ray
BNP Paribas Securities Services has appointed Graham Ray to the newly-created role of Global Head of Sales and Relationship Management for Financial Intermediaries with immediate effect.
Ray will be responsible for driving new sales and strategic opportunities with financial intermediaries, and for deepening relationships with new and existing clients. His proven experience in helping clients with complex needs to optimise their business operations will continue to position BNP Paribas Securities Services as a strategic partner to its clients. Ray will be based in London and will report globally to Alvaro Camuñas, and locally to Patrick Hayes, Regional Head of UK, Middle East & South Africa.
Alvaro Camuñas, Global Head of Sales and Relationship Management at BNP Paribas Securities Services said: “We’re delighted to have Graham on board. His outstanding track record in our industry, product knowledge and client expertise position us well for future growth. He joins at an important time for our business, which is growing rapidly around the world.”
Ray has more than 15 years’ experience in the custody industry. He joins BNP Paribas from Deutsche Bank where he was Global Head of Investor Services, responsible for product management for an extensive portfolio of products. Prior to this, Ray worked in global operations for Northern Trust as a Division Manager, responsible for securities and alternative investment settlement operations.
CC-BY-SA-2.0, FlickrSabastián Ochagavía, courtesy photo. Sebastián Ochagavía, Allfunds' New Chile Country Manager
Allfunds Bank, Europe’s largest open architecture fund platform, continues to expand its presence in Latin American with the appointment of Sebastián Ochagavía as the new Country Head of Chile with additional responsibility for the Allfunds business in Uruguay and Argentina.
Allfunds has been present in Chile since 2008 and has extensive plans to continue to accelerate its growth in the Region.Ochagavía will be responsible for heading up the Allfunds sales efforts in Chile, Argentina and Uruguay and will report directly to Laura Gonzalez, Head of LatAm and Iberia. Gonzalez, said: “I am very pleased to welcome Sebastián to Allfunds -I am confident he will make an immediate impact on our business. The Latin American market, particularly Chile, is extremely important to us. Sebastián will be joining an already very well-established team that has have been operating in the Region for over 10 years and so I am delighted to have his experience and insight to help grow our business.”
Previously Ochagavía was Deputy Head of Institutional Clients at Compass Group where he was in charge of the distribution of third-party products (mutual funds, ETFs and alternatives strategies) to institutional clients in Chile including Pension Funds, Insurance Companies and Local Mutual Funds companies. Before joining Compass, Ochagavía was a Business Development Associate at BlackRock for SAxB region, where he covered Institutional Clients in Chile and Peru, based in Santiago. Prior to this, he worked at Corso Inversiones, one of the largest single Family Offices in Chile, as a buy-side investment analyst. Ochagavía has a Bachelor degree in Business Administration with a concentration in finance from University of Chile. He is fluent in Spanish, English and French.
Pixabay CC0 Public DomainFree photos. US Companies are at the Forefront of Another Outstanding Period of Results on a Global Scale
Since the beginning of the year, equities have positioned themselves as one of the most attractive assets for investors given the risk / reward ratio that it offers. Therefore, asset managers have been calibrating and searching for the best combination of US, European, and emerging market equities. According to the asset management companies, this will continue to be a fundamental piece in the portfolios for the second part of the year.
Although historically summers are a quiet period, logically there are also some exceptions, sources at DWS point out that this year “the growth of some shares, for example Facebook, has been afflicted, and defensive stocks have outperformed the behavior of the most cyclical securities. In fact, some cyclical stocks obtained poor results, while sovereign bonds barely moved.”
US equities stood out due to the good behavior of business profits which, as was to be expected, increased thanks to the fiscal reform that was already noticeable this quarter. According to Richard Turnill, Global Head of Investment Strategy at BlackRock, “the strength of corporate profits, especially in the United States, will continue until the end of the year, as the optimistic forecasts of companies show that confidence is on the rise”.
In his opinion, US Companies are at the Forefront of another outstanding period of results on a global scale. According to his analysis, firms that exceeded expectations have been rewarded with a rise in prices, even in spite of investors’ concerns about the increase in economic uncertainty, trade tensions and the appreciation of the US dollar. “Our analyses of business forecasts suggest that business confidence is on the rise, which provides us with the basis to affirm that the soundness of profits can be perpetuated in 2018 in a context characterized by the robustness of global growth,” says Turnill.
In his opinion, US Companies are at the Forefront of another outstanding period of results on a global scale. According to his analysis, firms that exceeded expectations have been rewarded with a rise in prices, even in spite of investors’ concerns about the increase in economic uncertainty, trade tensions and the appreciation of the US dollar. “Our analyses of business forecasts suggest that business confidence is on the rise, which provides us with the basis to affirm that the soundness of profits can be perpetuated in 2018 in a context characterized by the robustness of global growth,” says Turnill.
But all that glitters is not gold, especially in the United States. “The downside is that American companies are seeing more pressure on the cost of raw materials and wages. There have also been quite a few companies in the United States that have pointed out the negative effects that the increase in tariffs has on them, whereas European companies have taken advantage of the opportunities that trade tension has generated,” DWS points out in its latest report.
Once again, the United States and Europe are the markets where investors and asset managers find more opportunities for equities, after the exit of flows from emerging countries due to the effect of the strength of the dollar. According to Union Bancaire Privée (UBP), the strength of the dollar must be added to the political uncertainty generated by the US administration with its trade policy. “In our opinion, investors have become excessively pessimistic about emerging markets’ assets, and a stabilization of the dollar should allow a rebound in emerging market stocks,” UBP explains in its latest report.
The entity is cautious and prefers to follow strategies that allow them to participate in equity growth through hedge funds, strategies that protect capital, and convertible bonds, avoiding direct investment in shares. “Within equities, we have expanded our underweight in Europe given the constant political fragility that is projected, and a more moderate economic growth. On the other hand, Euro-zone shares are more attractive than US equities, while offering a modest perspective of earnings growth,” he argues egarding his position towards the end of the summer.
Pixabay CC0 Public DomainOimheidi. After the Trade Storm of Summer, what do the Last Four Months of the Year Hold in Store?
All analysts point to several elements as the protagonists towards the end of the year: Geopolitical tensions in the face of a possible commercial war, rising interest rates on the horizon, the Brexit negotiations, and the confidence in fundamentals that suggest that Global growth will continue.
For some experts, such as Olaf van den Heuvel, Head of Investments at Aegon Asset Management, the markets are behaving well and will continue to do so for the rest of the year, despite the constant background noise generated by the economic situation, geopolitics and the associated volatility.
“As we anticipated, the most prominent feature so far in 2018 has been the reappearance of market volatility in most asset classes. Volatility is often synonymous with good news for active fund managers, as it allows us to provide added value through fundamental analysis and a good selection of securities. In addition, volatility has not prevented most economies from maintaining a steady growth rate. To date, the year has been marked by a continuous flow of events that have focused the attention of the markets at one time or another, from the abrupt stock market corrections to the widening of the Libor spreads, Italian politics, and the depreciation of emerging market currencies. Although these events caused strong fluctuations in the markets, within a matter of days they were already of secondary importance,” says Van den Heuvel.
According to this expert, it isn’t difficult to identify the events that will affect the markets in the coming months: “Trade policy has become a central issue and will continue to be so long as Donald Trump continues to apply tariffs on Chinese goods. The Chinese economy is already somewhat weakened in itself after the strong corrections experienced by both its currency and its stock markets. I think fears about the sustainability of the Chinese growth model will come to the fore some time during the year, as well as the possible repercussions of the agreement, or lack of agreement, on Brexit.”
At Lombard Odier they share the same theory, as they believe that “trade tensions will remain restrained, although we must admit that the possibility of a trade war has become a risk that deserves our utmost consideration.”
Regarding this summer period of tweets and tensions that we are just about to conclude, the team of economists at Schroders, are wondering as to just how real the “calm” we are experiencing really is. “Concerns about China, the weakening of commodity prices, and the appreciation of the dollar, all point to a period of slower growth for the global economy. The trade wars have probably generated a rebound and later a fall, as importers advanced their expenditure in order to avoid higher tariffs and now they are reducing it again”
Macro analysis
Looking at the fourth macro, at Lombard Odier they point out that the global environment does not favor the growth of emerging markets, “although the most affected countries to date have been those with weaker fundamentals or greater political risk.” For the United States, it foresees, in the short term, that the Fed will not accelerate the adjustment of its policies and that the economy of the Euro-zone will suffer specific falls, rather than sustained ones.
In this regard, Schroders points out that, unless trade wars hurt “business confidence and investment, the global economy should recover, but the combination of tariffs and tax cuts is likely to lead to an increase in inflation in the U.S”.
CC-BY-SA-2.0, FlickrJulieta Henke, courtesy photo. Julieta Henke Returns to Robeco in Charge Of the Retail Business in Argentina and Uruguay
Robeco has rehired Julieta Henke to cover the retail business in Uruguay and Argentina, plus some clients in Miami and Panama. She will report to Jimmy Ly, Head of Sales for Americas Offshore.
“We’re excited to have Julieta back with us to further enhance Robeco’s relationships in the region. She is an excellent addition to our team and I have no doubt she will be highly successful immediately.” Said Jimmy Ly.
She will be based out of Miami.
Back in December 2017 Henke joined the Pioneer Investments team in Argentina, as Country Manager. She has over 20 years experience in companies such as Robeco, Merrill Lynch International, and the Argentinean Central Bank. She is a CIMA charterholder.
The Millennial generation gets a lot of flak, but is it actually warranted? Often pegged as lazy and entitled, Millennials actually highly value hard work and education, surveys have shown. Unfortunately, hard work and education aren’t getting them as far as it did previous generations; Millennials face greater financial burdens with rising education costs, crippling student loan debt and stagnant wages. As the costs continue to soar and Millennials take on more debt, it’s little wonder that many of them experience financial anxiety. One study found that 74 percent of Millennials surveyed feel daily stress related to their student loan debt.
American Financial Benefits Center (AFBC), a document preparation company, recognizes that Millennials face tough financial challenges in today’s economy and reminds student borrowers that there may be options to help. “We hear all the time that it’s gotten harder to make ends meet,” said Sarah Molina, manager at AFBC. “When you look at the statistics, it becomes clear that this isn’t an exaggeration.”
Higher education has become increasingly expensive; since 1980, tuition has risen nearly 260 percent. The rising costs and loan interest have made it more difficult for Millennial borrowers to pay off student debt than it was for previous generations. Baby Boomers, for example, would have had to work 306 hours at a minimum wage job, adjusted for inflation, to pay for four years at a public college; Millennials have to work an average of 4,459 hours in comparison. Millennials also have 300 percent more debt than their parents, the majority of which consists of student loans. Many Millennials with student debt have a net worth of -$1,900; they owe more than they own. In addition to shouldering monumental student loan debt, they face other financial challenges with increases in housing and medical costs, as well as lower wages.
“It’s easy to take on student debt without realizing how much it will impact you later,” said Molina. “After graduation, the reality of having to pay off the debt sinks in and many young people feel overwhelmed trying to balance loan payments with other expenses.”
According to a study conducted by Northwestern Mutual, approximately one-quarter of Millennials say that their financial anxiety affects their job and makes them feel physically ill, compared to 12 percent of Boomers or Gen Xers. A quarter of them also said that it affects their relationship with their significant other and causes them to miss social opportunities. Furthermore, 18 percent of Millennials said their financial anxiety caused them to feel depressed on a weekly basis. Adding to the stress, many Millennials don’t know the details of their loans or even how long it will take to pay off their debt. For Millennials with federal student loan debt, income-driven repayment plans (IDRs) may be a helpful option to reduce some of the financial stress. By taking into account a borrower’s family size and monthly discretionary income, loan payments can be recalculated to what should hopefully be a more manageable amount.
“We feel young people should be able to have options for paying off their loans so their financial anxiety can be lessened,” stated Molina.
