Polen Capital and iM Global Partner Will Present Their Investment Strategies in Montevideo

  |   For  |  0 Comentarios

On September 25 at 7:30 PM (local time), the Alquimista Hotel in Montevideo will host an event organized by Polen Capital in collaboration with iM Global Partner to discuss “new growth opportunities” for Uruguay’s industry.

The event, which will also feature a networking space, will include presentations by Todd Morris, Portfolio Manager, and Rana Pritanjali, Investment Research Analyst.

“Together, they will share their experience and offer insights into our quality approach to U.S. and international equity investments,” says the invitation to the event, which is exclusively for professional investors.

Additionally, they highlight that this is “an opportunity to gain a deeper understanding of how Polen Capital seeks to identify and invest in companies that demonstrate resilience, stability, and superior growth potential.”

About the Speakers

Rana Pritanjali, CFA, is a research analyst on Polen’s Growth team. Prior to joining the firm, she was a Global Consumer Analyst at Causeway Capital Management. She has also worked at Indian firms such as Askanis Capital and at Credit Suisse in Singapore. She holds a civil engineering degree from IIT Delhi and an MBA from Columbia Business School.

Todd Morris is the Portfolio Manager for Polen Capital’s international Growth strategy. He also contributes as an analyst, identifying and researching investment opportunities for the strategy. Before joining Polen Capital, he worked in research and marketing at Prudential and Millennium Global Asset Management. Previously, he served in the U.S. Navy for seven years, during which he navigated a warship on three deployments, taught at the U.S. Merchant Marine Academy, and served with the U.S. Army in Iraq. He holds a degree in History from the U.S. Naval Academy, where he was a student-athlete, and an MBA from Columbia Business School.

AXA IM Strengthens Its Core Unit With The Appointment Of Dominic Byrne As Global Head Of Equities

  |   For  |  0 Comentarios

AXA Investment Managers (AXA IM) has appointed Dominic Byrne as the new Head of Global Equities for AXA IM Core. According to the asset manager, Byrne will report to Jeroen Bos, Global Head of Equities, and will be based in London starting on September 16. This appointment follows recent hires in the team, including Stephanie Li, who will focus on Asian equities, and Koichiro Nanaumi, who will focus on Japanese equities.

In this role, Dominic Byrne will lead the global equities team to achieve its strategic objectives and manage several global equity portfolios at AXA IM, in collaboration with his team. With over 20 years of investment experience, he was previously deputy head of developed markets equities at abrdn and has been managing global equity portfolios since 2009, recently focusing on sustainability. From 2017 until his departure, he managed abrdn’s Global Equity Impact Strategy fund, which was designed to invest in companies with a clear social or environmental impact.

Commenting on this appointment, Jeroen Bos, Global Head of Equities at AXA IM, said: “Equity investing remains of strategic importance at AXA IM, and we are very pleased that Dominic is joining us to further accelerate our growth ambitions. I am confident that, with a larger and more experienced global equities team, we are well-positioned to deliver superior performance to clients and accelerate the growth of our business.”

Ocorian Appoints Michael Gull as Head of Funds in the U.S.

  |   For  |  0 Comentarios

Ocorian has hired Michael Gull as Head of Funds in the U.S. as part of the firm’s expansion strategy.

Gull, who will work at Ocorian’s New York office, brings nearly 30 years of leadership experience from companies in San Francisco, Los Angeles, and New York, according to the statement.

“The U.S. is a key market for Ocorian, and Michael’s appointment underscores our commitment to increasing our presence in the U.S. financial services markets. His expertise will be crucial in continuing to expand our services, which include fund administration, corporate services, capital markets, and private client services,” commented Frank Hattann, CCO of Ocorian.

Most recently, Gull worked at Carta in New York, where he served as Head of Sales Management and Business Development, and previously, he was Managing Director of Sales Management and Business Development at SS&C Technologies.

“This is an exciting time to join Ocorian in the U.S. I look forward to working with our expanding team to further develop our presence in the fund administration sector and deliver greater value to our clients through our unique combination of local expertise and global capabilities,” added Gull.

Ocorian first entered the U.S. market in 2021 with the acquisition of Philadelphia-based Emphasys Technologies, marking the start of its expansion across the country. Since then, the company has been enhancing its onshore capabilities, making key hires, and building out its service offering to support its growing client base, according to company information.

XP Invests in Expanding Its Operations in the U.S., Aiming to Broaden Its Offering of International Funds

  |   For  |  0 Comentarios

The platform already has 700 Brazilian strategies in its portfolio as its U.S. operations advance, with over 100 funds from 30 international asset managers.

It’s no secret that the international fund business faces tough competition in Brazil, a country with very favorable interest rates. However, the business is progressing due to the growing need for investor diversification. Today, XP’s portfolio holds around $1 billion in international offerings, most of which are hedged in reais.

The Brazilian firm is also investing in expanding its U.S. operations to provide its clients with a broader selection of assets in U.S. dollars.

“XP is focused on expanding its international offering to meet the demand for international investments in both reais and dollars,” Cintra states, noting that the broker’s U.S. operations have grown significantly in the past year, with more than 100 funds now available. “I see the dollar segment growing at an even faster pace,” he adds.

Cintra further mentions that client demand for dollar accounts has increased, as any brokerage client can easily ‘dollarize’ their assets or a portion of them via the app, in a simple process with a low minimum ticket of around $1,000. “It’s much easier,” he says.

“We are in talks with global managers to add more funds to XP USA, serving both Brazilian and U.S. clients,” he adds.

Investment Funds: A Growing Demand

Tax exemptions and attractive returns are creating space for exchange-traded funds within XP Investimentos’ vast portfolio. With more than 700 funds, absorbing over 300 billion reais, the platform is experiencing increasing demand for Infrastructure Investment Funds (FIP), Real Estate Funds (FII), and Agribusiness Investment Funds (Fiagros).

“CRI funds, for example, are very attractive because they distribute tax-free earnings, which is a major differentiator for investors, especially in a high-interest-rate environment,” explains Cintra, the head of XP’s fund analysis team.

These funds, which are traded on B3 and Cetip, have attracted both retail investors, particularly high-net-worth individuals, and institutional investors, such as family offices. Pension funds, which already benefit from tax advantages, have also been drawn to these funds, especially FIPs, according to Cintra.

“Brazilian investors prefer fixed income, especially in the current scenario of high interest rates. And, when combined with tax exemptions, these funds become even more attractive,” he says, adding that this type of strategy has also offered good credit rewards. Some, like FIIs, pay monthly dividends. “Some funds pay up to 1% per month, net of taxes,” says Cintra, who is seeking new FIP and FII options for investors.

Curation: Track Record, Performance, Guarantees, and Solid Origination

XP has a stringent process when selecting new funds, says Cintra, who focuses on managers with a proven track record. “I look for managers with a solid performance history, good origination and collateral management, and strong access,” he explains.

“Our team conducts a thorough technical analysis of managers and funds. It’s a meticulous process, where we analyze the fund structure to understand what assets will make up the portfolio,” he says, adding that it’s also necessary to assess all levels of collateral behind the assets, such as credit rights.

XP also evaluates the structure of the fund’s tranches. “For example, a subordinated tranche is the first to absorb losses, which is why we analyze the level of this ‘safety cushion.’ There are many technical aspects we observe during due diligence to ensure that the fund has the right configuration and that the credits are of high quality,” he says.

**Tightened Spreads Due to Demand for Credit and Infrastructure Funds**

According to Cintra, the high demand for credit and infrastructure assets has compressed spreads, “which requires an even more careful selection process regarding both the managers and the securities that make up these funds,” he says. He adds that he is actively seeking more partnerships in this asset class.

Why Does the Fed’s 50 Basis Point Cut Make Sense?

  |   For  |  0 Comentarios

The U.S. Federal Reserve (Fed) met the expectations set by its chairman, Jerome Powell, at the Jackson Hole meeting and announced on September 18 a rate cut of 50 basis points, the first since 2020. The cut was widely expected and discounted by the markets, but the debate centered on whether the Fed would opt for a 25 or 50 basis point cut. In the end, its stance was more aggressive, opting for the latter, which came as a slight surprise. Why?

“It was a closely contested meeting, with markets divided over whether to start the rate cut cycle with 25 or 50 basis points. In the end, the Fed made a bold move with a 50 basis point cut. Certainly, the labor market has cooled in recent months, and inflation has continued to fall. The cut appears to be preventive, and both the accompanying dot plot and comments from the press conference highlight greater caution regarding the pace and extent of future easing. All in all, it’s a somewhat aggressive cut. However, one thing is clear: the ‘doves’ are in control, and any further weakness in the labor market would lead to faster and deeper cuts. And now the markets know this. We maintain our view that a soft landing remains the most likely outcome for this year,” adds Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International.

On the other hand, for Guy Stear, Head of Developed Market Strategy at Amundi Investment Institute, the big news isn’t the 50 basis point cut itself, but rather the downgrade in growth forecasts and the sharp revision of the dot plot. “The Fed seems confident that it has won the battle against inflation and acknowledges that monetary policy is now too restrictive, especially in light of the threats to growth,” Stear emphasizes.

According to Tiffany Wilding and Allison Boxer, economists at PIMCO, “The Fed’s actions suggest that it saw a shift in the balance of risks surrounding inflation and employment, justifying a quicker adjustment toward neutrality than many Fed members had previously thought.” They also note that historically, when examining Fed cycles since the mid-20th century, an initial 50 basis point rate cut often precedes or signals a recessionary easing cycle, meaning a series of deeper, more abrupt, or prolonged cuts aimed at stimulating a struggling economy.

The Labor Market Issue

Several analysts point out that this aggressive cut is due to the labor market. “The reasoning is as follows: the economy is still doing well, but there’s a warning in the labor market. By responding firmly to this change in the labor market, the Fed limits the risk of contagion to the rest of the economy and reduces the probability of a recession in the coming months. The 50 basis point cut carries these qualities,” explains Philippe Waechter, Chief Economist at Ostrum AM (Natixis IM).

In this regard, Christian Scherrmann, U.S. Economist at DWS, adds: “We view yesterday’s policy decision as an insurance policy to protect labor markets from further deterioration, which would be incompatible with achieving a soft landing. During the press conference, the Fed Chairman somewhat confirmed this view, referring to the decision as an ‘appropriate recalibration’ in light of the cooling labor market conditions. However, he reiterated that they are not on a preset course, meaning they could slow or accelerate their efforts. Ultimately, this means that the Fed remains data-dependent, and the dot plot ‘is not a policy plan,’ with 50 basis points not being the new pace.”

Avoiding a Recession

For Donald Ellenberger, Senior Vice President and Portfolio Manager at Federated Hermes, by cutting 50 basis points instead of 25, the Fed signaled its confidence that inflation will continue on a sustainable path toward 2%. “FOMC members reduced their core inflation forecast from 2.2% to 2.3%. But the most important measure seems to show their determination to achieve a soft landing, avoiding the slowing labor market from dragging the economy into a recession,” he clarifies.

Franco Macchiavelli, an independent market analyst, points out that one of the few reasons behind the Fed’s surprising decision may be the U.S. government’s growing debt, which not only rises exponentially but already exceeds military defense spending. “Nonetheless, the Fed has been irresponsible, allowing such a stark narrative between 25 and 50 basis points to remain so prominent in the market, instead of setting a clearer roadmap that would have allowed the market to price in the September move and avoid sharp spikes in volatility, as seen in the options market,” he explains.

The analyst believes that the markets have gone too far in pricing in a recession, primarily driven by labor market weakness, and because they believe the Fed has fallen behind other central banks that have already begun cutting rates. “However, what stands out is the disparity between optimism and pessimism, mainly based on the narrative that the U.S. economy is very weak and on the verge of recession. But… is the U.S. economy really as weak as it is perceived to be?” Macchiavelli reflects.

“We don’t believe the U.S. economy is currently in a recession. Consumer spending remains resilient, and investment growth appears to be accelerating. However, as inflationary pressures ease, the Fed seems focused on ensuring that U.S. growth and labor markets remain strong by aligning monetary policy with the current economy, which now seems much more normal since the series of pandemic-related shocks that drove high inflation has largely subsided,” PIMCO economists add.

The Road Ahead

Experts now focus on when the next rate cut will be and, again, whether it will be 25 or 50 basis points. “The key for the Fed will now be to carefully calibrate the pace of easing as inflation continues to approach the target and the economy slows down. In fact, while Chairman Powell may signal that 50 basis points will be the exception rather than the rule during this easing cycle, the Fed should be prepared to move with these larger steps if it sees new signs of weakness,” notes James McCann, Deputy Chief Economist at abrdn.

PIMCO economists believe the Fed is on track to ease monetary policy with 25 basis point moves at each of its upcoming meetings. “However, the Fed remains data-dependent. If the labor market deteriorates faster than expected, we expect the Fed to make more aggressive cuts,” they clarify.

In the opinion of Ostrum AM (Natixis IM)’s Chief Economist, “The Fed will continue, but the magnitude of future cuts will depend on the pace of the labor market, while inflation will slow with the sharp drop in oil prices. The issue remains with the ECB, whose cut last week already seems ridiculous.”

From DWS’s perspective, starting the rate cut cycle with a larger step is not without risks. “On the one hand, it implies increased confidence by central bankers in the inflation outlook, although the main factor behind the decision was likely uncertainties about labor market prospects. This carries the risk that the Fed will need to recalibrate its reaction function to incoming data, as we have seen in recent times,” explains Scherrmann.

The Broader Picture

With this rate cut, the Fed is following the same path as most developed market central banks, and consequently, global financial conditions will continue to ease in the coming months. “This will allow several emerging market central banks to resume or continue the easing cycles they had initiated before the Fed. The decline in risk-free rates in developed markets will also lower the external borrowing costs for emerging market issuers, reducing refinancing risks and improving debt sustainability. The easing cycle will incentivize asset allocators to increase their exposure to emerging markets, as the appeal of money market instruments and rates in core developed markets will gradually diminish,” observes Carlos de Sousa, Portfolio Manager of Emerging Markets Debt at Vontobel.

Regarding market reactions, Carlos del Campo from Diaphanum’s investment team notes that the stock market response was not overly dramatic since a 50 basis point cut was a very real possibility. However, “In fixed income, we can see a consolidation of the historical yield curve inversion of recent years coming to an end.”

J.P. Morgan Asset Management Launches Guide to ETFs

  |   For  |  0 Comentarios

J.P. Morgan Asset Management has launched the inaugural edition of its “ETF Guide,” which will be updated quarterly to provide a foundation for advisors when working with the product.

“The ETF Guide is the cornerstone of the company’s ETF Insights program, a new global initiative that offers financial professionals and investors leadership and practical resources,” says the company’s press release.

Despite the popularity of ETFs, there is still a demand for information about the structure of the vehicle and market dynamics. The ETF Guide “helps meet that need with in-depth analysis, performance metrics, and investment trends,” the company adds.

Led by Chief ETF Strategist Jon Maier and his team, the guide is dedicated to educating advisors and their clients about opportunities in the sector.

“ETFs have become an indispensable investment structure for both retail investors and financial professionals, and the ETF Guide underscores our unwavering commitment to leading the discussion and driving innovation in the ETF space,” said Jed Laskowitz, Chief Investment Officer and Global Head of Asset Management Solutions at J.P. Morgan Asset Management.

The guide covers topics such as active ETFs, the fixed income ETF ecosystem, and other emerging trends. It also highlights the role ETFs can play in enhancing diversified portfolios and explains the “what” and “how” of their potential tax efficiency benefits, a critical area of interest for advisors and their clients.

Some key points from the ETF Guide:

– ETFs are a staple of the broader market, consistently accounting for around 28% of trading volume over the past 15 years. They have acted as crucial buffers during crises like COVID-19 by providing market liquidity. ETFs can also enhance liquidity in less liquid markets and can be used as price discovery vehicles, especially during times of market stress, J.P. Morgan adds.

– Active Fixed Income ETFs: Interest rates have peaked, making it an ideal time for fixed income investments. Passive indexes have limitations; investors should consider active management, as a significant percentage of active managers consistently outperform basic passive benchmarks over time.

– Tax Advantages of ETFs: ETFs, with their exchange trading and in-kind securities transfers, offer tax advantages compared to other investment structures. In 2023, only 61 out of 1,297 active ETFs distributed capital gains, with funds distributing gains averaging about one percent, highlighting the tax efficiency of the ETF structure, according to the report.

ETF Insights joins a suite of investor programs from J.P. Morgan Asset Management, including Portfolio Insights, Retirement Insights, and Market Insights, the latter celebrating its 20th year as an industry standard for keeping investors informed about the latest economic and investment trends.

In the past five years, ETF assets have grown to $160 billion, according to the firm.

To access J.P. Morgan AM’s ETF Guide, please visit the following link.

81% of Citizens Worldwide Believe That Funding Their Retirement Is Their Own Responsibility

  |   For  |  0 Comentarios

Are You Unsure if You Can Retire? Don’t Worry, the Global Retirement Index (GRI) by Natixis IM Shows Stability in Retirement Conditions Worldwide

According to the latest edition of the Global Retirement Index (GRI) from Natixis Investment Managers, retirement conditions remain stable globally. After nearly all developed countries improved their scores last year, the latest findings suggest that retirement remains secure.

Countries that perform best in the GRI tend to show consistent results across all sub-indices, reflecting a stabilization of global retirement prospects. The top 10 ranked countries have remained the same for two consecutive years. However, individuals are feeling the pressure as more people realize that they are increasingly responsible for financing their retirement on their own.

In this year’s index, Switzerland overtook Norway to claim the top spot with an overall score of 82%, relegating Norway (81%) to second place. The top rankings have seen little change, with Iceland (3rd), Ireland (4th), and Australia (7th) maintaining their positions. Germany and Denmark each moved up one spot from last year, securing 8th and 9th places, while the Netherlands overtook Luxembourg to claim 5th place, pushing Luxembourg to 6th. However, New Zealand showed the most significant change among top-performing countries, dropping two spots to 10th.

Created in collaboration with Core Data Research, the GRI serves as a global benchmark that incorporates a wide range of essential factors for ensuring a healthy and secure retirement. These factors include important financial considerations as well as access to healthcare, its costs, climate conditions, governance, and overall population happiness. The GRI’s rankings are relative, not absolute, based on an aggregate of average scores ranging from 0% to 100% for 18 performance measures across four sub-indices (Finances in Retirement, Material Wellbeing, Health, and Quality of Life) that together offer a comprehensive picture of the retirement environment.

“It’s encouraging to see a consistent set of results in this year’s GRI, although there’s still room for improvement in most cases, within a broader environment characterized by rising debt levels, fiscal pressures, and higher interest rates. To prevent a future retirement crisis, a key step is to invest and work with a professional financial advisor to design a resilient, well-diversified portfolio, making the most of savings opportunities that align with individual retirement goals and the current environment. Fortunately, more people are taking responsibility for ensuring their financial security in retirement,” explains Javier García de Vinuesa, head of Natixis Investment Managers for Iberia, in relation to the survey results.

Key Index Movements

Manutara Ventures highlights that Switzerland, which tops this year’s GRI, achieved a perfect score in the unemployment indicator, reflecting the country’s impressive workforce participation rate. Despite declines in most sub-indices, Iceland retains its third position for the second year in a row. “Notably, Iceland dropped seven spots in the Health indicator (from the top 10 to 11th), despite a slight increase in its score,” they note. Meanwhile, Norway saw declines in both the Material Wellbeing sub-index, dropping from 1st to 6th, and in the Finances in Retirement sub-index, where it fell out of the top 10, landing in 12th place due to drops in the fiscal pressure, dependency ratio, and governance indicators.

Luxembourg, however, rose four percentage points to claim the top spot in the Health sub-index, driven by an increase in its life expectancy score, displacing Norway from its previous lead. Slovenia and Belgium also climbed four spots each: Belgium moved from 19th to 15th, and Slovenia just missed the top 10, moving from 15th to 11th.

Ireland leads the Finances in Retirement sub-index, improving its score by one percentage point to 74%, thanks to the continuous reduction of public debt. The United Kingdom also moved up two spots in this year’s GRI, ranking 14th due to improvements in the Health sub-index, while its scores in the other sub-indices remained unchanged.

Citizens Feel Increasingly Alone in Retirement

Despite generally positive global retirement security prospects, the Natixis Global Survey of Individual Investors in 2024 shows that the number of individuals who believe it is increasingly their responsibility to fund their retirement, rather than relying on public or private pensions, has grown from 67% in 2015 to 81% in 2023. Additionally, the number of people who believe a miracle is required to achieve retirement security rose from 40% in 2021 to 45% in 2023. One in five investors (19%) says that even if they could save $1 million, they still wouldn’t be able to afford retirement, including 18% of those who have already accumulated $1 million.

The report also identifies key risks individuals face, highlighting four in particular. First, they point to interest rates. “While low rates had been a key risk for retirees in the more than 15 years following the Global Financial Crisis, today’s higher rate environment presents new risks. Specifically, with more than $6 trillion invested in money market funds, deposits, and similar instruments, investors need to be aware of how the current cash trap could prevent them from meeting their need for a sustainable long-term income source,” they explain.

Second, they highlight inflation. While the worst may be over, as inflation slowly returns to central bank targets, the post-pandemic price surge serves as a stark reminder of how quickly and severely inflation can rise. Now, 83% of investors acknowledge that recent events have reminded them of the great threat inflation poses to their retirement security, and they must act accordingly to ensure they’re prepared for any future inflationary episodes.

Another risk is public debt, which in OECD countries has more than doubled in the first quarter of the 21st century, as policymakers responded first to the Global Financial Crisis and then to the Covid-19 pandemic. While these measures were necessary to avoid short-term economic collapse, policymakers now face the long-term task of paying down this debt. A growing number of people are concerned that they’ll be asked to foot the bill, which could lead to cuts in public retirement benefits—the cornerstone of many retirement plans.

Lastly, they identify “people themselves” as a risk. “A secure retirement is a journey, not a destination. Success requires realistic expectations and significant individual commitment. While many may appreciate this in concept, not all investors set reasonable assumptions or establish realistic goals. GRI survey results show that investors lack a consistent view of what it takes to succeed,” the report concludes.

Manutara Ventures Fund Invests in the Latin American Expansion of Atomic Kitchens

  |   For  |  0 Comentarios

(cedida) Cristián Olea, Managing Partner de Manutara Ventures

As part of its second venture capital fund, the specialized investment firm Manutara Ventures announced a $750,000 investment in the foodtech startup Atomic Kitchens, which operates in the food industry. The purpose of the funding, they explained, is to support the company’s expansion across Latin America.

The early-stage venture capital vehicle shared details of the deal through a statement, noting that the investment was in equity and marked their entry onto the tech firm’s board.

In addition to regional expansion, the financing aims to develop new business lines that synergize with the current business model. The foodtech company has set the ambitious goal of doubling its partner network between October 2023 and October 2024.

Founded in 2020 in Chile, Atomic Kitchens focuses on creating and connecting food franchises with restaurants and ghost kitchens—also known as dark kitchens—that have unused capacity.

This startup’s work, they explained, is supported by the development of its own data analysis technology, which allows them to optimize kitchen capacity, implement marketing strategies, and improve the offerings of these franchises.

Under this model, the company helps expand food franchises or brands without requiring large initial investments, while assisting established kitchens and restaurants in boosting their sales and operations. Their mission is to support and empower small food entrepreneurs.

Currently, Atomic Kitchens has over 900 franchises from its brands distributed across Latin America, with operations in Argentina, Bolivia, Chile, the Dominican Republic, and Uruguay. They have also launched a B2B marketplace in their main markets, reporting double-digit monthly growth.

Manutara Ventures, also founded in Chile, operates in Miami as well, offering entrepreneurs a platform to access U.S. markets and experience. The private equity firm has built an ecosystem of entrepreneurs and investors, helping to grow its portfolio of renowned startups. This includes Xepelin, ETpay, and OpenCasa—three young firms that, together, exceed $1 billion in valuation.

In the press release, Cristián Olea, Managing Partner of the venture capital firm, highlighted Atomic Kitchens as a startup with “high potential.” “Although the investment is recent, it’s highly likely that we’ll invest in them again if they continue with their current strong performance and traction, to avoid too much dilution in the next round,” he said.

Meanwhile, Atomic Kitchens CEO and co-founder Uriel Krimer stated that the investment “represents significant support for our vision and long-term goals.” He added, “We are committed to using this capital to drive sustainable growth, improve the profitability and professionalism of our partners, and expand our presence in both current and future markets, always with a focus on innovation and leadership in our sector.”

Is a New Golden Age for Fixed Income Approaching?

  |   For  |  0 Comentarios

According to the team at Insight Investment (BNY Investment), as markets reach a mid-point in 2024, now is an ideal time to increase allocations to fixed income.

“With bond yields returning to pre-financial crisis levels, investors no longer need to take on the equity-like risks or sacrifice liquidity to meet their investment goals. Simply put, yields are back, and they’re here to stay,” the firm argues.

Their analysis suggests that despite some signs of inflation stabilization and easing rate hikes by mid-year (both the European Central Bank and the Bank of Canada cut rates in June), central banks are expected to operate in higher interest rate ranges over the coming years, which should keep bond yields elevated.

“It’s likely that market participants will take some time to adjust to the idea that extremely low interest rates aren’t coming back. After all, some investors have only known an era dominated by central bank easing and quantitative easing policies. However, we believe that optimism around rate cuts will be tempered by the persistence of inflationary pressures. Globalization, which had exerted significant downward pressure on goods prices, is now giving way to increasingly protectionist rhetoric, and we think this will be one of the factors making it harder for central banks to control inflation sustainably,” Insight Investment adds.

At the longer end of the yield curves, high government debt issuance and the reduced proportion of debt held on central bank balance sheets should keep yields elevated. Over time, this is expected to slowly become ingrained in market psychology, keeping bond yields at levels similar to those seen before the global financial crisis.

In this context, Insight Investment believes that long-term return objectives can be achieved with fixed income alone. Many segments of fixed income markets currently offer yields comparable or even higher than the long-term returns of the MSCI World Index.

“We believe this creates the opportunity to lock in long-term returns similar to equities but in fixed income markets and sectors like global high yield,” they add.

Volatility Check

Insight Investment points out that fixed income markets, largely income-driven, tend to be less volatile and more predictable than other asset classes like equities. In many cases, this can lead to more reliable returns, lower downside risk, and diversification benefits. “An active management strategy can allow a manager to add value above market yields. With low interest rates and quantitative easing behind us, volatility may be structurally higher in the coming years, providing market disruptions that managers can exploit. The more flexibility a manager has, the broader the range of potential opportunities they can explore,” they argue.

Corporate Health

From a corporate perspective, Insight Investment notes that many companies are well-positioned at this stage of the cycle. Corporate balance sheets look healthy, as do debt profiles. Many treasurers took advantage of low interest rates during the pandemic to lock in favorable funding levels for an extended period. This has insulated many companies from rising rates, giving them time to plan for higher financing costs.

“As global investors, we believe an increasingly asymmetric equity world makes a fixed income allocation even more appealing. While the rise of the so-called ‘Magnificent Seven’ reflects a period of exceptional profit growth, their dominance means that many equity investors are now more concentrated than they realize,” Insight Investment experts comment.

Risk Considerations 

Finally, Insight Investment highlights risk as a key consideration. “All markets carry some degree of risk. However, while fixed income markets experience periodic declines, they tend to be shallow and brief. For instance, the long-term returns of global high yield have been similar to those of global equity markets. Overall, this asset class has experienced less severe downturns and has recovered more quickly than equities.”

Income Generation

Lastly, they note that as income generated in fixed income markets offsets price declines, this creates natural protection against losses, provided that yields are high enough and the time horizon is long enough.

They also point out that government debt, and to some extent high-grade credit markets, offer another useful attribute. Economic recessions, when equity markets typically fall and economies contract, tend to be some of the best periods for fixed income returns.

“When central banks ease policy to stimulate growth, longer-term bond yields typically fall, and this drop in yields results in capital appreciation in fixed income markets. The negative correlation between fixed income and equities during severe equity market declines means that high-quality fixed income investments can complement holdings in higher-risk assets like equities,” Insight Investment states.

In this regard, the firm’s experts pose the question: What path should fixed income investors take? Their answer is straightforward: “For the remainder of the year, we believe that rising yields have created an opportunity to secure attractive long-term income streams. With yields returning to pre-crisis levels, income should once again dominate fixed income returns. In this context, more customized and sophisticated fixed income portfolios can be built to meet the specific risk/return objectives of a wide range of investors,” Insight Investment concludes.

The Return to the Office Begins: A Step Back in Workplace Flexibility?

  |   For  |  0 Comentarios

Over the past 12 months, there has been a significant shift towards in-office work: currently, 47% of companies follow a work model focused on in-person attendance, compared to 36% last year, while 45% follow a hybrid model (down from 53% last year). According to a study by Grant Thornton, if companies push too hard for a return to the office, they may inadvertently undermine gains in female representation in key positions that have been made possible through flexible work practices. The study’s main conclusion is that it is essential to ensure that at least one senior female executive is involved in decision-making on diversity, equity, and inclusion.

“This shift appears to be driven by male CEOs: 50% of companies led by a man follow a predominantly in-person model, compared to 40% of companies led by a woman,” states Grant Thornton’s Women in Business (WiB) study, based on a survey of around 10,000 business leaders from 28 countries. To foster and retain female talent in the workplace, companies must carefully evaluate the work practices they offer. The research suggests that following certain decisions made by male executives, it is necessary to ensure that a senior female executive is involved in diversity, equity, and inclusion decisions. Pushing too hard for a return to the office could unintentionally undo some of the progress made in promoting women to leadership roles, which was achieved through the adoption of flexible work practices.

Regional differences are also notable. In North America, 39% of companies have adopted a primarily in-office work model, compared to 53% in the European Union. Many large companies have begun implementing guidelines and incentives to encourage employees to return to offices, such as Goldman Sachs’ “office-first” approach, which required employees to attend the office five days a week. Amazon, Disney, and Boeing have also enacted return-to-office policies in recent months, according to a report by *Inc.*

Companies where employees predominantly work in offices are the only ones where the percentage of women in senior leadership positions falls below the global benchmark.

The ability to choose where to work offers substantial benefits to women in companies, not just at the leadership level but also for the talent pipeline. “A work model that combines in-person and remote modalities is great for both men and women, as it allows for a much better work-life balance. On the other hand, it’s also important that younger employees don’t feel neglected, so being available in person when needed is crucial,” says Grant Thornton Chile.

Finally, the study emphasizes, “When female employees have taken maternity leave and are ready to return to work, offering a hybrid model is essential to retaining them and helping them advance in their careers.”