Keys to The Free Trade Zone Reform in Uruguay

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A bill reforming the bylaws of Uruguay’s Free Trade Zone, where a good part of its financial industry is established, was approved almost unanimously by the Chamber of Deputies. Before the Bill’s final approval, its text must pass through the Senate, but parliamentary sources consider that it will pass that stage without major modifications.

Funds Society had access to the bill, which clarifies some of the most controversial issues of the proposed change, which, according to the Uruguayan government, was necessary in order to meet OECD criteria.

Greater Requirements and More Formalities

As set forth, companies must submit documentation within a year on the fulfillment of several objectives: the employment of Uruguayan labor, the development of investments and exports, and incentives to international economic integration. If these requirements are not met, contracts could be rescinded in June 2021.

“Free trade zone users, either direct or indirect, with contracts in progress that have no established term, or whose term exceeds the one referred to in the previous article, or which have been automatically granted extensions, must present documentation and updated information about the company and its current business plan, that allows evaluation of its economic and financial viability and its contribution to the fulfillment of the objectives established in Article 1 of this law, within a period of one year from the regulation of the law, for approval by the Free Trade Zones area of the General Directorate of Commerce,” says the bill.

The Requirement of 75% of Uruguayan Personnel is Maintained

This was another of the reform’s burning issues, since some companies had pointed out the difficulty encountered in certain sectors when trying to maintain the quota of Uruguayan personnel.

The bill stipulates that, “in carrying out their activities, free trade zone users must employ a minimum of 75% (seventy five percent) of personnel constituted by Uruguayan citizens, natural or legal, in order to be able to maintain their quality as such and the benefits and rights that this law accords them.”

However, in the case of activities within the services sector, the percentage may be reduced to 50% with prior authorization: “The request to the Executive Branch to reduce the percentages of nationals in the activity must be answered within sixty days from the date of submission of the request. Failure to reply within that period, shall deem the application as approved.”

Respect for Existing Contracts

The reform bill confirms that existing contracts will not be touched in order to adapt them to the new demands that will be mandatory for new companies wishing to establish themselves in those areas with a special tax regime.

“During the validity of the respective contracts, users of free trade zones will maintain all their benefits, tax exemptions and rights in the agreed terms, prior to this law’s date of effect, within the framework of the Free Trade Zones regime as established in Law. No 15.921, of December 17, 1987, and the provisions of this law shall not apply to them when said provisions imply limitations on such benefits, exemptions or rights, that were not applicable under said free trade zone regime prior to the effective date of the same”, says the text explicitly.

For more information we attach the text, in Spanish, of the law in PDF format.

Corporate Debt and Inflation-Linked Bonds Are Amongst this Year’s Best Options in Fixed Income

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Deuda corporativa y bonos ligados a la inflación: entre las mejores opciones en renta fija para este año
Pixabay CC0 Public DomainPhoto: Petraboekhoff. Corporate Debt and Inflation-Linked Bonds Are Amongst this Year’s Best Options in Fixed Income

Asset management companies agree that 2018 will be characterized by a low rate environment and by a slow normalization of monetary policies calculated step by step to avoid damaging global growth. Once again, this leaves us with the same question as to what to expect from fixed income, to which so many investors and asset managers look with suspicion due to the low profitability it offers.

Where will the opportunities lie in this type of assets? For Hans Bevers and Bruno Colmant, Chief Economist and Head of Macro Analysis respectively, at Degroof Petercam, the context has to be taken into account. Neither one expects the normalization process of monetary policies to produce much higher yields than long-term bonds.

In an environment of very low interest rates, Degroof Petercam proposes the following alternatives to sovereign debt: investment grade corporate debt in Euros, which offers a limited return, but with durations that are often shorter than those of sovereign debt, and international bonds linked to inflation.

“Although inflation levels have recently disappointed, inflation-linked bonds remain attractive considering that overall growth forecasts and the improvement of the labor market situation should translate into a modest rise in inflation. We believe that valuations of inflation-linked bonds do not fully reflect this perspective,” says Jérôme van der Bruggen, Head of Private Banking Investment at Degroof Petercam.

In turn, SYZ AM points to credit as a key asset for 2018 within fixed income, despite its high valuations and the risks involved. “As far as the bond market is concerned, everyone knows that the sovereign returns of Western countries are low. However, it isn’t the government bond segment where the values of the fixed-income market are trivial. It’s in corporate credit. After years of ultra-accommodative monetary policy and a desperate search for profitability by investors, corporate credit in general, and high-yield markets in particular, have become the most expensive asset class in the world,” says Hartwig. Kos, Vice-CIO of Investments and Co-Head of Multi-assets at SYZ AM. He advises that, in an environment where inflationary pressures are rising and the stance on the ECB’s monetary policy is tightening, the high-yield market and its valuations are “clearly vulnerable.” According to Kos, “in investors’ minds at the present moment the asset class chosen is equity. And, in fact, although bonds are expensive, in comparison, equity is at a reasonable value. This is obviously a relative argument, but when you look at equity valuations in absolute terms the picture looks quite different.”

USA

AtEthenea, they take this into consideration and do not expect a rate hike, but they do not rule out that there will continue to be a significant demand on fixed income. “In this environment, and with continued demand from both domestic and foreign institutional investors, we believe that the pressure on long-term bonds should remain moderate. At the same time, continued strong economic conditions, favorable refinancing conditions, and low default rates should support spreads on corporate bonds,” explains Guido Bathels, Portfolio Manager at Ethnea Independent Investors.

According to Bathels, in the United States, we find a slightly different environment given the time of the economic cycle in which it is and the short-term increase in interest rates. “It’s possible that the rate increase of the first half of the year is corrected downward during the second half due to economic concerns. If this reverses, the profitability curve during the year would be a clear indicator of an impending economic slowdown. This prospect could put pressure on the risk premiums of corporate bonds. This type of scenario would definitely have an impact on interest rates and spreads in Europe towards the end of the year,” he explains.

In this context of global growth, but certain financial uncertainties, Bathels argues that active management and a flexible investment approach will be very important in order to not miss the opportunities that arise in the fixed income market.

Funds Society Celebrated its 5th Anniversary with a Party in Miami

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Funds Society celebra su V Aniversario con una gran fiesta en Miami
Pixabay CC0 Public Domain. Funds Society Celebrated its 5th Anniversary with a Party in Miami

January 11th marked Funds Society’s fifth anniversary celebration. The party took place on the terrace of the East Hotel, in Brickell City Center. More than 100 professionals from the top asset and wealth management firms with in Miami and New York were able to enjoy a cocktail and strengthen ties with their colleagues and competitors.

The magazine’s team, with local presence in Madrid, Mexico, Miami, Montevideo and Rio de Janeiro, celebrated more than 5 years of offering news and exclusives about the investment fund industry and presented the number 13 of the US Offshore edition of the print magazine, to which you can subscribe through this link.

Along with it, the second edition of the Asset Managers Guide was distributed, which contains information on more than 60 international fund managers doing business in the market of non-residents in the United States (NRI). The first issue of the 2018 magazine will be at the readers’ tables over the next few days.

 

Gonzalo Milans Del Bosch Takes Over As Santander Asset Management’s New CIO

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Santander Asset Management nombra a Gonzalo Milans Del Bosch nuevo CIO
Pixabay CC0 Public DomainGonzalo Milans Del Bosch, courtesy photo. Gonzalo Milans Del Bosch Takes Over As Santander Asset Management's New CIO

Santander Asset Management, has a new CIO. Gonzalo Milans Del Bosch has been chosen to replace the current head of Investments, Dolores Ybarra, according to sources close to the bank that confirmed the news to Funds Society.

Ybarra, which was CIO since 2011, will now be the Global Head of Products and will support Milans Del Bosch in the transition to adopt its new functions.

Milans Del Bosch has until now been responsible for the  Investment “Inversiones y Participaciones” division of Banco Santander.

Lyxor Sees in ETFs an Opportunity for Sustainable Investment to Continue Growing

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Lyxor ve en los ETFs una oportunidad para que la inversión sostenible siga creciendo
CC-BY-SA-2.0, FlickrFrancois Millet, courtesy photo. Lyxor Sees in ETFs an Opportunity for Sustainable Investment to Continue Growing

Lyxor ETF has a new route for sustainable investment. The firm argues for the expansion of this type of investment and how ETFs have become a remarkable vehicle to invest under ESG criteria. A trend that the firm believes will continue to grow given that so far only 1% of European ETFs follow these investment criteria.

According to the management company’s assessment, these figures show great potential for growth. In addition, in terms of investment strategies, and taking Europe as a reference, it is observed that all strategies increased since 2013. As an indication, Lyxor ETF points out that just those strategies with exclusion criteria grew by 22% in 2015, as compared to 2013. This trend is compounded by the popularity and demand for passive strategies, which leaves the ideal framework for the development of sustainable investment through ETFs.

“ETFs can democratize access to these strategies because it is difficult for an investor to participate in certain assets, such as green bonds, for example. Instead, by using ETFs to diversify the portfolio, this type of asset can be accessed. In addition, it should be noted that they have lower costs, especially those that are contracted through digital platforms,” explains Francois Millet, Head of Product Line Management at Lyxor. Due to these qualities, Millet argues that it will be the millennial investors who will resort more readily to this type of solutions.

In his analysis of sustainable investment, Millet points out that, within the status that sustainable investment has in Europe, “we observe that the strategies that grow the most, investment through exclusion, impact investment, and sustainability issues, are precisely those invested in by passive management,” he says.

At Lyxor ETF, they have addressed this type of investment with two proposals: thematic investment and investment in indices. “In the case of the thematic investment, we have four ETFs that are within the theme of the UN Millennium Goals. They are related to energy, equality, water and green funds. Transforming these objectives into investment strategies is complicated, but it can be done by participating in the market of those megatrends which affect these issues,” says Millet.

Regarding their second proposal, the indices, he emphasizes that “investment is based on the sustainable rating of the companies. However, in order to consider these indices, data, exclusion strategies by sector or activity, and demonstrating that they prioritize certain objectives, are required”. In this regard, the firm uses the MSCI indexes.

Passive vs. active

At Lyxor ETF, they opt for an active use of passive management or, at least, a smart combination in order to address market needs. “In less efficient market areas, active managers are able to capture greater profitability; while in more efficient markets it is more complicated, and therefore, passive management makes more sense because the active manager has a harder time achieving good investment behavior”, explains Marlène Hassine Konqui, Head of ETF Research at Lyxor, who argues that the conflicting vision of active management versus passive management is wrong.

“For us, it makes more sense for active managers to include passive strategies in their portfolios which allow them to capture returns or help the portfolio to have a certain behavior,” she points out. According to her estimates, the perfect balance between these two management styles would be 70% of passive management and smart beta strategies, and 30% of active management.

Argentina, Seeking For New Tax Deferral Strategies

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Argentina, buscando nuevas estrategias de diferimiento fiscal
Wikimedia Commons. Argentina, Seeking For New Tax Deferral Strategies

The new tax reform bill in Argentina will continue to be an issue throughout 2018, since, according to Marcelo Gutiérrez, Director at Invertax, it’s that country’s most significant change in regulations during the past 30 years. One of the income tax related modifications refers to the deferral of the tax payment due on offshore income.

Prior to the adoption of the new bill, many Argentineans held bank accounts in the name of an offshore company, and that allowed them to defer income tax until they decided to bring their money to Argentina. With which, the deferral could be eternal as long as the funds were not repatriated.

However, as pointed out by Invertax, the tax reform, under article 70, proposes that “the application of a new regime of international fiscal transparency, attributing the income to the holders of the intermediary structures (companies, trusts, etc.) from the moment of its generation, regardless of whether there is an effective distribution, provided that a series of requirements are met”.

According to Gutiérrez: “From now on, legislation takes a 180 degree turn, because due to the content of the reform, what will happen under international tax transparency standards is that that income will be directly attributed to the Argentinean, who will have to pay taxes. In this context, international tax planning does not offer a single solution which applies to everyone, so it usually has to be customized. What is clear is that now we have to look for a sophisticated strategy.”

The tax reform demonstrates the great knowledge on tax planning strategies of the law’s main author, Andrés Edelstein, Undersecretary of Public Revenues and former partner of International Taxation at Price Waterhouse Coopers. Amongst other issues the law analyzes in depth the definition of “control” in international structures and the ownership consequences for trusts constituted abroad, when they allow to defer taxes and when they do not.

“We are waiting for the regulation of the reform to come into effect because, among other things, those jurisdictions that are considered tax havens will be regulated. Offshore companies are not going to work anymore, and what they are asking for is companies from countries where taxes are levied, where companies have offices and have personnel that can carry out the activities they claim they carry out. And tax planning begins to be much more sophisticated and much more complex,” informs Marcelo Gutiérrez.

What Were the Asset Management Industry’s Major Business Operations in 2017?

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¿Cuáles fueron las grandes operaciones de negocio de la industria de gestión de activos en 2017?
Pixabay CC0 Public DomainDevanath. What Were the Asset Management Industry’s Major Business Operations in 2017?

2017 was a good year for operations, acquisitions, mergers and expansion into new markets by leading international asset management companies; yet another example of the asset management industry trend towards higher concentration, while seeking higher efficiency and margin growth. Technology, regulatory changes, opening into new markets and strengthening their product supply capacity put these operations into context.

One of the major ones was the Aberdeen Asset Management and Standard Life merger, which together have become one of the largest investment companies in the world with 737 billion Euros in assets under management. The merger was closed in August, after the operation was announced in early March.

According to the firm, the merger leverages the complementary capabilities of both companies, leaders in the investment and savings market. The result is an investment group with strong brands, at the forefront of institutional and wholesale distribution franchises, market leading platforms and access to lasting strategic alliances globally.

Also, by combining the strong balance sheets of both companies, the resulting group has greater capacity for investing, as well as to grow and innovate. Together, Standard Life Aberdeen has offices in 50 cities around the world, serving clients in 80 countries. In addition, the firm maintains a market capitalization of more than 12.1 billion Euros (11 billion pounds).

The other two major operations in 2017 were the merger between Henderson and Janus Capital, and Amundi’s acquisition of Pioneer Investments. Regarding the first of those operations, it was carried out through a share exchange: each Janus share was exchanged for 4.719 new Henderson shares. With this exchange, Henderson shareholders took control of 57% of the capital and Janus shareholders of the remaining 43%. The resulting company, Janus Henderson Global Investors, has 320 billion dollars in assets under management and a market capitalization of around 6 billion.

The combination of both businesses has created an important global leader in asset management with a significant scale, as well as a great diversity of products and investment strategies, and great depth in global distribution of funds. In fact, Janus’ strength in the US market will combine with Henderson’s in the United Kingdom and Europe, creating a very global management company, with a very diverse and widespread geographic footprint.

The acquisition of Pioneer Investments, which was closed towards the end of 2016 for an amount of 3.545 billion Euros, is the third major operation that the sector saw last year. During the first six months, Amundi established the new group’s growth strategy, defined the priorities of its business lines, and established an integration plan; so that by July it was able to completely close the purchase.

Although with a little less dimension than the previous operations, another important transaction within the industry has been Schroder’s acquisition of Adveq, an asset manager specialized in private capital worldwide. As a result, of Adveq’s acquisition – which was renamed Schroder Adveq – Schroders’ private assets business rose to more than $ 7 billion in client commitments.

Other Operations

Other operations carried out by asset management companies with the aim of growing in markets where they already had a presence have perhaps been less striking. The clearest example was BlackRock’s purchase of Citi’s asset management business in Mexico in November 2017. With this operation, BlackRock in Mexico doubled its size.

In fact, BlackRock and Citibanamex, a member of Citigroup, signed an agreement for BlackRock to acquire Citibanamex’s asset management business. Impulsora de Fondos Banamex, has approximately 31 billion dollars in assets under management through fixed-income products, equities, and multiple asset products, mainly for consumer banking clients.

UBS also looked at growth possibilities in Latin America and bought CONSENSO, Brazil’s largest family office, in May. Both companies closed an agreement under which UBS acquired a majority stake in the Brazilian multi-family office that will result in the combination of its wealth management operations in Brazil. The resulting division is being directed by both, UBS executives and CONSENSUS’ founding partners.

With this operation, UBS consolidated its capabilities in Brazil, improving its offer for local clients and offering advice from a global player in the sector. The entity recognized after closing the agreement that this transaction allows them to accelerate their expansion in Brazil and to reaffirm their commitment to grow the wealth management business.

And for 2018?

These are just some of the most significant operations of 2017, which was a year when the industry showed some concentration and the search for synergies. The trend has continued during the first weeks of 2018, during which we have already witnessed First Eagle Investment Management’s acquisition of NewStar Financial, and the announcement of a merger agreement between Quaero Capital and Tiburon Partners. The big question now is what else will this year bring.

According to experts, it would not be unusual for this trend to continue as asset management firms face a change in their own industry marked by technological challenges, such as blockchain technology or bitcoin development, by new millennial consumers, by passive management’s strength, and by the pressure that all this is asserting on its margins.

Franklin Templeton Investments to Acquire Edinburgh Partners

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Franklin Templeton Investments llega a un acuerdo para adquirir Edinburgh Partners
Pixabay CC0 Public DomainPhoto: Mikewiz. Franklin Templeton Investments to Acquire Edinburgh Partners

The M&A market is off to a good start of the year with Franklin Templeton Investments announcing that it has entered into an agreement to acquire Edinburgh Partners Limited, which managed approximately US $10 billion as of December 31, 2017 in global and emerging markets equities. The transaction is subject to regulatory approvals and is expected to be completed in the first half of 2018. Terms of the transaction were not disclosed.

Jenny Johnson, president and chief operating officer of Franklin Resources said, “We’re pleased to announce the acquisition of Edinburgh Partners, an established global value investment manager, and to welcome back Dr. Sandy Nairn to our organization. Dr. Nairn worked alongside the late legendary global investor, Sir John Templeton, and was employed by Franklin Templeton for more than a decade. He brings a tremendous amount of leadership experience and expertise in managing global and international equities, an area that continues to be of strong interest to our clients around the world. This is the latest example of the firm continuing to make strategic investments in relatively small, yet highly experienced asset management teams that complement Franklin Templeton’s global offerings.”  

Nairn will become chairman of Templeton Global Equity Group and remain investment partner and CEO of Edinburgh Partners. He will report to Stephen Dover, Franklin Templeton’s head of Equities.

Based in Edinburgh, with an office in London and two in the United States, Edinburgh Partners is an independent fund management company that invests globally with an emphasis on absolute returns over a long-term time horizon. Its team of 12 investment professionals are highly regarded within the international asset management industry, with a combined average tenure of 22 years managing four distinctive strategies. 

Templeton Global Equity Group is a pioneer in global investing, with a storied investment philosophy that dates back to the 1940s. Templeton’s team of 39 experienced investment professionals, based in offices around the world, search for undervalued stocks across all sectors and regions globally. Templeton Global Equity Group manages over US $101 billion in assets as of December 31, 2017.

“Dr. Nairn and his experienced team will be an excellent addition to our global equity capabilities,” said Dover. “As chairman of Templeton Global Equity Group, Dr. Nairn will bring many new insights to share, having run his own firm for the last 15 years, while also drawing upon his in-depth knowledge of the Templeton investment philosophy and process from his many prior years with the group. We look forward to having Dr. Nairn and his team join our strong lineup of investment groups.”

Nairn said, “I am very excited to be coming back to Templeton, the company that gave me my great appreciation for global investing. My team and I are deeply familiar with the history and strong reputation of the broader Franklin Templeton organization, and we’re pleased to join such a well-regarded firm. I look forward to sharing my perspective and experience with the Franklin Templeton organization. The access to Franklin Templeton’s extensive global resources will allow me to focus my time on investment management, as we continually seek to bolster our investment process and enhance our clients’ experience.”  

 

Mexican Pension Regulator Changes Investment Regime, Allowing for Investment in International Mutual Funds

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Ya es oficial, las afores en México podrán invertir en fondos mutuos internacionales
CC-BY-SA-2.0, FlickrPhoto: Javier Samaniego . Mexican Pension Regulator Changes Investment Regime, Allowing for Investment in International Mutual Funds

Until now, Afores could invest abroad through three vehicles: ETFs, Indexed Mutual Funds and Investment Mandates, but, seeking to offer more investment alternatives, as well as granting them with greater flexibility and better defense tools against volatility cycles, the Mexican Pension Regulator, the CONSAR, decided, among other things, to include Mutual Funds with active strategies as an additional investment vehicle.

Afore Citibanamex, the Afore with most funded mandates, told Funds Society: “At Afore Citibanamex we see as positive any release of restrictions on the Afores investment process… We believe that the experience we have acquired over the years in active investments will be very useful to take advantage of the opportunities in mutual funds that this change in regulation represents. We will be looking forward to hearing about the specific details of this regulatory change in order to take advantage of them for the benefit of our affiliated workers.”

“At Afore SURA we will be attentive to the Consar details of the process to be followed as well as the eligibility and regulation criteria that will allow the Afores to invest in international mutual funds,” said Luis de la Cerda, director of Investments.

Gustavo Lozano, who leads Amundi Pioneer’s efforts in Mexico, Central America and the Caribbean, mentions that “international funds will give pension administrators access to active management strategies they did not have to before. This will be especially important the following years in which the timely selection of stocks and assets will be key, however, we do not see any of the options as excluding: Mandates, ETF or Funds, since these will give Afores the possibility to have different levels of exposure to international markets with different investment horizons and different strategic asset allocation profiles”.

Regarding the eligibility of strategies and managers, Lozano added: “What we have seen from the projects that are being proposed for the implementation of this, is that the selection criteria for managers and strategies that could be offered in Mexico, should be quite in line with what is currently being demanded of investment managers in Mexico, regarding mandates. We also believe that the reporting requirements will be strict but achievable, giving the regulator the visibility and timely follow-up that currently applies to the pension industry. “

According to Mauricio Giordano, Country Manager of Natixis IM Mexico, these changes are positive for the sector and allow the Afores smaller exposures that they did not get before. In addition, it allows all Afores to complement their diversification strategies and achieve tactical positions to take advantage of the global situation. However, he believes that the afores will continue to seek to implement mandates for their long-term positions: “Afores continue to see this partnership with a long-term manager in which knowledge transfer and reporting are key, as very important for strategic positions”. The executive points out that there are still pending “CAR guidelines in this regard, it should be at the end of February or March when we could have the final rules and restrictions,” he concludes.

What Would 2018 Look Like for Private Equity Investors?

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What Would 2018 Look Like for Private Equity Investors?
Photo: wolfgang11. What Would 2018 Look Like for Private Equity Investors?

2018 is expected to have an increase in global growth and, according to William Charlton, Managing Director at Pavilion Alternatives Group, most institutional investors are maintaining or increasing their allocations to private equity.

While growing economies generally would be beneficial to most private equity fund managers, with the possible exception of distressed managers, Charlton believes that 2018 is shaping up to be a year of challenges as well as opportunities. “The capital deployment issue is one of the known knowns, but as Donald Rumsfeld has argued, the bigger risk may well be from the unknown unknowns.” He states.

In his opinion, the biggest challenge facing the U.S. venture capital market is the IPO environment.  “While the IPO market showed some signs of recovery in early 2017, several IPOs were not well received and it remains very difficult to successfully navigate the intricacies of taking a company public.” On a more positive note, he expects the repatriation of large amounts of capital currently held by public companies in off-shore accounts due to the tax reform, a situation he considers could impact positively on an already robust acquisition market.

Meanwhile, in Europe, fundraising activity has increased recently while both deal flow and exits have been declining in the European buyout market, and EBITDA multiples “are up significantly over recent years and are approaching the lofty levels already seen in the United States. If prices remain high and expected economic growth remains bounded, European fund managers will be challenged in 2018 to generate historically attractive private equity returns commensurate with their risk profiles.  Furthermore, the uncertainty induced by Brexit adds to the complexity of accurately assessing risk-return exposures across the region.”

In contrast to the mixed measures for both the U.S. and European markets, deal flow, exits, and fundraising are up in Asia-Pacific private equity markets. Given the region’s export-dependent nature, Charlton believes investors focused on it will face the continued challenge of investing in companies that can be successful even in the event of a decrease in global demand.

Regarding oil and considering its prices have enjoyed a steady recovery puting them at a level Charlton believes are attractive investment opportunities, he believes a challenge “is identifying quality private equity fund managers that can consistently generate attractive returns when the underlying value of their assets are highly dependent on a decidedly volatile commodity.” In infrastructure, he believes the biggest challenge will be identifying assets that have the potential to generate attractive returns despite the higher entry prices.

Private credit markets have seen rapid growth in recent years as many institutional investors seek a broader opportunity set to increase returns in their fixed income portfolios.  Consequently, private credit is enjoying a strong fundraising market.  However, it appears that some fundamentals in private credit markets may be weakening. The increased interest in private credit has led to a decrease in spreads as well as an increase in covenant-lite deals. “If the recent economic recovery does not sustain, we could be seeing the initial phases of a perfect storm in global credit markets.  If so, distressed fund managers may be well-positioned to take advantage of current overly lenient terms. The challenge in credit markets for 2018 will be finding fund managers that are able to issue loans with terms that provide some protection in the event of an economic decline.” He concludes.