Margaret Franklin, courtesy photo. Margaret Franklin Becomes First Woman to Lead the CFA Institute
CFA Institute, the global association of investment professionals, has appointed Margaret Franklin, CFA, as its new CEO and President, the first woman to hold the position in its 73-year history. She will assume the role on September 2, 2019, taking over from Paul Smith.
Marg Franklin has been a leader in the investment management industry for 28 years, most recently as President of BNY Mellon Wealth Management in Canada and head of International Wealth Management in North America. Her deep practitioner experience has been gained at firms ranging from large, global asset managers to start ups, including Marret Private Wealth, State Street Global Advisors and Barclays Global Investors. Her work has included advising individuals, families, pension plans, endowments, foundations and government agencies.
Marg’s experience with CFA Institute also runs deep. In 2011, Ms. Franklin was chair of the Board of Governors of CFA Institute, which is a volunteer position, and is a member of CFA Society Toronto, where she has also served on its board. She is a founding member of the CFA Institute Women in Investment Initiative, a past recipient of its Alfred C. Morley Distinguished Service Award in 2014, and a member of its Future of Finance Content Council.
Franklin said: “I am honored to assume the leadership of CFA Institute whose mission to promote the highest standards of ethics, education, and professional excellence is more important than ever as our industry faces disruption from many quarters. I look forward to applying my wide-ranging experience as a practitioner and extensive knowledge of the organization in the service of its mission and members.”
“Marg joins CFA Institute at a time when candidate growth and our global society network are at all-time highs,” said Heather Brilliant, CFA, chair of the board of governors of CFA Institute. “We thank Paul for his work to promote the CFA charter and fair and functioning markets all over the world. He leaves a strong organization ready to address the challenges of markets and economies in flux, passing the baton to Marg Franklin, a proven leader.”
Franklin will join the organization on September 2. Smith, who previously announced his departure at the end of 2019, will remain in an advisory capacity to the CEO until December 31, 2019.
Pixabay CC0 Public DomainPhoto: Actinver. Legg Mason and Actinver Announce Strategic Alliance in Mexico
Legg Mason and Corporación Actinver announced the signing of a strategic alliance agreement that will allow Actinver to manage and make available to its clients in Mexico funds using investment advice provided by Legg Mason-affiliated asset managers.
Based in Mexico City, Actinver is a fully integrated financial services firm providing private and wealth banking, asset management, wealth management and investment banking services. It’s Mexico’s largest private bank in terms of number of clients and the second largest in terms of number of branches.
“This exclusive agreement provides Mexican investors with a robust lineup of funds featuring investment strategies designed and maintained by world-class investment managers,” said Alonso Madero, CEO of Actinver’s Asset Management Unit. “By expanding access to international markets, we’re enhancing opportunities for diversification.”
Funds that are managed by Actinver using investment models provided by three Legg Mason affiliates — ClearBridge Investments, Martin Currie and Western Asset — are now available to retail investors in Mexico.
“With the population of Mexico as well as the number of people accessing banking services expected to increase over the next 20 years, we see substantial growth potential in the country,” said Lars Jensen, Legg Mason’s Head of Americas International. “We’re thrilled to partner with Actinver, and we’ll continue to develop additional solutions for the Mexican investor together.”
The funds available via Actinver are as follows:
SALUD, which is designed to deliver long-term capital appreciation through investments in companies involved in all aspects of healthcare and the life sciences. In managing the fund, Actinver is advised by New York-based ClearBridge Investments. With a legacy dating back over 50 years, ClearBridge is a leading global equity manager committed to delivering differentiated long-term results through authentic active management.
ESFERA, which seeks to achieve long-term capital appreciation through the active management of a portfolio of global companies, taking a long-term, unconstrained investment approach, with an expected low portfolio turnover and investment horizon of five years or more. In managing the fund, Actinver is advised by Martin Currie of Edinburgh, Scotland. Martin Currie builds global, stock-driven portfolios based on fundamental research, devoting all of its resources to delivering optimum investment outcomes and superior client relationships.
ESCALA, which is designed to preserve capital and reduce interest-rate risk while delivering income opportunities by investing in laddered, short-term, U.S. dollar-denominated, investment-grade corporate bonds. In managing the fund, Actinver is advised by Western Asset, one of the world’s leading global fixed-income managers. Founded in 1971, Western Asset has been recognized for its team-based approach, intensive proprietary research and robust risk management.
“We are delighted with the Actinver partnership which we are entering into with Legg Mason,” said Julian Ide, Chief Executive Officer of Martin Currie. “This is a strong validation of the power of Martin Currie’s investment capabilities and Legg Mason’s distribution relationships.”
“The Mexican asset management industry is still under-developed compared to those in other countries so the opportunities are enormous,” added Actinver’s Madero. “By working together, Actinver and Legg Mason are encouraging the development of the market and, by extension, helping with the economic development of the country.”
Pixabay CC0 Public DomainPhoto: Petr Kratochvil CC0. Bolton Expands NYC Presence with Morgan Stanley Hires
Bolton Global Capital is pleased to announce that Michel Palacci has joined the firm’s Manhattan office. Palacci was formerly with Morgan Stanley where he managed assets of $125 million. His international high net worth clientele is based in Europe, Latin America and the US. He joined Morgan Stanley in 2009 after 10 year career at Citigroup Global Markets.
Last month, Bolton recruited Daniel Geller, also from Morgan Stanley in New York City with $430 million in client assets. He is affiliating with a team of former Morgan Stanley advisors Ruben Lerner and Manual Uranga who joined Bolton in 2017 and manage over $250 million in client assets. The firm also recruited Nicholas Schreiber from Morgan Stanley in 2018 who is located at Bolton’s Fifth Avenue office where Michel Palacci will operate his business.
Since opening offices in Miami and New York City, Bolton has recruited more than two dozen international teams from the major US banks and wirehouses. The firm offers turnkey office space and a full suite of global wealth management capabilities to allow teams to easily transition to the independent business model where they can achieve higher compensation and greater ownership of their business. This model is the fastest growing segment of the US wealth management industry and Bolton has sustained a 20 percent annual growth rate over the last 5 years by focusing on teams at the major banks and wirehouses that specialize in international business.
Pixabay CC0 Public DomainFrom left, Brian P. Westcoat, CFP®, CPFA; Lynn Muzio, Enclave Wealth Advisors Client Service Specialist; Terry C. Murray, CFP®. $275 Million Former Merrill Lynch Team Joins Sanctuary Wealth
Enclave Wealth Advisors, the investment advisory team led by industry veterans Terry C. Murray, CFP® and Brian P. Westcoat, CFP®, CPFA, will join Sanctuary Wealth. The Walnut Creek, California-based group will be the first of many breakaway advisory teams to join Sanctuary’s network of advisors in June.
Enclave is an independent wealth management firm dedicated to providing highly personalized service and sophisticated wealth management solutions, which are designed to be optimized to each clients’ individual investment goals. The team manages $275 million client assets, generating $1.6 million in revenue.
“We are very excited to join Sanctuary. We have access to technology and business solutions that were not available to us before and that will only augment our clients’ overall experience,” Murray said.
“Doing what is best for our clients and acting as fiduciaries has always been our top priority. Sanctuary was the right strategic partner to guide us on our path to independence,” Westcoat said. “We believe that we’ll be able to grow successfully with access to an expanded range of investment options, operational support, and client services through Sanctuary, which will enable us to maintain our client focus and continue to deliver best-in-class advice.”
“We are very impressed by the team at Enclave, and I am honored to welcome them to join Sanctuary. We believe their strong client-centric approach makes them an ideal fit for our network,” said Sanctuary CEO and founder Jim Dickson.
“Both Terry and Brian have significant investment expertise and operate with a fiduciary mindset, making them invaluable to their clients and to the Sanctuary community. We very much look forward to working with them, helping them grow their business, and having them expand our network into California.”
Pixabay CC0 Public DomainPhoto: PexelsCC0. Thornburg Funds Launch on Allfunds Platform
Thornburg Investment Management, a global investment firm with $44 billion in assets under management as of the end of Q119, is pleased to announce that its Ireland-domiciled range of UCITS funds have been added to the Allfunds platform, the world’s largest institutional fund distribution network and the largest European platform.
Thornburg has also widened its global distribution footprint in Europe. In addition to availability for investors in Ireland, Switzerland and the United Kingdom, Thornburg’s suite of eight UCITS funds are now accessible to investors in Denmark, Finland, Italy, the Netherlands, and Norway.
“Greater availability of our global equity, fixed income, multi-asset and alternative investment solutions, particularly across Europe, is an important step to making Thornburg’s investment strategies more accessible to investors,” said Carter Sims, global head of distribution at Thornburg. “We are excited to partner with Allfunds to offer our highly active and benchmark agnostic UCITS funds to intermediary and institutional investors across the globe.”
Thornburg’s range of UCITS funds available through Allfunds include:
Thornburg Investment Income Builder Fund is a globally oriented portfolio whose aim is to provide an attractive and growing income stream, with capital appreciation, over time. A dynamic blend of global dividend-paying stocks and bonds of virtually any type, this fund is broadly flexible in pursuit of its objectives.
Thornburg Global Opportunities Fund is a flexible and focused equity portfolio with holdings selected on a bottom-up basis via a disciplined, value-based framework.
Thornburg Global Quality Dividend Fund is a bottom-up, value-oriented, focused portfolio of dividend-paying stocks from around the world in a broad search for attractive dividend yield.
Thornburg International Equity Fund is a focused, diversified portfolio of leading, mostly large-cap international companies, selected via a fundamentally driven, bottom- up, valuation-sensitive process.
Thornburg Developing World Fund is a balanced approach to investing in emerging markets, built on a concentrated portfolio of leading companies at attractive valuations selected to manage risk while still pursuing a differentiated return.
Thornburg Limited Term Income Fund is a flexible, actively managed, core portfolio of high-quality U.S. dollar-denominated bonds.
Thornburg Strategic Income Fund is a global, income-oriented fund with a flexible mandate focused on paying an attractive, sustainable yield. The portfolio invests in a combination of income-producing securities with an emphasis on higher-yielding fixed income.
Thornburg Long/Short Equity Fund, a U.S. equity long/short fund that combines tenets of both growth and value investing to pursue long-term capital appreciation.
Thornburg Investment Management is a privately-owned global investment firm that offers a range of multi-strategy solutions for institutions and financial advisors. A recognized leader in fixed income, equity, and alternatives investing, the firm oversees $44 billion as of March 31, 2019 across mutual funds, institutional accounts, separate accounts for high-net-worth investors, and UCITS funds for non-U.S. investors. Thornburg was founded in 1982 and is headquartered in Santa Fe, New Mexico.
According to a company statement: “At Thornburg, we believe unconstrained investing leads to better outcomes for our clients. Our culture is collaborative, and our investment solutions are highly active, high conviction, and benchmark agnostic. When it comes to finding value for our clients, it’s more than what we do, it’s how we do it: how we think, how we invest, and how we’re structured.”
Pixabay CC0 Public DomainCourtesy photo. Aeromexico Launches Private Jet Card in Partnership with Delta Jets
Aeromexico Group has partnered with Aerolíneas Ejecutivas to launch Aeromexico Private Jets, an offering that will include a jet card product. For domestic U.S. flights, Aeromexico jet card customers will utilize Delta Private Jets aircraft and crews to avoid cabotage issues.
In a press release, Aeromexico said, “We are proud to present Aeroméxico Private Jets, a new private aviation service in conjunction with Aerolíneas Ejecutivas, which combines the best of both worlds: the experience and premium service of the Mexican flag carrier with the flexibility of Aerolíneas Ejecutivas, a leading aviation company private for more than 50 years.”
Aeromexico said the new product is aimed at corporate clients, entrepreneurs, and companies seeking personalized service at any time they need it. It notes, “The service will work through the Jet Card Aeromexico, a prepaid card where customers can make use of their flight hours in a private jet operated by Executive Airlines.”
Available jet types include the Hawker 400XP (8 passengers) and Beechcraft Premier A1 (6 passengers); Learjet 75/45 and Hawker 800XP (both 9 passengers), and Bombardier Challenger 605 (12 passengers).
Jet card users can also apply their balance for tickets on Aeromexico to more than 90 destinations the airline flies.
Pixabay CC0 Public DomainPhoto: U.S. Air Force by Senior Airman Joshua Eikren. SEC Approves 3 to 1 the New Regulation on Conflicts of Interest for Brokers
While the SEC has allowed for years that brokers call themselves financial advisors without requiring them to disclose all conflicts of interest or put the interests of the clients above their own financial rewards, those times are over.
This Wednesday, the SEC voted 3 to one in favor of the so-called “Regulation Best Interest”, a regulation that will require brokers to act in the best interest of investors and disclose more about conflicts of interest that may arise and potentially divert the advice they give.
The SEC said the new rule aims to provide investors with more information about complex payment incentives and other practices that can influence a broker’s advice, without upsetting Wall Street’s commission-based sales model.
The SEC did not impose brokers with a higher fiduciary duty than that applied to investment advisors, who, unlike brokers, receive a payment for managing assets on an ongoing basis.
Although the brokers and advisors will continue to be governed by two rules, SEC Chairman Jay Clayton said that the best interests rule brings brokers’ one closer to the one advisors have. “We elevate, improve and clarify these obligations in an integral way, this action was long overdue”.
The final regulation for brokers does not require that they recommend mutual funds or other types of lower cost products; Cost is just one of the factors that brokers must consider to ensure that advice meets the best interests of a customer.
This Thursday it is expected that the fiduciary obligation of investment advisers will be defined.
Pixabay CC0 Public DomainPhoto: PxHere CC0. Out of 129 CKDs, Only 15 Have had IIRs Above 10% so Far
The assets under management of the 10 AFOREs in Mexico amount to 186.771 million dollars at the end of April 2019, according to CONSAR. The AFOREs can invest 18% in CKDs and CERPIs as an average because each Siefore has his own limit.
The AFOREs at the end of April 2019, have investments in CKDS and CERPIs that represent 6.0% of their portfolio and have commitments that amount to approximately 5.5%, which establishes a potential market for investing 6.5% (10.272 billion dollars).
There is a total of 129 CKDs with a market value of 12.631 million dollars (md) according to the information prepared with data from the Mexican Stock Exchange and the issuers as of April 30.
Of these 129 CKDs 21 are CERPIs which have the characteristic that as of January 2018 they can invest 90% of the resources they manage abroad and 10% in Mexico. Currently the value of CERPIs is 791 million dollars of which 18 were issued in 2018 (81%); so far only 2 in 2019 and one in 2016.
Of the 21 CERPIS there are 11 fund of funds, 6 of Private equity, 3 of infrastructure and only 1 of real state that was born in 2016 before the changes of 2018.
Due to this change, 2018 is the year with the highest issuance of CKDs (38) and the highest amount committed in one year (6.869 million dollars).
As issuers of CERPIs we can find names like: Blackstone (4 CERPIs); KKR (3); BlackRock (2); General Atlantic (2); Lexington Partners (2); Spruceview (1); Partners Group (1); Glisco Discovery (1); Discovery Capital (1); Global Capital (1); Motal Engil (1); Mexico Infrastructure Partners (1) and MIRA Manager (1).
In the CKD universe, the sector with the largest amount committed is real state, which represents 25% of the total, followed by the infrastructure sector (19%); private capital (18%); fund of funds and energy (13% respectively); credit (11%) and the primary sector with 1% of the total issued.
The CKD performance is complex given that each one has its own characteristics (sector, economic cycle, year of issue, degree of advance of investments, leverage, among others), which makes comparisons difficult. Despite this, the comparisons open the conversation with the GP about their performance in the period being compared.
The comparisons must be made with public information since it allows equal circumstances.
The way to calculate the performance of the CKDs with public information is calculating the IRR of each one (inflows and outflows of money to the CKD in the time of life that it has). In the 10 years of life that CKDs have, it is important to mention that between 2009 and 2012 they were pre-funded and since 2012 they were allowed to make capital calls, leaving the first CKD under this modality in July 2012. Homero Elizondo expert in CKDs estimated that the change reduced the cost between 200 and 500 basis point.
If all the CKDs are grouped by year of issue, the years that stand out are:
The 4 CKDs that came out in 2009 have a IRR of 9.8% in simple average and unweighted to the assets under management of each CKDs;
The 8 CKDs that came out in 2010 have an IRR of 7.6% on average;
The 4 CKDs of 2013 have a IRR of 7.3%;
The 19 CKDs of 2015 have an average IRR of 6.3% and
The 5 of 2011 have a IRR of 5.9% to mention the most profitable years of the last decade.
The results of the first three years of life of the CKDs is likely that are due to the fact that they are the ones that have lived the longest (between 7 and 10 years of life). When reviewing by sectors you can see:
In the case of real state, the CKDs that were born between 2010 and 2013 bring average IRR per year between 6% and almost 9%.
For the infrastructure CKDs, two-digit average IRRs can be seen in at least three years: 2012 (21.9%), 2009 (11.5%) and 2015 (10.0%).
In the energy sector, although the average IRR of the 3 CKDs in 2015 is 10.3%, the case of the CKD that was issued in 2012 have a negative IRR of 57.8% stands out.
For private equity CKDs, there are two years with IRR slightly above 9% (2010 and 2012).
For credit CKDs, 2010 and 2012 stand out with IRRs of 8.0% and 10.0% respectively.
In the CKDs that are fund of funds, the highest TIR is 2012 with 4.3%.
In the primary sector where there are only 2 CKDs, only the 2008 issue is the one with an IRR of 4.4%.
Only 15 of a total of 129 CKDs, are identified with a greater IRR than 10% as of April 30.
In real state the two CKDs of Grupo Inmobiliario MEXIGS (IGSCK_11 and IGSCK_11-2) and FINSA (FINSACK_12) have a IRR higher of 10%.
Pixabay CC0 Public Domain12019
. Black Tulip Asset Management Democratizes Access to Alternative Investments in the Entertainment Industry with FlexFunds
Black Tulip Asset Management, a Miami-based alternative asset management company exclusively focused on advising and structuring exchange-traded products (ETPs) for European capital markets, announces it is launching multiple ETPs with FlexFunds, a globally recognized service provider in asset securitization, allowing access to the entertainment industry.
Technology and a raft of new players in both entertainment production and distribution has forever changed the industry’s competitive landscape: Netflix, Apple, Alibaba, Tencent, Google, Hulu and Amazon. Traditional pay TV platforms have been forced to adapt.
The key is to capture the market with proven performers in the production arena, with a demonstrable track record of success and profitability. Rebel Way Entertainment and Empyre Media are good examples of production management teams and film financiers able to repeatedly achieve Internal Rates of Return in excess of 35%.
To address this market need, Black Tulip Asset Management has introduced Black Tulip Rebel Way Entertainment and Black Tulip Empyre Media Exchange-Traded Products (ETPs) arranged by the innovative asset securitization program offered by FlexFunds, which allows access to global investors.
The Black Tulip Empyre Media ETP offers the possibility of investing in a portfolio of three to six A-list Hollywood movies managed by Empyre Capital Management and advised by Empyre Media Ltd., a London-based media content financing and investment firm with over 50 years of experience in entertainment finance. Empyre Media management team has recently invested in 4 films that have generated more than $950 million in box office receipts and been nominated for 14 Academy Awards, four Golden Globes and eight BAFTAS.
The Black Rebel Way Entertainment fund is designed to invest in a slate of at least 10 low budget action and horror movies destined for streaming platforms and in some cases theatrical release. The principals have made over 350 films in this manner in the last four decades and the deal is an example of accessing valuable original content.
Lastly, Black Tulip Asset Management is also working with FlexFunds on a new $100 million content fund for women-empowered film, television and theatre.
Oliver Gilly, Managing Partner at Black Tulip Asset Management LLC, said: “We are delighted to continue working with the FlexFunds team and to be using their innovative securitization platform. The flexibility of FlexFunds’ model has allowed the issuance of the first ETP alternative uncorrelated notes to offer streamlined access to proven original content producers in Hollywood’s Second Golden Age, while the transparency of ETP securities enables global distribution, both privately and institutionally.”
Mario Rivero, FlexFunds’ CEO, said: “Through FlexFunds’ asset securitization program, we are capable of converting any asset into a listed security, allowing international investors to easily participate in any investment project. Black Tulip’s entertainment ETPs are a clear exhibit of how flexible asset securitization can be: from real estate assets to funds that invest in Hollywood movies, or any private equity project. Asset securitization plays a key role in allowing investors to participate in a wide array of opportunities at lower minimum investment levels, thus democratizing access to capital markets.”
Foto cedida. In an Economic Slowdown, Improving the Credit Quality of Fixed Income Portfolios is Key
The pace of global growth is slowing and the financial community is divided between those who believe that it is the beginning of a recession and those who do not. Regardless of where you stand, for Malie Conway CIO Global Fixed Income of Allianz GI, the strategy to follow for fixed income portfolios at this time of uncertainty is clear: improve the credit quality of the portfolio, avoid idiosyncratic risk and be positioned at the 3-7 year range within the curve.
“In an environment where there is little visibility on the global outlook, you want as much visibility in the portfolio as possible” states Conway.
Risk is not rewarded
Thus, Conway explains that, in a global scenario of economic slowdown, “highly leveraged companies will not do well. If we look at the risk reward and risk adjusted return in leveraged loans or CCC companies, we really see that they do not compensate. So we are underweight in highly leveraged companies. Our theme is to upgrade the credit quality of our portfolio.”
Conway also stresses the importance of avoiding idiosyncratic risk and for this reason highlights the importance of robust credit analysis that identifies which sectors and industries do well in an environment of economic slowdown.
Positioning in the curve
The second decision to be made is positioning within the credit curve that is currently flat. “In our view there is no inflation; inflationary pressures are cyclical not structural in nature, so that keeps the long-end quite low and this is why the curve has flattened over the last year. In the end, we believe the economic fundamentals will win – growth has peaked and inflation is under control. We do not see any reason for the long-end to sell off, “states Conway.
However, they do not believe that investors are compensated for lending to companies within the credit curve, so they consider the 3-7 year range (belly of the curve) as the most interesting since “you get good carry from credit and you get very good yield relative to the wings of the curve”.
Allianz GI team believes that the Fed has stopped increasing interest rates at the right time compared to those who believe that the Fed is too late and, therefore, expect a more gradual slowdown, with growth below trend but they do not see an economic recession for the time being.
“But even so, if we are wrong and rates go down, the 3-7 year will do well, not as well as long-dated bonds, but still do very well. And if you have the highest credit quality, you will suffer a bit of a sell off, but not as much as lower-rated bonds, “says Conway.
Credit market outlook
As for the recent evolution of the corporate bond market, Conway acknowledges that the credit market was very expensive during most of 2018, “at best it was fair value,” adds Conway.
“In fact, we have the lowest beta to credit risk in our portfolio since March 2009. We are pretty neutral with respect to the market, with quite significant relative value views.” Specifically, she mentions that she prefers US financials versus European, short-term BB assets versus long-term BBBs and emerging market sovereign debt against peripheral Europe. “We are trying not to take directional trades, but we are focusing on as much relative value trades as possible; we think that directionality and beta is not where the most added value will be in 2019” concludes the expert.
Interest in FRN assets
Conway supervises a fund that invests in FRN assets that after just one year of life has already accumulated $540 million assets under management. Moreover, Conway emphasizes that since the Fed put on hold the prospect of further interest rate rises, the fund has raised $150 million. In Conway’s view, this is due to the fact that there are investors who are de-risking their portfolios: “some investors are re-risking, but others are saying this is a window of opportunity”. Thus, the manager explains that this fund is an excellent alternative to cash. From her point of view, if you are accumulating cash there are two options: “Either you buy money market funds at 2-2.5% which is good capital preservation or you invest in high yield or leveraged loans in which I think the market is over stretched and you are taking a lot of credit risk. Leveraged loans will yield 6-7% and this fund over time will yield 4% “, ” if you are not sure if there is going to be a recession, but are worried about the credit cycle, valuations and credit quality and do not want to give up too much yield, this is really a unique product, “concludes Conway.
