Foto cedidaMariano Belinky, courtesy photo. Mariano Belinky, New Head at Santander Asset Management
Banco Santander appointed Mariano Belinky as Head of Santander Asset Management (‘SAM’). Belinky joins SAM from Santander InnoVentures, the Bank’s $200 million fintech investment fund, which he has led successfully for the past three years.
Before joining Santander InnoVentures, Mariano Belinky was an Associate Principal at McKinsey where he advised global banks and asset managers across Europe and the Americas. He also worked in the research technology team at Bridgewater Associates in the United States, and as a trader in equity derivatives markets in his native Buenos Aires. He holds a bachelor’s degree in computer science and philosophy from New York University.
Víctor Matarranz, Head of Wealth Management, which comprises private banking and asset management, said: “By combining Santander’s experience and expertise in asset management with the Group’s technological capabilities, we can transform the services we offer our clients. Mariano has an outstanding track record in driving innovation and delivering for customers and I am confident he will help Santander Asset Management achieve its full potential.”
Santander Asset Management has a history spanning more than 45 years and a presence in 11 countries in Europe and Latin America. It manages €182 billion in assets across all types of investment vehicles, from mutual and pension funds to discretionary portfolios and alternative investments. SAM’s investment solutions include bespoke Latin American and European fixed income and equity mandates. The company employs more than 700 professionals around the world.
Belinky replaces Juan Manuel San Román who is leaving the Group for personal reasons. Victor Matarranz said, “I’d like to thank Juanma for his service to the Group and his support during the transition.”
Manuel Silva will continue to head the Santander Innoventures investment team and Mario Aransay will continue to lead portfolio partnerships for the fund.
Photo: U.S. Department of State. The politics of NAFTA: we now see elections in Mexico and US first and NAFTA in 2019
The slow pace of NAFTA negotiations so far, suggests that politics will come into play pushing negotiations to 2019. The sixth round of NAFTA negotiations ended in Canada with slight progress, but without addressing any of the controversial topics raised previously by the US delegation. Stands out also that the US has not changed a bit the metric it uses to evaluate the fairness of the trade deal: the goods trade deficit. Even though we don’t agree with such a metric as it puts trade deals as a zero sum game (and the US has an overall trade deficit with the world as a consequence of consuming more goods and services than the ones produced in the US), when the real benefits are in higher employment, lower prices, higher profits on both sides of the border. Nevertheless, the fact remains that the US has a trade deficit with Mexico.
The US cannot close a deal before its November elections that does not seem clearly advantageous to them, when Republican are expected to lose the House. Trump campaign on the premise that NAFTA is a bad deal to US workers and it has to be changed or terminated. By the same token, Mexico cannot accept a deal that seems at a disadvantage to Mexico, as the Government can be severely questioned and affect its candidate going into the presidential elections. We believed Trump doesn´t want to withdrawal from the agreement before the Mexican elections as several US studies suggest that it will favor the left party in the Mexican elections and it would be preferable for the US to deal with the right for other issues like immigration border security and drugs. We also believed that Trump has listened to the Republican states like Texas, the auto industry and agriculture organizations that favor NAFTA.
After the Mexican elections, the US might try to force a deal advantageous to the US with a real threat of withdrawal. In our view, the issues and the likelihood of democrats advancing in both houses will set the tone for the aggressiveness of the US stance regarding NAFTA. In any case, we believed that there will also be pressured from the president elect in Mexico to postpone the negotiations until he sits in office. In that case, the most likely scenario is that the deal will be negotiated in 2019, either with (or without) the US already withdrawn from the deal and coming back to the table before the six month notice expires.
The silver lining of the politics of NAFTA adds new risks to the equation as we don´t know who in Mexico will end up negotiating the deal and its priorities. Also, as now the elections of Mexico go before we have a NAFTA deal, the electorate will be actually choosing the President that will negotiate NAFTA and define the foreign policy of the next six years. In this scenario, the elections become even more important than before when the expectation was for a NAFTA deal before the elections. Also, we don’t know at this point what the mandate from the electorate the next Mexican president will have. It is important to consider at this point, that Trump won the election in the US as he was able to capture the anguish of the US population against the widening of the distribution of income by blaming the political class and promising to “drain the swamp”, and against lost and better jobs by halting immigration and an America first policy of nationalism. These concerns are global, as seen defining other elections like Brexit and Mexico certainly is no exception. The time has come for Mexico to define its future.
Foto cedidaCourtesy photo. Exan Capital Starts the Year Buying a 144 Million Trophy Property
900 G Street NW, a trophy 112,635-square- foot office building in the East End submarket of Washington, DC, has new owners. The property sold for $144 million to an affiliate of Masaveu Real Estate US that was advised by EXAN Capital. The strategic acquisition of 900 G will grow Masaveu’s footprint in the U.S. with a portfolio value of more than $720 million. ASB completed the transaction on behalf of the Allegiance Fund, its $6.2 billion core investment vehicle that owned the property.
ASB developed 900 G Street in partnership with MRP Realty and subsequently acquired MRP’s interest after the project reached stabilization in 2016. The property is now 95% leased to high profile and blue-chip legal and government affairs tenants including Simpson Thacher, Swiss RE, Rio Tinto, Herman Miller, Truth Initiative, and BMW.
The project was designed by Gensler and earned NAIOP’s award for Best Urban Office Building up to 150,000 square feet in 2016.
Larry Braithwaite, Senior Vice President and Portfolio Manager of ASB’s Allegiance Fund, said: “We saw a strategic, and somewhat unique, opportunity to take advantage of domestic and international capital demand for new Class A product after successfully leasing up this one of a kind trophy project.” “Given current supply/demand dynamics in the market, and the strong interest in assets of this caliber, the sale facilitated our plan for prudently managing the Fund’s overall portfolio,” Braithwaite said.
At about about $1,270/sf, This is a record per-foot price for a Washington office building. Last June, Norges Bank Investment of Norway and Oxford Properties of Toronto paid $1,180/sf, or $151 million, for the 128,000-sf building at 900 16th Street NW from a JBG Cos. partnership in a deal handled by JLL.
Pixabay CC0 Public DomainJamesQube. Quaero Capital and Tiburon Partners Join Forces
M&A’s are off to a good start of the year. QUAERO CAPITAL and London based Asian fund management specialist Tiburon Partners have announced that, subject to FCA and FINMA approval, they will join forces.
The tie-up, under the QUAERO CAPITAL brand, will form a single business managing more than USD 2.3 billion.
In line with the shared boutique philosophy the combined business will remain 100% employee owned and continue to focus on highly concentrated, actively managed, value strategies.
QUAERO CAPITAL CEO Jean Keller said, “We are delighted to be joining forces with another excellent value specialist as our skills and expertise are wholly complementary. We are also excited to have a substantial presence in London – one of the key centres for investment talent in the world.”
Tiburon Partners’s senior partner Rupert Kimber said, “QUAERO CAPITAL’s managers think and work like us. They have a similar investment approach based on value orientated, concentrated portfolios. So, naturally, we are keen to partner with a firm which shares our philosophy, and can take our offering more widely around Europe.“
Foto cedidaGabriel Anguiano, Photo PROBITAS 1492 . Probitas 1492 is the First Lloyd’s Syndicate to Open in Mexico
Probitas 1492 has opened its office in Mexico City, becoming the first Lloyd’s syndicate to join the Representative Office of Lloyd’s in Mexico. The regional office will service the wider Latin America region.
Gabriel Anguiano, Head of Strategy & Business Development for Latin America, commented “We’re really excited to be opening the regional office, as part of our continued strategy to get closer to the source of business and further penetrate Latin America. We see this as a major step in establishing a local presence, with local people, local knowledge, local wordings in the local language. We see our presence in the region as a vital component in providing outstanding levels of service. The support we have had from cedents and brokers to date has been very encouraging. The new team is looking forward to continuing to develop and reinforce these relationships.”
The regional hub will initially provide facultative reinsurance for both casualty and property.
Gabriel Anguiano will lead the Mexico strategy spending time between London and Mexico City. He is joined by Property Underwriters, Roberto Gómez and Jocelyn Naranjo. Lorena Solís, Casualty Underwriter, completes the core team. Full technical underwriting support will be provided by Probitas’ London based Chief Underwriting Officers Jon Foley and Neila Buurman.
Ash Bathia, Probitas 1492 CEO, said “We are delighted to be the first Lloyd’s syndicate to build a local presence in Mexico to service the Latin American markets. This is a long term strategic play for Probitas and underpins the syndicate’s commitment to the region.”
Probitas 1492 have worked closely with Lloyd’s and Daniel Revilla, Lloyd’s Regional Head for Latin America and Lloyd’s Representative in Mexico, stated “Mexico is the largest source of premiums for Lloyd’s in Latin America, accounting for nearly a third of the region’s total premium. Having Probitas develop a local presence is fully aligned with Lloyd’s strategy in Latin America. Close proximity to local (re)insurance stakeholders will allow Probitas to conduct business that would not otherwise flow through the Lloyd’s market.”
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.
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.
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.
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.
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.
