Foto cedidaAris Prepoudis, courtesy photo. Aris Prepoudis, New CEO of RobecoSAM
RobecoSAM, the investment specialist focused exclusively on Sustainability Investing (SI), has appointed Aris Prepoudis as CEO from January 1, 2017, subject to FINMA approval. He will take over from Reto Schwager, who has led the company as interim CEO since August 2016. Schwager will continue to perform as Global Head of Private Equity and a member of the Executive Committee.
Albert Gnägi, PhD, Chairman of the Board of Directors, RobecoSAM: “The Board of Directors is delighted to appoint Aris Prepoudis as the new CEO for RobecoSAM. Prepoudis brings to the company the ideal set of skills, an entrepreneurial mindset and a passion for Sustainability Investing. These qualities will be instrumental for continuing innovation and fostering profitable growth opportunities at RobecoSAM. The Board of Directors would also like to thank Reto Schwager for his commitment as RobecoSAM’s CEO ad interim, and for providing consistent leadership during the transition.”
Aris Prepoudis, appointed CEO, RobecoSAM: “I am proud and honored to be named as CEO of RobecoSAM, the pioneer and global leader in Sustainability Investing for over two decades. I am looking forward to shaping the SI landscape by delivering cutting-edge asset management solutions to our clients. As the CEO, I will focus on profitable growth, further develop our expertise and leverage on the burgeoning interest in Sustainability Investing around the world.”
Aris Prepoudis, a Swiss national, served until recently as CEO of Vescore (formerly Notenstein Asset Management), an asset manager specializing in sustainable and quantitative investments. Previously, he was Head of the Institutional Client Business Unit at Notenstein Privatbank, where he led the consolidation of all the asset management activities of Raiffeisen Switzerland into Notenstein Asset Management. From 2000 to 2013, Prepoudis worked at Bank Sarasin & Cie AG in various senior positions, culminating in the role of Global Head of Institutional Clients. He began his career at STG Cooper & Lybrand (now PwC) and subsequently worked at ATAG Ernst & Young as an audit manager for Swiss Mutual Funds and Banks. Prepoudis holds a Bachelor of Business Administration from the University of Applied Sciences in Basel.
Foto cedidaPhoto: Mark Mobius, Executive Chairman at Templeton Emerging Markets Group / Courtesy photo. Mobius: “A Period of Bilateral Agreements between the U.S. and Emerging Markets is Opening Up, offering Great Opportunities, even for Mexico”
“Mexico is not going to disappear because Trump has arrived at the White House. Its oil will still be there, and so will its manufacturing capacity, and if the U.S. market closes up to it, there will be other markets that want to buy products Made in Mexico, especially with such a cheap Peso.” This quote sums up the opinion which Mark Mobius, Executive Chairman at Templeton Emerging Markets Group, and a Portfolio Manager of Franklin Templeton’s emerging equity strategies since 1987, holds on emerging markets following Trump’s victory: we must not fear a debacle.
In an interview with Funds Society, Mobius talks about one of the main concerns of investors in emerging markets looking forward to 2017: what will happen to these markets once Trump is president? Returning to Mexico’s case, which is probably the most vulnerable country due to its hefty trade balance with the United States: “Given that Trump is primarily a businessman, I think he will reach a bilateral agreement with Mexico that will ultimately be beneficial to the country. Problems related to drug cartels and organized crime are common for Mexico and the United States, so it makes sense for both countries to work together to solve them.” The solution, Mobius says, may involve negotiations to help normalize the movement of people, “but I think they will eventually come to an understanding.” In fact, for Mobius, Mexico now offers tremendous opportunities: “The Mexican peso cannot drop much more from current levels, at least on a sustained basis. We estimate that it is already slightly undervalued.”
On comparing Mexico to Brazil, one of the markets that Mobius has favored in its emerging equity strategies for a longer period of time, he points out that the Brazilian economy has suffered a much greater punishment than Mexico, with two consecutive years of GDP contraction, and is now in full recovery phase with ongoing structural reforms that Mexico has yet to undertake. “Mexico’s dialogue with the Trump administration could be a catalyst for the adoption of these reforms, which in the end would be very beneficial to the country,” says Mobius.
As for the Asian continent, Mobius does not see a negative effect for China due to Trump’s victory. “The countries receiving the most aid from the United States are Japan, South Korea, and to some extent also the Philippines. With Trump, these countries may have to redefine the terms of their relationship with the United States by increasing their contributions, so they may face additional pressure in their budget that should be monitored.”
The United States spends about USD 5 billion a year on maintaining its military bases in Japan, and another USD 2 billion on bases in South Korea. Donald Trump has questioned this expenditure throughout his campaign, as well as the usefulness of these military bases to maintain stability in the Asia-Pacific region. Political experts in this region point out that China has been hoping for the United States to withdraw its troops from Japan and South Korea for a long time, which now seems more plausible.
Mobius believes that China has favored Trump over Clinton from the very beginning, because it believes that he is willing to negotiate. “We will not see so much cold-war-like rhetoric in China-US relations, so negotiations will be easier.” Something similar, but even more pronounced, happens with Russia, a country with which the United States has reestablished dialogue. “If Trump is not going to allocate so many resources to the Middle East, dialogue with Russia becomes essential.”
Overall, Mobius believes that the multilateral treaties in which the United States participates will be weakened, but many opportunities are opening up in US bilateral agreements with individual countries, which will be positive. He does not anticipate a steep crises in emerging market equities and forecasts a return of inflows once specific measures by the president-elect, or the absence of them, become public.
Faced with the FED’s rate hikes – which seem much more likely after Trump’s victory- it is foreseeable that in future US Treasuries will return to a much more attractive yield than currently, which will be beneficial for emerging markets equities,” says Mobius. “There is a perception that equities fall when the FED raises rates, but if we look at history we see that there is no correlation.”
Pixabay CC0 Public Domain. Active European Equity Funds Set to Continue Outperforming U.S. Counterparts
European equity funds with conviction and strong performance could lead the way in reversing outflows in the sector caused by a combination of Brexit, stretched valuations, and weak earnings that has sent investors elsewhere, according to the latest issue of The Cerulli Edge – European Monthly Product Trends Edition.
Cerulli Associates, a global research and consulting firm, notes that active equity funds in Europe have fared considerably better than their counterparts in the United States. A study by S&P Global shows that 90% of active U.S. equity funds tracking the S&P 500 underperformed the index in the three, five, and 10 years to the end of June 2016. In contrast, 63.8% of active equity funds in Europe underperformed the S&P Europe 350 over three years.
“To put it in a more positive way, over 36% of active funds matched or beat the index. Whether it is the result of the more disparate nature of the European markets or other factors, Europe clearly has more active funds outperforming than the United States,” says Barbara Wall, Europe managing director at Cerulli.
She points to companies such as Allianz Global Investors with its sizable funds that have outperformed over one, three, five, and 10 years. “The funds’ clear sector stances, such as overweighting industrials, seem to have paid off. Some funds can achieve outperformance just by underweighting one major sector.”
The performance of the finance sector over the past couple of years serves as an example, according to Wall. “Amundi’s Europe Conservative fund has underweighted this sector, which makes up just 4.45% of the portfolio. In the three years to September 2016 the fund gained 29.5%, compared with 18.4% for the MSCI Europe, in which financials are 19.5%.”
Pixabay CC0 Public DomainPhoto: Mampu. Local Partners Purchase Raymond James’ Argentinean Equity Interests
The Argentinean shareholders of Raymond James Argentina and RJ Delta Asset Management announced today that they have reached an agreement with Raymond James South American Holdings Inc.’s (Raymond James) to acquire all of the shares of both companies.
Raymond James Argentina S.A. has been rebranded as AR Partners S.A,. while RJ Delta Asset Management S.A. has been renamed Delta Asset Management S.A.
Eduardo Tapia, former President of Raymond James Argentina acquired control of AR Partners and will continue as President of the company.
Gabriel Ruiz, former President of RJ Delta Asset Management and current President of Delta Asset Management and Christian Cavanagh, former Chief Investment Officer at RJ Delta Asset Management and present Director of Delta Asset Management, collectively acquired controlling interest in Delta Asset Management.
For his part, Eduardo Tapia has increased his shareholding a pro-rata and continues to be a board member of Delta Asset Management. The changes detailed above do not imply alterations in the current management structures and do not affect the operations of the companies, which will continue to operate freely and independently from each other.
Raymond James came to Argentina in 1998, partnering with Tapia, to be the company that would take over for Caspian Securities, a pioneer in emerging markets, recognized for its quality research and proven track record in corporate finance.
Raymond James Argentina had as purpose to provide securities services, corporate finance, financial advising and research in Argentina. The joint venture, in which Raymond James held a controlling interest while placing the strategic management in the hands of the Argentine partner, has maintained a strong track record over the past 18 years. Raymond James Argentina – headed by Eduardo Tapia – has been a leader in the Argentine equity market, participating in 65 percent of the IPOs & Follow-on Offerings of Argentine companies, participating in financial transactions in exceed of USD 8 billion dollars. Its Research team has been recognized by institutional foreign investors as the best in Argentina on numerous occasions.
In 2005, Raymond James and Eduardo Tapia partnered with Gabriel Ruiz, senior executive of the Asset Management unit of the Santander Group, to create RJ Delta Asset Management, a company that would provide Asset Management services. In 2008, Cavanagh, senior executive of the Asset Management unit of the BBVA Group, was invited to join as a Partner and Chief Investment Officer.
Delta Asset Management, headed by Gabriel Ruiz and Christian Cavanagh, is one of the leading independent asset managers in Argentina, with 13.5 billion pesos in assets under management and more than 10.000 customer accounts, held by corporations, institutions and individuals. The company has received many accolades since inception and continues to be one of the top asset management firms in Argentina. Recently the international rating agency Standard & Poor’s named RJ Delta Asset Management among the “Top Managers” in the local market.
This acquisition reflects both the positive expectations of the buyers in the Argentine capital market and their trust in the quality of the operations that local management has successfully led since its inception. This transaction is part of the long-term strategies of the local companies. The acquiring partners view this as a reaffirmation of their commitment to the Argentine capital markets. As they continue to lead the companies, they are very optimistic of its long term prospects.
“We are beginning this journey with plenty of optimism, as this acquisition will allow us to take full advantage of the opportunities we believe the new Argentine marketplace will offer. We expect strong development in the financial services sector, where there are high expectations for the repatriation of the capital market which has moved abroad over the last two decades. We thank Raymond James for these years of successful partnership” said Eduardo Tapia.
“We believe the asset management industry and particularly the mutual fund sector has great growth potential, which we think will be sustained by a strong increase in savings among Argentine and foreign investors in the domestic market. We will continue to be leaders and innovators in the industry, thanks to the professionalism of our team, our outstanding performance and the quality of our products. We thank Raymond James for being a great partner that accompanied our growth, since we launched RJ Delta Asset Management 11 years ago”, Gabriel Ruiz explained. In a statement from Raymond James, they express their gratitude to the acquiring partners and to all associates for their outstanding work and accomplishments as well as the strong relationship that was built over the last 18 years.
To the date, the transaction has been communicated to argentine regulatory agencies.
CC-BY-SA-2.0, FlickrPhoto: Ainhoa Sanchez Sierra. Millennials Put Greater Importance on ESG Factors
The Schroders Global Investor Study 2016, which surveyed 20,000 end investors in 28 countries, found that millennials (aged 18-35) are more likely to place greater importance on Environmental, Social and Governance (ESG) factors than older investors (aged 36+). The survey found that the millennial generation ranked ESG factors as equally important as investment outcomes when considering investments decisions. The study also highlighted that global investors would hold ESG investments for an average of 2.1 years longer than their usual investments.
Millennials demand for ESG
ESG factors such as corporate governance, social responsibility and environmental impact issues, such as world poverty and climate change, were all significantly more important to millennials than to the older generations in their investment decision. Opinions between these two age groups differed the most on world-based social outcomes, like poverty and climate change, with millennials rating these highly (7.2/10) compared to older investor groups (6.4/10), on average. The study also concluded that millennials were more likely to actively pull funds from companies with poor ESG records, companies associated with weapons manufacturing/dealing or linked to repressive regimes would be the primary causes of this.
Most groups of investors are looking for good corporate governance, with the issue topping their list of ESG concerns. However, millennials again appeared to show more concern rating it an average of 7.4/10 compared to older investors rating it 7.0/10.
ESG an alternative to short-termism
The study found that global investors would stay invested in ESG investments longer than usual, with 82% indicating they would do this. Over a third (38%) said they would stay invested in companies with positive ESG philosophies for at least two years longer than they would stay invested in their usual investments.
The value of ESG
On average, global investors rated ESG issues as less important when making an investment decision, than tangible, long-term growth, which they rated 7.8/10. However, global investors still rated positive ESG factors highly at 6.9/10 on average, indicating a high degree of importance placed on both issues. Many experts would argue the two considerations are inseparable.
Jessica Ground, Global Head of Responsible Investing at Schroders, said: “The interest in ESG and corporate governance issues for investors only looks set to grow given its prevalence amongst millennials. While returns are still the most important issue, ESG’s importance to end investors means that these factors are too big for any advisor to ignore… It is important to continue to educate investors on the value and added return ESG can provide. While many policymakers are concerned about the rise of short -termism in markets, encouragingly, those surveyed said they would stay invested in ESG philosophies longer than they would in other investments. It is important that investors recognise the value of being invested for the long term and this is especially relevant when considering ESG factors. ”
For more information on the study results follow this link.
CC-BY-SA-2.0, FlickrMatteo Renzi, after the referendum. Italy Starts a Period of Uncertainty After Matteo Renzi's Defeat
On Sunday, the populist wave spreading across Europe saw a defeat in Austria after the Green Party’s Alexander Van der Bellen won 53.3% of the votes versus Hofer’s 46.4%. However, in Italy, with around 60% of voters opting for a “no”, and nearly 70% turnout, Italians firmly rejected an important Constitutional reform that would have removed power from the Senate and left the Lower House as the key legislative Chamber in Italy. The reform was one of the flagship measures of PM Renzi, who has already confirmed he will tender his resignation.
Patrice Gautry – Chief economist, Union Bancaire Privée (UBP) believes that “a period of political uncertainty is coming back on Italy, with rising difficulties to form a government coalition or to find a clear majority. No time for the government to engage new economic reforms in front of political uncertainties.”
According to Nicola Mai, Head of European Sovereign Credit Research at PIMCO the result is negative at the margin for Italian and European risk assets, for a couple of reasons:
First, the reform’s failure means that Italy has lost an opportunity to make its political system leaner and more conducive to reforms.
Second, Renzi’s resignation is likely to lead to a period of higher political uncertainty which comes in the midst of ongoing recapitalization efforts in the Italian banking sector.
However, he believes that negative market sentiment on the vote is likely to be mitigated by the fact that the market has been expecting a “no” (based on polls) and that the ECB, which will meet next Thursday remains in play in European sovereign markets. Although originally they experienced losses, shares in Italian banks have rallied this morning. “Tail risk is sentiment deteriorating significantly on Italian banks and infecting other Italian and European risk markets.” Mai points out stating that the referendum outcome makes the recapitalization of Monte dei Paschi harder to achieve, with potential negative knock-on effects on the rest of the system and in particular on Unicredit’s equity raising plans, which today announced is in exclusive talks with Amundi for the sale of Pioneer Investments.
The Amundi team considers the Italian referendum is particularly important for portfolio construction for several reasons:
The markets doubt in Italy’s ability to make the reforms needed to revitalise its economy, which is a problem in a country where the debt-to-GDP ratio is well over 100%. The referendum is merely adding uncertainty to an already complex situation;
It comes at the end of a year of political surprises that caught out some investors;
It is being held just days before two much-awaited central bank meetings (ECB and Fed), which will only add to market jitters;
The markets’ capacity to absorb heavy trading flows at the end of the year is, at best, reduced, and this is stoking fears that volatility will rise. This is particularly true as the Italian market’s interest rate futures are also used to hedge positions on other premium-based markets (the credit market, for example) when liquidity is tight.
In terms of next steps, President Mattarella will seek to facilitate the formation of a transition government, headed by a political or technocratic figure, tasked with leading through ongoing bank recapitalizations and reforming the current electoral law (which is currently inconsistent between the two Chambers). This will take some time, and elections are unlikely to be called until this is done (until mid-2017 at the earliest). The new electoral system is likely to be proportional in nature, and facilitate the formation of grand coalition governments in future.
The people “have spoken in a clear and unequivocal way… we leave with no regrets,” said Italy’s Matteo Renzi, before tendering his resignation. According to Allianz GI, Italy’s rejection of reforms and Renzi’s resignation may lead to early elections or other scenarios that could spook investors already facing a tumultuous political year in Europe. Then again, markets may have already discounted future bad news, and the ECB stands ready to step in.
CC-BY-SA-2.0, Flickr. Pioneer Investments Could Become French
UniCredit and Amundi have entered into exclusive negotiations in relation to the possible sale of the Pioneer Investments business to Amundi. In a brief joint press release, they confirmed the negotiations are ongoing without disclosing price or further details.
The french asset management group confirmed its interest in acquiring Pioneer Investments last October saying the acquisition was consistent with the growth strategy, and that if it was to be closed it would have to offer a return on investment greater than 10% over a three-year horizon. However they denied a €4bn valuation for Pioneer Investments.
Other groups that were interested in acquiring Pioneer include British Aberdeen Asset Management which decided a €3.5bn valuation was too expensive, Australian Macquarie and Spanish Banco Santander which decided last July not to merge its Asset Management Business with Pioneer.
Pioneer had over 225 billion euros in Assets Under Management as of end of September.
Pixabay CC0 Public DomainPhoto: Unsplash. Monaco Passes Law on Multi-Family Offices
The National Council of Monaco – the Monegasque Parliament – has passed a law on 29 November 2016, aiming to regulate the activity of multi-family offices in the Principality.
Amendments to the draft law put forward by the Monegasque government, allowing banks and asset managers to establish MFOs in the Principality and the ability given to MFOs to manage portfolios, were finally removed to avoid possible conflicts of interest.
Monegasque MFOs will be categorised in one of two ways: some will only focus on administration but will not be allowed to process financial transactions, while those in the second category will be able to transmit financial orders and provide financial advice to their clients.
The second type of MFOs will need both authorisation from Monegasque regulator the Commission de Contrôle des Activités Financières (CCAF) and the Monegasque government, as well as starting capital of €300,000.
Speaking to InvestmentEurope, Thierry Crovetto, the rapporteur of the law on MFOs and CEO/independent fund analyst at TC Stratégie Financière, says : “The law will spur foreign residents of Monaco to favour local MFOs rather than those of their countries of origin.
“It is estimated only 10% of the assets of Monaco’s foreign residents are currently deposited in banks established in the Principality. There is a huge potential to explore here. A few legal safeguards have been enshrined in the text. The remuneration will be that pertaining to clients only. In addition, banks and asset managers cannot be major shareholders of MFOs that will establish themselves in the Principality. We do not want to see asset managers selling their products through the setup of MFOs in Monaco,” Crovetto adds.
More to read about Monaco’s law on multi-family offices in the forthcoming December 2016/January 2017 issue of InvestmentEurope.
CC-BY-SA-2.0, FlickrPhoto: rachaelvoorhees
. AllianzGI to Acquire Sound Harbor Partners
Allianz Global Investors will acquire Sound Harbor Partners, a US private credit manager led by Michael Zupon and Dean Criares, for an undisclosed sum.
As a result of the acquisition, the Sound Harbor team will join AllianzGI. Sound Harbor is a New York-based private credit manager focused on alternative investments in corporate loans, direct lending, distressed debt and opportunistic credit. The firm manages these investments on behalf of its clients in private limited partnerships, collateralized loan obligations and separately managed accounts. Zupon is a former Partner at The Carlyle Group where he founded and led the leveraged finance business. Criares is a former Partner of The Blackstone Group where he founded and led the loan management business. The transaction is expected to close in the first quarter of 2017.
Andreas Utermann, CEO and Global CIO of AllianzGI, said: “Over the last five years, AllianzGI has invested steadily in the quality and breadth of its active investment offering. Within our fast-growing Alternatives segment, private debt stands out as a particularly exciting area, where we’ve clearly signalled our intent to expand our capabilities to address our clients’ evolving investment needs. The addition of the team from Sound Harbor is a significant step in that process, strengthening and complementing our existing capabilities in this important space.”
Deborah Zurkow, Head of Alternatives at AllianzGI, added: “We are very excited the Sound Harbor team are joining our expanding private debt platform. We continue to see strong demand from our clients for access to a diverse range of illiquid alternatives solutions. Sound Harbor’s expertise enhances AllianzGI’s existing global Alternatives capability, which includes infrastructure debt and a fast-growing corporate loans capability in Paris, underlining our desire to establish ourselves as one of the most prominent private debt managers globally.”
Commenting on behalf of Sound Harbor, Michael Zupon said: “Dean and I, along with the entire team, are looking forward to joining a leading and respected investment manager that shares Sound Harbor’s commitment to outstanding investment performance and dedication to its clients’ needs. Joining AllianzGI will enhance our ability to capitalize on trends favoring growth in alternative investment managers with scale, brand recognition and long-term capital.”
Wikimedia CommonsFoto: Zimbres. Shenzhen—China's Silicon Valley
Despite all the negatives we hear about the hollowing out of Shenzhen as a manufacturing base—either overseas or to inland urban areas, the city continues to move up the value chain into design, branding, marketing and more says Jeremy Sutch, Senior Research Analyst at Matthews Asia. Who points as an example, the development of drones, a newer and now-booming industry.
Back in the late 1990s, Shenzhen still had a reputation for making fake DVDs, cheap clothes and copycat toys. Eventually, it morphed into the tech hardware capital of the world. And in the past decade or so, Shenzhen has earned its status as the birthplace for certain popularly emerging consumer products. It churns out more than 90% of the world’s e-cigarettes and over 70% of the world’s consumer drones.
So what is it that has enabled Shenzhen—a sleepy fishing village just 30 years ago—to become the “Silicon Valley of China,” now with a population of roughly 12 million? About seven years ago, Shenzhen officials began designating sectors like information technology, the internet, biotechnology and renewables as “strategic industries.” These industries received financial support of up to about US$77 million (RMB500 million), and contributed 40% of the city’s GDP in 2015. (GDP growth in 2015 was a strong 8.9%).
Once a place for transients trying to turn a quick profit, Shenzhen has grown more welcoming. According to Matthews Asia, it is now easier to get work and residential permits, and Shenzhen is often said to be a more meritocratic society where political relationships are less critical—unlike cities where state-owned industries dominate.
Sutch believes China’s drone makers have credited supportive local government policies. In March of this year, the city earmarked billions to attract world-class talent, including national and foreign scientists and academics, to drive innovation. Some of the incentives include housing subsidies for job seekers who hold higher educational degrees. In 2015, R&D accounted for 4.05% of Shenzhen’s economy. This compares with an estimated 1.98% for the whole of China; 2.76% for the U.S. and 4.04% for South Korea, respectively, according a 2016 study by the Industrial Research Institute.
The two (interconnected) factors of funding and talent pool alone do not explain Shenzhen’s success says the specialist adding that “the balance of elements that create its unique ecosystem are its supply chain, manufacturing capability and transport infrastructure.” The city boasts easy and cheap access to every conceivable component—circuit boards, chips, LEDs, lithium batteries, sensors, screws—enabling significantly faster times for production and testing of prototypes, to mass production (and delivery). The latter is abetted by a large number of specialized factories. Shenzhen, being in close proximity to Dongguan where labor is both abundant and skilled, also benefits from efficient air and sea transport links.
However he points out that, like in any environment where the focus is on innovation and speed-to-market, hiccups do happen. And Shenzhen has not been immune. One need look no further than last year’s arrival on the global consumer scene of the “hover board.” These self-balancing scooters—a large proportion of which were churned out of factories in and around Shenzhen—quickly got attention for the wrong reason; namely explosions. “Whilst a setback for the city’s name, innovation and future successes will continue to flow from the city. We may well, for instance, be on the cusp of drones—aided by rising brand strength, and constantly improving product functionality and ease-of-use—moving from the niche hobbyist market to mainstream consumer (not to mention commercial) market. Christmas shoppers beware!” Sutch concludes.
