Risk Management Is Gaining Importance In The Face Of Competition From Advisors

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Advisory services must pay close attention to risk management when advising their clients, and under this premise, ScoRe enters the U.S. Offshore market.

ScoRe is a tool that integrates traditional financial modeling and is based on indicators, perspectives, and other ratios. Additionally, it incorporates artificial intelligence components to measure qualitative variables that “have historically been difficult to evaluate,” said Oscar Manco López, CEO of Trust Investment and creator of the platform, in an interview with Funds Society.

Manco López added that risk management is crucial in financial advisory services and portfolio management. For this reason, “financial advisors can rely on a 24/7 tool for managing their risks, providing support that research departments sometimes cannot fully cover.”

The Trust CEO emphasized the importance of time management for advisors, noting that this “leaves a gap when portfolios have a large number of assets. With this tool, they can cover any number of issuers in their credit risks, enabling a more active management of their positions.”

To understand more about its application, ScoRe measures the quality of information, the level of education of executives, whether there are any pending investigations, the ability to respond to a requirement—in other words, everything that is generally not measured. However, the functionality of ScoRe does measure it, commented Manco López.

Moreover, the tool covers an unlimited number of issuers, meaning it anticipates situations that allow advisors to reallocate their positions or validate their existing allocations, explained Manco López. He also highlighted the inclusion of new technologies for forecasting and risk measurement.

Trust Investment S.A.S. – Tisas is a company founded 13 years ago to provide specialized financial solutions with high value and innovation. It offers a portfolio of services aimed at businesses, with a presence in Colombia and the United States, serving the global market, according to the information provided by the firm.

GAM and Galena Join Forces to Offer Investment Opportunities in Commodities

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GAM has announced a strategic alliance with Galena Asset Management—a specialist in commodity financing and a fully-owned regulated investment subsidiary of Trafigura Group, which specializes in commodity trading and logistics. This agreement will provide GAM’s clients with access to global commodity markets, benefiting from Galena’s expertise in metals, mining, energy, and renewables.

Commodities are a vital asset class for today’s investors, offering resilience, diversification, inflation protection, and attractive returns in a changing world, according to the company’s statement. GAM has a long history in alternative investment and innovation, and this strategic alliance with Galena will further enhance its ability to offer superior solutions to clients.

The new GAM and Galena partnership will continue to strengthen GAM’s alternative product offering and has two main aspects: a global distribution agreement for Galena Funds and future product innovation.

With this distribution agreement, GAM will be the exclusive global distributor of Galena’s existing commodity investment strategies, which include (subject to local availability):

1. Trade Finance: A strategy providing short-term financing to commodity producers and traders, generating fee and interest income while mitigating risks through collateral, insurance, and diversification.

2. Multi-Strategy: A strategy that invests in macro and commodity themes across the full spectrum of asset classes. It employs a combination of directional, relative value, and arbitrage strategies based on rigorous fundamental and technical analysis.

3. Private Equity: Invests in private companies in the commodity sector, focusing on metal and mineral mining, processing, and related infrastructure and services.

Regarding product innovation, by working closely with Galena, GAM will be at the forefront of the rapidly evolving commodities investment landscape, with access to cutting-edge research, development, and technology. According to the firm’s statement, by leveraging extensive networks, projects, and research, GAM and Galena will collaborate to develop and launch new, innovative commodity-focused investment products for clients, addressing the challenges and opportunities of the energy transition, circular economy, and digital transformation.

Maximilian Tomei, CEO of Galena, stated: “We are thrilled to have formed an alliance with GAM, a firm that shares our entrepreneurial and innovative spirit and our passion for delivering the best alternative returns to our investors. As commodities gain greater importance and dynamism globally, we see enormous potential to create value for our clients by giving them access to our unique expertise and insights. We look forward to working with GAM to offer exciting and exclusive commodity investments to a broader international audience.”

On the other hand, Elmar Zumbuehl, CEO of GAM Group, noted that this strategic alliance with Galena “is a significant step forward for our firm and our clients, as it will enable us to access exclusive and attractive commodity investment opportunities by leveraging Galena’s capabilities and resources. We believe commodities are a key asset class for the future, offering appealing return potential and diversification benefits. We are excited to work with Galena to provide our clients with innovative and differentiated solutions that meet their needs and expectations.”

Smart Asset Management: Keys to Harnessing the Power of AI

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Foto de Steve Johnson en Unsplash

Artificial Intelligence (AI) is revolutionizing the financial world by optimizing asset management, identifying opportunities, and supporting strategic decisions. FlexFunds breaks down the keys to adopting these technologies in the sector.

In recent years, asset management has radically changed, driven by the personalization of financial vehicles and diversified portfolios. Technological tools like AI allow managers to be more efficient and comply with regulations. Deloitte’s report, “How technology empowers success in the alternative assets market,” highlights that automation is key to managing risks, meeting regulations, and reducing operational costs.

Likewise, liquid assets and alternative instruments are benefiting from these tools in the structuring of portfolios to boost performance in options like stocks, bonds, mutual funds, and other financial securities alternatives.

In this context, technological solutions also contribute to the distribution and growth of investment products for asset managers, although the activity still requires significant human oversight, explains FlexFunds, a leading service provider for the management of securitized assets.

FlexFunds uses advanced technologies to structure personalized investment vehicles that can enhance the global distribution of investment strategies. In their view, AI could be a determining factor for the future of managing and structuring investment instruments in the coming years.

According to Mercer Investments’ 2024 global managers’ survey, 91% of managers are already using or planning to use AI in their investment strategies. The areas with the greatest potential are stocks, hedge funds, and digital assets, where AI drives value creation.

Operational efficiency and strategic decision-making

Asset managers can take advantage of AI by improving operational efficiency, user experience, and investment processes, enabling financial products to be adapted to client needs consistent with their risk profile and investment horizon. According to BlackRock, this increases the quality of data and financial instrument analysis.

Additionally, AI can assist the manager during decision-making in the investment process by quickly identifying patterns and insights. For example, with an instrument like an ETF (exchange-traded fund), AI models can help decide how to weight allocations within a given index, facilitating management and enabling more accurate replication of it.

The AI race in the global financial sector

Consulting firm IDC projects that global spending on AI will reach $500 billion by 2027. The financial sector could benefit greatly, especially in fraud detection and financial forecasting. As explained by S&P Global, up to 40% of financial firms already rely on machine learning for these use cases.

Generative AI, capable of creating original content from existing data, could generate up to $340 billion annually for the global banking sector, increasing productivity and offering more personalized products and services.

S&P Global’s report also notes that AI will contribute to the creation of hyper-personalized products and services and facilitate the technological modernization of financial entities. These advances will allow asset managers to better meet regulatory requirements, improve portfolio diversification, and increase efficiency in the distribution of investment products.

The impact of AI on asset management

A report by the CFA Institute Research Foundation highlights that the success of AI in asset management depends on its ability to detect complex patterns and process large volumes of unstructured data, improving forecasting accuracy. This technology also has the ability to self-improve, eliminating the need for manual reconfigurations. However, they warn that AI can fail if data quality is low,or tasks are too complex.

Despite the challenges, artificial intelligence is transforming the way managers structure and distribute financial products, promoting efficiency, diversification, and personalization in an increasingly competitive market.

In conclusion, FlexFunds emphasizes that, although AI presents challenges, its ability to process large volumes of data and continuously improve its performance is redefining how asset managers structure and distribute their financial products in an increasingly competitive global market. In this landscape, artificial intelligence tools and other technologies are fostering greater efficiency, diversification, and personalization in investments while enhancing strategic decision-making.

For more information on how FlexFunds uses advanced technologies to structure personalized investment vehicles that can cost-effectively expand access to international investors, write to us at info@flexfunds.com.

Flossbach Von Storch Will Change Its Legal Form And Become A European Company

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Flossbach von Storch is changing its legal structure. As the firm explained in a statement, the company will transition from an Aktiengesellschaft (AG – joint-stock company) under German law to a European company, Societas Europaea (SE) – Flossbach von Storch SE, in the fourth quarter of 2024. “We are not only long-term investors but also founders and owners of a company. In this sense, succession planning is essential for us. The legal form of the SE gives us the opportunity to create an institution for future generations. We still have much to achieve together,” explained Kurt von Storch, founder and owner of Flossbach von Storch.

Additionally, it was announced that the two company founders, Bert Flossbach and Kurt von Storch, will join the Board of Directors, alongside Johanna Hey, who was previously a member of the Supervisory Board. The current members of the Executive Board, Tobias Schafföner, Till Schmidt, and Marcus Stollenwerk, will form the Management Board. They highlighted that the greater flexibility of an SE’s board of directors, compared to a Supervisory Board under an AG, is something medium-sized companies can benefit from in succession planning and ensuring the sustainable orientation of the company.

In recent years, Flossbach von Storch has been taking steps to prepare the company for the future. For example, a partnership model has been implemented to ensure the long-term retention of the company’s key executives. Additionally, younger profiles have been brought into the Executive Board, and leadership responsibilities have been distributed across multiple leaders. “The change in legal form is another step forward,” said Bert Flossbach.

They also noted that Flossbach von Storch has grown favorably and become increasingly European. Currently, the company has employees working in Italy, Spain, Switzerland, Austria, Luxembourg, and Belgium. The change in legal structure also reflects the company’s growing international focus, which is expected to continue in the future. The registered headquarters and main office will remain in Cologne.

Dean Blackburn, Appointed as the New Deputy CEO of Zedra

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Zedra, a global provider of wealth management services, has announced the appointment of Dean Blackburn as its new Deputy CEO. According to the company, this addition strengthens its leadership team with “innovative” and “dynamic” professionals.

Blackburn joins Zedra from JTC, where he started as Group Director in 2019 and was later appointed CEO. He also served as Chief Commercial Officer at JTC before assuming the role of Group Head of Institutional Client Services in 2022. “He is a people-focused professional with a proven track record of delivering significant business results. His leadership style is characterized by a deep commitment to team development and empowerment, which has consistently translated into strong business performance and growth,” Zedra highlights.

Following this announcement, Ivo Hemelraad, CEO of Zedra, commented: “We are thrilled to welcome Dean to Zedra. His unique combination of people-centered leadership and business acumen aligns perfectly with our values and vision for the future. We are confident that Dean will play a key role in driving our business forward and achieving our strategic goals.”

Regarding his appointment, Dean Blackburn, now as Deputy CEO, added: “I am excited to join Zedra at such a dynamic time in the company’s journey. I look forward to contributing to the continued success of the business, driving innovation, and most importantly, supporting our talented teams to reach their full potential.”

In his new role as Deputy CEO, Blackburn will work closely with the senior leadership team to help define Zedra’s strategy, ensuring the company continues to provide exceptional service to its clients while fostering a supportive and empowering environment for its employees.

WisdomTree Expands Its Range of ETPs With the World’s First ETC on European Natural Gas

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WisdomTree, a global financial products provider, has announced the launch of the WisdomTree European Natural Gas ETC (TTFW), which has begun trading on the London Stock Exchange, Borsa Italiana, and Börse Xetra. According to the asset manager, the fund aims to track the performance, before fees and expenses, of the BNP Paribas Rolling Futures W0 TZ Index, which provides exposure to natural gas in the Dutch Title Transfer Facility (TTF) and measures the total return based on the underlying ICE Dutch TTF Gas Futures contracts.

“The war between Russia and Ukraine that began in 2022 profoundly altered the natural gas markets in Europe. Natural gas flows through pipelines from Russia to Western Europe, once the main source of natural gas for the region, are now insignificant. Western Europe is much more reliant on Norwegian pipeline flows and global liquefied natural gas (LNG) imports. In its energy transition, the European Union will continue to depend on natural gas. Considering this, there will be periodic sharp increases in natural gas prices in Europe, as the fuel is used to offset renewable energy deficits. The Dutch Title Transfer Facility (TTF) is the most representative and liquid natural gas benchmark in Europe and therefore the best tool for tactical exposure to these price jumps and for hedging purposes,” explained Nitesh Shah, Head of Commodities & Macroeconomic Research Europe at WisdomTree.

The asset manager highlights that this launch complements its range of natural gas products, which offer exposure to U.S. Henry Hub natural gas, the most well-known gas trading hub in the U.S. This includes the WisdomTree Natural Gas (NGAS), a euro-hedged alternative, as well as short and leveraged exposures. These products allow investors to express both their short-term tactical view and long-term strategic view.

“We have a strong track record of innovation and launching pioneering exposures in the market across all asset classes. Investors expect WisdomTree to provide exposures they cannot find elsewhere, and that’s exactly what we’ve done with this ETC. This launch strengthens our leadership position in the commodity ETP market and offers investors an additional tool to navigate a dynamic market environment,” emphasized Alexis Marinof, Head of Europe at WisdomTree.

This new fund is passported for sale in Germany, Austria, Belgium, Denmark, Spain, Finland, France, Ireland, Italy, Luxembourg, Norway, the Netherlands, Poland, the United Kingdom, and Sweden.

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

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

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

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

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

About the Speakers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Funds: A Growing Demand

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

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

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

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

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

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

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

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

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

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