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Managers Are Exploring More Liquidity Solutions, Investment Vehicles, and Value Creation to Strengthen the Momentum of Alternatives

According to the latest survey from Goldman Sachs Asset Management titled *2024 Private Markets Diagnostic Survey, Charting New Routes,* conducted with 235 institutions and fund managers worldwide, demand for private market assets is expected to continue rising. Investor optimism and expectations of uncovering new opportunities across strategy classes are driving this growth. The survey also indicates a reduction in concerns around potential economic recession or inflation resurgence, with investor attention now focused more on geopolitical risks from global conflicts.

One key finding from the report is that sentiment is generally positive across all asset classes, with fund managers displaying more optimism than wealth managers. Even in the real estate sector, often considered the most challenging asset class, 38% of asset managers see improved investment opportunities, compared to 31% who perceive worsening prospects.

Investors remain confident in venture capital funds and optimistic about infrastructure, believing these assets can continue delivering stable returns through market cycles. Meanwhile, private credit has seen a slight decline in favorability among nearly a quarter of Limited Partners, though net sentiment remains positive.

“Investor sentiment is improving overall, even in asset classes like real estate that faced headwinds over the last two years. Limited Partner focus on macroeconomic risks has diminished as inflation moderates and interest rates drop. However, concerns persist over inflated valuations and their impact on trading volumes,” explained Jeff Fine, co-head of Goldman Sachs Alternatives’ Capital Formation.

According to Dan Murphy, Head of Alternative Portfolio Solutions at Goldman Sachs Asset Management, “Investors are creating asset allocations in new areas of private markets, including private credit and infrastructure, through various entry points such as secondaries and co-investments.”

Key Trends and Concerns

The survey highlights liquidity as a top priority for investors. Fund managers are increasingly exploring liquidity solutions to return capital to investors, as exits are still hindered by ongoing macroeconomic uncertainty and valuation disconnects between buyers and sellers. “While some Limited Partners face over-allocation issues, private markets generally remain underweighted, with strong demand for new entry points like co-investments, secondary investments, and semi-liquid vehicles,” noted Stephanie Rader, global co-head of Alternative Capital Formation at Goldman Sachs Alternatives.

Geopolitical conflict now tops investor concerns at 61%, followed by inflated valuations at 40%, and recession risk at 35%. Limited Partners are relatively more focused on valuation-related risks, recession, and inflation, while General Partners place greater emphasis on interest rates and regulatory challenges.

Due to widespread underweighting, 39% of Limited Partners are increasing their capital deployment, while only 21% are reducing it, a significant change from last year’s 39% reduction. Capital deployment is now concentrated on credit strategies (34%)—where underweighting is most pronounced—followed by private equity (18%), real estate, and infrastructure (10% each).

Challenges in the Industry

To address valuation gaps, General Partners focus on value creation through revenue growth: 63% aim to boost organic revenue via existing channels, and 52% through new channels. Other significant value creation avenues include mergers and acquisitions (45%), margin improvement via technology and efficiency (35%), and introducing new products or services (27%).

As exits remain sluggish and valuations appear inflated, private equity managers are prioritizing profit growth as the primary source of value creation. Strategic sales are expected to remain the primary exit route (81%), followed by sponsor sales (70%), though optimism toward IPO markets has declined. Demand for interim liquidity solutions, such as dividend recapitalizations (54%), continuation vehicles (52%), and preferred shares (44%), is on the rise. In recent years, most General Partners have expanded their capabilities, either organically (46%), through spin-offs (24%), or via acquisitions (5%).

“General Partners are broadening their product offerings in both strategies and structures, often seeking external capital to support these expansion plans,” stated Ali Raissi, global co-head of Goldman Sachs’ Petershill Group.

Sustainability is also a central consideration in private markets, especially for large Limited Partners outside the Americas. Adoption varies based on the asset base, with larger cohorts more likely to integrate sustainable factors and wider stakeholder concerns (84%). “We continue to observe significant attention to sustainable investing from major investors, particularly in EMEA and APAC, although LPs generally have more progress to make toward their goals,” said John Goldstein, global head of Sustainability and Impact Solutions, Asset & Wealth Management at Goldman Sachs.

With the macroeconomic environment relatively stable, Limited Partners and General Partners express growing optimism across all asset classes. They see the post-COVID-19 normalization process ongoing and the long-term growth trajectory of private markets as strong. “New frontiers in AI, investment vehicles, and value creation are increasingly explored, driven by both opportunity and necessity. Looking ahead, we expect both LPs and GPs to continue adapting to an evolving private markets landscape that plays an increasingly vital role across sectors and regions,” Murphy concluded.

DWS Launches the Global Xtrackers Infrastructure ETF With ESG Criteria

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DWS lanza ETF de infraestructura con criterios ESG

DWS expands its Xtrackers ETF range with the launch of the Global Xtrackers Infrastructure ETF, a product that reflects the performance of infrastructure securities meeting environmental, social, and governance (ESG) criteria. According to the asset manager, this is the first ETF to follow the ESG variant of a broad traditional infrastructure index.

With the Xtrackers Global Infrastructure ESG UCITS ETF, DWS aims to provide access to companies that deliver energy, transportation, and communication infrastructure, among others. The firm expects companies in these segments to experience comparatively minor fluctuations in fundamentals throughout the economic cycle. The ETF began trading last week on the London and German stock exchanges, with a fixed annual fee of 0.35%. The ETF seeks to closely track the Dow Jones Brookfield Global Green Infrastructure Index, calculated since 2016, reflecting the performance of 73 listed infrastructure companies, mostly based in industrialized countries and adhering to ESG criteria.

According to DWS, electric utility companies make up the largest part of the index, around 32%, followed by telecommunications infrastructure, mainly mobile tower REITs (19%), multi-business companies offering a wide range of products (11%), and construction and engineering firms (10%). The oil and gas storage and transportation sector, which is heavily represented in traditional infrastructure indexes, makes up less than 1% of the Dow Jones Brookfield Global Green Infrastructure Index.

DWS explains that, by country, the United States leads with 15 listed companies and a weighting exceeding 46%, followed by Spain, France, and the United Kingdom, each with five companies and a combined weighting of 29.5%. The index also includes 13 Chinese companies, with a total weighting of 2.6%. The largest individual holdings, according to DWS, are the U.S. transmission tower operator American Tower, with an index weighting of approximately 9.5%, and the French infrastructure and construction group Vinci, with 7.9%.

“The need for infrastructure beyond fossil fuels is growing rapidly as governments and companies worldwide work to develop more sustainable infrastructures focused on electrification and information technology. The index offers broad, global exposure to infrastructure but places particular emphasis on projects reliant on greener technologies,” says Michael Mohr, Head of Xtrackers Product at DWS.

Japan Is Regaining Its Direction and Appeal for Equity Investors

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Japón recupera atractivo para inversores

After decades of economic and market stagnation, Japan may be on a path to sustainable recovery, reigniting investor interest in the opportunities Japanese equities offer in this new context. Experts from Vanguard believe that Japan’s paradigm is shifting, shaking off a previously resigned mindset. “The Bank of Japan may go further in its rate hike campaign, which began earlier this year, and the recent change in the country’s Prime Minister is unlikely to halt this momentum,” they note.

Shuntaro Takeuchi and Donghoon Han, managers at Matthews Asia, explain that many investors are understandably questioning the direction of Japan’s stock markets. It’s worth remembering that the market performed well until June but then shifted. The aggressive interest rate increase announced by the Bank of Japan on July 31 preceded weak economic data from the U.S. These factors combined to trigger an unexpected liquidation of yen carry trades, which wreaked havoc on global stock markets, especially in Japan. The Nikkei 225, or Nikkei Stock Average, dropped 12.4% on August 5, its largest decline since the day after the U.S. Black Monday crash in 1987.

“Japanese stocks recovered much of their losses in August, but volatility persists. Weak U.S. economic data and ongoing concerns about the sustainability of the artificial intelligence (AI) boom continue to cause sharp movements in stock prices, along with a strengthening yen. In our view, investors are likely to remain focused on macroeconomic issues. The Bank of Japan has indicated that more rate hikes can be expected, which could further strengthen the yen, while a U.S. rate cut cycle and a weakening dollar could negatively affect sentiment toward Japanese exporters. Moreover, if economic indicators start suggesting a further weakening of the U.S. economy, greater concerns about a slowdown in global trade—on which Japan heavily relies—could emerge,” they explain.

At Matthews Asia, the managers emphasize that recent exchange rate movements have not significantly impacted the profitability of high-quality Japanese companies. “In many areas, both for domestically oriented and international exporting companies, we continue to expect corporate earnings to grow at a mid- to high-single-digit percentage rate in yen terms, supplemented by healthy dividends and accelerated share buybacks, which could add another 2%-3% to total return potential. Japanese stock valuations are also attractive, trading at around 15 times earnings, roughly their average over the past 10 years,” state Takeuchi and Han.

Attractive Outlook

Beyond equities, experts at Vanguard believe that Japan’s structural changes extend beyond the impact on yield curves and currencies. The asset manager explains that in the past, surprise interest rate moves by the Bank of Japan (BOJ) made the Japanese fixed income market unattractive for foreign investors. Additionally, the BOJ holds the majority of Japanese government bonds (JGBs), creating an environment where prices and yields did not reflect true market forces.

However, they note that the BOJ has moved towards greater transparency, signaling its interest rate moves in advance. Although the BOJ still owns 55% of JGBs, it has reduced its holdings, increasing the likelihood that the yen will converge to its fair value.

For Vanguard, the conclusion for investors is that a market easily ignored in recent decades due to economic stagnation and BOJ dominance now appears to be a potential alpha source. “For better or worse, Japan has become much more interesting for investors, with market forces playing a more prominent role,” says Ian Kresnak, Investment Strategist at Vanguard.

According to Kresnak, in light of these changes, investors may consider their long-term asset allocation strategies. “A stronger yen would enhance the returns of Japanese stocks for a U.S. investor. Fixed income is a bit more complex. Higher interest rates would generate more short- to medium-term volatility, which a stronger yen could help offset. However, in the long run, higher yields indicate better future outcomes, reaffirming the role of Japanese bonds in globally diversified portfolios,” Kresnak concludes.

New Prime Minister

Investment firms agree that Japan’s new Prime Minister, Shigeru Ishiba, is a key factor in the country’s reactivation and the renewed attractiveness of its market. Mario Montagnani, Senior Investment Strategist at Vontobel, explains that Shigeru Ishiba’s unexpected victory in the race for the leadership of Japan’s Liberal Democratic Party signals a potential shift away from “Abenomics” policies.

The asset manager points out that Ishiba’s support for normalizing monetary policy and raising corporate taxes could significantly impact Japan’s financial landscape. Investors are reconsidering the prospects for Japanese equities and yen carry trades, examining how changes in interest rates, currency values, and fiscal policies could reshape investment strategies and market dynamics in the near future.

“We believe his emphasis on structural reforms, particularly the revitalization of rural areas, does not align with the growth-oriented approach of ‘Abenomics,’ which has supported Japanese stock prices in recent years. In fact, Ishiba previously criticized the BOJ’s aggressive monetary easing. Consequently, we believe investors may approach this shift in Japan’s political landscape more cautiously, potentially causing volatility or even a market correction in the short term, especially if expectations of aggressive monetary stimulus decrease. It’s worth noting that Ishiba himself recently downplayed speculation on this matter. Over the weekend, he emphasized that Japan’s monetary policy is expected to remain accommodative, implying a willingness to keep borrowing costs low to support still-fragile economic growth,” Montagnani explains.

Finally, Kelly Chia, an Asia Equity Analyst at Julius Baer, notes that Ishiba has reversed his stance on interest rates, fiscal stimulus, and tax increases, which has weakened the yen and helped to revalue stocks. She explains that after a period during which the stock market was affected by currency appreciation, recent developments under Japan’s new Prime Minister have changed market perspectives.

“Ishiba has reversed his stance in three key areas investors were focused on. He now supports keeping rates low (previously, he was in favor of raising them), has announced plans for a fiscal stimulus package (previously, he advocated for some austerity), and has backed off from tax increase plans. This was nearly the same approach the previous Prime Minister took upon taking office,” Chia explains.

The analyst’s main conclusion is that most investors already have a basic expectation that Japanese companies will improve profitability and increase shareholder returns, but she warns: “Failing to meet corporate reform expectations could lead to significant stock depreciation. Ishiba’s reversal from his previous stance has helped ease investor concerns.”

Women in ETFs Invites to the Second Annual Deep Dive in Miami

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The South Chapter of Women in ETFs will host the second annual “Deep Dive into the U.S. Offshore Market” event, aimed at analyzing the growth and development of the U.S. Offshore market.

The event, scheduled for November 7 at 5 p.m. local time in Miami, will focus on the ongoing capital flow into ETFs and explore how assets are implemented and marketed through UCITS models.

In addition to insights on UCITS models, the event will feature a section dedicated to Latin American investors’ experiences, highlighting differences compared to the approach taken in the United States, according to the information provided by the organization.

The event will also include a cultural segment with a focus on Venezuela, offering a rum tasting and cocktail-making class. This activity will allow attendees to learn more about one of the South American country’s traditions and its internationally recognized rum production, as noted in the invitation.

This gathering represents an opportunity for professionals in the exchange-traded funds (ETF) industry, asset managers, investment consultants, and other financial sector players interested in gaining a deeper understanding of the current U.S. Offshore market landscape and its evolution.

The event will be held at the W Miami, Great Ballroom, located at 485 Brickell. To register, please visit the following link.

The Last Three Months of the Year Bring Volatility, Geopolitics, and Central Banks Into Focus

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The final quarter of 2024 has started with significant tension. According to international asset managers, the coming months will be dominated by volatility and geopolitical risks. However, theoretically, the predictability of the major central banks, particularly the Fed and the ECB, should provide confidence and security for investors. What are the main outlooks for the end of the year?

Edmond de Rothschild AM explains that the most notable market movements are due to the worsening conflict in the Middle East: “Concerns over a potential Israeli response against Iran drove oil prices up by nearly 10%, although Saudi Arabia is threatening to increase production to protect its market share.”

Benoit Anne, Managing Director of the Strategy and Insights Group at MFS Investment Management, believes that geopolitics may be the main challenge to macroeconomic stability. From a macroeconomic standpoint, the “goldilocks” scenario of balance remains the most likely.

“However, the risk pendulum has swung toward the possibility of a no-landing scenario. The main challenge to the goldilocks view comes from the international scene, with a significant risk of escalation in the Middle East crisis. For now, the reassuring signal is that U.S. investment-grade credit spreads, which have fallen to 83 basis points, show no signs of being affected by geopolitical contagion. In any case, fixed income can play a useful role as a defensive asset if the global risk appetite weakens,” says Anne.

Fidelity International also views the current geopolitical risks as very complex. According to Henk-Jan Rikkerink, Global Head of Solutions and Multi-Asset at Fidelity International, the conflicts in the Middle East and Ukraine remain unresolved, with no end in sight, while the U.S. elections loom on November 5. He adds, “The successes of the far-right in Germany and France have caused a seismic shift in European politics, threatening to make decision-making within the EU even more difficult. The policies regarding China and trade that follow will be crucial, as will fiscal policy in a time when the reduction of abundant market liquidity is becoming a reality.”

The Issue of a Soft Landing

Asset managers are keeping an eye on the geopolitical context while also monitoring the actions of the Fed and ECB and their impact on the economy. According to Rikkerink, the economy is returning to normal after five years of substantial public support that kept the global engine running.

“At present, we believe that the recent poor data is more indicative of a phase of weakness rather than a serious slowdown, but investors are reacting, and we are closely watching growth and labor market indicators for signs of further deterioration. We believe the global economy is not heading toward an imminent recession, and we see indications of more of a rotation than a change in direction,” says this expert from Fidelity International.

Asset managers agree that central banks have worked hard throughout the year to control inflation without damaging the environment. MFS IM points out that all central banks are easing their monetary policy, although some faster than others. In the global race to lower official interest rates, the Bank of England seems in no rush. Meanwhile, in the U.S., an interesting debate has recently arisen over whether the Fed’s recent 50-basis-point rate cut was a policy mistake.

Erik Weisman, Chief Economist at MFS IM, believes it was not, as the 5.50% rate was too high to begin with. “It’s more important to think about where the Fed will hit the pause button: above neutral, at neutral, or below. The key risk is that the labor market deteriorates more than desired. After the nonfarm payroll figure, that risk seems less pronounced, but we must not forget that labor data can be volatile, especially given the impact of seasonal adjustments and exogenous disruptions like hurricanes and strikes. Overall, all this central bank easing favors fixed income unless something derails,” argues Weisman.

Quarterly Outlook

As for the implications of this environment for investors, Fidelity International notes that last year’s structural themes still seem relevant. “The commercialization of AI technologies will continue to develop at a strong pace, governments are investing billions in power grid improvements, and healthcare is both a defensive sector and a strong long-term theme. We are in the mid-to-late cycle phase, and there are some significant unknowns. Generally, this situation tends to lead to positive returns, although with greater volatility. We still believe a ‘soft landing’ is the most likely outcome, but from an asset allocation perspective, it’s important to be nimble to seize emerging opportunities,” says Rikkerink.

According to Claudio Wewel, Currency Strategist at J. Safra Sarasin Sustainable AM, the Fed’s rate cut, combined with China’s economic stimulus and falling oil prices, is creating a more favorable backdrop for risk assets. “In September, the rotation between different equity market segments continued. In equities, the changing monetary environment and the increased likelihood of a soft landing will support the shift from growth to value. This perspective also applies to asset classes like commodities, which are undervalued compared to equities in historical terms. For these reasons, we have reallocated funds to companies involved in the extraction, processing, and use of industrial metals,” argues Wewel.

“Given the circumstances, we remain neutral on risk assets and duration. We prefer UK and emerging market equities. Government bonds acted as a safe haven early in the week as geopolitical risks intensified, but yields rose again following some optimistic U.S. data,” adds Edmond de Rothschild AM.

Meanwhile, GVC Gaesco maintains a positive outlook on fixed income and believes that now is the time to focus on specific sectors and geographies in equities. Regarding this asset class, GVC Gaesco analysts still see opportunities but with a more cautious attitude. In this sense, the experts believe it is advisable to focus on specific sectors and geographies with active management rather than a global approach. “Europe and emerging markets seem more attractive to us. By sectors, those that benefit most from lower rates gain importance in our asset allocation,” they add. Specifically, real estate, healthcare, telecommunications, and utilities are the sectors GVC Gaesco is overweighting in their portfolios, although they do not exclude specific companies in other industries such as industrials or insurance, notes Víctor Peiro, General Director of Analysis at GVC Gaesco.

Additionally, in the case of monetary assets, GVC Gaesco estimates that “the most attractive opportunity seems to have passed, and the expectation is that central banks will continue to reduce rates in the coming quarters, so we move from positive to neutral,” says Gema Martínez-Delgado, Director of Advisory and Portfolio Management at GVC Gaesco.

PineBridge: Investing in Global Equities by Focusing on Companies Rather Than Macro Factors

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With the support of LarrainVial, PineBridge Investments presented its global equity fund in Montevideo, emphasizing its differentiator compared to the competition: the complete recategorization of each asset’s benchmark to capture the life cycle of each company.

LarrainVial aims to make a strong entry into the Uruguayan market by offering the distribution of a diverse network of international managers, leveraging its team of 56 people dedicated to serving Latin American clients, both onshore and offshore.

Juan Miguel Cartagena, Partner & Co-Head of International Distribution at LarrainVial, estimates that the Uruguayan fund market is worth between $15 billion and $18 billion and believes that his firm can be valuable to independent advisors due to its variety of strategies and expertise in alternative assets. The company currently manages $30 billion in assets.

The PineBridge Global Focus Equity

Adrien Grynblat, Managing Director for Latin America at PineBridge Investments, acknowledged upfront that Uruguayan investors have ample access to global equities and that competition is strong. That’s why he highlighted the firm’s differentiator: “Companies, like human beings, have cycles, and that’s why studying them is essential. We categorize them based on their growth, maturity, and stability.”

Building on this philosophy, the fund’s managers recategorize the benchmark according to their analysis and convictions, looking for “market dislocations.” It is a quality-focused portfolio with around 40 to 50 stocks that has weathered recent crises well.

What was refreshing about Adrien Grynblat’s presentation was the absence of lengthy debates about Fed interest rates or a U.S. recession. In a year dominated by the exhausting focus on “half a basis point,” the PineBridge executive explained that they are not concerned with U.S. elections or macroeconomics: the focus is on selecting the right companies.

For this reason, Paulina Espósito, newly appointed representative of LarrainVial in Uruguay and Argentina, argued that the fund is a good enhancer for portfolios in the Río de la Plata region, capable of adding alpha with lower volatility.

AXA IM Expands Its Range of Fixed-Income ETFs With Exposure to U.S. Treasury Bonds

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AXA Investment Managers (AXA IM) strengthens its range of fixed-income ETFs with the launch of the AXA IM ICE US Treasury +25Y UCITS ETF, which began trading yesterday, and the AXA IM ICE US Treasury 0-1Y UCITS ETF, set to launch later this month. According to the asset manager, the first of these vehicles aims to replicate the performance of the ICE® US Treasury 25+ Year Bond Index, net of management fees, both in rising and falling markets.

It provides exposure to U.S. sovereign debt in its domestic market, denominated in U.S. dollars. With the longest duration available in the market, this ETF offers a unique proposition for investors seeking long-term exposure to fixed-income markets.

On the other hand, the AXA IM ICE US Treasury 0-1Y UCITS ETF aims to replicate the performance of the ICE® BofA 0-1 Year US Treasury Index, net of management fees, both in rising and falling markets. It provides exposure to U.S. sovereign debt with a maturity of less than one year, denominated in U.S. dollars. Due to its short maturity, this dynamic component allows investors to invest their cash in U.S. dollars on a short-term basis.

“U.S. Treasury bonds are recognized as a safe haven and a staple for many investors, primarily due to their high liquidity. By offering our current clients, as well as potential clients, two ETFs positioned at opposite ends of the curve, these products complete our range of fixed-income ETFs, providing investors with dynamic tools to build their portfolios. This allows them to easily capture the ups and downs of U.S. interest rates at a low cost,” commented Olivier Paquier, AXA IM’s Global Head of ETF Sales.

The asset manager highlights that the Total Expense Ratio (TER) for each ETF will be 0.07%, excluding transaction fees charged by intermediaries. Additionally, the ETFs will be available in Germany, Austria, Denmark, Spain, Finland, France, Italy (limited to institutional investors until listed in Italy), Liechtenstein, Luxembourg, Norway, the Netherlands, and Sweden.

BlackToro Sets Its Sights on Peru and Colombia and Approaches the Chilean Market

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(cedida) Gabriel Ruiz, presidente de BlackToro, presenta ante una audiencia en Santiago de Chile

Talking about his goals in Latin America, the president of the wealth management boutique BlackTORO Global Wealth Management, Gabriel Ruiz, wants the Latin American public to have them “among their options.” Based in Miami, with a presence in Argentina, Mexico, and Chile—where they recently held their first event—they are now seeking partners to enter new markets. Their focus is on Peru and Colombia, as well as Venezuelan clients residing in the U.S.

Anchored in an RIA (Registered Investment Advisor), the firm provides advisory services to Latin American clients who want to invest in global assets, whether they reside in their home countries or the U.S. The model they use involves utilizing BlackToro as an offshore platform and establishing strategic alliances in Latin American markets, the executive explains in an interview with Funds Society. The goal, he emphasizes, is not to open their own offices in the region.

“There are already enough and exceptionally good players in the domestic markets in Latin America. What we believe we can be is excellent complementary partners for those players,” he notes, referring to brokerage firms and banks that have not fully developed their offshore advisory capabilities.

After signing an agreement this year with SORO Wealth, a wealth management firm based in Monterrey, Mexico, they are currently looking for strategic partners in Peru and Colombia. They are already exploring both markets and holding meetings with interested parties.

Local Dynamics

In Peru, Ruiz points out that the local market could be a good fit for this system, with firms that could benefit from a window to global investments, much like those in Colombia.

In Venezuela, they also see an opportunity, though not on the local front. “It’s a bit more complicated, obviously, in the domestic market, but the Venezuelan community that has been living in South Florida for 20 years is enormous,” he explains, with a variety of established business clients who still maintain a “Latin root.”

Overall, Ruiz has already set a clear goal: “We want to become a wealth management boutique that is at least in the top three.”

The Latin American Logic

Not all investors are the same, with different contexts influencing decision-making. In this regard, the president of BlackToro highlights the importance of understanding the logic of clients. “Not all products, investment strategies, and portfolios are designed for the idiosyncrasies of Latin Americans,” he comments.

Many financial products are designed with American and European investors in mind, he explains, who face low unemployment rates and institutional risks in their businesses.

“The role that savings play for a Latin American is not the same as for an American. That’s why Americans are much more willing to take on volatility risk,” he adds. Latin Americans tend to experience more volatility in their income and wealth sources, so they see their savings as an anchor.

Approaching Chile

The firm already has Chilean clients, relying on their strategic partner in the Andean country: the law firm Bruzzone & González, a legal office specialized in corporate, tax, and accounting matters. With this, Ruiz explains, they have local support with the necessary expertise for offshore investment structuring.

“We want to be perceived by affluent investors as a good option when deciding whom to turn to for advice on investing in global markets,” says the president of the boutique.

Strengthening ties, the firm held its first event in Santiago, in one of the halls of the Ritz-Carlton hotel, located in the Las Condes district. The event featured presentations by Ruiz and BlackToro’s chief economist, Fernando Marengo.

The keynote speaker at the seminar was economist Vittorio Corbo, former president of the Central Bank of Chile, who described a country that, while facing challenges such as investment and growth, does not have major macroeconomic issues. With a trend growth rate estimated at 1.8% annually for the 2025-2034 period, he called for efforts “to reverse this.” He also urged, “Let’s not sell Chile short,” highlighting the country’s institutional, macroeconomic, and financial stability.

Subsequently, lawyer Osiel González, partner at Bruzzone & González, joined the event, addressing topics related to jurisdiction, asset protection, and tax efficiency.

Azimut Is Seeking an Acquisition to Grow Its Business in Chile

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After two years of restructuring, Azimut Investments’ office in Chile is now ready for the next phase. Following the strengthening of operations with the hiring of an Institutional Sales professional, the focus is now on inorganic growth opportunities. Diego Varela, the firm’s CEO, reveals that they are looking for partners with a foothold in the wealth management business, either for an acquisition or a joint venture.

“Historically, Azimut has chosen to establish and grow in its markets mainly through mergers and acquisitions,” the executive explains in an interview with Funds Society, adding that only the Chile office – which also covers Argentina, Colombia, Peru, and Uruguay – focuses solely on distributing the funds of the Italian asset manager.

Up to now, Varela’s attention was focused on making internal changes to align the firm with Azimut’s global and, specifically, Latin American standards. Now that they are moving past that, the priority is finding a company involved in the Chilean wealth management business, a segment that has seen significant growth in recent years.

“My main focus for the rest of the year and the first months of next year, because it is a priority for the Chile office, is to seek some form of partnership with a local player,” says the CEO, describing his growth plans as “ambitious.” This union, he adds, could be done through a minority or majority acquisition, depending on the size of the firm, or through a joint venture.

The goal is to acquire more than 51% of the firm, as Azimut is publicly traded, allowing them to gain control and consolidate assets for the holding company. The plan is to grow the alliance. What does this mean? They plan to offer this partner a six- or seven-year plan – no more than ten, Varela stresses – to gradually increase participation, ideally ending with some form of cash-out for the partners. However, Varela emphasizes that they do not intend to “empty” the firm they choose, but rather that the original partners will continue running the business with Azimut’s support.

One segment they are closely watching for this purpose is independent advisory firms and multi-family offices. “Multi-family offices are a very interesting segment,” he points out, as they have the structure and clients. Thus, an international partnership of Azimut’s scale could take them to the next level, he notes.

In this regard, the executive highlights the potential for Azimut’s acquisition to complement the operations of wealth management companies, providing “the full backing of Azimut.” This includes the capabilities of an international group involved in various businesses, including funds, life insurance, and discretionary portfolio management in Luxembourg.

A New Phase

Since Varela took the helm of Azimut Investments’ Chilean branch in June 2022, his primary focus has been on adjusting operations and strengthening the foundation for growth in the Andean country.

In addition to deepening their relationship with HMC Capital – a distributor of vehicles with whom they have an agreement – the firm worked on improving the internal functioning of the subsidiary, deepening ties with HMC, and enhancing technological platforms and infrastructure.

This process is concluding with a key milestone: the hiring of Cristián Cerda. The executive, who joined as Institutional Sales, comes from Prudential AGF, where he worked as a local fixed income trader, and he holds a master’s degree in Economic Analysis from the University of Chile. The goal of this appointment, Varela explains, is to have “someone much more involved in the field, more engaged with counterparts.”

Looking ahead, the CEO’s direction is clear: “We are now in a position to say that we are entering a more aggressive expansion phase,” with a focus on asset gathering.

This effort coincides with a positive moment for Azimut overall. According to Varela, the international group surpassed $100 billion in assets under management and is projected to achieve its highest net profits in its 32-year history this year.

“Everything converges at one point. We are growing significantly as a group, expanding, aligning many things with international standards, coordinating with HMC, doing interesting things, and now, we’ve added Cristián,” the CEO notes.

Fixed Income Leadership

Another tailwind for Azimut in Chile is the strong performance of their fixed income funds, an asset class that has become much more popular since interest rates increased. This has resulted in various vehicles outperforming their peers, including high yield strategies, their flagship subordinated investment-grade debt fund, the flexible Global Macrobond strategy, and a convertible bond strategy.

“We feel that we are a fixed income powerhouse. We’ve had these returns that have accompanied us,” Varela comments, adding that this strong performance has coincided with increased client demand.

Regarding the market dynamics, the executive has an optimistic outlook. While investors who decided to lengthen their durations when international central banks reached their interest rate peaks saw disappointing results in the first half of the year, this has recently changed. “Things have adjusted a bit, and there is indeed consensus,” he explains, so “it makes a bit more sense to start lengthening those durations.”

The increased interest has inspired a roadshow that the firm organized with Nicolò Bocchin, Azimut’s Head of Fixed Income and portfolio manager, whom Varela describes as a “rockstar” of the Italian parent company. This tour includes stops in Lima, Santiago, and Montevideo, where Bocchin will meet with institutional investors.

“With the strong performance of our fixed income funds and the positioning we can showcase, it makes sense to close the year with his visit, as he is the person everyone wants to meet and listen to,” says the CEO.

Advenir and Azora Partner to Tackle Housing Shortage in the U.S.

| For Amaya Uriarte | 0 Comentarios

Advenir y Azora contra la escasez de vivienda en EE. UU.

Azora, a global investment firm based in Spain, and Advenir, a U.S.-based real estate investment and management corporation, have announced a new strategic alliance aimed at creating affordable rental housing in key U.S. markets. This partnership, valued at over $3 billion, comes at a pivotal moment when the housing shortage, combined with a challenging capital markets environment, presents an attractive opportunity for investment in both the development and acquisition of properties in the housing sector.

“The agreement establishes a new combined corporation, Advenir Azora, which will be a vertically integrated platform encompassing capabilities in acquisition, development, asset management, property management, and fund services, ensuring a comprehensive approach to creating value for investors and enhancing the well-being of residents,” they explain.

According to Stephen Vecchitto, CEO and founder of Advenir, the housing shortage in the U.S. exceeds 5 million homes, exacerbating the gap between the rising cost of homeownership and the more accessible cost of renting. “Combining the global financial power, residential knowledge, and credibility to attract institutional capital from a company like Azora, with Advenir’s deep expertise and experience in real estate development and management, will help us reach our goal of expanding our current portfolio and our pipeline of 4,700 single-family rental homes to 10,000 units, while also increasing our capacity to acquire existing properties. We believe now is the time to double down on residential housing, and our combined company is well-positioned to capitalize on this market dislocation,” Vecchitto stated.

Azora Advenir is expected to deploy over $3 billion over the next five years, with the aim of developing at least 10,000 new single-family rental homes and acquiring 5,000 existing units. “Investing in and alongside Advenir is a new expression of Azora’s long-term commitment to helping create high-quality multifamily and single-family rental housing in the U.S. Beyond being a good business, this effort will assist countless families. Advenir’s operational excellence, local expertise, and shared values make them the ideal partner as we continue to seek value in investment opportunities across the U.S.,” noted Fernando Pérez-Hickman, Managing Partner and Director of Azora America.