Lombard Odier Appoints Marc Braendlin as New Head of Latin America

  |   For  |  0 Comentarios

buena
Foto cedidaMarc Braendlin, responsable de los mercados latinoamericanos de Lombard Odier.. Lombard Odier nombra a Marc Braendlin como nuevo responsable para el mercado latinoamericano

Lombard Odier has announced the appointment of Marc Braendlin as Head of Latin American Markets, with a special focus on Brazil. He will take over from February 1st with the aim of strengthening and expanding the group’s coverage of this region.

Braendlin will be based in Zurich and will report to Stephen Kamp, Head of Southern Europe & Latin America for Private Clients. The company has pointed out that the nomination marks its commitment to further expansion within Latin America, and growth in key strategic markets.

“We are pleased to welcome Marc to Lombard Odier. With more than 20 years’ experience in the banking sector, he has a solid track record of growing businesses in Latin America. This expertise, along with his key client relationships, will enable him to ensure the Firm’s continued growth, particularly in the strategic market of Brazil”, Kamp stated.

Braendlin began his career at Credit Suisse in 1998 where he was promoted to Vice President at Credit Suisse Group’s M&A/ Corporate Finance team in 2005. He then joined Julius Baer where he worked for 13 years, eventually holding the position of Deputy Region Head Latin America and heading the Brazilian market where he expanded the business. Most recently, Marc was Head of Latin America Zurich at Pictet. A Swiss national, he holds a degree in Economics and Business Administration from the University of Basel.

UBS Acquires a Digital Platform to Offer Wealth Management Services for Millennial and Gen Z Affluent Investors

  |   For  |  0 Comentarios

Captura de Pantalla 2022-01-27 a la(s) 14
. Pexels

UBS and Wealthfront, an automated wealth management provider serving the next generation of investors, have signed an agreement whereby the bank will acquire the plataform in an all-cash transaction valued at 1.4 billion dollars.

UBS has revealed that through this acquisition, it will accelerate its growth ambitions in the US, broaden its reach among affluent investors and expand its distribution and capabilities. To do so Wealthfront will become a wholly owned subsidiary of UBS and will operate as a business within UBS Global Wealth Management Americas.

The transaction is currently expected to close in the second half of 2022, subject to closing conditions including regulatory approvals.

With over $27 billion in assets under management and more than 470,000 clients in the US, “Wealthfront’s award-winning, state-of-the-art platform helps clients easily manage their wealth by providing access to financial planning capabilities, banking services and investment management solutions”, the firms say.

Following the transaction, Wealthfront and its clients will benefit from access to UBS’s leading wealth management capabilities, including the UBS Chief Investment Office’s best-in-class thought leadership, an unrivaled global footprint, and deep products and services shelf.

“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the US,” commented Ralph Hamers, Group Chief Executive Officer of UBS.

The platform’s primary focus is on millennial and Gen Z investors, a client segment with significant domestic growth potential. With more than 130 million investors in the US alone, millennials and the Gen Z population together comprise a high growth segment that will own an increasing share of the world’s wealth. 

In addition, Wealthfront will expand UBS’s existing offering through the firm’s Wealth Advice Center, which focuses on serving core affluent clients, and its Workplace Wealth Solutions business, which works with employees of corporate clients on equity plan participation, financial education and retirement programs.

“Partnering with UBS will allow Wealthfront to offer our clients additional value-added services and best in class research that will help accelerate our vision to make growing wealth delightfully easy,” said David Fortunato, Chief Executive Officer of Wealthfront.

AllianzGI Creates Unit Dedicated to Private Markets Impact Investments

  |   For  |  0 Comentarios

Allianz GI
Foto cedidaMatt Christensen, director global de Sostenibilidad e Inversión de Impacto de Allianz GI. . Allianz GI crea una unidad dedicada a las inversiones de impacto en los mercados privados

To enhance its commitment to impact investing, Allianz Global Investors (AllianzGI) has announced the creation of a dedicated Private Markets Impact unit within its Sustainable investment platform. This new area will be led by Matt Christensen, Global Head of Sustainability and Impact Investing.

The Private Markets Impact unit combines existing equity and debt investing expertise with a newly created impact measurement and management capability. The firm has revealed in a press release that this 12- strong unit, which will be overseen by Christensen, will complete the Sustainability platform created in 2021 to push the boundaries of sustainability for its clients.

Three impact teams

Martin Ewald, Lead Portfolio Manager, heads the Private Equity Impact Investing team, which seeks to invest in real assets and private companies that contribute to solve global environmental and/or social issues. He is currently responsible for EUR 500 million committed through the Allianz Impact Investment Fund and AfricaGrow initiative, and also the Emerging Market Climate Action strategy (EMCA) launched at COP26 by AllianzGI in cooperation with the European Investment Bank.

In this sense, AllianzGI reveals that with a target size of EUR 500 million, EMCA will invest in climate-focused investment funds and projects active in emerging markets and developing countries, with a focus on climate mitigation, climate adaptation, and access to electricity.

Meanwhile, Nadia Nikolova, Lead Portfolio Manager, is heading the Development Finance & Private Debt Impact Investing team, which currently invests in de-risked sustainable loans in emerging and frontier markets. The team brings together the expertise from the AllianzGI Private Credit platform with an impact investing lens. It focuses on building partnerships with Development Finance Institutions and Agencies, Donors and commercial investors to mobilize private capital for sustainable development, and already raised over USD 2 billion since 2017.  

Also announced at the recent COP 26, the team manages the vehicle for the recently announced Managed Co-Lending Portfolio Program (MCPP) between Allianz and the International Finance Corporation (IFC), a member of the World Bank Group. “The new program, MCPP One Planet is the world’s first cross-sectoral portfolio of emerging-market loans aligned with the Paris Agreement”, the company explains.

In addition, AllianzGI announced the creation of an Impact Measurement & Management team, led by Diane Mak, and the launch of an impact framework to facilitate the due diligence and selection of investments that contribute to material and positive impact. The approach supports rigorous measurement and management of impact over the lifecycle of the investment to ensure that impact is being delivered. Diane Mak joined AllianzGI in August from Y Analytics where she oversaw TPG Global’s impact assessments and management activities.

“Impact investing is fast-growing out of its niche. Investors want to see a positive change for the planet while generating a return, and impact investing offers a solution to these twin goals. The future growth trajectory of impact investing depends on asset managers demonstrating how the impact can be measured and reported. Our new Impact Measurement & Management approach enables us to measure impact in private equity and debt investments and will allow us to develop further our offering according to the best standards”, said Christensen.

Lastly, Christensen has been appointed as a board member of the GRESB Foundation, a newly established not-for-profit organization that owns and governs the ESG standards upon which the GRESB real estate and infrastructure assessments are based. GRESB, a mission-driven and industry-led organization, provides standardized, validated and transparent ESG data to financial markets. The GRESB Foundation Board will guide the GRESB Standards to ensure they remain investor-led and aligned with responsible investment principles.

What Is the Next Step for the U.S. Equity Market for 2022?: A New VIS with DWS

  |   For  |  0 Comentarios

header (9)
Foto cedida. VIS DWS

Next Tuesday, February 1, at 10:30 am EDT, Funds Society will host a new Virtual Investment Summit entitled “What Is the Next for the U.S. Equity Market by 2022?”.

Jerónimo Nin, Head of Trading and Investments at Nobilis, will present this event, which will feature speakers David Bianco, CFA, Chief Investment Officer-Americas at DWS, and Jesús Martín-del-Burgo, Head of Coverage-Latin America at DWS.

U.S. equity investors have much to digest heading into 2022 around “transitory” inflation, the speed of monetary policy changes, variants, and corporate earnings. How do all these data points then come together to present a picture of the stock market for the year ahead? This VIS will address these issues.

You can register at this link to attend the virtual event.

Host

Jerónimo Nin, Head of Trading and Investments at Nobilis has more than 15 years of experience in financial markets. He holds a degree in Economics from the Universidad de la República and is CFA charterholder. He has been an investment manager at Nobilis since the company’s inception, where he is responsible for supervising the model portfolios and managing two Fund of Funds in Uruguay, with AUM above 220 million dollars.

Nin was Chief Investment Officer of Integration at AFAP. He has extensive experience in active portfolio management and investment decision making. In addition, he worked at BEVSA and has given several lectures locally and internationally on investment decision making in the securities markets and the pension system.

Speakers

David Bianco, Chief Investment Officer-Americas at DWS has more than two decades of investment experience, having rejoined DWS in 2012 in his current role. Prior to that he was Chief U.S. Equity Strategist at Deutsche Bank and, before rejoining, at BofA Merrill Lynch and at UBS. Prior to being chief strategist, Bianco served as the Valuation & Accounting Strategist at UBS, a Quantitative Strategist at Deutsche Bank and an industry equity analyst at firms such as Deutsche Bank, Credit Suisse and at NatWest Markets. He earned a BS in Economics from The Wharton School, University of Pennsylvania and is a CFA Charterholder.

Jesús Martín-del-Burgo, Head of Coverage-Latin America at DWS, joined DWS in 2006 with 7 years of industry experience. Prior to his current role, he was Head of Sales for Chile and Peru and before that, he served as Head of Product Management for Iberia and Latin America and as a Risk Manager for DWS Investments in Madrid. Before joining, he worked as a Senior Investment Consultant for Insurance Companies and in Equity Sales at various institutions. Additionally, Martín-del-Burgo served as Academic Co-Director and Lecturer at Instituto de Estudios Bursátiles (IEB) from 2007 to 2011. He earned a BA in Business Administration from Universidad Autónoma de Madrid; Master’s Degree in Portfolio Management and MBA in Banking and Finance from Instituto de Estudios Bursátiles.

Unicorn Strategic Partners Will Represent Calamos Investments in Latin America

  |   For  |  0 Comentarios

Captura de Pantalla 2022-01-25 a la(s) 15
Foto cedidaEquipo de Unicorn Strategic Partners. Foto cedida

Calamos Investmentsa global investment management firm with more than 40 billion dollars in assets under management, has signed a strategic agreement with Unicorn Strategic Partners for the distribution of its UCITS investment solutions in the Latin American region.

In a press release, Unicorn revealed that it will serve both the retail and institutional business. Until now, Calamos covered the Latin American business under the guidance of Carlos Soriano, Head of US Offshore and Latam, who will now be responsible for the Unicorn relationship and will work directly with the team to continue to grow the business in the region.

Unicorn SP was launched at the end of 2017 and has become one of the premier fund distribution firms within the US Offshore and Latam market. They have a team of 16 professionals based in NYC, Miami, Buenos Aires, Montevideo and Santiago de Chile.

Florencia Bunge, partner in charge of the Latam retail business, commented that such an event is “a great milestone” for Unicorn SP, as it continues to enhance the list of high conviction strategies. In her view, these funds provide an integral and comprehensive solution to client’s investment portfolios in the region. “Our objective at Unicorn SP is to offer best-in-class strategies and avoiding any overlap between our menu of offerings at all times”, she added.

“Calamos is one of the most recognized firms in the industry for its Convertible strategy. Many clients in the region are familiar with Calamos and we are certain that they will greatly appreciate the daily coverage and presence of a local team”, Bunge concluded.

Fernando Campoo Joins Alex. Brown from Citi

  |   For  |  0 Comentarios

Captura de Pantalla 2022-01-25 a la(s) 10
. Pexels

Alex. Brown, a division of Raymond James, has welcomed Fernando Campoo in Miami. He joins the firm from Citi, where he worked for 21 years.

“I couldn’t be prouder to announce that Fernando Campoo has joined the Alex Brown/ Raymond James family as managing director to serve clients in Central America. The sky’s the limit, Fernando,” posted Eric Termini, Alex Brown’s director for South Florida.

Campoo worked since 1997 for Jefferson Pilot Securities in Fort Wayne and then moved on to other firms in Windsor and Puerto Rico until landing at Citi, according to his BrokerCheck profile. He managed a portfolio of Central American clients with AUMs of approximately $200 million, according to industry sources. 

The Strongest Year On Record For M&A

  |   For  |  0 Comentarios

usa-g07a63680c_640
Pixabay CC0 Public DomainEl año más alcista para el M&A. Toro

2021 was a great year for the U.S stock market and economy. Stocks were up for the month, 4th quarter and year and posted their biggest three year gain since 1999. The strength of the S&P 500’s rally is reflected in its 70 record-high closes during the year, second only to 77 in 1995 back to 1928.  The U.S. economy staged a strong recovery as rising demand offset supply chain and microchip disruptions, rising prices, labor shortages, and the drag of mutating COVID-19 infections on the services industries. More economic reopening’s, the consumer wealth effect, and inventory rebuilds bode well for 2022.

 The above consensus jump in the core U.S. inflation rate took the FOMC by surprise and pushed the 10-year U.S. Treasury note yield up 60 basis points on the year to 1.51%, the most since 2013, when the yield rose 127 basis points to 3.03%.  On May 22, 2013 Fed Chair Bernanke announced the start of a reduction of its quantitative easing bond buying and sparked the bond market’s ‘taper tantrum.’.

Chinese President Xi Jinping focused on the need to keep a “strategic focus” in his 2022 New Year address: “We must always keep a long-term perspective, remain mindful of potential risks, maintain strategic focus and determination, and ‘attain the broad and great while addressing the delicate and minute’.”

M&A activity remained vibrant in the fourth quarter of 2021, totaling $1.5 trillion, the sixth consecutive quarter that M&A exceeded $1 trillion and the second largest quarter ever. The strong fourth quarter brought full year M&A activity to $5.9 trillion, the strongest year on record and an increase of 64% compared to 2020 levels. Excluding SPAC acquisitions, which totaled $600 billion, or 10% of activity, 2021 M&A activity totaled $5.3 trillion, still the strongest year for mergers on record. We believe the drivers remain in place for continued robust deal activity in 2022 and beyond.

2021 proved to be a somewhat lackluster year for convertibles globally. After record performance over the past few years, convertibles finally took a breather, resetting valuations and terms. While new issuance continued to be strong this year, some of it was at unattractive terms. Those large issues that came with no coupons and premiums in excess of 50% tended to underperform and drag the market with it. Finally, convertibles have traditionally been favored by growing companies and the rotation from growth to value played a role. With rising interest rates, growth valuations started to seem a bit excessive and while convertibles outperformed their underlying equities as they moved lower, performance relative to the broader equity markets was disappointing.

Looking forward, we are optimistic for our market this year. First, 2021 was a bit of a reset. The market rejected some of the excessive terms and with growth valuations coming back down to earth, we are starting to see some attractive values amongst the carnage. While rising rates may force some growth valuations lower still, they set the table for more attractive issuance in the future. Rising rates have traditionally been good for the market, with convertibles moving higher each of the last 10 times we have seen a 100 bps increase in 10 year treasuries. While there may be more interest rate sensitivity this year, the majority of the market will still be driven by underlying equities.

______________________________________

To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:

GAMCO MERGER ARBITRAGE

GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.

Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.

Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.

Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of  approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.

Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476

GAMCO ALL CAP VALUE

The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.

GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise.  The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach:  free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.

Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155

GAMCO CONVERTIBLE SECURITIES

GAMCO Convertible Securities’ objective is to seek to provide current income as well as long term capital appreciation through a total return strategy by investing in a diversified portfolio of global convertible securities.

The Fund leverages the firm’s history of investing in dedicated convertible security portfolios since 1979.

The fund invests in convertible securities, as well as other instruments that have economic characteristics similar to such securities, across global markets (but the fund will not invest in contingent convertible notes). The fund may invest in securities of any market capitalization or credit quality, including up to 100% in below investment grade or unrated securities, and may from time to time invest a significant amount of its assets in securities of smaller companies. Convertible securities may include any suitable convertible instruments such as convertible bonds, convertible notes or convertible preference shares.

By actively managing the fund and investing in convertible securities, the investment manager seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market.

Class I USD          LU2264533006

Class I EUR          LU2264532966

Class A USD        LU2264532701

Class A EUR        LU2264532610

Class R USD         LU2264533345

Class R EUR         LU2264533261

Class F USD         LU2264533691

Class F EUR         LU2264533428 

Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.

Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.

 

Itaú Private Bank Appoints Fernando Mattar Beyruti as New Global Head of Private Banking

  |   For  |  0 Comentarios

1571273730538
. Foto cedida

Fernando Mattar Beyruti has taken over as the new Global Head of Itaú Private Bank.

“It is with great joy that I share the information that I have assumed, as of now, the position of Global Head of Itaú Private Bank”, the executive posted this week on his LinkedIn account.

Beyruti has been based in Miami since 2019 when he was appointed CEO of Itaú USA. However, he has an extensive career within the bank, originating in his native Brazil.

“I want to thank the entire team at Itaú Private, with whom I am extremely proud and pleased to work side by side and with the certainty that together we are building the best global platform to meet the specific needs of our clients – in Brazil and around the world”, he added.

With more than 20 years at Itaú, Beyruti was senior Private Banker, Superintendent at Itaú Private Bank, and Director of Itaú Asset Management in São Paulo.

His newly assumed position had been vacant since March 2021 when Luiz Severiano Ribeiro left the company.

Inexco Opens Miami Office for US Offshore Business

  |   For  |  0 Comentarios

Captura de Pantalla 2022-01-20 a la(s) 14
. Pexels

Panamanian financial services firm Inexco has announced the opening of a RIA office in Miami.

“Inexco is pleased to open a US-based Registered Investment Advisor (RIA) with dedicated investment services for financial advisors throughout Latin America and the state of Florida and their clients who wish to have top-notch service and advice,” posted Luis Alfredo Cercos, CEO, on his LinkedIn account.

Inexco obtained SEC approval on January 14, 2020 for its Brickell Avenue office, according to information available on the U.S. regulator’s website.

The wealth banking, investment and securities brokerage firm is focused on providing financial services to a select base of affluent clients, corporations and financial intermediaries in Latin America. The company also focuses on affluent and high net worth individuals and institutions, as well as financial intermediaries and their clients.

This market movement is in addition to several Latin American companies that have landed in Miami, such as Puente or Bancolombia, which is still subject to regulatory approvals.  

Ben Kirby (Thornburg IM): “Growth Stocks Are Unlikely To Be Winners in 2022”

  |   For  |  0 Comentarios

Ben Kirby_0
Foto cedidaBen Kirby, co director de inversiones de renta variable desarrollada de Thornburg IM. . Ben Kirby

Developed Equities Co-Head of Investments, Ben Kirby, shares his views on the biggest opportunities and challenges in 2022 with Funds Society in the following interview. You can also know more about the expert’s investment view through this video

With 2021 in the rear-view mirror, what are the biggest lessons you’ve learned over the past year? Did anything take you by surprise?

The biggest surprise in 2021 was the rapid recovery in economic activity and the attendant spike in inflation in durable goods. U.S. companies performed strongly, largely passing on higher costs and growing earnings by more than 50% for the full year. It’s worth noting that it only took about a year and a half for U.S. companies to recover their earnings level from the slippage of 2020, and that they are now trending well above their pre-COVID-19 levels. To highlight how remarkable this is, after the global financial crisis of 2008-2009 it took roughly seven years for these numbers to get back to trendline growth. The level of earnings growth and financial-market recovery seen in the U.S. over the past year has been unprecedented as seen in the chart below.

Looking ahead to the new year, what are your expectations for economic growth in 2022 and what does this mean for U.S. equities?

We witnessed supply-chain issues in 2020 that worsened over the past year, and many companies experienced an inventory run down to very low levels. As a result, in 2022 we expect a major restocking-and-destocking trend on the supply side. Companies will replenish their inventory to healthier levels and the supply bottleneck will be largely worked out over the next year, thus easing pent-up consumer demand. So when you think about a traditional business cycle, the “restock-and-destock” inventory event can become a really important growth driver, and we expect to see it spur an acceptable level of GDP growth next year. The big question is whether this will be enough to deliver a sustainable growth trajectory throughout the rest of 2022, or if the trend will peter out as the year goes on. With all things considered, we’re bullish on U.S. economic growth and stock-market performance this year. But we believe 2022 growth will likely be lower versus the rock star year of 2021, and that we’ll see increased volatility in equities due to overall tightening of the markets.

Gráfico 1

How have inflationary risks and the potential for rate hikes impacted your portfolio positioning?

The Federal Reserve has been in denial about inflationary pressures building over the course of the year, and only recently backed away from their “transitory” language. While we believe durable goods inflation exacerbated by supply chain constraints may ease in 2022, we believe there are at least three longer term drivers of above average inflation: owner equivalent rent rising with a lag to rising home prices, wage-price spiral as bargaining power has shifted to labor, and the energy/low carbon transition, which will require trillions of dollars in capital investment and drive higher energy costs in the medium term. We’re through with the easy money part of this economic cycle, and the Fed, already behind the curve, may be forced to hike rates more aggressively than previously believed. From a portfolio-strategy perspective, that means growth stocks are unlikely to be winners in 2022, and this is especially true for aggressive growth companies that have low or no net profit. With inflationary pressures set to persist through next year, we are underweight higher-growth emerging franchises and instead favor strong businesses that have consistent, stable earnings and attractive valuations. We also think companies that have strong pricing power will be better positioned to pass inflationary pressures to the consumer and to maintain revenues. Higher-margin companies for which labor is not a major component of input costs will also fare better in a rising-wage environment. As an example, payment-network names will be less impacted by inflation because their revenues are tied to transaction volume. These types of companies will have the ability to grow with inflation in the long term. Companies with the ability to make money despite the upward inflation pressure will be better positioned overall. We see such companies not only among financials and banks, but also in consumer discretionary and technology. Lastly, in a rising-labor-costs future there’ll be huge demand for labor-saving technologies, and that will breed new investment opportunities in the automation and semiconductor space.

What are the risks worth keeping an eye on in 2022? What’s keeping you up at night?

As world economies become more interconnected and interdependent, a key risk lies in adverse geopolitical events such as the China-Taiwan divide. These sorts of risks aren’t getting as much attention as they deserve, even though they can have huge implications even for a U.S. equity portfolio. As an example, Taiwanese firms are among the world’s largest contract manufacturers of semiconductor chips that power just about everything global consumers interface with on a daily basis—phones, laptops, cars, watches, refrigerators and much more. The world depends on Taiwan for semiconductors, and the country plays a significant role in the digitaltransformation age that we’re living through. If China-Taiwan tensions result in any disruption on the manufacturing side there could be significant shocks, not only in the semiconductor space but across the global economy. And that’s only one example—so U.S. portfolio managers need to be keenly aware of this overall geopolitical risk factor.

 

Thornburg is a global investment firm delivering on strategy for institutions, financial professionals and investors worldwide. The privately held firm, founded in 1982, is an active, high-conviction manager of fixed income, equities, multi-asset solutions and sustainable investments. With $49 billion in client assets ($47 billion AUM and $1.9 billion AUA as of December 31, 2021) the firm offers mutual funds, closed-end funds, institutional accounts, separate accounts for high-net-worth investors and UCITS funds for non-U.S. investors. Thornburg’s U.S. headquarters is in Santa Fe, New Mexico with offices in London, Hong Kong and Shanghai. For more information, please visit www.thornburg.com.

 

For more information, please visit www.thornburg.com