FIBA’s 2022 AML Compliance Conference is back in person! The premier Anti-Money Laundering Compliance Conference, will take place between February 28th and March 2nd, 2022 in Miami.
Over 1,500 participants, from over 300 financial institutions, will hear from regulators, law enforcement and industry experts in a 3-day information exchange and collaboration event.
In an environment in which the increase in regulations and sanctions has forced banks to assume many roles: investigator, regulator and tax authority, topics will include: the advances and challenges in identifying money laundering practices, where we stand regarding to AMLA 2020, the evolution of OFAC sanctions, the Pandora, Panama and Paradise Papers and their impact on bank secrecy, section 6308, the fight against corruption, the world of cryptocurrencies, technological advances, and banking marijuana related businesses, among others.
This event provides a valuable platform for all players in the banking industry and regulators to jointly discuss industry challenges and explore existing or emerging ways in the fight against money laundering.
The 90+ speakers include Sergio Alvarez-Mena from Charles Schwab, Ivan Garces of Kaufman Rossin, Jeff Horowitz from BitGo, Jim Richards from RegTech Consulting, David Schwartz from FIBA, Robert Targ from Diaz Reus International Law firm, Giorgio Trettenero Castro from FELABAN, Daniel Wager from LexisNexis, iand Rani Hong, one of the world’s leading voices in the fight against modern-day slavery.
Together, they will look to explain how all these new rules and regulations work, and what it means for banks in the US and its customers, as well as for banks in LATAM and the Caribbean.
With more than 35 exhibitors, participants will also be able to learn about the latest trends, products, and strategies to meet the new regulatory environment, leaving with new connections, new ideas for current and future projects, as well as CE credits.
In addition, golf lovers will be able to participate in the first FIBA AML compliance golf tournament, which will take place on February 27, 2022.
Franklin Templeton has hired Ivan Del Rio, CFA, as Vice President and Sales Executive. Based in Miami, he will be in charge of developing and expanding the offshore business with clients in the region, and will report to Shane Cunningham, Senior Vice President and National Sales Manager for Americas Offshore.
“Ivan is intently focused on delivering a superior client experience for the Miami region by bringing his extensive background in offshore sales to the role. We continue to offer clients a broad range of investment opportunities and differentiated capabilities – including ESG, alternatives and customized solutions – to meet their investment needs”, said Cunningham.
Del Rio has 13 years of experience in the financial services industry, having previously worked as Managing Director, Offshore Investments at John Hancock Investment Management, servicing financial professionals in the US offshore market. He was also Vice President and NRC Senior Advisor Consultant for Invesco Distributors, Inc., where he partnered with financial advisors in US offshore markets. In addition, he was part of the team that built the US offshore division for OppenheimerFunds Inc.
Del Rio holds a Bachelor of Business Administration from Florida International University, with a major in Business Management. He is also a CFA charterholder.
Foto cedidaVincent Archimbaud, esponsable de de Ventas Mayorista para Europa de Tikehau Capital. Vincent Archimbaud, nombrado responsable de de Ventas Mayorista para Europa de Tikehau Capital
Tikehau Capital has announced the appointment of Vincent Archimbaud as Head of Wholesale Sales for Europe. Based in Paris, his role will be to develop the distribution of the group’s funds in Europe and contribute to the growth of its assets under management.
The asset manager has explained in a press release that Archimbaud will now be responsible for accelerating the development and supporting Tikehau Capital’s client base in all its business units as well as private banking divisions. He will also coordinate the coverage of this client base with the regional managers in Europe across all asset classes in which the firm invests (private debt, private equity, real assets and capital markets strategies).
Archimbaud will be reporting to Frédéric Giovansili, Deputy CEO and Global Head of Sales, Marketing and Business Development at Tikehau IM.
“We are delighted with the arrival of Vincent Archimbaud. His extensive experience in distribution, combined with his substantial network and his in-depth understanding of the needs of wholesale clients in Europe will enable him to successfully contribute to the Group’s ambitious growth dynamic”, highlighted Giovansili.
Archimbaud brings with him more than 20 years of experience in the asset management industry. Prior to joining Tikehau Capital, he was since 2014, Director of head of Third Party Distribution at Lombard Odier IM (France, Belgium, Luxembourg and Monaco). Prior to that, he spent a year at Goldman Sachs as responsible for sales of UCITS platforms before joining Citigroup Global Markets for three years, also as responsible for sales of UCITS platforms. In addition, Archimbaud was responsible for Sales for Lyxor Asset Management (2006-2010), for AXA IM (2003-2006) and for Société Générale AM (2001-2003). He is a graduate of ESC Bordeaux Business School (1996).
Foto cedidaAndrew Hendry, responsable de Distribución en Asia (sin Japón) de Janus Henderson.. Janus Henderson nombra a Andrew Hendry para el cargo de responsable de Distribución en Asia (sin Japón)
Janus Henderson has announced in a press release the appointment of Andrew Hendry as Head of Distribution in Asia (ex-Japan). He will join the firm in February 2022 and will be based in Singapore, from where he will report to Suzanne Cain, Global Head of Distribution.
In his new role, Hendry will be responsible for the overall strategy and management of Janus Henderson’s distribution functions across Asia (excluding Japan and Australia). The firm has explained that his primary focus will be to “maintain, grow and diversify” the distribution business to ensure they continue to meet their clients’ evolving needs. He will also “develop strategic client partnerships across institutional and intermediary channels” and work collaboratively with leaders from across the firm to identify and cultivate business development opportunities.
With 23 years of global experience, Hendry will be joining from abrdn, where he was most recently the Head of Distribution – Asia Pacific. He has previously worked at Westoun Advisors, M&G Investments and started his career at Capital Group.
“We are excited to welcome Andrew to the firm. His wealth of experience from some of the global asset management industry’s leading firms, coupled with his steadfast client-centric approach, will enable growth in the region and ensure we continue to meet our clients’ evolving needs”, said Cain.
She also commented that Hendry’s appointment, in addition to the appointments of Shinichi Aizawa as Executive Chairman and President of Janus Henderson Investors (Japan), as well as Tomoyasu Tanimoto as Head of Distribution in Japan, “demonstrates Janus Henderson’s ongoing commitment to building a best-in-class team and client offering in Asia.”
The announcement follows several key hires across the Global Distribution team so far this year, including the Global Head of Consultant Relations, Global Head of Client Experience, Head of North America Institutional, Director of Institutional Solutions in Australia, and Deputy Head of Investment Trusts.
The question of whether inflation is transitory or structural is the crux of what financial markets and central banks today are currently grappling with. We have been notably below trend inflation for at least the last decade within the U.S. and the eurozone. Japan and some other countries have been experiencing this for 20 plus years. In fact, Japan even faced deflation.
Coming out of the Covid experience we believe most of the supply chain issues today are transitory in nature. However, the biggest challenge pointing to at least some level of structural inflation is the shift in the mindset of workers, which is likely to result in higher wages and unlikely to be transitory in nature. For decades, we have seen a move away from the power of labor towards the power of capital, and many workers are reluctant to go back to low wage jobs without relatively solid and forward career progression. Covid accelerated this swing.
In the U.S., there is notably stronger stimulus from the Democrats in power than under the Republican party, with a substantial infrastructure plan as well as possible additional social fillip in the works. In the EU, stimulus has been injected into economies for years now, and in China, there is a movement towards what is being called common prosperity.
Such stimulus will feed through to inflation, but we caution that this is likely to be viewed by the Federal Reserve as “good” inflation and a return to what they want to see in terms of changing social dynamics in the economy. So, in short, we think that most of the underlying inflation pressures are transitory in nature, but “transitory” is likely to be a multi-year process as we recover from supply chain issues.
What’s Next?
Today, the U.S. consumer balance sheet remains robust, with household debt still at a lower level than before the pandemic, although Q2 2021 showed an increase in credit card debt. Even corporate balance sheets, though they are elevated, show a strong ability to service that debt. We don’t believe that a potential small incremental move up in underlying borrowing rates is likely to bring the growth to a significant halt.
Tapering and the idea of higher U.S. rates (nearly two Fed interest rate hikes are now priced into 2022 on the back of supply driven inflation, rather than transitory inflation) are proving to have a profoundly negative impact on emerging market asset performance. This is most notably true with high yield EM sovereign/corporate credits where the market has been “Offer Wanted” and many participants fear a liquidity crunch.
As a global system, we’ve fought the last two slowdowns in growth with a significantly elevated level of debt and leverage. If we’re to see strong growth continue, it’s unlikely that it comes with notably higher rates, as higher rates typically act as a brake on growth. However, given the likelihood of higher wages this time around, we are likely to see elevated inflation compared to pre-pandemic levels. In fact, inflation ran notably below trend for over a decade leading into the pandemic, and thus, to central banks and the Fed in particular, it’s unlikely to be a challenge if it runs just slightly above trend for some years to come.
Despite the pressure around the globe and in the U.S. from higher inflation and the questions surrounding its transitory nature, rates remain relatively contained. There has been a flattening in the U.S. yield curve since the spring of this year, with long rates falling modestly, while front-end rates moved up.
It has often been stated that fixed income is ballast to an equity portfolio, and so it has been in a low rate, low inflation environment. Typically, when fixed income zigs, equity markets zag. But in a rising rate environment, and in a rising inflation environment, that may not be the case. As interest rates rise, fixed income is less defensive, and perhaps, equity multiples compress, and equities themselves drop. The way we’re thinking about this in our multi-asset portfolios is first and foremost reassessing the risk and return that fixed income can have. Today, that means maintaining an underweight duration posture. As rates rise and potentially slow the economy, an increase in duration can rise right along with it.
Today, we think investors are best served playing more defense from a rate perspective, focusing on consumers with strong balance sheets through asset-backed securities such as securitized auto loans and mortgages that represent that market. Although we currently retain an underweight duration stance, we do believe that as rates rise and the economy normalizes, we’ll want to step into what we believe are relatively neutral levels of duration so that we position the portfolios to have a natural balance and act as an offset to other risk global assets.
On the equity side, we don’t want to be too underweight risk. There are both significant positives to a healing economy and workers returning to offices and other worksites, but there’s also some risk as we transition to whatever the new economic paradigm is.
Equity indices in most parts of the world sit notably higher than they were going into the pandemic, so financial markets today don’t just represent a return to normalization. They represent perhaps a new paradigm: one of significantly depressed rates, ongoing government stimulus, and higher multiples across the world.
We are relatively neutral on our equity allocations and our overall risk budget, while retaining a defensive posture in fixed income. We don’t try to time the economic cycle, but we want to make sure that we’re well-equipped to step into any weakness and take advantage of opportunities when they come forward.
Important Information
The views expressed are subject to change and do not necessarily reflect the views of Thornburg Investment Management, Inc. This information should not be relied upon as a recommendation or investment advice and is not intended to predict the performance of any investment or market.
This is not a solicitation or offer for any product or service. Nor is it a complete analysis of every material fact concerning any market, industry, or investment. Data has been obtained from sources considered reliable, but Thornburg makes no representations as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg does not accept any responsibility and cannot be held liable for any person’s use of or reliance on the information and opinions contained herein.
Investments carry risks, including possible loss of principal.
Outside the United States
This is directed to INVESTMENT PROFESSIONALS AND INSTITUTIONAL INVESTORS ONLY and is not intended for use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to the laws or regulations applicable to their place of citizenship, domicile or residence.
Thornburg is regulated by the U.S. Securities and Exchange Commission under U.S. laws which may differ materially from laws in other jurisdictions. Any entity or person forwarding this to other parties takes full responsibility for ensuring compliance with applicable securities laws in connection with its distribution.
Aiming to give Latin American investor access to BlackRock alternative strategies, investment platform HMC Capital announced a distribution partnership, focused in the private equity segment.
According to a press release by the firm, the agreement with BlackRock Private Equity Partners will allow them to offer private equity solutions diversified across stages, strategies, and geographies to regional clients.
HMC Capital added that the agreement will seek to offer access to venture capital managers and growth equity direct investments.
“We are pleased to announce HMC’s partnership with BlackRock Private Equity Partners, which reflects our singular focus on developing investment solutions for our clients,” said Ricardo Morales, the regional firm’s founding partner and Executive Chairman.
Nicholas Franco, HMC’s Head of Venture & Growth, added that their objective is “to capture alpha through carefully-selected, scaled positions with managers that are typically access- and capacity-constrained.”
Representatives from the U.S. manager also highlight the agreement between both firms. “This partnership combines BlackRock’s extensive investment capabilities and sourcing network with HMC’s experience in launching innovative alternative investment strategies to serve its global investment base,” said Johnathan Seeg, Global Head of Client Solutions and Strategy for BlackRock Private Equity Partners.
Roque Calleja, Head of BlackRock Alternative Specialists for Latin America, added: “We are excited to join with HMC in launching this new partnership with a value proposition that we anticipate will resonate strongly in Latin America.”
The challenge of feeding the world’s eight billion people while also preserving biodiversity provoked lively discussion at this year’s Klosters Forum in June on the ‘Future of Food Systems and Biodiversity Regeneration’.
“There is trickery in food, especially when food is produced in ways that destroy the relationships that are a prerequisite for sustainable food in the future,” said writer-educator Nora Bateson.
“People don’t eat nutrition, they eat food. So, what is food?” Bateson asked. Her answer was that it isn’t just agriculture, but also “about culture, about relationships, about the soil, about the generations that have worked the soil.” She proposed “warm” data as a way of reconciling these various issues. Warm data, Bateson explained, was about “mixing stories, biodiversity, ecology of ideas and education to perceive the interconnectedness of things, sharing information across contexts from chemistry to politics.” This meant recognising that “how the relationship between culture and identity plays out in food is very important.” Warm data “is fun”, she explained, “because it is connected to memories, to your own life.”
Another forum participant suggested we look more seriously at how to get diverse, nutritious food to the world’s 600 million people who do not have access to secure food sources. But apart from the traditional question of undernourishment, according to her, there’s also the fast-growing issue of obesity, as well as other problems linked to nutrition, including heart disease, diabetes and forms of cancer. The solution, she said, was to prioritise access to diverse, more nutritious food and to resist the fashionable view of “food as medicine” in favour of an approach based on “food as health.”
There’s a complex challenge in measuring agricultural ‘progress’ or scientific advances while also taking account of the risk of collateral damage if we accept the US-based Center for Urban Education about Sustainable Education’s definition of a food system as “the interrelationship of agricultural systems, their economic, social, cultural, and technological support systems, and systems of food distribution and consumption.”
We still need a common language to define environmental biodiversity and then measure it.
The director of a major conservation organisation at the forum warned that science had its limitations and was often open to the charge of reductionism. “We can all use the same science and come to different solutions. Science can be the truth at a certain point of time, but it is the whole truth throughout time,” he said. While acknowledging he was “not sure we can feed the whole world through an ecological agricultural approach,” he argued that science had to change. “It is quite uncomfortable for scientists to emerge from their silos,” he said, “but the most interesting transformational ideas have come from those scientists that have done different things.”
“Nature has historically been viewed as priceless, so we have never priced it. Now we have to price it, we don’t know how,” one forum participant said. “What has been the effect of attempts to intensify agriculture on the natural capital of a country like Zimbabwe, for example? We just don’t know because farming sustainability is not adequately measured,” he said. Even more fundamentally, we still “need a common language to define environmental biodiversity and then measure it,” he said. For example, what is the real meaning of “sustainable intensification,” which is described by one international body as “an approach using innovations to increase productivity on existing agricultural land with positive environmental and social impacts.” He argued the term was “inadequately defined.”
Another participant thought that a bridge between science, with its fixation on tangible results, and sustainability could be found in the writings of Rudolf Steiner, the so-called ‘Scientist of the Invisible’, who rejected the division between scientific enquiry and dimensions of reality at the periphery of science such as emotional chemistry. “Science is good at coarse matter and energy, less good at fine measures,” he said.
We have failed to help the young make sense of the world in which we find themselves.
Integrating the human element into discussion about biodiversity and food production could contribute to those “fine measures” one United Nations representative suggested. We need to frame the question of food sustainability in emerging markets and elsewhere in terms of “how to help farmers make a bit of money and support broader communities at the same time,” he said. “If you frame the question in terms of empathy and ways of doing business, you can get a better outcome,” he argued. He pointed to India, where pressure to produce more food per square metre of land led to a spike in suicides before a move away from pure productivism was found to produce better food more profitably.
The UN official thought youth and its aspirations would be key in the struggle for a sustainable food system. “Up to now,” he said “we have failed to help the young make sense of the world in which they find themselves. This has got to change. Interconnections between generations and disciplines is the key.”
Lamenting the “vested interests” which he felt continued to dominate various international food summits and the lack of consensus on food sustainability, another forum participant also placed his faith in youth, among whom he detected an underlying, if hard-to-define, “shift of consciousness.” He quoted Bob Dylan: “And something is happening here, but you don’t know what it is.”
This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation.
The information and data presented in this document are not to be considered as an offer or sollicitation to buy, sell or subscribe to any securities or financial instruments or services.
Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.
This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management (Europe) SA, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.
For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.
Pictet Asset Management (USA) Corp (“Pictet AM USA Corp”) is responsible for effecting solicitation in the United States to promote the portfolio management services of Pictet Asset Management Limited (“Pictet AM Ltd”), Pictet Asset Management (Singapore) Pte Ltd (“PAM S”) and Pictet Asset Management SA (“Pictet AM SA”). Pictet AM (USA) Corp is registered as an SEC Investment Adviser and its activities are conducted in full compliance with SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref.17CFR275.206(4)-3.
Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in Canada to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).
In Canada Pictet AM Inc is registered as Portfolio Manager authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA.
Pixabay CC0 Public Domain. HSBC crea la primera serie de índices bursátiles del mundo basados en la biodiversidad
HSBC has announced the launch of the Euronext ESG Biodiversity Screened Index series, jointly developed with Euronext and Iceberg Data Lab. The firm has explained in a press release that these are “the first investable biodiversity screened benchmark indices based on a broad range of equities”.
Constituent companies of the Euronext ESG Biodiversity Screened Indices are selected from either the Euronext Eurozone 300 Index or Euronext World Index, using the following criteria: they are committed to the UN Global Compact Principles and are not involved in controversial weapons, tobacco production, or thermal coal extraction. Besides, their ESG Risk scores are determined by Sustainalytics, and their Corporate Biodiversity Footprint (CBF) score is calculated by Iceberg Data Lab, which assesses their impact on biodiversity from change of land use, greenhouse gas emissions, air and water pollution, taking into consideration their whole value chain.
“The Euronext ESG Biodiversity Screened Indices provide a benchmark for investors as to which stocks to include in their portfolios and which to exclude, based on how a company’s overall activities impact nature. They will also be able to invest in a range of products that track these indices. In this way, investors will have greater oversight of their portfolios’ ESG and biodiversity credentials”, said Patrick Kondarjian, Global Co-Head of ESG Sales, Markets & Securities Services at HSBC.
Meanwhile, Marine de Bazelaire, Group Advisor on Natural Capital, highlighted that they are helping to develop business and investment models for enterprises that are finding ways to restore, manage and protect nature. “Biodiversity and ecosystems provide value to society in a myriad of ways such as food security, medicine, clean water, carbon removal and weather regulation. The decline in natural capital has been rapid and is ongoing”, she added.
HSBC believes that COP26 has given added momentum to the importance of protecting biodiversity and achieving the goals set by the Paris Agreement: “More than 100 countries, which cover 85% of Earth’s existing forests, have now pledged to end and reverse deforestation by 2030”.
Regarding its business, the company points out that transition to net zero is one of its four strategic pillars. “We are putting nature and biodiversity at the heart of our net zero strategy because we believe that protecting and restoring nature is essential for a thriving global economy and a successful net zero transition,” commented Marine. In this sense, HSBC has committed to providing between US$750 billion and US$1 trillion in finance and investment by 2030 to support its customers across sectors to decarbonise and accelerate new climate solutions.
Pixabay CC0 Public Domain. Robeco prevé unos nuevos "tórridos años 20" que favorecerá el rendimiento de los activos de riesgo
Robeco has published its eleventh annual Expected Returns report (2022-2026), a look at what investors can expect over the next five years for all major asset classes, along with post-pandemic economic predictions. The asset manager shows a “tempered optimism” and expects an improvement of US labor productivity, a supply-side boost for the global economy and important technological growth for the next decade.
Specifically, the report anticipates an investment-led pick-up in productivity that will beat the subdued GDP-per-capita growth during the 2009-19 great expansion. “The fact remains that due to an atypical stop-start dynamic in 2020-21, macro-economic uncertainty hit its highest level in recent history, exceeding the levels it reached in the disinflation period in the 1980s and the 2008 global financial crisis. The question of whether inflation will be transitory or longer-term means that investors should keep an open mind as to how the economic landscape could unfurl over the coming five years”, says Robeco. In this sense, it believes that productivity boosts “are not a luxury”, but a necessity to deal with climate risks, ageing societies, and economic inequalities.
In its base case scenario -called the Roasting Twenties inspired by the Roaring Twenties of the previous century-, the firm expects the world to transition towards a more durable economic expansion after a very early-cycle peak in growth momentum in 2021. In its view, there is still “no clear exit” from the Covid-19 pandemic, although governments, consumers and producers have adopted an effective way of dealing with what has become “a known enemy”.
In this context, Robeco highlights that negative real interest rates drive above-trend consumption and investment growth in developed economies, while the link between corporate and public capex and the productivity growth that ensues remains intact, with positive real returns on capex benefitting real wages and consumption growth. “Workers’ bargaining power increases due to more early retirements by members of the baby boomer generation after the pandemic – not only in developed economies, but also in China. Central banks want their economies to grow, but not too much, and in this scenario they have luck on their side”, says the report.
Meanwhile, regarding the debate about whether inflation is transitory or on a secular uptrend, it remains largely unresolved, reflecting a stalemate between rising cyclical and falling non-cyclical inflation forces. This creates leeway for the Fed and other developed market central banks to gradually tighten monetary conditions, with a first Fed rate hike of 25 bps in 2023 followed by another 175 bps of tightening over the following three years.
Climate risk
According to Robeco, another reason to temper optimism is the growing awareness of the severity of the climate crisis. Global temperatures will rise to at least 1.5˚C above pre-industrial level by 2040, leading to more extreme weather events and increased physical climate risks in developed economies. The firm expects investors to incorporate climate risk factors into their asset allocation decisions more and more in the next five years. To help them do so, this years’ Expected Returns framework introduces an in-depth analysis of how climate factors could affect asset class valuations in addition to macroeconomic factors.
This analysis is based in a couple of considerations. The first one is that the composition of asset classes may be impacted more by climate change than expected returns, as it anticipates more issuance of shares and bonds from green companies going forward. Also, it considers that emerging equity markets and high yield bond markets are much more carbon intense than developed equity markets and investment grade bond markets, which will put pressure on their prices over the next five years.
Lastly, it highlights that active investors can add value by integrating their view of climate change and how policies, regulations, and consumer behavior will affect a company’s profits; and that massive divestment from fossil fuel companies may lead to a carbon risk premium.
“A year and a half after the initial Covid-19 outbreak, the world is at a crossroads. Amid the paradox of recovering economies and technological growth on the one hand and macroeconomic uncertainty and climate risk on the other, we believe the world will transition towards a more durable economic expansion, the ‘Roasting Twenties’. Negative real interest rates drive above-trend consumption and investment growth in developed economies, while the link between corporate and public capex and the productivity growth that ensues remains intact, with positive real returns on capex benefiting real wages and consumption growth”, comments Peter van der Welle, Strategist Multi Asset at Robeco.
Meanwhile, Laurens Swinkels, researcher at the firm, says that although 86% of investors from the survey believe climate risk will be a key theme in their portfolio’s by 2023, regional valuations do not yet reflect the different climate risks to which the various regions are exposed. “Therefore, this year’s Expected Returns publication takes into account, for the first time since its launch in 2011, the impact of climate change risk on returns”, he adds.
Frigid bond markets, torrid equity markets
Regarding expected returns for the 2022-2026 period, the report shows that current asset valuations, especially those of risky assets, appear out of sync with the business cycle, and are more akin to where they should be late in the cycle. “The dominant role central banks have taken on in the fixed income markets has forced yields well below the levels warranted by the macroeconomic and inflation outlook. Torrid valuations are suggestive of below-average returns in the medium term across asset classes, and especially for US equities. This is reason enough to keep an eye on downside risk at a time that many investors have a fear-of-missing-out, buy-the-dip mentality”, the document wars.
Ex-ante valuations have historically typically only explained around 25% of subsequent variations in returns. The remaining 75% has been generated by other, mainly macro-related, factors: “From a macro point of view, the lack of synchronicity between the business cycle and valuations should not be a problem given our expectations for above-trend medium-term growth, which bode well for margins and top-line growth. In our base case, we expect low-double-digit growth in earnings per share for the global equity markets to make up for sizable multiple compression”. According to Robeco, previous regimes in which inflation has mildly overshot its target – something else it expects in its base case – have historically seen equities outperform bonds by 4.4 percentage points per year. A world in which inflation is below 3% should also see the bond-equity correlation remain negative.
The report also considers that even though they expect real rates to become less negative towards 2026, negative real interest rates are here to stay for longer, which implies that some parts of the multi-asset universe could heat up further: “With 24% of the world’s outstanding debt providing a negative yield in nominal terms, investing in the bond markets is a frigid proposition from a return perspective as it is hard to find ways of generating a positive return. Sources of carry within fixed income are becoming scarcer, and are only to be found in the riskier segments of the market, such as high yield credit and emerging market debt”.
Lastly, Robeco believes that with excess liquidity still sloshing around and implied equity risk premiums still attractive, the TINA (There is No Alternative) phenomenon persists as alternatives for equities are hard to find: “Overall, we expect risk-taking to be rewarded in the next five years, but judge the risk-return distribution to have a diminishing upside skew. The possibility of outsized gains for the equity markets is still there, but the window of opportunity is shrinking”.
Therese Niklasson, nueva directora global de Inversión Sostenible de Newton IM nombra, parte de BNY Mellon IM. . Newton IM nombra a Therese Niklasson para el cargo de directora global de inversión sostenible
Newton Investment Management Limited, part of BNY Mellon Investment Management, has appointed Therese Niklasson as Global Head of Sustainable Investment. Reporting directly to Euan Munro, CEO, she will join the executive committee and be responsible for driving the firm’s strategic plan for responsible and sustainable investment globally.
The asset manager has explained in a press release that as part of this role, Niklasson will oversee the responsible research agenda and lead the integration, measurement and evidencing of ESG factors within the investment processes across strategies and asset classes.
To this end, she will manage the continued development of Newton’s responsible investment team of 19 specialists focusing on research, stewardship, data and product advocacy. She will also provide oversight of governance and processes relating to responsible and sustainable investing, as well as advancing the further development and innovation of the firm’s product capabilities to deliver responsible and sustainable investment outcomes to current and future clients.
With a career in responsible and sustainable investment spanning 17 years, Niklasson joins from Ninety One Plc (previously Investec Asset Management), where she was most recently Global Head of Sustainability, leading the development and execution of the firm’s holistic sustainability strategy. Prior to this, she was Global Head of ESG and Head of ESG research at the firm, and before that she held the role of Head of Governance and Responsible Investment at Threadneedle Investments.
“As a purposeful owner, Newton seeks to be long-term in its approach, selective in its choices, deep in its research and active in its engagement, always for the benefit of its clients. Our global head of sustainable investment is a pivotal role, leading the next stage in our 40-year responsible investment journey to help shape and promote awareness of Newton’s sustainable investment strategies and approach to responsible investment”, said Munro.
The CEO also believes that her extensive experience and proven track record in building global ESG capabilities and influencing and transforming investment teams’ approach to sustainability issues “will be instrumental in driving Newton’s vision and continued development of our sustainable investment franchise.”
Niklasson will officially join on 7 February 2022 and will be based in London, United Kingdom.
