Foto cedidaMarie Fromaget, nueva analista del equipo de Stewardship de Allianz GI.
. Allianz GI refuerza su equipo de Stewardship con la incorporación de Marie Fromaget
Allianz Global Investors is strengthening its Stewardship team with Marie Fromaget, who will join the firm next January as analyst. She will be based in Paris and report to Antje Stobbe, Head of Stewardship.
In a press release, the asset manager has announced that Fromaget will be responsible for engagements, especially on inclusive capitalism, and voting on its holdings in EMEA.
Prior to joining Allianz GI, she was ESG analyst at AXA IM since 2018. In this role, she was in charge of research and engagement on the theme of human capital and diversity. She was also involved in strengthening the firm’s voting policy on gender diversity, and contributed to the integration of social issues within different asset classes.
“We are delighted to strengthen our team with a proven investment professional like Marie Fromaget. She brings skills in the analysis of social issues, a wealth of ESG convictions, as well as the thematic background required to both feed growing client demand and serve our ambition in active stewardship”, commented Antje Stobbe, Head of Stewardship.
Mark Wade, Global Head of Research and Stewardship, added that inclusive capitalism is one of their “three targeted sustainability thematic pillars” with Climate Change and Planetary Boundaries, as they believe they are interlinked and co-dependent. “Marie’s knowledge and experience in social issues will be key to developing our thematic engagement and voting policy in this thematic”, he concluded.
Foto cedidaCorporate Earnings Season Keeps Pointing Towards Higher Growth. Brújula
US equities propelled the market higher, with major indices achieving all-time highs. Despite the backdrop of supply chain issues, input cost pressures and tight labor markets, corporate earnings season highlighted higher demand and improved margins.
The FDA is on track to approve Pfizer’s COVID-19 vaccine for use in children ages 5-11 and booster vaccines continue to be distributed to the rest of the population. While the Delta wave of the pandemic is past its peak, the approaching holidays and winter months will test whether the U.S. can sustain that momentum.
Markets have shown that investors are expecting the Fed to raise interest rates next summer, following recent inflation reports and signals from other major central banks that they are moving towards tightening policy. Inflation has been linked to the supply chain crunch that is leading to shortages and shipping problems, which has already affected holiday shopping. Fed Chair Jerome Powell noted that while we see those things resolving, it is very difficult to say how big those effects will be in the meantime or how long they will last.
M&A continued pace in October with many notable deals making progress including Kansas City Southern and Canadian Pacific had their voting trust reaffirmed by the Surface Transportation Board leaving just Mexican regulatory approval outstanding for their $31 billion deal; and Kadmon received U.S. antitrust approval to be acquired by Sanofi for $9.50 cash, or about $1.6 billion, clearing the way for the deal to close in November.
Equity markets surged in October bringing convertibles along with them. In sharp contrast to the many concerns facing equities in September, the market shifted its focus towards earnings, which have been generally good so far. Convertible issuance stalled but should pick up again as we get closer to year-end.
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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.
Pixabay CC0 Public Domain. Protein Capital desembarca en Estados Unidos y abre su primera oficina en Miami
Protein Capital will establish its first office in the United States. As announced a month ago, this opening responds to the company’s expansion plans through which it expects to reach its target of 30 million euros (33.75 million dollars) by 2021.
The company has revealed in a press release that its interest in entering the North American country lies in the fact that it is the main market for this type of funds. Of the 397 in the world, 66.44% are in the United States, where Miami is becoming the most important crypto hub worldwide. In addition, Protein Capital believes the city is an ideal focus for “attracting talent and creating a high-level professional team”.
Due to the new opening, Alberto Gordo, CEO, traveled to the country to meet with the team of the new office and participate in the presentation event of Protein Capital Fund.
Protein Capital is the first hedge fund with 100% Spanish capital dedicated to digital assets. Founded in February 2021, it currently manages a €15 million fund through its offices in Madrid, Luxembourg and Miami.
Pixabay CC0 Public Domain. El 90% de las compañías a nivel mundial han aumentado o mantenido sus dividendos en los últimos 12 meses
Global dividends are rapidly recovering from the pandemic, according to the latest Janus Henderson Global Dividend Index. Thanks to rising profits and strong balance sheets, in the third quarter of 2021 payouts rose at a record pace of 22% year-on-year on an underlying basis to deliver an all-time high for the quarter of 403.5 billion dollars. The total was up 19.5% on a headline basis.
Janus Henderson revealed that its index of dividends is now just 2% below its pre-pandemic peak in the first quarter of 2020. Globally, 90% of companies either raised their dividends or held them steady, which, in the firm’s view, is one of the strongest readings since the Index began and reflects “the rapid normalisation of dividend patterns as the global recovery continues”.
The exceptional strength of Q3 payout figures, along with improved prospects for Q4, have led the asset manager to upgrade its forecast for the full year. It now expects growth of 15.6% on a headline basis, taking 2021 payouts to a new record of 1.46 trillion dollars. Janus Henderson anticipates that global dividends will have recovered in just nine months from their mid-pandemic low point in the year to the end of March 2021. Underlying growth is expected to be 13.6% for 2021.
The most relevant sectors and markets
The analysis shows that soaring commodity prices resulted in record profits for many mining companies; more than two thirds of the year-on-year growth in global payouts in Q3 came from this sector. Three quarters of mining companies in Janus Henderson’s index at least doubled their dividends compared to Q3 2020. “The sector delivered an extraordinary 54.1 billion dollars of dividends in Q3, more in a single quarter than the previous full-year record set in 2019. BHP will be the world’s biggest dividend payer in 2021″, said the firm.
The banking sector also made a significant contribution, mainly because many regulators have lifted restrictions on payouts and because loan impairments have been lower than expected.
The index also highlights that geographies that had seen the steepest cuts in 2020 and those most exposed to the mining boom or to the restoration of banking dividends saw a rapid recovery. Australia and the UK were the biggest beneficiaries of both of these trends. Europe, parts of Asia and emerging markets also saw large increases on an underlying basis.
Those parts of the world, like Japan and the US, where companies did not cut much in 2020 naturally showed less growth than the global average. Nevertheless, US company dividends rose by a tenth to a new Q3 record. A strong Q3 means Chinese companies are also on track to deliver record payouts in 2021.
“Three important things changed during the third quarter. First and most importantly, mining companies all around the world have benefited from sky-high commodity prices. Many of them delivered record results and dividends followed suit. Secondly, banks took quick advantage of the relaxation of limits on dividends and restored payouts to a higher level than seemed possible even a few months ago. And finally, the first few companies in the US to start the annual dividend reset showed that businesses there are keen to return cash to shareholders”, commented Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team.
In her view, a big driver for 2022 will be the ongoing restoration of banking dividends, but it seems unlikely that mining companies can sustain this level of payouts given their reliance on volatile underlying commodity prices: some of these have already fallen. “Miners are therefore likely to provide a headwind for global dividend growth next year”, she added.
Implications for portfolio allocations
Ben Lofthouse, Head of Global Equity Income at Janus Henderson, pointed out that dividends are recovering more quickly than expected, driven by improving corporate balance sheets, and increased optimism about the future. “Two of the most impacted sectors last year were the commodity and financial sectors, and the report highlights that these sectors have been the most significant driver of dividend growth during the period covered. We have added to these sectors over the last year, and it is great to see shareholders being rewarded by increased distributions”, he said.
Composed of representatives from Brazil, Mexico, Chile, Colombia and Peru, the CAIA Association prepares the launch of its 32nd Global Chapter: CAIA LatAm, which will work to provide opportunities for local CAIA members to network, share knowledge and create a environment that encourages the growth of the local alternative investment industry.
The chapter will also host educational events with opinion leaders, who will discuss a variety of trends and alternative investment strategies.
As Daniel Mueller, CAIA, director of the LatAm Chapter, commented to the Funds Society, “we decided to launch this chapter because of the great interest of CAIA Latin American Charterholders in having a local community that serves the needs of the local industry and allows continuous growth. The needs are multiple; to improve the education of alternative assets, to bring the best global practices to the local Latin American industry, and to have a community that encourages networking and career development.”
The official launch will take place on November 30, 2021 with a hybrid event via zoom, from Santiago de Chile.
Join CAIA Association Executive Director Bill Kelly, CAIA Executive Vice President John Bowman, and the LatAm Chapter Committee for this special launch event as they outline their mission and plans for 2022!
Kandor Global, the Miami based RIA serving ultra-high-net-worth clients worldwide, has announced the addition of four new recruits that will strengthen the Investments and Reporting teams to enhance services to international clients. In a press release, the firm has also revealed that it has amassed 500 million dollars in assets under management after just a year of its launch.
One of the new recruits is Santiago Torres, who joins as an Associate in the Private Investments division. He previously accumulated 5 years of experience with Global Seguros de Vida, one of the largest institutional investors in the private markets sector of Colombia. “Kandor Global is confident that his experience will ensure best practices, spanning from due diligence to implementation, from an institutional perspective”, said the company. To support him in this mission joins Santiago López Zapata, who previously worked at Banco de Bogotá.
“Currently, the team has managed investments in 80 funds and we expect this number to increase as our clients have shown a strong interest in private investments due to performance and ability of a true long term investment. Our sharp and experienced team can effectively offer our clients a broad portfolio of managers while managing the processes efficiently for all parties involved”, stated Guillermo Vernet, Founder & CEO of Kandor Global.
Two additional members now reinforce the reporting team that manages a holistic view of the clients’ investments by using Addepar: Santiago López Cardona and Gabriela Díaz. According to the firm, their technological savviness will contribute to maximizing the use of Kandor Global’s current tools and incorporating others necessary in providing custom reports to clients.
“Since our launch, our focus has been in creating a strong, agile and enthusiastic team. We’re an effective team of 15 members spanning different locations in the U.S., Colombia, and Spain. In the next steps of expanding the business, we are avidly recruiting new advisors and focusing on intensive due diligence for domestic and international acquisitions,” added Vernet.
Kandor Global serves ultra-high-net-worth clients worldwide through a wide array of services: multi-family office, wealth management and private markets consulting. The firm is headquartered in Miami with an extended reach across Latin America and Europe. It is supported by Summit Growth Partners, LLC (“SGP), a partnership between Summit Financial Holdings and Merchant Investment Management.
Foto cedidaMatthew Beesley, nuevo CIO de Jupiter AM. . Jupiter AM incorpora a Matthew Beesley como nuevo CIO
Jupiter AM has announced the appointment of Matthew Beesley as Chief Investment Officer (CIO), succeeding Stephen Pearson who is retiring following a 35-year career in the industry including nearly two decades at Jupiter. He will join the company in January 2022.
The asset manager has revealed in a press release that Beesley will initially work closely with Pearson to ensure a seamless handover. Besides, he will report to CEO Andrew Formica and join the Executive Committee. In his new role, he will have overall responsibility for the management of all of Jupiter’s investment professionals and strategies across equities, fixed income and multi-asset.
Supported by Jupiter’s eight-strong CIO office, “he will also have oversight of the associated functions that form the backbone of the company’s investment process”, including its dedicated stewardship, data science, dealing and performance analysis teams.
“The role of CIO is crucially important to the delivery of our strategic objectives through the guardianship of our dynamic, actively-driven investment culture at Jupiter. The fact that we have attracted a high calibre individual such as Matt is a testament to our talented fund management team and the enduring appeal of the Jupiter brand to an increasingly diverse global client base”, commentedFormica.
In his view, Beesley shares their commitment to actively-driven returns and has “a well-deserved reputation” for being an “effective and inspiring” leader: “We are confident that, under Matt’s leadership, we will continue to deliver the strong investment results for our clients that is a hallmark of Jupiter”.
With nearly 25 years of experience in the investment industry, Beesley joins Jupiter from Artemis, where he has been CIO since April 2020. Prior to this, he was Head of Investments at GAM Investments from 2017 to 2020, where he was responsible for the management and oversight of its investment strategies managed by teams based in Europe, Asia and the US. Beesley has also been Head of Global Equities at Henderson, responsible for a team managing significant assets in global, international (World ex US) and Global Socially Responsible investment strategies.
Production losses and rising commodity, energy and logistics costs are dampening economic growth and could lead to increased bankruptcies among companies with low earnings. Emerging markets such as India and Cambodia are also increasingly suffering from energy shortages and dramatic price increases. More than 50 per cent of energy production is based on coal, whose price has skyrocketed. Developing new deposits takes a long time and is politically undesirable. Inventories are empty and in addition to hitting the economy of the region, the power shortages that are expected would also worsen global supply-chain problems.
To what extent these losses can be compensated by higher prices depends on the structure of the economy. Net exporters of energy and commodities (e.g. Russia) currently have the advantage over net importers (e.g. Germany). Energy- and commodityhungry China will also likely see a decline in growth. September saw the first decrease in manufacturing activity since the beginning of the pandemic, due to production losses caused by the shortage of electricity in many parts of the country.
There are also signs of a crisis in the Chinese real estate market, where the difficulties of China’s largest real-estate developer Evergrande are causing unrest. The company has more than EUR 250 billion in liabilities, with bonds and bank loans accounting for around 30 per cent of this amount. The largest share is for liabilities to customers and suppliers, i.e. construction companies. It is common practice for property buyers to make advance payments for properties that are still under construction. A collapse of the company would therefore not only affect shareholders, bondholders and lending banks, but also property buyers and suppliers. The situation could become especially precarious if real-estate prices were to fall across a broad front, thereby causing difficulties for other real-estate companies. Given the great importance of the real-estate sector, which economists Kenneth Rogoff and Yuanchen Yang calculate contributes 29 per cent of China’s economic output, and real-estate assets that represent around two thirds of the total assets of Chinese households, a collapse in prices would have serious consequences for the Chinese economy.
The crisis, however, also reveals the structural weakness of the Chinese economy. Credit-financed investments in unproductive residential towers caused private household debt to grow strongly and inflated bank balance sheets. Since the financial crisis in 2008, total debt (private households, companies, government) has grown significantly faster than the growth rate of the economy (see Figure 1).
More and more yuan of additional debt must be incurred for each yuan of additional growth. This model has now reached its limits. The Chinese government is aware of this and Xi Jinping’s call to “strive for real and not excessive growth” may be taken as an indication that other areas of the economy, such as consumption and technology investment, will take priority in the future.
The Evergrande case will likely also make an example of the widespread problem of moral hazard, since a rescue of all interest groups is not expected. Ultimately, the Chinese state banks will work with the central bank and government to manage the crisis in a way that avoids social unrest in order to maintain the legitimacy of the leadership. Shareholders and bondholders will probably go away emptyhanded. It is exaggerated, however, to compare this to the Lehman Brothers bankruptcy and subsequent financial crisis, since there are practically no loans with parties abroad. The expected slowdown in the Chinese real-estate market will nevertheless also have a negative effect on global economic growth.
Given the strong growth in the USA, however, it would be premature to talk of global “stagflation”. This term, which was coined in the seventies, describes the simultaneous combination of falling or stagnant economic output and rising prices. At that time, an oil embargo by Arab exporters caused the price of oil to increase from three to 12 dollars within a year. Inflation rose to 12 per cent in the USA in 1974, while real growth was minus 0.5 per cent and remained below zero in 1975 (see Figure 2).
Although the current situation is not comparable to the seventies, a new inflation regime could become established if the inflation bump continues longer and leads to higher inflation expectations.
So-called second-round effects, in particular higher wage demands in future collective bargaining, will play a role in this. Even if the inflation bump has already receded again by then, the unions will not simply forget the increase in inflation this year but will instead demand extra compensation. This would increase the inflation base.
There are also structural factors that are likely to lead to a higher level of inflation in the long term: deglobalisation, decarbonisation and demographics.
• Deglobalisation: Supply-chain problems are causing companies to distribute their production facilities more broadly and, in some cases, renationalise them. However, choosing resilience instead of efficiency also increases costs.
• Decarbonisation: Climate protection is not without cost. This is politically intended. In addition to significantly increasing CO2 prices, which will have a direct effect on consumer wallets (electricity, petrol, natural gas), the energy transition will also increase production costs, which will indirectly lead to higher consumer prices.
• Demographics: The Baby Boomers will retire in coming years, thereby further worsening the already noticeable shortage of skilled workers. This will drive up labour costs. A growing number of older people who are no longer working will increase the costs of health and pension insurance, therefore also increasing labour costs.
A column by Bert Flossbach, cofounder at Flossbach von Storch
In October, inflation in the United States reached 6.2% year-on-year, a figure not seen in 30 years that coincides with supply problems, strong consumer demand and, consequently, an increase in prices. At this point, analysts move away from the transient/structural dichotomy and point to a scenario that will see rising and rigid prices appear in some sectors, while not in others.
The new data
Price growth was led by categories such as housing, used and new cars and, of course, energy, since these components have witnessed strong simultaneous restrictions on demand and supply in some areas. In a first analysis this Wednesday, BlackRock considers it likely that “inflation will remain on the high side for a while and the risks of rigid inflation persist.”
Thus, Rick Rieder, head of global fixed income investments at BlackRock, points out that “over time pandemic distortions and extreme base effects are likely to decrease, causing aggregate prices to recede towards a 2% growth rate and allowing quantities to continue expanding once supply pressures are eased, but this will not happen quickly. However, this is not a normal set of historical patterns that can be easily modeled; many inflation factors are likely to remain rigid for a while, even when the aggregate inflation metric of the PCE can normalize in the coming year.”
“It is fascinating to note that, while the supply chain interruptions we are experiencing are clearly a global phenomenon, the U.S. stands out for the dramatic way in which longer delivery times and higher prices are affecting the economy. This is likely to be due in part to the fact that the United States committed itself to an extraordinary stimulus during (and after) the acute phase of the crisis, which boosted savings, household wealth and, ultimately, an extraordinary demand for goods,” Rieder adds.
The manager considers that some cost pressures may begin to decrease in the first and second quarters of 2022. For example, the nature of the pandemic crisis, with initial blockades, social distancing and mobility restrictions, temporarily reversed a trend of more than seven decades towards greater participation of consumption in services, with a marked rebound in the share of goods in consumption.
The data does not justify a stagflation situation
“However, although many easy comparisons have been made with other historical periods of high inflation (such as the 1970s and early 1980s), and the term “stagflation” has spread quite lately, we do not believe that the data justify such concerns,” Rieder considers.
“To be more specific, in terms of rising energy costs, the lack of energy investment in recent years reflects overinvestment in the sector during the period 2012 to 2014. In fact, capital expenditure in the energy sector as part of the S&P 500 has decreased from a peak of more than 30% to recent lows of only 5%. As such, energy prices around current levels may persist or even worsen during a cold winter, but there is no structural shortage of oil, but what we are witnessing is a seasonal or perhaps cyclical phenomenon, “they add from the asset management firm.
Rieder believes that the risks derived from inflation have increasingly become a priority for Federal Reserve policymakers, since excessive accommodation for too long, or essentially making the economy warm up, could well have unintended consequences on the market that further erode confidence and eventually harm the recovery: “We were pleased to see the Fed’s recent decision to start reducing asset purchases, which will be an important evolution for policy, but our eyes (and those of those responsible of policy formulation) will focus on inflation data in the coming months.”
Julius Baer: there is no need to fear slower growth and high inflation
Shortly before the publication of October inflation data in the United States, Julius Baer analyzed the situation in two axes:
Economic growth is slowing down due to supply constraints, while demand remains solid.
Inflation remains largely transitory, since autonomous inflation dynamics are the exception, not the rule.
“The slowdown in economic growth that has fallen from the highest growth rates of all time in the first half of the year and, together with high inflation rates, gives the remarkable impression of stagflation. At the same time, demand remains robust, which contradicts concerns of stagnation. Strong demand in many areas and insufficient supply are in fact the main cause of high inflation. But the response on the supply side is increasingly visible,” they announced from the entity.
The U.S. labor market and inflation
The U.S. labor market added 531,000 new jobs in October and the September data were revised upwards to 312,000 new jobs. Unemployment fell and hourly pay continued to increase, although at a slower pace than in the previous month. As a result, the U.S. labor market remains quite tight, “which fuels fears that high inflation will not only be less transitory, but vicious circles between wages and prices are emerging,” Julius Baer points out.
“While a spiral of prices and wages is a clear possibility, it is unlikely to happen. Formal links in wage contracts between inflation and wage increases remain quite rare and current wage increases are, in most cases, in line with productivity growth, which reduces the pressure to increase prices due to higher wages. The risk of other types of vicious inflationary circles also remains remote, at least in the U.S. and the Eurozone,” explain the bank analysts.
“The depreciation of exchange rates due to high inflation, which leads to higher import prices, is not a problem. In addition, credit dynamics are quite mediocre, despite historically low interest rates and flexible credit conditions, which prevents high inflation from further boosting demand. Therefore, high inflation remains largely a transitory phenomenon, with some more permanent driving factors such as higher rental inflation in the future, while autonomous inflation dynamics are largely absent,” they conclude from Julius Baer.
Since its creation in 2014, Brazilian-born firm, Leste Group, has been consolidating its presence in the alternative asset market, with offices in Miami, London, Sao Paulo and soon New York.
In an interview with Funds Society, Stephan de Sabrit, the firm’s managing partner and co-founder, shared that something that makes them special is their revolutionary partnership model, whereby Leste, as a holding company, partners with world-class investment managers, which are completely dedicated to their line of business.
Leste supports them with compliance issues, and all they need to launch their business, “leaving the front office to the partners, while Leste takes care of everything that goes on behind the scenes,” says Sabrit, adding: “We bring capital and structure, but we also support them as investors and participate in their investment committees.”
An example of this is its partnership with Cassio Calil, through which they recently launched a new mobility strategy that will invest in solutions related to mobile device financing, subscriptions and early updates.
Its clients are mainly UHNWI in Latin America, but they also offer solutions to US residents. “In the case of Brazilians, with rates of 14.5% it was difficult to imagine them taking risk in alternatives, but when rates dropped to 2% there was a change in mentality… [clients] began to look at alternatives and they also realized that they invest abroad,” recalls the manager.
The firm offers investors a wide range of strategies in real estate, credit, risk, liquid markets and other alternative asset classes. Regarding the situation generated by the COVID-19 pandemic, the manager mentions that “not everything is always rosy”, and that the parts related to hotels of both his real estate portfolio in the US and the one in Brazil were affected, but that “little by little they are recovering, and fortunately, we with the partners in this business we were able to cope”. For de Sabrit, being very transparent and explaining the situation to clients allowed them to maintain trust.
His team, which is close to 100 people, coming from different cultures and geographies, seeks to connect and leverage their local knowledge of the markets in which they invest “so that nothing is lost in translation.” Another advantage that he highlights is the ability of his team to originate operations and business, “which allows us to be one step ahead.”
The manager hopes to open an office in New York in the short term, which will be driven by a Venture Debt strategy in the US that has already had its first closure. By 2022 they are preparing a Permanent Capital Strategy for Real Estate in the United States, which will be available to the firm’s foreign investors, “allowing them to take advantage of the largest real estate market in the world, with professional management, and without sacrificing liquidity,” he mentions.
“We have significant ambitions and we want to grow three to four times to reach 8 billion in AUM in 2025,” Sabrit concludes.
