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PIMCO Names Giovanni Onate Senior Vice President and Kimberley Stafford Global Head of the Product Strategy Group

PIMCO_Stafford_Kim_770x340 — Foto cedidaKimberley Stafford, nueva directora global del Grupo de Estrategia de Producto de PIMCO.. PIMCO nombra a Kimberley Stafford directora global del Grupo de Estrategia de Producto y a Alec Kersman director de Asia-Pacífico

In the last few days, PIMCO has announced numerous changes in its executive positions. As it confirmed this week to Funds Society, Giovanni Onate will be joining them in Miami in the position of Senior Vice President. Also, in a press release, the asset manager revealed that Kimberley Stafford, currently Head of Asia-Pacific, will become Global Head of its Product Strategy Group.

Onate will be leading business development efforts in Mexico as the firm continues to expand its presence in Latin America and the Caribbean. He will report directly to Barbara Clancy, Executive Vice President and Head of Latin America and the Caribbean for PIMCO. Onate had been leading BlackRock’s Mexico institutional client business for more than a decade and will now be replaced by Horacio Gil, who joined the firm in 2019.

Stafford will return to PIMCO’s Newport Beach office in the middle of this year to take up the new role, overseeing traditional strategies and alternatives, which include PIMCO’s private strategies and hedge funds. Consequently, Alec Kersman, currently Head of Strategic Accounts in U.S. Global Wealth Management, will become the new Head of Asia-Pacific. Both will report to Emmanuel Roman, Managing Director and PIMCO’s Chief Executive Officer.

Stafford has been a member of PIMCO’s Executive Committee for five years and will also serve as a Trustee on the Board of PIMCO Funds, alongside Peter Strelow, Co-Chief Operating Officer and Chairman of PIMCO Funds. Stafford has led the Asia-Pacific region since 2017 and, during her 21 years at the asset manager, she has held various positions including Head of the Consultant Relations Group, oversight of U.S. institutional sales and alternatives marketing teams, Head of Human Resources and Talent Management and Head of Global Sustainability Initiatives and Account Manager in the Consultant Relations Group.

“Kim has served in almost every facet of our business during her two decades working for PIMCO. She is a strategic thinker and a natural leader who motivates, mentors and develops employees. Her expertise in managing client relationships will be invaluable as we continue to evolve our products and strategies for investors in traditional and private strategies”, said Roman.

Regarding Kersman, the firm highlights that he drove the growth of the Latin America business over more than a decade and, more recently, has played a major role in bringing his client relationship expertise to U.S. GWM: “With his deep understanding of the regulatory environment and proven strategic leadership, Alec will build on the excellent work that Kim and the team have delivered over the past four years driving our expansion in Asia-Pacific,” added Roman.

Kersman will be supported in Asia-Pacific by PIMCO’s regional leadership team and deep bench of investment professionals. In addition, John Studzinski, Vice Chairman of PIMCO’s Executive Office, will continue playing a key role in broadening relationships in Asia-Pacific with leaders in business, finance, government and NGOs.

Other appointments

The firm also announced other key leadership roles: David Fisher, currently Head of Traditional Product Strategies, will become Co-Head of U.S. GWM Strategic Accounts alongside Eric Sutherland, President of PIMCO Investments LLC. Fisher, who has spent 13 years as a leader in the Product Strategy Group and also serves as a trustee of PIMCO Closed End Funds, will relocate to the New York office. He and Sutherland will report to Gregory Hall, Head of U.S. GWM. Ryan Korinke, Head of Hedge Fund and Quantitative Strategies, based in Hong Kong, will join PIMCO’s Executive Office in Newport Beach, where he will report to Roman.

Commenting on Korinke’s role in the Executive Office, Roman pointed out that his understanding of hedge fund strategies and the role they play for clients, together with his “detail-oriented and thoughtful approach” have helped deepen many of their relationships with hedge fund investors around the world. “He is a creative and analytical thinker and widely admired by PIMCO colleagues as an executive who embodies PIMCO’s culture”, he concluded.

Standard Life Aberdeen Simplifies and Extends its Strategic Partnership With Phoenix Group

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Foto cedidaStephen Bird, director general de Standard Life Aberdeen.. Standard Life Aberdeen cambia su nombre a Abrdn

A few weeks ago, there were rumors that Standard Life Aberdeen might change its name after selling its brand to Phoenix Group. Finally, this week the asset manager announced in a statement that it has decided to simplify and expand its partnership with Phoenix Group, shedding light on the future of its brand.

This strategic partnership started in 2018, when Standard Life Aberdeen sold its UK and European life insurance business to Phoenix Group for 3.24 billion pounds. The transaction created a complex network of commercial and operational services between the groups, including the shared use of the “Standard Life” brand.

The agreements announced this week simplify the partnership focusing it on the provision of Standard Life Aberdeen’s high-quality asset management services to Phoenix Group and its insurance and workplace pension customers.

Now, the strategic asset management partnership, under which Standard Life Aberdeen currently manages 147.4 billion pounds of Phoenix Group assets, will be extended until at least 2031 (in the original agreement, it was up to 2028). Also, the asset manager will pay upfront 62.5 million pounds for the purchase of the Wrap SIPP, onshore bond and TIP businesses from Phoenix, which represent 36 billion pounds in assets under management.

The agreement also establishes that Standard Life Aberdeen will pay 32 million pounds to Phoenix Group for bearing the cost of some transferring colleagues going forward after selling its brand and will no longer provide marketing services. Lastly, the resolution of legacy matters will not materially impact on Standard Life Aberdeen’s 2020 financial performance, as it will receive a net cash inflow of 34 million pounds this February.

Standard Life Aberdeen will sell its brand to Phoenix Group during the course of 2021, a transaction that they don’t expect to impact materially on their results. The asset manager also revealed that it has initiated a branding review, the outcome of which it will announce later this year.

A recognized brand

“The most successful partnerships in business tend to be formed on clear and simple terms. What we are announcing today is an agreement that simplifies the relationships between Standard Life Aberdeen and our strategic partner Phoenix Group in a way that will allow us to work together constructively as partners for at least the next ten years. Both businesses will be able to play to their respective strengths in the partnership”, said Stephen Bird, CEO of Standard Life Aberdeen.

He also pointed out that the “Standard Life” brand has an important heritage: “In the UK, it has strong recognition as a life insurance and workplace pensions brand. This is closely aligned with Phoenix’s strategy and customer base. This is much less the case with the business we are building at Standard Life Aberdeen which is focused on global asset management, our market-leading platforms offerings to UK financial advisers and their customers, and our UK savings and wealth businesses. That’s why I am excited about the work we are doing on our own brand, which we look forward to sharing later this year”.

Lastly, Andy Briggs, CEO of Phoenix Group, claimed to be delighted with the extension of the strategic asset management partnership until at least 2031: “This recognizes the global expertise and excellent service that Aberdeen Standard Investments delivers to Phoenix Group and our customers as our preferred asset management partner. The simplification of the Standard Life brand, sales and marketing will be a key enabler of Phoenix’s growth strategy, which in turn should lead to greater asset flows to ASI.”

Large European Firms Take the Lead over US Competitors when Aligning with the Paris Agreement

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pollution-2575166_1920_0 — Pixabay CC0 Public Domain. Las gestoras europeas lideran el compromiso con el Acuerdo de París frente a las estadounidenses y las asiáticas

The portfolios of the world’s 30 largest fund managers, which collectively hold 50 trillion dollars in assets, continue to be misaligned with the goals of the Paris Agreement, with US firms lagging behind their European competitors. That’s why the latest research by InfluenceMap finds that “urgent action” is required to drive change in key climate-risk sectors.

The Asset Managers and Climate Change 2021 report scores companies based on three criteria: engagement with investee companies, support for climate-related shareholder resolutions, and portfolio analysis. It shows mixed results when it comes to engagement with investee companies to speed up the transition of business models and lobbying practices, with large US companies significantly behind European players.

InfluenceMap believes forceful engagement is needed in the automotive, fossil fuel production and utility sectors where stranded asset risk is prominent for investors, as those firms continue to lobby against Paris-aligned climate policy. Given “the huge influence” these asset managers have over the global economy, it is vital they take action to ensure the world can meet the climate goals of the Paris Agreement. However, this latest report shows most are still moving too slowly when it comes to using their clout to drive change in investee companies.

“Once again, we see European asset managers taking the lead over their US competitors. This report highlights the need for giant US asset managers to step up and take stronger action, especially given their market dominance and unique ability to send a clear signal to the rest of the economy”, insists Dylan Tanner, Executive Director at InfluenceMap.

In addition, even for those asset managers who lead on stewardship, the ultimate test will be real-world improvements on climate change by problematic companies. “This needs to be demonstrated sooner rather than later if high climate-risk companies are to remain in portfolios”, he adds.

Between those European asset managers which top the chart when it comes to engagement with investee companies on climate, Legal & General Investment Management and the asset management arms of BNP Paribas and UBS all scored within the A grade. Meanwhile, global market leader BlackRock has recorded an improvement in its engagement score (B, up from C+ a year ago), which puts it ahead of its next biggest US competitors Vanguard (C), Fidelity Investments (D), and State Street Global Advisors (B-).

The research shows that in Asia, Japanese Sumitomo Mitsui Trust Asset Management scores a B+ on engagement with companies on climate change. For InfluenceMap, this leadership “is needed” in Japan, where the TOPIX 1600+ companies remain the most Paris-misaligned of major indexes globally, primarily due to a focus by Japanese power utilities on thermal coal.

Also, overall support for climate-related resolutions increased during the 2020 proxy season (62%) compared with 2018 (56%) and 2019 (39%) levels. However, many US firms continue to rely on their European competitors to do the heavy lifting in this area.

“There is a clear trend towards investors requiring more information from companies than just operational emissions data. More and more, we are seeing investors wanting to know that corporate lobbying practices and business models are aligning with Paris targets,” Tanner says.

InfluenceMap highlights as “a promising development” during the past year the decision by BlackRock, State Street Global Advisors, and JP Morgan Asset Management to join the Climate Action 100+ process, which is prioritizing the transformation of corporate business models and lobbying on climate. In its opinion, an acceleration of this trend sends a further signal to the corporate sector that shareholders are serious about climate governance and the energy transition.

Lastly, at a fund level, the portfolio analysis indicates that there are significant differences between individual funds’ alignments depending on their geographical and thematic investment strategy. However, asset managers’ overall portfolios continue to be overweight in companies deploying brown technologies and underweight in those deploying green technologies. “Forceful engagement with the companies in these sectors is needed to hasten their transition to low carbon technologies. This must occur if the finance sector wishes to align its portfolios with Paris climate goals and reduce this risk of stranded assets”, the report notes.

Jupiter Commits to Net Zero Emissions and Announces Alignment with UN Global Compact

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leaf-5533218_1920 — Pixabay CC0 Public Domain. Jupiter se compromete a alcanzar las cero emisiones netas y anuncia su adhesión a iniciativas clave de inversión sostenible

Jupiter Fund Management has announced its commitment to achieving net zero emissions by 2050 across its full range of investments and operations, in line with the Paris Agreement, that stablishes the need to limit global warming to less than 1.5°C.

In a press release, the asset manager has revealed that, by the end of this year, it will have defined a detailed roadmap including milestones and targets for achieving this ambition across its 61.4 billion euros investment range, including interim targets for 2030. At the same time, it is aligning with the UN Global Compact (UNGC).

“In line with the Compact, all our investment decision-making and engagement will be guided by the principles of the UNGC and all investee companies will be expected to abide by the Compact’s Ten Principles, committing to meeting fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption”, Jupiter said.

The company has also become a member of the Good Work Coalition. Consequently, across its flagship UK equities business, it will encourage all investee companies to pay a living wage to their employees and will push for better working conditions and reduced workplace inequality, in partnership with ShareAction and other members of the Coalition. “This move reflects Jupiter’s responsibilities as a UK company, its strong stewardship and governance framework and deep investment reach across its home market”, they insisted. To demonstrate this commitment, they will also accredit as a Living Wage Employer.

At its corporate level, Jupiter has already made significant progress in planning for achieving its net zero emissions target. As part of this plan, it has also announced its partnership with Forest Carbon, a not-for-profit scheme providing woodland carbon capture projects in the UK. By investing in woodland creation in the UK, the company is not only removing carbon emissions but also facilitating flood alleviation, habitat creation, employment, public access and cleaner air, benefiting wider society in line with its corporate purpose.

In addition, over the course of the year, the asset manager will further enhance its disclosure on the total Scope 1,2 and 3 emissions produced by its operations and will set operational emissions targets consistent with its net zero objective.

A commitment with sustainability

“Today’s raft of announcement builds on Jupiter’s position as a long-standing supporter of sustainable and responsible investing. We believe that the future is better served by sustainable companies with strong environmental credentials, and it is imperative that we work together as a company, an industry, and a society to tackle climate change. I am pleased at the progress Jupiter is making towards this at both an investment and company level”, Andrew Formica, CEO, said.

In this sense, he pointed out that as a high conviction and active manager, they have a responsibility and an opportunity to do all they can to influence the companies they invest in to adopt more sustainable businesses. “The transition to net zero carbon emissions is imperative but improving wider societal and governance standards is also crucial. Along with net zero commitments, initiatives that align with the wider sustainability agenda, such as the UNGC principles and Good Work Coalition, will result in long term gains for all stakeholders”, he added.

Last month, Jupiter announced a number of senior appointments within its sustainability suite, reinforcing its commitment to this strategically important client proposition which offers clients a range of differentiated investment options with a shared goal of generating attractive returns through long-term sustainable investing.

Should Investors Consider a Stand-Alone All-China Equity Allocation?

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dragon-872933_1920 — Pixabay CC0 Public Domain. ¿Deberían los inversionistas considerar una asignación independiente a la renta variable china?

As China’s weight within global equity indices increases and its markets mature, should investors consider a dedicated All-China allocation or continue gaining their Chinese equities exposure via international or emerging market (EM) allocations? Our research suggests that despite the growing opportunity, investors are typically under-exposed to Chinese equity.

Our analysis and history also suggest that concerns about US-China tensions—a key reason many investors are cautious on China—are on balance a manageable long-term risk that should not preclude investors from embracing this opportunity.

Chinese equity markets are rapidly changing. Whereas historically China’s economy was powered by State Owned Enterprises (SOEs), the modern economy is increasingly driven by small- and mid-size private companies, foreign investment, increasing capital supply and investment in biotech, artificial intelligence, 5G and other innovative sectors.

Five reasons for China optimism

As a result, we contend that All-China equity is the best way to take advantage of these trends. The market, from Hong Kong to A-share exchanges and the new Nasdaq-like STAR market, has matured and is evolving in five constructive ways:

1. China’s economy is no longer dominated by SOEs: SOEs have significantly reformed and the combination of the growing number of SOE privatizations and IPOs has overhauled the composition of Chinese equity indices (Exhibit 1), making markets more dynamic and efficient.

Gráfico 1

2. Corporate governance has improved: The reduced dominance of SOEs (often used as tools of government policy) and regulatory reforms that better align corporate interests with those of shareholders have changed the governance landscape.

3. Capital markets have developed: The development of China’s markets is illustrated by the number and market capitalization of listings in Shanghai, Shenzhen, Hong Kong and US-listed American Depositary Receipts (ADRs)— 5,333 companies worth $14.1 trillion at the end of June (Exhibit 2). That compares to the $7.8 trillion market capitalization of euro area equities.

gráfico 2

4. China’s benchmark weightings are rising: China’s increasing weight in key benchmarks,
such as the MSCI EM Index and the MSCI All Country World Index, is accelerating the institutionalization of its markets. At the same time, the still relatively high proportion of trading conducted by local individual investors (often funded by margin debt) creates inefficiencies that can be exploited by savvy investors to derive potential alpha.

5. China’s new consumer buys domestic: China’s middle-and upper-income consumers increasingly buy domestic products, eschewing once-favored global brands. The dynamic nature of China’s corporate universe is seen in the fact that China is the “youngest” market regionally in terms of listing years of index constituents (Exhibit 3).

gráfico 3

China is investing heavily in innovation

Beijing is also investing heavily in “new infrastructure”—technologies in which it wants to reduce its foreign reliance; artificial intelligence, 5G, cybersecurity, alternative energy, electric vehicles and semiconductors. Beijing is encouraging a startup culture it hopes can rival Silicon Valley while also attracting international investors. For example, China has filed one third of the world’s 5G patents (Exhibit 4).

Index tracking is a flawed approach to China investing

We believe that allocating to China by index tracking is the wrong approach because, among other reasons, MSCI ACWI weightings heavily favor large-cap firms with negligible exposure to faster-growing, domestic Chinese firms. In addition, MSCI’s EM Index (Exhibit 5) is similarly weighted toward offshore China at the expense of A-shares. So, allocating to China by tracking benchmarks is akin to gaining US equity exposure by overweighting mega-caps at the expense of everything else. An All-China equities allocation offers a more balanced approach and enhances the odds of capturing potential future returns.

Finally, investors should consider the alpha opportunity in Chinese equity markets, which still have inefficiencies that can exploited: Over the past decade, the median China A-shares strategy outperformed the MSCI China A Onshore index by 8.4%, annualized (Exhibit 6, see next page). Meanwhile, in global EM equities, the median manager only marginally outperformed while the median S&P 500 manager underperformed. So, for long-only equity investors, China offers a rare source of meaningful, sustainable alpha potential.

Conclusion

While the specific All-China allocation for any specific investor depends on such factors such as risk appetite, we believe that typical current allocations to China do not reflect the country’s bright prospects and that investors should consider an All-China allocation beyond current benchmark levels, now 5.1% of the MSCI ACWI Index. Less benchmark-sensitive investors that share our strong conviction in China’s improving outlook could consider an even larger allocation.

Column by Anthony Wong, CFA, Portfolio Manager Hong Kong and China Equity; William Russell, Global Head of Product Specialists; and Christian McCormick, CFA, Senior Product Specialist in China Equity in Allianz Global Investors.

Wells Fargo Sells its Asset Management Business to GTCR LLC and Reverence Capital Partners

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The news that has been rumored for months is confirmed: Wells Fargo has announced a definitive agreement to sell Wells Fargo Asset Management (WFAM) for 2.1 billion dollars to GTCR LLC and Reverence Capital Partners, L.P., both private equity firms.

The firm has explained in a statement that WFAM is the trade name used by the asset management businesses of Wells Fargo and includes Wells Fargo Funds Management, LLC, the investment advisor to the funds, Wells Capital Management Incorporated and Wells Fargo Asset Management (International) Limited, both registered investment advisors providing subadvisory services to certain funds.

As part of the transaction, Wells Fargo will own a 9.9% equity interest and will continue to serve as an important client and distribution partner. WFAM currently has 603 billion dollars in assets under management and specialized investment teams supported by more than 450 investment professionals.

The agreement is in line with the decisions made by Charles Scharf, former BNY Mellon CEO, who joined the bank in 2019 following a sales practices scandal. The clearest precedent is that the bank agreed in January to sell its Canadian direct equipment finance business to Toronto-Dominion Bank. The deal is expected to be fully closed by the second half of 2021.

Nico Marais, CEO of Wells Fargo AM since June 2019, will remain in his position and together with his team will continue to oversee the business. Joseph A. Sullivan, former chairman and CEO of Legg Mason, will be named executive chairman of the board of the new company following the closing of the transaction

JP Morgan Asset Management Launches a Multi-Asset Fund with a Focus on ESG

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future-431270_1920 — Pixabay CC0 Public Domain. JP Morgan AM lanza un fondo multiactivo con enfoque sostenible

JP Morgan Asset Management has launched the Global Income Sustainable Fund (SICAV), a globally diversified multi-asset income fund with a sustainable focus. In a press release, the asset manager has announced that this vehicle will complement its flagship JPMorgan Investment Funds – Global Income Fund, with 29 billion dollars in assets under management.

The new fund will be run by the same portfolio managers, Michael Schoenhaut and Eric Bernbaum, and will use the same investment philosophy as the Global Income Fund, taking a flexible approach to seeking out the best sustainable income opportunities from around the globe, leveraging sustainable exclusions and a positive environmental, social and governance (ESG) tilt.

Also, JP Morgan AM has revealed that the new offering will go further on ESG with two additional sustainability characteristics. First, it will exclude companies from 10 unsustainable sectors based on client values, industry norms and regulation. Second, leveraging the firm’s well-established global research capabilities for finding attractive income-producing investments globally, the Global Income Sustainable Fund will be tilted towards securities with more effective governance and superior management of environmental and social issues.

This, in their view, will produce a portfolio with a higher overall ESG score and a materially lower carbon footprint. Reflecting the Global Income Sustainable Fund’s concentration on ESG leaders, the two funds are expected to only have about 30% overlap in holdings. The new vehicle, which will have a TER of 75 basis points (C share class), is expected to register 65% lower carbon emissions than the multi-asset income investment universe.

“In the continued incredibly low yield environment, investors need more sustainable sources of diversified income. For more than a decade with our Global Income Fund, we’ve provided investors with a disciplined and rigorous approach, supported by strong research capabilities, to finding the best risk-adjusted income opportunities globally, across multiple geographies and asset classes. We’re thrilled to now expand our offering with this dedicated sustainable multi-asset income fund,” said Massimo Greco, Head of EMEA Funds at JP Morgan AM.

Meanwhile, Rob Stewart, Global Head of the Multi-Asset Solutions Investment Specialist team, pointed out that a huge challenge for sustainable multi-asset income investing is incorporating widely varying ESG factors, from across different asset classes, and bringing those together into a diversified portfolio that produces attractive risk-adjusted income.

“That’s why we believe it is critical for sustainable multi-asset investors to leverage well-established fundamental and quantitative research capabilities. We’re able to draw on over 50 years of experience in multi-asset investing. This enables us to optimize top-down global asset allocation to strive for stable income, while the fund’s bottom-up asset class specialists focus on the most sustainable securities within their respective sub-asset classes,” he added.

Pandemic Caused 220 Billion Dollars of Global Dividends Cuts in 2020

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scissors-2759721_1920 — Pixabay CC0 Public Domain. La pandemia provocó recortes por valor de 220.000 millones de dólares en los dividendos a escala mundial en 2020

The cuts or cancellation of dividends made headlines during the worst part of the pandemic. Now, according to the latest Global Dividend Index from Janus Henderson, we know that global dividends fell 12.2% to 1.26 trillion dollars in 2020. On an underlying basis, this means dividends were 10.5% lower in 2020.

In a press release, the asset manager reveals that this data is better than its initial best-case forecast of 1.21 trillion dollars thanks to a less severe fall in Q4 payouts than anticipated. On an underlying basis, the decline was smaller than after the global financial crisis. Janus Henderson’s index of global dividends fell to 172.4, a level last seen in 2017.

The dividend cuts were most severe in the UK and Europe, which together accounted for more than half the total reduction in payouts globally, mainly owing to the forced curtailment on banking dividends by regulators. “But even as payouts in Europe and the UK fell below the levels seen in 2009 when our index began, they rose 2.6% on a headline basis in North America to a new record”, points out the asset manager’s study.

In its view, North America did so well mainly because companies were able to conserve cash and protect their dividends by suspending or reducing share buybacks instead, and because regulators were more lenient with the banks. In Asia, Australia was worst affected, due to its heavy reliance on banking dividends, which were constrained by regulators until December. Elsewhere, China, Hong Kong and Switzerland joined Canada among the best performing nations.

The analysis shows that Q4 payouts fell 14% on an underlying basis to a total of 269.1 billion dollars while the headline decline was just 9.4%. This was less severe than expected as companies like Sberbank in Russia and Volkswagen in Germany restored suspended dividends at full strength, while others like Essilor in France brought them back at a reduced level.

Also, special dividends were also larger than expected, while in the US the dividends announced for the next four quarterly payments were better than expected.

Clearly, COVID-19 affected global dividends: although the cuts and cancellations totalled 220 billion dollars between April and December 2020, companies nevertheless paid their shareholders 965 billion dollars, still far outweighing the reductions. One company in eight cancelled its payout altogether and one in five made a cut, but two thirds increased their dividends or held them steady.

The study shows that banks accounted for one third of global dividend reductions by value, more than three times as much as oil producers – the next most severely affected sector. Six in ten consumer discretionary companies cut or cancelled payouts, but the classic defensives – food retail, pharmaceuticals and personal products – were well insulated. Among the world’s larger stock markets, the impact in Spain and France was particularly widespread with 71% of companies making reductions compared to just 9% in Canada.

The outlook

Janus Henderson believes that 2021 will see payouts fall, although the decline is likely to be smaller than between Q2 and Q4 2020. The outlook for the full year remains “extremely uncertain”.

“The pandemic has intensified in many parts of the world, even as vaccine rollouts provide hope. Importantly, banking dividends will resume in countries where they were curtailed, but they will not come close to 2019 levels in Europe and the UK, and this will limit the potential for growth. Those parts of the world that proved resilient in 2020 look likely to repeat this performance in 2021, but some sectors are likely to continue to struggle until economies can reopen fully”, says the asset manager.

In its view, a slow escape from the pandemic, and the drag caused by the first quarter, suggest that dividends may fall by 2% (headline) for the full year in a worst-case scenario (-3% underlying). Its best-case at this stage suggests an increase of 2% on an underlying basis, equivalent to a headline rise of 5%, yielding a total of 1.32 trillion dollars.

“Although the pandemic has changed the lives of billions in previously unimaginable ways, its impact on dividends has been consistent with a conventional, if severe, recession. Sectors that depend on discretionary spending have been more severely impacted, while defensive sectors have continued to make payments“, said Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team at Janus Henderson.

“At a country level, places like the UK, Australia and parts of Europe suffered a greater decline because some companies had arguably been overdistributing before the crisis and because of regulatory interventions in the banking sector. But at the global level, the underlying 15% year-on-year contraction in payouts between Q2 and Q4 has been less severe than in the aftermath of the global financial crisis”, she added.

Professional Fund Selectors Anticipate Heightened Risk in 2021 but Are Optimistic about Market Opportunities

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traffic-light-876050_1920 — Pixabay CC0 Public Domain. Los selectores de fondos profesionales anticipan un mayor riesgo en 2021, pero son optimistas sobre las oportunidades de mercado

Natixis Investment Managers recently published the results of its annual Global Survey of Fund Selectors, which found that, against the backdrop of continued market volatility and negative interest rates, professional buyers are positioning portfolios to capture the upside potential in 2021.

The survey was conducted last November and December among 400 investment professionals, including fund selectors at independent financial advisors, registered investment advisors, insurance company investment platforms, private banks and family offices around the world, representing 12.7 trillion dollars in assets.

One of the conclusions of Natixis IM is that, despite the newfound optimism provided by the approval of the Pfizer and Moderna vaccines towards the end of 2020, six in ten fund selectors believe the COVID-19 “new normal” is here to stay and two-thirds predict the global economy will not recover from it in 2021.

Significant concerns about the pandemic and politics have not necessarily translated into a negative view on markets and the majority (80% of those surveyed) believe central banks will support the market in the event of another downturn.

According to respondents, volatility and negative rates are the first and second portfolio risks for global fund buyers in 2021, at 49% and 39% respectively. Other risk concerns included inflation (37%), a credit crunch (34%) and liquidity issues (25%).

With more fiscal and monetary stimulus likely to come from policy makers, fund selectors think stocks have even more room to run in 2021 and will look around the globe for opportunities.

In this sense, projections at the end of Q4 2020 favored a risk-on strategy, with 61% calling for small-caps to outperform large-caps, 60% predicting emerging markets to outperform developed markets, and 66% saying aggressive portfolios will outperform defensive in 2021. Fund selectors will be focusing on finding the potential bright spots in difficult markets and 70% forecast active investment will outperform passive in 2021.

“2020 marked a year of extreme challenges for markets that went beyond the health pandemic, including climate events and natural disasters, political tensions and the fastest market correction in history. Uncertainty continues and concerns are mounting that financial markets may have entered bubble territory. However, fund selectors surveyed view market risk as an opportunity, while acknowledging close analysis is required to uncover the opportunities to generate alpha for clients”, said Matt Shafer, Head of Wholesale & Retail Distribution, Natixis Investment Managers commented:

An optimistic vision

According to the survey results, optimism carries over into sector views and pro buyers are particularly bullish on healthcare, with 56% of those surveyed calling for the sector to outperform, followed by consumer discretionary (46%), information technology companies (45%) and energy (44%) and financials (44%).

ESG investing has remained a consistent focus area for global fund buyers. ESG strategies were a proven winner from the market turmoil in 2020 and 57% of respondents believe outperformance will continue in 2021. To access the full breadth of opportunities in the market, more than half of fund buyers intend to add to their model portfolios offering and enhance their lineup with specialty strategies for ESG and thematic investing.

Adapting asset allocation

In an environment of low to negative interest rates and slow growth, the survey revealed that value investing is making a comeback in 2021. Entering 2020, fund buyers focused their attention on sectors with strong secular growth drivers, while conversely, in 2021, 63% of fund buyers anticipate that value stocks will outperform growth.

Over one third (36%) of fund selectors surveyed intend to reduce their US equity holdings to capitalise on the opportunities presented by market performance in other territories, with 55% planning to acquire APAC stocks.

Against a backdrop of continued market volatility, Natixis IM shows that fund buyers seek to reorientate portfolios to take advantage of the emerging markets opportunity beyond Asia, with 65% of participants stating that emerging markets are more attractive now than they were before Covid-19. Moreover, 52% of participants confirm that they will be increasing their emerging markets positions.

Concerns about investor risk appetite

Given that fund selectors see the potential for greater volatility and are projecting value stocks to outperform growth, 83% believe markets will favor active investments in 2021.

The asset manager believes that commitment to active strategies was likely reinforced last year, when two-thirds say active investments on their firm’s platform outperformed during the market downturn.

“There is growing concern amongst professional buyers that individual investors will be able to successfully navigate the risks they face in 2021″, the survey points out. In Natixis IM’s view, the strong market performances throughout the pandemic is likely to have caused retail investors to take on risk more carelessly than before Covid-19 and 78% of fund buyers have concerns that increased volatility will cause individuals to liquidate their investments prematurely.

As a result, fund selectors see their firms transforming the investment offering to achieve greater consistency across client portfolios to better meet client needs, with 80% saying the emphasis is on quality rather than quantity. Given the focus on riskier, more volatile assets and concerns about potential liquidations, more than half (54%) among the 295 professional buyers whose firms offer clients model portfolios anticipate that they will move more clients to model portfolios in 2021.

IK Investment Partners and Luxempart Become Investors of iM Global Partner

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philipe — Foto cedidaPhilippe Couvrecelle, consejero delegado y fundador de iM Global Partner. IK Investment Partners y Luxempart se incorporan como socios a iM Global Partner

The project of Philippe Couvrecelle, iM Global Partner, enters a new phase in its development, welcoming two new investors. IK Investment Partners and Luxempart have bought part of Eurazeo‘s stake in the company, subject to the approval of the French Autorité des Marchés Financiers and the Commission de Surveillance du Secteur Financier.

In a press release, iM Global Partner highlighted that the addition of both firms as shareholders marks an important step in the development of the company. It believes their support strengthens its development potential and will accelerate its growth for years to come. iM Global Partner’s strategy is to continue to invest, both organically and through external growth, to further develop the company with the aim of exceeding 100 billion dollars in assets under management within five to seven years.

Following the transaction, Eurazeo, as a controlling shareholder, will continue to actively support the company alongside shareholders IK Investment Partners, Luxempart and Amundi. Proceeds from the disposals relating to this transaction of 20% of the capital represent about 70 million dollars for Eurazeo, a cash-on-cash multiple of 2.1x and an internal rate of return of 22%. Dassault/La Maison, a shareholder from the outset, sold its stake at the time of the operation.

A growth story

“We are pleased to welcome IK Investment Partners and Luxempart alongside Eurazeo and Amundi, which have been accompanying and supporting us since the beginning of this great adventure. Together, we will continue to develop our unique asset management model and further accelerate the growth of our activities worldwide“, stated Philippe Couvrecelle, CEO and founder of iM Global Partner.

Also, Marc Frappier, Managing Partner of Eurazeo and Head of Eurazeo Capital, said that their strong belief in the growth of the asset management profession, coupled with “the talent and the vision” of Couvrecelle, led them to support the development of “an innovative network bringing together the best managers worldwide and leading distribution capacities”.

As for the new investors, Thomas Grob, Partner at IK Investment Partners, added that they were impressed by the growth trajectory, quality of the teams, international nature and development project of iM Global Partner. “We are pleased and proud to have won the trust of Philippe Couvrecelle, Eurazeo and Amundi to join them in contributing to the company’s growth story”, he commented.

Lastly, Olaf Kordes, Managing Director of Luxempart, claimed to be pleased to be able to join the group of the firm’s shareholders: “We have been convinced by the quality and vision of the management team. We are very keen to continue supporting the development of this leading player with significant international ambitions. This operation is perfectly in line with Luxempart’s revised strategy, which aims to support first-rate management teams in their development projects over the long term”.

This transaction comes after iM Global Partner, a global network dedicated to asset management, increased its assets under management by 65% -of which 46% was organic growth- to more than 19 billion dollar in the year to end December 2020. With Eurazeo and Amundi, which have supported Couvrecelle and the management team since the company’s inception, iM Global Partner has become a major international asset management network in just a few years.