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Jupiter AM Appoints Six New Analysts for its Sustainable Investment Teams

paper-3213924_1920 — Pixabay CC0 Public Domain. Jupiter AM nombra seis nuevos analistas para sus equipos de estrategias de inversión

Jupiter AM has announced in a press release the hiring of six new analysts within its sustainable investing strategies, doubling the size of the existing resources and “adding fresh investment expertise to key portfolios”.

The asset manager has highlighted that its sustainability suite of funds offers clients a range of differentiated investment options with a shared goal of generating attractive returns through long-term sustainable investing. Following a strategy refresh earlier this year, Abbie Llewellyn-Waters was appointed as Head of Sustainable Investing, working with Rhys Petheram, Head of the Environmental Solutions team.

The firm is now strengthening its offering with the appointment of new analysts. Specifically, Maiken Anderberg joins the Global Sustainable Equity team as Equity Analyst. Having previously interned with Jupiter’s Sustainable Investing team in 2018, she is returning to the company in a new permanent role, working closely with Abbie Llewellyn-Waters and analyst Freddie Woolfe with a dedicated focus on the Jupiter Global Sustainable Equities strategy

The Jupiter Global Sustainable Equities strategy was launched in 2018 to offer clients an alternative to mainstream global equities by combining financial returns with positive environmental and social returns – enabling clients to participate in the transition to a more sustainable world.

Joining Jupiter in a newly created role, Noelle Guo has been appointed Equity Analyst of Environmental Solutions. Supporting fund manager Jon Wallace and reporting into Petheram, she will work across the equity strand of Jupiter’s environmental solutions suite. Guo has eight years of equity research experience, joining from an Investment Analyst role at Pictet Asset Management before which she was at AB Bernstein as a Senior Research Associate.

Laura Conigliaro has been named Analyst of the Environmental Solutions team. Having joined Jupiter in 2019 as a member of Jupiter’s Governance and Sustainability team, she will now work directly with fixed income specialist Petheram with a particular focus on fixed income verification, also providing sustainability research into the desk’s environmental impact themes. Prior to joining Jupiter, Conigliaro has held roles at the Inter-American Development Bank and sustainability management consultancy Critical Resource.

Jupiter’s Environmental Solutions suite of funds boasts a 33-year track record and over 890 million pounds in AUM across the Jupiter Global Ecology Growth and Jupiter Global Ecology Diversified funds, and UK onshore vehicles. The strategy looks to invest in companies intentionally focused on providing solutions to sustainability challenges across key environmental themes.

In an internal move, Jenna Zegleman joins the teams as Investment Director. Having arrived at Jupiter in 2018 as a product specialist, she will provide client-facing support across the full range of portfolios in the Sustainable Investing suite.

In addition to these hires, Anisha Arora and James Kearns have joined Jupiter’s Governance and Sustainability team. An emerging markets economist and strategist with 10 years’ experience across sell side research and buy side asset management, Arora joins from Allianz Global Investors and has experience in applying ESG considerations to macroeconomic analysis, as well as to the sovereign debt investment process. Kearns joins Jupiter from BNP Paribas, where he worked initially in CSR within their Global Markets division before moving to become a Sustainable Finance Analyst.

“As we navigate through this global pandemic, the importance of confronting the climate crisis, bridging social inequality and ensuring a sustainable future is more important than ever. By investing in companies leading a sustainable transition across our Global Sustainable Equities and Environmental Solutions strategies we are able to offer our clients a range of attractive and truly innovative solutions that deliver positive outcomes for planet, people and profit”, Abbie Llewellyn-Waters, Head of Sustainable Investing, commented.

Meanwhile, Stephen Pearson, CIO, added: “We are pleased to make these appointments to the team as we continue to grow Jupiter’s sustainability suite, helping us continue to innovate and build on our long heritage of sustainable investing. We are delighted to be making these appointments at this important point in time, cementing support for these key strategies with the addition of specialist insight and investment expertise.”

It’s Always the Right Time for Emerging Markets

| For Cecilia Prieto | 0 Comentarios

city-1209105_640 — Pixabay CC0 Public DomainEmergentes . Asia emergente

Two questions about investing in emerging markets (EM) are increasingly common: Does it make sense to time allocations to emerging market equities? And given the MSCI’s EM Index’s historic, near-doubling from its March 2020 low, is it time to get out?

Trying to time shifts is difficult in any market, but even more so in emerging markets. Market timing questions aside, there are several compelling reasons to maintain a consistent and material allocation to emerging market stocks, if not increase it.

Why Emerging Markets Should Comprise a Consistent Allocation Within a Portfolio

Developing economies represent about 85% of the global population and generate nearly half of global gross domestic product (GDP), thanks in large part to a rapidly expanding middle class. Not only are these economies contributing a significant portion of the world’s economic output, but their collective GDP has also proven more resilient through the pandemic and is expected to rebound more this year and next. According to the International Monetary Fund’s World Economic Outlook from January, advanced economies are estimated to have declined 4.9% in 2020 and are forecast to expand 4.3% this year and 3.1% in 2022. By contrast, emerging and developing economies collectively declined just 2.4% in 2020 and are seen growing 6.3% in 2021 and 5% next year.

The faster economic growth should be supportive for emerging market earnings, if past experience is any guide. Despite the rapidly increasing importance of emerging markets in a global context, the companies in emerging markets represent less than one quarter of global stock market capitalization. This will very likely grow over time.

While the long-term investment opportunity in EM is compelling, there are portfolio benefits as well. Since its inception in 1988 through December 31, 2020, the MSCI EM Index has delivered a 10.2% annualized total return, which is similar to the S&P 500 Index’s 11% annualized gain and considerably more attractive than the MSCI EAFE Index’s 5.4% rise. Importantly, emerging markets tend to behave differently than their developed-market counterparts as they both under- and outperform each other at different points in time, providing meaningful asset diversification over market cycles.

Indeed, because EM economies and capital markets are less mature, emerging markets still experience pronounced business cycles. This attribute alone could provide a material performance advantage over time, particularly for portfolios that are actively balanced across the growth/value spectrum throughout the cycle. This balance can enhance diversification while positioning the portfolio to take advantage of sector and style rotations.

Although the S&P 500 Index extended its outperformance in the latter half of the last decade, the MSCI EM Index’s 18.7% return in 2020 slightly beat the S&P 500 Index’s 18.4% gain. And over the first two months of 2021, the developing country benchmark more than doubled the return of the S&P 500, perhaps signaling a turn in the cycle. If so, that would reinforce the long-term performance of emerging market equities as well as the portfolio diversification benefit of consistent exposure to emerging markets.

Putting the Last Few Years into Context

Emerging market equities frequently oscillate between strongly positive and sharply negative performance. Putting the moves of the last several years into context illustrates this dynamic nature of EM investing and supports our view that it’s always the right time to be invested in EM.

Following the 2008 Global Financial Crisis, emerging markets rebounded sharply on the back of strong domestic consumption trends and bold stimulus programs, particularly in China. Expectations and valuations grew quickly, but were subsequently disappointed as the debt-fueled stimulus programs began to wear off. Most emerging markets were left with a debt overhang. By 2015, the U.S. Federal Reserve had tapered its asset purchases and then steadily lifted its key rate from late 2016 through mid-2019, spurring a strengthening U.S. dollar. The dollar headwind was too much for most emerging market earnings translated into greenbacks, despite consistent underlying EM growth trends. And while relative valuations favored developing country stocks in recent years, the U.S.–China trade dispute and questions about the future growth rate of China also weighed on broader developing country equities.

Entering 2020, economic conditions looked strong for many emerging markets but the spread of COVID-19 and to a lesser extent an oil price war between Russia and Saudi Arabia ultimately resulted in the first quarter being the worst quarter for global equities since the Great Financial Crisis. A flight to safety ensued as a general sense of fear overcame the markets, resulting in elevated capital flows out of EM and into the perceived safety of the U.S. dollar. The impact was especially painful for EM economies with elevated macro sensitivity to oil as well as those seen as too dependent on foreign investment.

Ultimately, though, with vaccine developments stoking the reopen trade and the U.S. election easing geopolitical tensions, emerging market equities finished an unprecedented 2020 on a high note. The MSCI EM Index returned just under 20% during the fourth quarter, its highest quarterly return in more than a decade.

The years following the Great Financial Crisis have shown once again that emerging markets are volatile. However, investors who maintained consistent exposure to EM during this period would have realized an attractive return on their EM allocation, with annualized performance of 10% for the MSCI EM Index from December 31, 2008, through December 31, 2020. Note that during this period the MSCI EM Index outperformed the S&P 500 50% of the time on a quarter-by-quarter basis, illustrating again that EM markets behave differently than their developed-country counterparts and reinforcing the argument that maintaining a consistent allocation to EM can enhance asset allocation diversification.

What Lies Ahead?

Many of the structural drivers that were beginning to emerge prior to COVID will come back into focus, helping to position emerging markets to potentially outperform in 2021. Among them, capital markets that continue to broaden and deepen, improving consumption trends fueled by rising incomes and an expanding middle class and new types of products and services that are continuing to penetrate many EM economies. Combined with massive global liquidity injections, highly accommodative interest rates, a weakening U.S. dollar, accelerating global growth and the deployment of COVID vaccines, emerging market stocks should have the wind at their back in 2021. Indeed, a recent global fund managers’ survey from Merrill Lynch showed that a record 62% of global money managers were overweight EM and two-thirds predicted that EM will be the top-performing asset this year. Yes, emerging markets are volatile. But it’s our strong view that because of the compelling long-term returns and portfolio diversification benefits, emerging market equities should remain a consistent and material portfolio allocation.

Charles Wilson, PhD is a portfolio manager at Thornburg Investment Management.

Founded in 1982, Thornburg Investment Management is a privately-owned global investment firm that offers a range of multi-strategy solutions for institutions and financial advisors around the world. A recognized leader in fixed income, equity, and alternatives investing, the firm oversees US$45 billion ($43.3 billion in assets under management and $1.8 billion in assets under advisement) as of 31 December 2020 across mutual funds, institutional accounts, separate accounts for high-net-worth investors, and UCITS funds for non-U.S. investors. Thornburg is headquartered in Santa Fe, New Mexico, USA, with additional offices in London, Hong Kong and Shanghai.

For more information, please visit www.thornburg.com

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.

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Fabiana Fedeli is Appointed CIO of M&G’s Equities Division

| For Beatriz Zúñiga | 0 Comentarios

M&G has announced that Fabiana Fedeli will lead its 57 billion-pound (78.4 billion-dollar) Equities division from the newly created role of Chief Investment Officer. She will report to M&G’s CIO, Jack Daniels.

In a press release, the asset manager has highlighted that the appointment follows its commitment a year ago to revitalize its active equity investment capabilities, “which has focused on delivering more consistent investment performance and developing strategies to meet evolving customer and client needs”.

M&G has a rich heritage in active equities investment; from launching the UK’s first mutual fund in 1931 and continuing to develop innovative strategies since then, including the recent launch of a range of impact investment strategies to tackle global challenges such as climate change and healthcare.

With over 20 years of experience in the investment management industry, Fedeli joins from Robeco Asset Management where she was Global Head of Fundamental Equities; leading an international investment team managing a range of active equity strategies. She had direct portfolio management responsibility for three of those strategies and has extensive experience of integrating sustainability and impact into investment processes. Prior to Robeco, Fedeli held a number of roles both in portfolio management and equity analysis in London, New York and Tokyo.

“Equities will always have an essential role to play in an investor’s portfolio and we believe that active equity management will deliver greater value for clients over the long-term. Fabiana’s appointment demonstrates our commitment to this vital asset class, bringing a wealth of investment experience in both equities and sustainability. Fabiana will be working with M&G’s talented team of investors, to promote greater collaboration, idea-generation and innovation across the Equities division”, Daniels, CIO of M&G, said.

Meanwhile, Fedeli pointed out that M&G has “a long heritage in active equity management, a strong culture and clear investment values”. In her view, as the industry continues to evolve, it remains imperative for asset managers to anticipate and respond to their clients’ needs. “I look forward to working with the talented and experienced investment team to continue to develop M&G’s equities proposition”, she concluded.

Vontobel Completes de Purchase of TwentyFour AM by Acquiring the Remaining 40%

| For Beatriz Zúñiga | 0 Comentarios

staub-zeno — Foto cedidaZeno Staub, CEO de Vontobel. Vontobel AM completa la compra de TwentyFour AM tras adquirir el 40% restante de la boutique

Vontobel Asset Management has completed the purchase of TwentyFour Asset Management after securing the remaining 40% of its capital. After acquiring a 60% stake in the fixed income boutique in 2015, Vontobel had intended to buy the remaining 40% in two tranches in 2021 and 2023. However, it has beaten its own deadlines and has already accomplished the operation.

In a press release, Vontobel AM has explained that it has taken “targeted steps” in recent years to develop a diversified range of products for its clients, and one of the main pillars was the acquisition of a majority stake in TwentyFour Asset Management LLP (TwentyFour), now a 24.2 billion swiss francs specialist fixed income boutique. Both firms have now agreed that Vontobel will have acquired the remaining 40% in one tranche as of 30 June 2021.

TwentyFour and Vontobel are thus underscoring the very positive development of the partnership. “By bringing the transaction forward it gives clients and investors clarity and ensures focus remains on delivering outstanding performance and client service for the long term”, the statement said.

After the transaction, TwentyFour will remain operationally independent and will continue to service its clients from offices in London and New York, as well as via Vontobel’s international network. Since the acquisition of the majority stake of 60% in 2015, all TwentyFour Partners have continued to play an active role in the company’s day-to-day operations. Besides, the asset manager has highlighted that the partners and portfolio management teams “remain committed to serving the interests of clients and ensuring the investment boutique’s ongoing success, hence will continue to serve as a driver of growth for Vontobel”.

Both parties have agreed not to disclose the purchase price but have revealed that the acquisition of this stake will be fully financed out of Vontobel’s own funds. Part of the transaction will be paid in the form of Vontobel shares, further underscoring the commitment of TwentyFour’s Partners.

“From the very beginning, we have been impressed by TwentyFour’s expertise and entrepreneurial culture, as well as its continuous growth. The acquisition of the remaining 40% stake is therefore the logical next step in our diversification and growth strategy. I look forward to our ongoing collaboration with our colleagues at TwentyFour, who are all supportive of this acquisition,” stated Zeno Staub, CEO of Vontobel.

Mark Holman, CEO of TwentyFour, claimed that after six years of working very closely together with Vontobel as a majority shareholder, the decision to move to full ownership was not a difficult one. “As a direct consequence of our partnership we have been able to spread our investment expertise to a far greater audience as we have moved from being a domestic player to genuinely global. Importantly though we have preserved the independence and entrepreneurial spirit of being a boutique, which I know is something that both our clients and staff really value and was at the core of our decision making for this transaction”, he added.

TwentyFour was founded in 2008 as a partnership, and has since grown to employ around 75 staff, responsible for providing a broad range of fixed income products to institutional investors. It is known for its disciplined investment philosophy and its proven investment process that generates sustained attractive risk-adjusted returns. The firm’s funds have been rated by Morningstar, which has assigned 99% of them (asset weighted) a four- or five-star rating. Furthermore, the quality of its products has been recognized by a variety of industry awards.

William Davies Will Become Global CIO of Columbia Threadneedle

| For Beatriz Zúñiga | 0 Comentarios

foto ligera — Foto cedidaWilliam Davies, CIO para EMEA y responsable global de renta variable, y próximo CIO global en enero de 2022.. William Davies asumirá el papel de CIO global de Columbia Threadneedle

Columbia Threadneedle Investments has put its Global Chief Investment Officer transition plan into action. The asset manager has announced the retirement of Colin Moore, who currently holds this position, after nearly 20 years at the firm. He will be replaced by William Davies, currently EMEA CIO and Global Head of Equities, in January 2022.

The firm has highlighted the “key role” that Moore has played in shaping its global investment capability, including its “well-established and highly successful investment process based on collaboration across asset classes, research intensity and independent oversight to foster continuous improvement.” Under his leadership, Columbia Threadneedle has generated consistently strong long-term investment performance for individual and institutional clients, and today has 103 four- and five-star Morningstar-rated funds globally.

“I would like to recognise and thank Colin for his numerous contributions, including establishing our global investment capability that has delivered an enviable track record of consistently strong investment performance for our clients. We have built an outstanding and experienced team of more than 450 investment professionals across our global footprint, and as we look forward, William is well positioned to assume the Global CIO role. He is both an exceptional investor and respected people leader with a deep understanding of our firm having joined us in 1993. I look forward to working with William and Colin to ensure a smooth transition”, said Ted Truscott, Chief Executive Officer of the firm.

Meanwhile, Moore claimed to be grateful for the opportunity he’s had to establish a broad and deep investment capability for their clients. “We have spent considerable time ensuring a thoughtful succession, and I am extremely pleased that William will assume the Global CIO role next year. It has been a privilege to lead our team of dedicated, experienced investors who will continue to focus on delivering consistent, competitive investment performance for our clients under William’s leadership”, he added.

Lastly, Davies commented that his focus is unchanged: “I will continue to work with my colleagues to consistently deliver the investment performance our clients expect. I am honoured to lead our talented global investment organisation and look forward to continuing our partnership with colleagues across the business to help our individual and institutional clients achieve their investment goals.”

Financial Flows, the Fountain of Youth for an Ailing Water Infrastructure

| For Beatriz Zúñiga | 0 Comentarios

reservoir-50681_1920 — Pixabay CC0 Public Domain. Flujos financieros: la fuente de la juventud para unas infraestructuras hidráulicas enfermas

Adequate water supply is essential for the human life as well for economies and businesses to thrive. Yet adequate water supply has become more of a luxury than a basic right due to a growing global water crisis where water supply is limited, quality issues prevail, and infrastructure is either old and breaking down or even non-existent in the case of the developing world.

Allianz Global Investors believes that the implications of inadequate water infrastructure and lack of access to fresh, high quality water supply has far reaching consequences impacting nearly every individual, economy, and business around the world. “Investments in new and upgraded water infrastructure are therefore necessary for high quality water supply access and effective wastewater treatment today and into the future. Such investments can support the development of resilient infrastructure which can more effectively meet both todays and future challenges tied to growing populations, urbanization, climate change and even cyber-attacks”, says the asset manager in a recent analysis.

Given the necessity for such investments, the US Senate recently approved the US Drinking Water and Wastewater Infrastructure Act of 2021, which authorizes USD 35 billion of water related investments to be allocated to improving wastewater, stormwater, drinking water and water recycling across the nation. It is one the few areas with bipartisan support in the US which highlights the urgent need for water investments.

Will funding run dry?

The makeover of US water infrastructure which still has to be passed by the House is just one part of the larger USD 2 trillion infrastructure bill. As unanimous as the consensus is about the urgency to make the world’s biggest economy’s drinking water, wastewater, and stormwater systems future-proof, is the remaining investment deficit as the USD 35 billion will only slightly move the needle. In 2019 alone, the accumulative investment gap on water infrastructure was USD 81 billion.¹Other calculations suggest annual needs of more than USD 100 billion each year for the next 20 years.²

Allianz GI points out that the consequences of funding shortfalls for water-reliant businesses and households are “enormous” as breakdowns and quality incidents will continue to plague local communities and disrupt future economic growth. “So, filling this financial void is vital not only to allow for the current US water infrastructure to function properly but also to make it resilient for future requirements“, they add.

The state of US water infrastructure

The United States’ public drinking water, wastewater, and stormwater systems resemble an outdated patchwork rug formed by pipes and lines from different centuries and with different levels of functionality. Because many pipes and pumps are nearly a one hundred years old and are operating at higher capacity than initially designed for, they are past the end of their usable life, leaking large amounts of water and oftentimes failing to meet today’s needs.

The asset manager highlights that municipalities are facing the question whether to upgrade, replace, or fortify these systems and how to make the water infrastructure future-proof to tackle severe weather events brought on by climate change. Additionally, they face the challenge to connect all US households to a regulated and safe water system. Currently, around a fifth of all households rely on septic tanks over public wastewater systems, and over two million lack properly connected drinking water and sanitation systems.³Around a quarter of Americans are very concerned about the quality of their community’s drinking water.⁴

The leaking lifeline

A modern and robust water infrastructure is vital to the country’s economic development as it secures not only the supply of water but also prevents the spread of illness and diseases, fosters economic growth, and ensures a higher living standard.

“The more water infrastructure leaks treated water, the more capital is lost negatively thus impacting both local residents and the local economy. It also affects the competitiveness of a city as a business located in an area with adequate water supply and infrastructure is more competitive and fosters long term growth”, they comment. According to ASCE’s 2021 Infrastructure Report Card⁵ there is a daily loss of approximately 6 billion gallons (approx. 22.7 million m³) of treated water due to water main breaks occurring at one-minute intervals, amounting to a yearly loss of 2.1 trillion gallons (approx. 7.9 trillion m³).

Within the next four years, almost three-quarters of all dams will be over 50 years old and gradually deteriorating. If not upgraded and rehabilitated, they will be vulnerably exposed to possible disaster scenarios leading to a loss of human lives and to a considerable damage of properties and existing infrastructure.
Following the estimations of the Association of State Dam Safety Officials⁶ there are more than 2,300 state regulated high-hazard-potential dams in poor or unsatisfactory condition and in need of remediation.
Urbanization combined with the age profile of wastewater treatment plans is increasingly resulting in system overloads and failures.
15% of wastewater treatment plants have reached/exceeded their designed capacity.

These are just a few examples illustrating the poor conditions of US water infrastructure and the dire need for infrastructure capital expenditure. The situation has far-reaching consequences and urgent action is needed to upgrade and modernize the world’s biggest economy’s drinking water, wastewater, and stormwater systems.

The investment gaps

For Allianz GI, while the infrastructure investment proposals currently making their way through the US Congress would be a step in the right direction, the US water infrastructure gap is still immense. Estimates indicate that over USD 2 trillion in water investments are needed over the next 20 years to close the funding gap and develop adequate water infrastructure across the nation. For example, the amount needed to replace the remaining lead pipes in the US is already over the projected USD 35 billion in the current proposal as estimates are as high as USD 45 billion to complete the replacements.

According to estimates of the Environmental Protection Agency (EPA) there are between 6.5 million and 10 million lead service lines in the US. On average, it costs about USD 4,700 to replace one single lead service line. Even if the EPA’s estimate is higher than needed in certain cases, the projected funds would quickly run dry.

Several angles for active investments

“Undoubtedly, the US Drinking Water and Wastewater Infrastructure Act of 2021 reflects a decisive first step to closing the existing funding gap. On the other hand, while it is ambitious it’s still short of meeting the most pressing water challenges as it cannot even address the remaining lead pipes which threaten the safety of US citizens. There are still substantial funding gaps that require capital expenditure to be addressed. That said, if this bill is passed later this summer, it will be a positive for water space and for water investments given the water equipment and projects that will be needed to make the upgrades”, explains the firm.

When considering the several aspects water infrastructure covers, we can clearly identify where active investments are needed and how they could pay off.

Replacement of lead pipes and service lines: The removal of all lead service lines in the United States not only ensures clean drinking water for every American but it is also contributing to improved public health by preventing severe chronic diseases like lead poisoning, ultimately easing the financial burden on health systems. Additionally, it is likely to result in an attractive investment opportunity in companies that provide piping systems. Investor-owned networks can also play a role here as they can make improvements independent of infrastructure stimulus, many times at lower costs than municipalities.
Leaking lines: To maintain and stop the loss of precious treated water companies have developed smart technologies and tools to detect leaks in water pipes.
Emerging contaminants and Per- and polyfluoroalkyl substances (PFAs)⁷: Specialised companies that offer advanced water treatment technologies can detect and remove emerging contaminants from drinking water and help protect citizens from developing cancer after consuming poor water quality for years at a time.
Aging wastewater treatment plants: The replacement of wastewater treatment plants reaching the end of their lifespan opens up interesting investment opportunities for companies who are experts in wastewater management and designing wastewater treatment plants.

Lookout

While the USA and a big part of the world is focussing on how the US Drinking Water and Wastewater Infrastructure Act will contribute to revitalizing the aging US water infrastructure, positively impacting economic and job growth over the medium to long-term, there are still many under-researched and prominent risks. Just take cyber security, a topic gaining increasing importance for the protection of water infrastructure against cyber criminals. The cyber-attack on the water supply in Oldsmar, Florida and the Cybersecurity and Infrastructure Security Agency’s call to “install independent cyber-physical safety systems”⁸ is just one piece of evidence of the high relevance cyber security has for a future-proof water supply.

Investment implications

Global Water strategies help to address the very real water-infrastructure and water-quality related challenges in the US and the rest of the world by investing in pure play water companies delivering solutions to the most pressing challenges. “Investments may not only generate financial alpha given structural support of the theme, but also environmental and social alpha given the solutions-oriented approach. Such investments can help to upgrade and build resilient water infrastructure that is well prepared to face the challenges tied to climate change and ongoing population growth and urbanization”, says Allianz GI.

This approach allows investors the ability to participate in a compelling long-term growth opportunity and contribute to the solutions of modern water infrastructure, a lifeline to society and the economy.

1 https://infrastructurereportcard.org/cat-item/wastewater/

² http://www.uswateralliance.org/sites/uswateralliance.org/files/publications/VOW%20Economic%20Paper_0.pdf

3 https://www.asce.org/uploadedFiles/Issues_and_Advocacy/Infrastructure/Content_Pieces/the-economic-benefits-of-investing-in-water-infrastructurereport.

pdf

4 http://uswateralliance.org/sites/uswateralliance.org/files/2021%20Value%20of%20Water%20Survey%20Analysis%20Slides.pdf

5 https://infrastructurereportcard.org/

6 https://damsafety.org/media/statistics

7 https://www.epa.gov/pfas/basic-information-pfas

8 https://us-cert.cisa.gov/ncas/alerts/aa21-042a

JP Morgan AM Acquires Campbell Global, a Firm Focused in Forest Management and Timberland Investing

| For Beatriz Zúñiga | 0 Comentarios

forest-5597499_1920 — Pixabay CC0 Public Domain. JP Morgan AM compra Campbell Global, firma especializada en gestión e inversión en el sector forestal

In an effort to directly impact the transition to a low-carbon economy and provide ESG-minded investment opportunities related to climate, conservation and biodiversity, JP Morgan Asset Management has acquired forest management and timberland investing company Campbell Global, LLC.

Although the terms of the deal with Campbell Global’s parent company, BrightSphere Investment Group, were not disclosed, the asset manager has stated in a press release that the acquisition does not impact current investment strategies for Campbell Global clients. It also revealed that the transaction is expected to close in the third quarter.

Campbell Global is a recognized leader in global timberland investment and natural resource management. Based in Portland, Oregon, the firm has over three decades of experience, 5.3 billion dollars in assets under management and manages over 1.7 million acres worldwide with over 150 employees. JP Morgan AM has indicated that all employees will be retained and Campbell Global will remain headquartered in Portland.

The deal will make the asset manager “a significant benefactor for thriving forests around the world”, including in 15 U.S. states, New Zealand, Australia and Chile. Carbon sequestration in forests worldwide will play an important role in carbon markets, and the firm expects to become an active participant in carbon offset markets as they develop. Besides direct access to Forestry sector, the transaction will provide alignment UN Sustainable Development Goals and Principles of Responsible Investing.

“This acquisition expands our alternatives offering and demonstrates our desire to integrate sustainability into our business in a way that is meaningful. Investing in timberland, on behalf of institutional and high net wealth individuals, will allow us to apply our expertise in managing real assets to forests, which are a natural solution to many of the world’s climate, biodiversity and social challenges”, said George Gatch, CEO of JP Morgan AM

John Gilleland, CEO of Campbell Global, commented that they have always held that “there should be no tradeoff” between investing wisely and investing responsibly. “We made our first institutional investment in timberland 35 years ago, have since planted over 536 million trees, and emerged as a leader in sustainable forestry. We look forward to continuing these efforts with JP Morgan. Importantly, this transaction further positions Campbell Global to serve our existing world-class clients at the highest standard“, he added.

“Acquiring Campbell Global provides us with an opportunity to strengthen and diversify our ESG focus, including building a robust carbon sequestration platform,” said Anton Pil, Global Head of J.P. Morgan Global Alternatives. “Timber investing further enhances our asset class offerings in our alternatives business, ultimately passing along the unique benefits of forest management to our clients. Our knowledge of real estate and transport markets, in particular, is expected to provide opportunities to optimize the usage of timber and wood products more vertically.”

The investment offering will sit within JP Morgan’s Global Alternatives franchise, with 168 billion dollars in AUM, and will tap into the continued growth of private markets. JP Morgan is an expert in investing in real assets, with leadership positions in real estate, infrastructure, and transport and as well as private equity, private debt and hedge funds. In their opinion, Campbell Global adds to this portfolio, filling an asset class gap in an attractive market while also supporting sustainability goals.

Jaime Cuadra Joins Better Way LLC as Partner, Managing Director and Founding Member

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Captura de Pantalla 2021-06-24 a la(s) 11 — Foto cedidaJaime Cuadra Jr.. ,,

Jaime Cuadra Jr. has joined as partner, managing director and founding member at Better Way LLC, a private investment firm where he will lead the global growth efforts focusing on capital raising, institutional partnerships, joint ventures, and investor relations.

Cuadra told Funds Society that he will now join forces with Alex Gregory, who founded the firm, built its infrastructure and brought in its initial investors.

Better Way LLC is an investment manager that offers a unique access program to invest in top overlooked Private Equity and Debt funds with a focus on mitigating risk and avoiding conflicts of interest for investors. Leveraging the team’s top performing decade long track record and deep relationships, target investors are investment advisors, family offices and institutional investors.

Jaime Cuadra has more than 15 years of experience in global asset management, private banking, and corporate strategy. Recently he was Global Director of Institutional clients at Compass Group in New York, an investment firm with over 41 billion dollars in assets where he led the unit that raised capital and advised global investors with Latin-American investments.

Throughout his career, Better Way’s new partner has held multiple leadership positions and enabled businesses in America, Europe and Asia through partnerships. He is an Industrial and Systems Engineer and also holds a Bachelors in Finance.

In his view, the rise and relevance of private investments in client portfolios (either institutional or retail) is “greater than ever” and he expects that this trend will continue in the future: “Allocation to Private Equity or Private Debt is still low relative to institutional portfolios, and there is a lot of room for this to evolve”.

“That being said, there are a lot of firms, distributors and banks, offering PE funds from top brands; yet in the competitive landscape our clients have told us they don’t hear a focus on risk or thorough due diligence when deals are presented. In our view, investing periodically in a carefully curated, small number of quality deals makes a big difference in performance”, Cuadra added.

He also pointed out that, given the reputation and the philosophy of Alex Gregory as a professional investor is “quite outstanding, unique and special”, it was “a no brainer” to work alongside him and bring this investment approach to investors around the world. “Alex’s track record is quite impressive over the decades and I hope we can continue evangelizing that paying attention to risk, and asking the tough questions is very important when allocating to Private Equity“, he concluded.

Aiming for Zero: Europe Raises its Clean Energy Game

| For Meritxell Sedo | 0 Comentarios

Shifting into a higher gear. This is precisely what the European Union has just done as it steers towards a more sustainable economy. Its new climate blueprint – which EU lawmakers and national governments have agreed in principle to make legally binding – proposes cutting greenhouse gas emissions by 55 per cent compared with 1990 levels by the end of the decade.

That is significantly more ambitious than the EU’s previous target of 40 per cent, and means the region could become climate neutral by 2050.

It’s not difficult to see why the EU should want to pursue a green recovery with such determination.

Executed well, the plan, to be adopted in May 2021 and apply from 2022, offers the tantalising prospect of restoring both the environment and the economy back to full health.

The funds being set aside certainly point in that direction. The package will translate into approximately EUR7 trillion of new green investments by 2050. Crucial for the region’s economic prospects, a large proportion of that money will be channelled to the environmental industry (see Fig. 1) – a fast-growing sector that is making an ever larger contribution to GDP.

The industry’s gross value add (GVA) – a measure of its contribution to national output – rose to EUR286 billion in 2015, up 63 per cent from 2003. Within the sector are some especially vibrant industries such as resource management, which includes renewable energy and energy efficiency and has grown 150 per cent over that time (1).

More broadly, Europe’s environmental goods and services industry can now claim to rival that of the US.

It already employs 4 million full-time equivalent workers, up 38 per cent from 2003, and has contributed more than 2 per cent to the region’s GDP in 2015 (1).

EVs: the green light

Under the European Commission’s new set of criteria for green investments, producers of rechargeable batteries, energy efficiency equipment, non-polluting cars, wind and solar power plants will be able to win a formal green label. That could prove transformative for Europe’s transport, energy and real estate sectors.

Take autos, if European governments are to achieve their growth and pollution targets, electric vehicles (EV) will have to evolve into a strategic industry.

Here, the approach is one of carrot and stick.

France has a EUR8 billion programme to boost its EV industry with a goal of producing more than 1 million electric and hybrid cars every year over the next five years. The plan also includes a financial incentive that would reduce the cost of buying an EV by up to 40 per cent.

Germany also stepped up its support for zero-emission transport, doubling subsidies to as high as EUR9 billion, following a prior increase in November 2019 (2).

These incentives have already had a clear impact on EV take-up. German EV sales, for example, rose to account for 13 per cent of total car sales in August 2020, compared with just 2.5 per cent in the same month in 2019.

Regulators are also playing their part. Europe, the second biggest EV market after China, now has tough new emissions standards. Every car manufacturer must cap emissions for its entire fleet to 95g of CO2/km on average by end-2020 – some 20 per cent below the average emission level in 2018. This cap will drop to 81g by 2025 and to 59g by 2030.

Those who fail to meet the standards will pay a heavy price: the fine is EUR95 for every g/km of excess emissions per vehicle. Car manufacturers that fail to improve their CO2 emissions compared with 2019 levels face possible fines of several billions of euros every year.

All of this will help further boost e-mobility’s growth (see Fig. 2).

Pictet AM

Build back better

Construction will also be at heart of the European recovery plan – not least because 70 per cent of all buildings in the region are over 20 years old.

The European Green Deal reserves some EUR370 billion – or EUR53 billion a year – for renovation to boost energy efficiency and decarbonise existing buildings. That would represent a big boost to the European renovation industry, which was worth EUR819 billion in 2019 (3).

Europe is also proposing to commit EUR100 billion in research and development (R&D) spending in digital and environmental sectors. The seven-year programme, launching in 2021, aims to boost productivity and growth and maintain competitiveness in sectors consistent with the Green Deal’s objectives. The Commission estimates each euro invested in R&D would have a leverage effect of EUR11.

When it comes to sustainability, Europe has just raised the bar. Its ambitious green spending commitments and stricter regulations not only give an environmental template for other countries to follow, they also offer the prospect of stronger economic growth and open up new investment opportunities.

Pictet AM’s Clean Energy strategy: investing in the energy transition

Europe’s 2050 climate target is set to disrupt and transform a number of industries, each representing rich and diverse investment opportunities which are underappreciated by the wider market.

E-mobility: Some 80 per cent of today’s transport energy needs to be converted to electricity to meet the emissions target. BNEF expects 57 per cent of all passenger vehicle sales will be electric globally by 2040, compared with only 3 per cent in 2019. This will likely boost investments into not only EV manufacturers but, more significantly, supporting technologies such as batteries and power semiconductors, as well as smarter grid networks and charging infrastructure.
Renewables: Under the European plan, the share of renewables in power generation must rise to 85 per cent by 2050 from today’s 20 per cent, with the bulk of that covered by wind and solar. The way we generate power is transforming as an increasing number of European power utilities ramp up their production of renewable energy with aggressive expansion plans. Underlining this trend, while total EU energy generation declined almost 10 per cent in July from the year before, renewable energy generation rose over 8 per cent.
Green buildings: All new European buildings must be “nearly net zero energy” starting 2021. We also expect a significant increase in demand for “retrofitting” existing buildings. This should support companies producing high-performance building materials and insulation, heat pumps and LED lighting as well as smart Heating, Ventilation and Air Conditioning (HVAC) and building energy management systems and other energy efficiency technologies and equipment.

Written by Steve Freedman, Sustainability and Research Manager in the Thematic Equities team at Pictet Asset Management.

Discover more about Pictet Asset Management’s long expertise in thematic investing.

Notes:

(1) Based on 2010 prices. Source: European Environment Agency (EEA)
(2) https://insideevs.com/news/443518/germany-plugin-car-sales-august-2020/ and https://cleantechnica.com/2020/09/04/germany-in-august-electric-vehicles-crushing-it-at-record-13-2-market-share
(3) Euroconstruct

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Global Wealth Creation Was Largely Immune to the Pandemic Shock in 2020

| For Beatriz Zúñiga | 0 Comentarios

monopoly-5136946_1920 — Pixabay CC0 Public Domain. Más ricos y más acaudalados: el crecimiento de la riqueza se mostró inmune al golpe de la pandemia mundial

Wealth creation in 2020 was largely immune to the challenges facing the world due to the actions taken by governments and central banks to mitigate the economic impact of COVID-19. This is the main conclusion of the twelfth “Global Wealth Report” recently published by Credit Suisse Research Institute.

The analysis shows that total global wealth grew by 7.4% and wealth per adult rose by 6% to reach another record high of 79,952 dollars. Meanwhile, aggregate global wealth rose by 28.7 trillion dollars to reach 418.3 trillion at the end of the year. However, widespread depreciation of the US dollar accounted for 3.3 percentage points of the growth. If exchange rates had remained the same as in 2019, total wealth would have grown by 4.1% and wealth per adult by 2.7%.

The research institute points out that overall, the countries most affected by the pandemic “have not fared worse in terms of wealth creation”. In this sense, the pandemic had a profound short-term impact on global markets in the first quarter of 2020: the report estimates that 17.5 trillion dollars was lost from total global household wealth between January and March 2020, equivalent to a fall of 4.4%.

However, this was largely reversed by the end of June. “Surprisingly, in the second half of 2020 share prices continued on an upward path, reaching record levels by the end of the year. Housing markets also benefitted from the prevailing optimism as house prices rose at rates not seen for many years. The net result was that 28.7 trillion was added to global household wealth during the year”, highlights the analysis.

“The pandemic had an acute short term impact on global markets but this was largely reversed by the end of June 2020. As we noted last year, global wealth not only held steady in the face of such turmoil but in fact rapidly increased in the second half of the year. Indeed wealth creation in 2020 appears to have been completely detached from the economic woes resulting from COVID-19“, said Anthony Shorrocks, economist and report author.

The regional breakdown shows that total wealth rose by 12.4 trillion dollars in North America and by 9.2 trillion in Europe. These two regions accounted for the bulk of the wealth gains in 2020, with China adding another 4.2 trillion and the Asia-Pacific region (excluding China and India) another 4.7 trillion.

Another key finding of the report is that India and Latin America both recorded losses in 2020. In this sense, total wealth fell in India by 594 billion dollars, or 4.4% in percentage terms. This loss was amplified by exchange rate depreciation: at fixed exchange rates, the loss would have been 2.1%. Latin America appears to have been the worst performing region, with total wealth dropping by 11.4% or 1.2 trillion.

Meanwhile, total debt also increased by 7.5% and the report points out that it would likely have increased much more if households had not been obliged to save more by the constraints on spending. Specifically, it rose markedly in China and Europe, but declined in Africa and in Latin America, even after allowance is made for exchange rate depreciation.

“Windfalls from unplanned savings and prevailing low interest rates saw a revival in housing markets during the second half of 2020. The net result was a better-than-average year for homeowners in most countries”, it adds.

Global wealth levels in 2020

Wealth impacts of the pandemic have differed among population subgroups due to two main factors: portfolio composition and income shocks. The wealth of those with a higher share of equities among their assets, e.g. late middle age individuals, men, and wealthier groups in general, tended to fare better. Homeowners in most markets have seen capital gains due to rising house prices.

“If asset price increases are set aside, then global household wealth may well have fallen. In the lower wealth bands where financial assets are less prevalent, wealth has tended to stand still, or, in many cases, regressed. Some of the underlying factors may self-correct over time. For example, interest rates will begin to rise again at some point, and this will dampen asset prices”, Shorrocks commented.

The report also shows that there have been large differences in income shocks during the pandemic. In many high income countries the loss of labor or business income was softened by emergency benefits and employment policies. In countries with an absence of income support, vulnerable groups like women, minorities and young people were particularly affected

Also, female workers initially suffered disproportionately from the pandemic, partly because of their high representation in businesses and industries badly affected by the pandemic, such as restaurants, hotels, personal service and retail. “Labor force participation declined over the course of 2020 for both men and women, but the size of the decline was similar, at least in most advanced economies”, it adds.

Wealth distribution and the outlook

Wealth differences between adults widened in 2020. The global number of millionaires expanded by 5.2 million to reach 56.1 million. As a result, an adult now needs more than 1 million dollars to belong to the global top 1%. A year ago, the requirement for a top 1% membership was 988,103 dollars. So, as Credit Suisse Research Institute highlights, 2020 marks the year when for the first time, more than one percent of all global adults are in nominal terms dollar millionaires.

Besides, the ultra high net worth (UHNW) group grew even faster, adding 24% more members, the highest rate of increase since 2003. Since 2000, people with wealth in the range of 10,000–100,000 dollars have seen the biggest rise in numbers, more than trebling in size from 507 million in 2000 to 1.7 billion in mid-2020. “This reflects the growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world”, says the report.

Global wealth is projected to rise by 39% over the next five years, reaching 583 trillion dollars by 2025. Low and middle-income countries are responsible for 42% of the growth, although they account for just 33% of current wealth. Wealth per adult is projected to increase by 31%, passing the mark of 100,000 dollars. Unadjusted for inflation, the number of millionaires will also grow markedly over the next five years reaching 84 million, while the number of UHNWIs should reach 344,000.

Ricos a 2025

Nannette Hechler-Fayd’herbe, Chief Investment Officer International Wealth Management and Global Head of Economics & Research at Credit Suisse, claimed that “there is no denying” actions taken by governments and central banks to organize massive income transfer programs to support the individuals and businesses most adversely affected by the pandemic, and by lowering interest rates, have successfully averted a full scale global crisis.

“Although successful, these interventions have come at a great cost. Public debt relative to GDP has risen throughout the world by 20 percentage points or more in many countries. Generous payments from the public sector to households have meant that disposable household income has been relatively stable and has even risen in some countries. Coupled with restricted consumption, household saving has surged inflating household financial assets and lowering debts. The lowering of interest rates by central banks has probably had the greatest impact. It is a major reason why share prices and house prices have flourished, and these translate directly into our valuations of household wealth”, she concluded.