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The Future of Sustainability: 85% of Investment Professionals Take into Account ESG Factors

money-2696219_1920 (1) — Pixabay CC0 Public Domain. El 85% de los profesionales de la inversión tienen en consideración los factores ESG en sus inversiones

A new global research study released by CFA Institute reveals that 85% of investment professionals say that they take ESG factors into account when investing, up from 73% three years ago. The report shows how sustainable investing will shape the investment industry over the next decade, a trend that has been accelerated by the COVID-19 pandemic.

“The Future of Sustainability in Investment Management: From Ideas to Reality” demonstrates that this growth has been driven by client demand, with 69% of retail investors and 76% of institutional investors having interest in ESG. Although the future of sustainable investing includes many unknowns, the study advances three tenets where it goes further than its forerunners: it is additive to investment theory and does not mean a rejection of foundational concepts; it develops deeper insights about how value will be created going forward using environmental, social, and governance considerations; and it considers many stakeholders.

“Incorporating sustainability in investment management has become part of our industry’s mission to serve society by improving long-term outcomes. This moment represents a valuable opportunity for organizations to address this challenge and help shape a future worth investing in. As the focus on sustainability in investing gathers increasing momentum, it will eventually dictate the sustainability of investing itself”, says Margaret Franklin, CFA, President and CEO of CFA Institute.

Key areas of sustainable investing

The report also focuses on four key areas of sustainable investing. The first one is the rise of alternative data and its importance in sustainability analysis: 71% of participants believes that the rise of alternative data will make sustainability analysis more robust, while 62% agree that sustainability is an area where human judgement and active management will thrive, highlighting the often subjective and contextual nature of sustainability data.

The second area is the increased demand for sustainable investing expertise, as there is a relative scarcity of sustainability talent in the investment industry. CFA Institute used LinkedIn Talent Insights and found that the supply of expertise among core investment roles is limited but growing quickly. Of the 1 million LinkedIn investment professional profiles examined, less than 8,000 list ESG as an area of expertise. However, this figure has increased 26% in the last year. Meanwhile, 18% of 1,000 portfolio manager job posts on LinkedIn mention the desire for sustainability-related skills.

This contrasts with the growth of investor demand, that’s driving firms to change their business models and expand product offerings. In this sense, the research points out that, among the various ways to incorporate ESG into the investment process, ESG integration and best-in-class approaches are more popular than negative or exclusionary screening. That’s why future growth opportunities in the product space include ESG index tracking and quant funds, ESG thematic products, ESG multi-asset products, climate transition strategies, long-term engagement, and better benchmarks.

The last key area is the relevance of systems thinking in sustainability analysis. The study concludes that the COVID-19 pandemic has emphasized the urgency of sustainability issues, highlighted the interconnectedness of the financial system, and how corporate value creation both affects, and is affected by, the ecosystem in which it operates. CFA Institute believes that the integration of sustainability issues will require a more widespread application of system-level thinking.

“The demand for sustainable investing continues unabated, driven by push and pull factors, catalyzed by societal expectations, and accelerated by the Covid-19 pandemic. Investment firms that incorporate sustainability into their business models need access to specialist knowledge to enrich their investment capabilities and to bridge the data gaps. Education and training in the ESG space, along with the rise of alternative data sources and enhanced disclosure frameworks, will equip firms to deliver on the potential of sustainable investing”, says Rhodri Preece, CFA, Senior Head of Industry Research for CFA Institute.

All in all, the research explores the influences driving the sustainability trend and sets out implications for investment firms, including the need to better integrate data and to develop expertise to meet client expectations with innovative products. It includes perspectives from over 7,000 industry participants, including investment clients, investment practitioners, ESG specialists, and more.

Franklin Templeton Expands its Range of Luxembourg-Domiciled Alternative Funds with a New Emerging Markets Strategy

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darts-102919_1920 — Pixabay CC0 Public Domain. Los activos en fondos europeos alcanzaron los 11,8 billones de euros en 2020

Franklin Templeton has announced the launch of the Franklin K2 Emso Emerging Markets UCITS Fund, a sub-fund of the Luxembourg-domiciled Franklin Templeton Alternatives Funds (FTAF) range.

This new Emso product seeks to generate capital growth through strategic investment exposure, both long and short, primarily to debt securities of sovereign and corporate obligors and currencies, including derivatives related thereto, all principally in emerging markets, explained the asset manager in a press release.

The fund will mirror the strategy of the Franklin K2 Alternative Strategies Fund and will be managed by the same team, Emso’s CIO Mark Franklin and John Hynes, Senior Portfolio Manager. Since becoming a co-manager in April 2015, the strategy has an annualised return of 5.4% with a standard deviation of 4.5%.

Franklin Templeton stated that this range –which was launched last October- offers European investors access to liquid hedge fund strategies in a UCITS format with daily liquidity and transparency from K2 Advisors, “one of the pioneers in the development and use of low fee liquid hedge funds”, through their Managed Accounts Platform (MAP).

“We currently have five managers spanning across long/short equity, relative value, and event driven strategies and are delighted with the addition of the K2 Emso Emerging Markets fund to the platform. The manager’s flexible mandate allows the team to invest where they see value across a large universe, applying a consistent investment framework”, said Bill Santos, Senior Managing Director at K2 Advisors.

Meanwhile, Julian Ide, Head of EMEA distribution at Franklin Templeton, pointed out that, since the acquisition of Legg Mason in July, they have become “one of the biggest providers of alternative solutions globally” with 124 billion dollars in assets under management. “As we continue to focus on strengthening our cost-effective product range of liquid alternative solutions in Europe, we are pleased to launch this fund, which offers a differentiated global macro style of alpha generation and provides further robust diversification to client portfolios”, he added.

Climate Change and Emerging Markets after COVID-19: Emerging Woes

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Climate change_Oxford_800x600-02 — . Pictet Asset Management

China and India are jostling for greater geopolitical influence, within the emerging world and beyond. Their ambitions are manifold. For instance, China aims to lead the world in AI technology, India to take China’s manufacturing mantle. But over the long run, they won’t achieve their aims through armed conflict on some high Himalayan glacier.

Rather, they’ll only do so by working towards the same goal of limiting global warming – and, along the way, will ensure the survival of the glacier they both claim.

A major, concerted effort at limiting how much global temperatures rise over the coming decades will pay significant dividends not just in China and India but for emerging economies generally. Were developed and emerging countries to work together in limiting global warming, they could roughly halve the loss in output they face by the end of the century compared to if there were no further climate change.

Emerging economies are much more vulnerable to rising global temperatures than their advanced counterparts. For instance, major cities around the world face annual losses of between USD300 billion and USD1 trillion in output from climate change-related sea level rises, according to modelling by Oxford University’s Smith School, in a report sponsored by Pictet Asset Management. China alone has 15 cities that risk losing as much as 4.7 per cent in GDP per capita per year from rising sea levels.

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But this is not where China’s worries about global warming end. Temperatures in the country have been rising faster than the global average. Current projections are for a 13 per cent fall in the country’s crop yields by 2050 compared with 2000.

Meanwhile, India stands to be one of the biggest losers from global warming, risking more than a 60 per cent shortfall in GDP per capita by the end of the century relative to if temperatures stayed the same. A hotter climate threatens the country’s productivity levels. Knock-on effects to education will prove a drag on the accumulation of human capital and thus economic development. Agricultural output will also decline.

In Brazil, climate change will have a major impact on water availability – by the end of this century, two-thirds of the country will be classified as arid. This will hurt harvests and also energy production – hydro power accounts for some 60 per cent of the country’s electricity supply. Similar issues confront Mexico, Indonesia and South Africa.

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Of major emerging market economies, only Russia is likely to benefit from rising global temperatures – at least, on the face of it. A melting Arctic would free more of Russia’s coastline, opening the region to trade and the exploitation of the region’s wealth of natural resources. But there’s a caveat. This doesn’t factor in the impact climate change would have on other countries’ demand for Russian goods. Subdued GDP elsewhere would very likely hurt Russian exports.

Read more about the Oxford-Smith paper at this link.

Except otherwise indicated, all data on this page are sourced from the Climate Change and Emerging Markets after COVID-19 report, October 2020.

Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.

Important notes

This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation. Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.

For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.

Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in North America to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).

In Canada Pictet AM Inc is registered as Portfolio Managerr authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA. In the USA, Pictet AM Inc. is registered as an SEC Investment Adviser and its activities are conducted in full compliance with the SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref. 17CFR275.206(4)-3.

Santander Named Bank of the Year in Spain and Americas by The Banker Magazine

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Santander premio — Foto cedida. Santander, reconocido como mejor banco de España y América por la revista The Banker

The Banker magazine has granted Banco Santander the award for Bank of the Year in the Americas and Spain. The publication highlighted Santander’s “ability to innovate and to adapt solutions developed in one market to other businesses within the group”, as well as its ability to deliver returns, gain strategic advantage and serve their markets.

The Banker -founded in 1926- also emphasized Santander’s “outstanding commitment” to responsible banking, including its efforts to promote education, social welfare and financial empowerment with initiatives such as Superdigital, a platform which offers access to financial services to underbanked and individual micro entrepreneurs in Latin America, and Santander Ayuda, which promotes local projects for vulnerable people in Spain.

After receiving the recognition, Santander group chief executive officer, Jose Antonio Álvarez said that throughout 2020 their teams have worked hard to ensure they remain close to their customers in every market. “To be recognised by The Banker as the bank of the year across many of our markets is a great testament to their efforts in a challenging year”, he added.

The group’s diversification across both geographies and products remains one of the firm’s key strengths, with its South American region contributing 41% of underlying profit this year, North America, 20% and Europe 39%.

In Brazil, the magazine –which is part of the Financial Times group- recognized a number of innovation made by Santander during the year, including products like Sim, a fintech that provides quick and affordable loans; EmDia, a debt renegotiation platform that connects creditors with consumers in arrears, Santander Auto, a car insurance business or Pi: a fully digital investment platform, with an open architecture.

In Argentina, The Banker noted the new services and products the bank now provides for female entrepreneurs and younger customers. For example, iU, a new product with benefits designed specifically for young people. The bank also offers a comprehensive proposition which focuses on female entrepreneurs, owners of SMEs and professionals.

Lastly, in Spain, they pointed out the extraordinary measures Santander has made to support its customers during the COVID-19 pandemic: “Through a commendable mix of product innovation and business agility, Santander Spain has played an invaluable role in assisting the country’s businesses and consumers through an unprecedented economic and health crisis,” the publication said.

Savills IM and Vestas Launch a Discretionary Logistics Fund

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production-4408573_1920 (1) — Pixabay CC0 Public Domain. Savills IM amplía la alianza con Vestas con el lanzamiento de un fondo de logística de gestión discrecional

Savills Investment Management, international real estate investment manager, has announced in a press release the launch of a pan-European logistics investment fund in partnership with Vestas Investment Management.

The Vestas European Strategic Allocation Logistics Fund (VESALF I) is amongst the first ever ‘blind’ funds that has been raised solely from Korean institutional investors to invest in European real estate. It will target core and core-plus logistics assets of between 40 to 140 million euros across all key European markets.

Savills IM will be the European fund and asset manager in partnership with Vestas, who has raised 200 million euros which, combined with manager co-investment and up to 60% gearing, will give the fund a target gross asset value of 450-500 million euros, as estimated by the firms. The strategy will be seeded with the recent acquisition of a new 115,000 square meters unit leased to DSV in Tholen, the Netherlands.

“Having advised and worked closely with Vestas for several years, we are delighted that the relationship has now led to us jointly establishing the first blind logistics fund for Korean institutions. It is a key milestone for both of our firms, and a clear sign of how the Korean market is maturing. Institutions are increasingly willing to back partners they trust, to better access stock in competitive markets and to achieve greater portfolio diversification”, said Jon Crossfield, Head of Strategic Partnerships at Savills IM.

Meanwhile, Salvatore Lee, Managing Director at Vestas Investment Management, pointed out that they are very pleased to set up this blind logistics fund with Savills IM “and to be able to bring a valuable new product to my proactive Korean investors in such a dynamic and competitive logistics market”. In his view, this is a big step for Vestas and builds on their five-year history of overseas investments.

“We are very grateful to the Savills IM team who have supported and are now partnered with us. We are excited to continue deploying the capital on behalf of VESALF I over the next two years”, he added.

Allfunds Becomes Fund Platform Provider of CMB Group, Leading Chinese Private Bank

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landscape-4266942_1920 — Pixabay CC0 Public Domain. Inversis apuesta por una cartera diversificada, con la atención puesta en emergentes y en EE.UU.

Allfunds, wealthtech and fund distribution company, has been selected by China Merchants Bank (CMB) Group as its B2B investment fund platform partner. Therefore, it will become the provider of access to third-party funds for its all overseas PWM&PB centers, especially in Hong Kong and Singapore markets.

Allfunds revealed in a press release that, with this agreement, CMB group will use its “proficient fund distribution capabilities to support its fast growing private wealth management and private banking business globally”. This move is also in line with the bank’s strategy of continuing to deploy overseas business, and to make sustainable development and investment.

By selecting Allfunds, CMB’s overseas businesses will be able to gain access to the world’s largest fund distribution network with a broad range of investment funds and take advantage of the asset services the wealthtech provides in Asia and globally. This include data & analytics, portfolio & reporting tools, research and regulatory services. Also, CMB aims to use Allfunds’ automatic dealing to increase the efficiency and boost the growth of its fund business.

Allfunds believes that the cooperation with the leading private bank in China -and Top 10 banking brands according to The Banker magazine- will provide an opportunity to further expand and strengthen its position in Asia Pacific, as well as enhance its comprehensive and integrated solutions for third party funds. The Asian market is a core part of its growth strategy and an extremely important region for the wealthtech.

“We are very pleased to partner with CMB, a highly reputable and leading private bank in China. We are excited about the huge opportunities ahead in the Asian and Chinese wealth management markets, which is an important part of our growth strategy as we continue to expand the global fund distribution network. We look forward to supporting CMB’s continuous expansion in the region”, said Juan Alcaraz, Founder and CEO of Allfunds.

Meanwhile, David Pérez de Albeniz, Regional Manager for Asia, stated that CMB is well-established with the position of an innovation-driven digital bank in the region. “As a leading wealthtech company, our team in Asia is committed to client experience, innovation and digital solutions. We are delighted to be able to help CMB move forward on the vision and support its growth ambition with our value-added and cutting-edge wealthtech solutions”, he added.

Allfunds has a branch in Singapore and a team of 17 employees who bring in-depth knowledge of the particularities of the Asian markets as well as substantial experience in the region. Earlier this year, they opened a new office in Hong Kong as the hub for its North Asia business, broadening its ecosystem with new distributors and fund managers coming from the region.

Bank of America Believes the Vaccines Will Boost Global Growth in an Uncertain Context Near-Term

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lighthouse-4846854_1920 — Pixabay CC0 Public Domain. Bank of America confía en que las vacunas impulsen el crecimiento en un entorno donde la incertidumbre dominará el corto plazo

With a surge in COVID cases and uncertain fiscal policy, Bank of America believes the near-term outlook is “weak and uncertain” but expects the roll out of multiple vaccines to boost global growth, particularly in the developed market economies with the biggest problems containing COVID, but with the best access to vaccines.

In the firm’s report for 2021, global economists Ethan S. Harris and Aditya Bhave point out that “we are not out of the woods yet” due to the surge in COVID cases and uncertain fiscal policy, but in their view more stimulus and “wide vaccine distribution” should boost growth mid-year.

For the United States, they think it will be a transition year, “moving back to services from goods, to private from public and to in-person from virtual” as “the scars from COVID will remain”. Specifically, they look for the economy to grow 4.5% in 2021. In the Euro area, after falling a 7% in 2020, they expect a 3.9% and 2.7% growth this year and in 2022.

Meanwhile, in Latin America they forecast GDP growth to rebound to 3.8% in 2021 after a decline of 7.4% in 2020 and fiscal deficits to likely improve. “But many countries will still be far from stabilizing their debt ratios and will need to develop credible exit strategies”, they warn.

In the near term, the most important uncertainties for Bank of America are around the US: “We are still very much in the rising part of the COVID curve and it will take a number of weeks to gauge the damage to public health and the economy. Fiscal policy is equally uncertain, with a potential stimulus package of anywhere from zero to a trillion dollars”, the report points out.

That’s why, medium term, the speed of a vaccine roll out is “critical”. “Of importance is not only the supply of doses but also the demand, i.e. the degree to which vaccine skepticism will slow progress towards herd immunity. If delays in vaccine rollouts in emerging markets are even longer than expected, investors should look for developed markets growth outperformance in 2021”, says the firm.

Four growth drivers

The bank identifies four major cross currents in the global economy that will be key drivers of growth: the evolution of the pandemic, the distribution of vaccines, another round of fiscal stimulus and a “more organized” trade war.

“The outlook is quite stable for countries that have done a good job containing the virus with effective testing, tracing and quarantining systems. By contrast, countries that have not contained the virus are super sensitive to the near-term surge in COVID cases and the medium-term surge immunizations”, the experts say.

That’s why, in their opinion, the roll out of highly effective vaccines will be the key driver for global growth. “A key part of our forecast is that we expect some vaccine nationalism, with countries that manufacture vaccines first immunizing large parts of their own populations before exporting to the rest of the world”. Thus the US likely will get most or all of the initial doses of the Moderna vaccine. And in general, developed economies will tend to get the vaccine faster than emerging markets. Among the second ones, China will probably be the first to get herd immunity.

The firm expects another round of fiscal stimulus worldwide. For the US, they are forecasting 750 billion dollars fiscal right after the Presidential Inauguration on January 20 and across Europe they expect more moderate stimulus of 1-2% of GDP.

The last cross current to watch is the trade war, which, after Joe Biden’s presidential victory, they expect to be “smaller and more organized”. Biden has said he will try to work with US allies to present a united front for dealing with “bad actors.” For Bank of America’s economists, that would include a continued push back against Chinese violations of intellectual property rights, national security concerns and human rights issues. “We would expect him to dial back battles with Europe, Canada, Mexico and allies in Asia, while seeking to reform rather than sideline international organizations. This means a much less uncertain climate for multinational businesses”, they conclude.

Inflation, deflation

Lastly, the experts reveal their outlook for inflation: “Inflation refused to budge before the pandemic, despite a long economic recovery and apparent full employment in much of the world. In our view, this stickiness was mainly due to the fact that many years of low inflation had lowered inflation expectations even as labor markets finally started to tighten. The effect was to both flatten and shiſt down the Phillips Curve”.

In their opinion, the COVID crisis has punched a hole in inflation, and whatever inflationary pressure was in the global economy has now leaked away: “It will take a number of years for most central banks to hit their targets”.

Debt Matters: Which Countries’ Debt Levels Put Them Most at Risk Today?

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Pre-pandemic, vulnerabilities in some EM economies had mounted amid slowing economic growth. As Fig. 1 shows, countries in the bottom right (Brazil, Egypt, Ukraine, South Africa) had limited fiscal space going into the health crisis as they already had high public-debt-to-GDP ratios.

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Since the onset of the current crisis we have seen a surge in debt ratios as recession hit. For the moment there is a tolerance in markets towards higher fiscal deficits and public debt (that we closely monitor), but actions to restore fiscal sustainability will be required once the recovery gets underway.

Tracking debt sustainability

Our proprietary ‘Debt Sustainability Score’ looks for a potential negative drift in government indebtedness before it becomes irreversible, using a range of tested inputs. Our ‘Shorter-Term Debt Score’ model detects shorter-term momentum shifts based on quarterly inputs. In fig. 2 below we combine the latest readings of both models.

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This chart shows us two things. First it identifies countries with good debt dynamics in the green quadrant: Taiwan particularly and Eastern Europe, especially Bulgaria. Conversely the red quadrant shows us less favourable markets: foremost Brazil (of which more from our EM debt team below), South Africa and Egypt.

Second it flags markets which are seeing short-term shifts that might point to improvements or deteriorations in their longer-term debt sustainability score. Improving on the margin are Chile and Turkey.

Meanwhile a range of markets are seeing short-term deteriorations with possible long-term consequences: foremost the Philippines, but also Malaysia, China and Romania.

A view from our EM Debt Team on Brazil

Brazil has been one of the worst affected countries during the Covid-19 crisis, with a large number of virus cases, significant restrictions and economic disruption.

The fiscal and monetary policy response has been timely and very powerful – involving large social transfers and a significant widening in fiscal balances as well as monetary policy easing and liquidity provision.

The large fiscal impulse in Brazil presented below, during a time of mounting debt to GDP, has unsettled market participants. Very low interest rates have also weighed on the currency, further exacerbated by a difficult environment for EM FX globally.

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More recently however, it is becoming clear that the Brazilian real (BRL) has become an increasingly domestic/idiosyncratic story, heavily centered around the outlook for fiscal policy. While we expect the external environment to improve, through a gradual although somewhat uneven global recovery and the prospect of a vaccine in 2021, we believe that BRL will continue to be dominated by domestic fiscal news flow and policy coordination.

The way forward...

In particular, we believe that Brazil needs to set out clear policies for maintaining the fiscal spending ceiling by allowing a gradual expiry of temporary fiscal measures, identifying spending cuts and pushing ahead with a more ambitious reform agenda. Should such a scenario materialize, likely over the next few months, we believe the risk premium specific to Brazil can be priced out from the currency, allowing the BRL to strengthen.

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Restoring fiscal credibility in Brazil together with an improving growth/virus picture, strong commodities backdrop and a positive external balance picture should translate into a reversal of this year’s significant underperformance. Of course, if there is evidence that the spending cap is not being respected it could mean further currency weakness, as the debt sustainability issue becomes the dominant driver of Brazilian assets.

By Sabrina Khanniche, Economist in the Fixed Income team, and Mary-Therese Barton, Head of Emerging Market Debt at Pictet Asset Management.

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Important notes

BlackRock to Acquire Provider of Personalized Index Solutions Aperio

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descarga — Foto cedida. BlackRock compra el proveedor de índices personalizados Aperio

BlackRock has entered into a definitive agreement to acquire Aperio, a pioneer in customized index investing, for 1.05 billion dollars. The asset manager announced in a press release that they will buy the business from Golden Gate Capital, a private equity company, and will incorporate Aperio’s employees.

BackRock is already a provider of SMAs for U.S. wealth management-focused intermediaries, specialized in customized actively-managed fixed income, equity, and multi-asset strategies. The firm pointed out that this acquisition will boost its SMA assets by roughly 30% to over 160 billion dollars.

It also “expands the breadth of personalization capabilities available to wealth managers from BlackRock via tax-managed strategies across factors, broad market indexing, and investor ESG preferences”. In its view, the combination with Aperio will set a new standard for personalized whole portfolio solutions in the SMA market.

“The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalization. BlackRock and Aperio, working together, will bring unmatched capabilities to meet these objectives. The combination will bring institutional quality, personalized portfolios to ultra-high net worth advisors and will create one of the most compelling client opportunities in the investment management industry today”, said Martin Small, head of BlackRock’s U.S. Wealth Advisory business.

Meanwhile, Aperio co-heads, Liz Michaels and Ran Leshem, commented that the they have been “honored” to earn the trust of the most demanding wealth managers by always putting investors’ interests first and partnering with advisors to solve the complexities of UHNW investors through research integrity and excellence in human-centric client experience.

“With BlackRock, we have found a like-minded fiduciary firm with long-standing roots in tax-efficient indexing, a commitment to sustainable investing, and diversity, equity and inclusion, and a track record of delivering consultative whole portfolio solutions to wealth management intermediaries. We are excited to harness BlackRock’s capabilities and reach to keep innovating on behalf of an even larger base of wealth managers and institutional investors”, they added.

Vertical integration

Aperio is a pioneer in customizing tax-optimized index equity SMAs to deliver wealth managers capabilities that “embrace the uniqueness of each investor and enhance after-tax performance”. It also pioneered individually personalized ESG portfolios that enable investors to elevate the purpose of their wealth and make an impact on causes deeply important to them.

Aperio’s high-touch consultative client service model focuses on ultra-high net worth households and institutions served by private banks and the fast-growing independent registered investment advisor (RIA) market. The U.S. retail and wealth SMA market totals approximately 1.7 trillion dollars in assets and is growing at approximately 15% annually and 35% among RIAs. With over 36 billion dollars of assets under management as of September 30, 2020, Aperio has outpaced the industry with an average annual organic asset growth rate of nearly 20% over the past five calendar years.

BlackRock plans to operate Aperio as a separately branded, vertically integrated team within its U.S. Wealth Advisory business. Aperio will retain its investment, business development, client service, and ESG-SRI processes under the leadership of Ran Leshem and Liz Michaels, who will become co-heads of the team. Their current CEO, Patrick Geddes, will maintain his role as Aperio’s Chief Tax Strategist and become a BlackRock senior advisor, focusing on broadening portfolio construction research and tools for taxable investors across asset classes.

“We are thrilled to welcome the Aperio team to BlackRock. We look forward to bringing Aperio’s innovative mindset in financial services to BlackRock and drawing on the team’s decades of experience to expand our offerings to even more advisors and their clients. This transaction deepens our presence in the San Francisco area and reflects the critical importance to BlackRock of tapping the innovation taking place on the West Coast of the U.S”, said BlackRock’s Chief Client Officer, Mark McCombe.

NN IP Launches an Alternative Credit Fund to Finance Global Trade

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container-3859710_1920 — Pixabay CC0 Public Domain. NN IP lanza un fondo de crédito alternativo destinado a la financiación del comercio global

NN Investment Partners has launched the fund NN (L) Flex Trade Finance, offering institutional investors access to a conservative portfolio of short-dated trade finance loans which are sourced globally. The asset manager announced in a press release that they will partner with Channel Capital Advisors LLP to enhance sourcing and pipeline management of the strategy.

“Trade finance allows institutional investors to enter a USD 15 trillion market that has been dominated by banks until recently. In trade finance, investors can find a potent portfolio diversifier that offers a yield pickup over liquid credit and that is efficient from a solvency capital perspective”, they pointed out.

The asset class is short in tenor which, in NN IP’s view, provides natural liquidity and allows portfolio managers to react quickly to changing circumstances. The investment strategy focuses on well-rated loans that facilitate a specific sale of often essential goods, which are supported even under stressed market conditions.

“Strict investment guidelines ensure a highly diversified portfolio in terms of geography, sector and counterparties, without employing leverage”, they said. Also, portfolio construction is aimed at properly diversifying risk whilst still allowing for a robust analysis of each individual transaction on credit and environmental, social and governance (ESG) criteria.

In this sense, the firm will assess each transaction of the strategy on ESG criteria using a specific framework for trade finance and align each of these with the Sustainable Trade Criteria from the International Chamber of Commerce. In addition to this, they will apply proprietary policies with a focus on financing sustainable goods with positive social impact (encouraging responsible consumption) and restricting the financing of goods with negative impact (such as coal, crude oil and tobacco).

Suresh Hegde, Head of Structured Private Debt, commented that, in the current low-interest-rate environment, there is growing demand for trade finance amongst institutional investors. “Building on our 10-year track record in financing international exports, we have spent a considerable amount of time assessing the short-dated trade finance market. We are delighted to offer a strategy which allows institutional investors to benefit from the attractive characteristics of these assets in a robust and responsible manner, without adding undesirable idiosyncratic risk”, he added.

A sub-fund with monthly liquidity

The asset manager revealed that the NN (L) Flex Trade Finance has a medium-term target return of USD LIBOR + 3-4% gross with a weighted average credit rating of BBB-/BB+, and an average maturity of less than one year. It offers institutional investors quarterly interest income distribution and monthly liquidity.

The strategy is a sub-fund of NN (L) Flex, established in Luxembourg. NN (L) Flex is duly authorised by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. Selected share classes of the sub-fund are currently registered in Luxembourg, Netherlands, Germany, France, United Kingdom and Italy.