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A Lost Decade for Value, but Not for Adaptive Value Managers

station-3714601_1920_1 — Pixabay CC0 Public Domain. Una década pérdida para el value, pero no para sus gestores si saben adaptarse

The value style of equity investing has faced severe structural headwinds over the past decade. NN Investment Partners thinks that this secular underperformance is due to several factors: the unconventional tools used by central banks across the world, the technological disruption that traditional value sectors face, and the low level of interest rates and absence of inflationary pressures. “Even in the face of these headwinds, value-based portfolios can still beat the market by adapting to the changing world around us”, said the asset manager in a recent publication.

In their view, equity managers with a value style have been left with few tools with which to navigate the turbulence of the past decade. Some have opted to stick with the traditional approach that succeeded prior to 2007 based on a buy-and-hold philosophy. “More often than not this implied waiting for mean-reversion, while facing the risk of holding so-called value traps; that is, companies that are cheap for good reason and that will continue to underperform the market, owing to either a broken business model or poor management”.

Others have integrated new tools in the investment process that reduce drawdowns, while maintaining “true to style” portfolios with key value characteristics. This is the option chosen by NN IP for managing the Euro High Dividend and European High Dividend strategies, and “the results speak for themselves”. Over time, these funds have outperformed on a relative basis, even with the significant headwinds facing the value investing style.

The asset manager points out that this “demonstrates that by taking an adaptable approach, value strategy investors can still beat the market”. To achieve this outperformance against peers and the broader market, they have integrated three key pillars of adaptability into their process.

1. Adapting to their own biases

Every portfolio manager has behavioral biases, which is not an issue as long as they are aware of them and compensate accordingly. By analyzing more than 10 years of portfolio trading history, the firm identified the behavioral biases that negatively affected performance as well as those areas where they work in their favor. “For example, the process of rebalancing our allocations back to target weights has been a substantial source of positive alpha over time. On the other hand, sticking with underperformers and being overly loss-averse was a source of negative alpha”.

Having become aware of these biases, they systematically reviewed the list of potential value traps in their holdings, then acted to cut them. This created significant positive alpha during the period of market volatility caused by the COVID-19 crisis.

2. Managing unintended macro risk

“All portfolio managers know the absolute level of risk in their portfolio. Some, however, aren’t aware of how underlying elements contribute to this risk and thus fail to actively manage it”. By analyzing the sources of risk, avoiding potentially unintended macroeconomic risks and allocating the majority of their risk budget to the idiosyncratic (stock-specific) component, the asset manager significantly reduced their portfolios’ sensitivity to unexpected external shocks.

As they pointed out, this approach did not prevent the strategies from remaining “true to style” as they retained their positive exposures to the value and dividend factors, but in a way that controlled macro risk.

3. Using ESG factors to enhance risk-return ratios

Value portfolio managers can screen their investable universe to seek out the most attractively valued names. However, simply conducting basic valuation screens heightens the risk of owning value traps. NN IP thinks that, as well as screening on valuation, portfolio managers must conduct an in-depth qualitative assessment of each company. “We have found that by consistently integrating ESG factors into our investment process and actively reducing exposure to companies with high levels of ESG risk, we can offer a better risk/return ratio than most of our value/dividend peers”.

Their norms-based approach for exclusion, engagement and voting, combined with the qualitative assessment of a company’s relevant ESG risks and their potential financial impact, reduces drawdown risk for their European and Eurozone dividend strategies. Monitoring ESG risks at portfolio level (using a proprietary Corporate ESG Indicator) provides another layer of risk management that limits unintended ESG risks.

“These three pillars have a common thread: by embracing the changes offered by the investment environment, value portfolio managers can strengthen their risk-adjusted returns while staying true to style”, stated the firm. Instead of sticking with the Value 1.0 approach that worked very well prior to the Great Financial Crisis, but has exhibited very poor risk-adjusted returns since then, NN IP has adapted their processes to this new reality. In doing so, they have delivered significantly better risk-adjusted returns than most of our value/dividend peers. “Value 1.0 is dead; long live Value 2.0”, they concluded.

Azimut Acquires a 55% Stake in Sanctuary Wealth, a Leading Independent Firm in the United States Wealth Management Industry

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iocenters-2673328_960_720 — Pixabay CC0 Public Domain. Azimut adquiere el 55% Sanctuary Wealth, una firma independiente de weath management en Estados Unidos

Azimut Group, one of Europe’s largest independent asset managers, via its U.S. subsidiary AZ US Holdings Inc., signed an agreement to acquire a 55% stake in Sanctuary Wealth Group, a leading US independent wealth management firm for financial advisors who seek to build and manage their own practices but want the all-encompassing support of an advanced platform to achieve their full potential.

Azimut, established in 1989 and headquartered in Milan, Italy, operates in 17 countries managing in excess of 57 billion euros (equivalent to almost 67 billion dollars) in total AUM. Azimut first entered the United States in 2015 with a greenfield initiative in Miami focused on the Latam-RIA space called AZ Apice, subsequently reinforced by another partnership with Genesis Investment Advisors. The U.S. has strategic importance for Azimut in the private markets segment as well where, through Azimut Alternative Capital Partners, it seeks to acquire minority stakes in mostly U.S.-based alternative asset managers providing permanent capital to grow and achieve their greatest business potential.

The deal with Sanctuary represents a significant milestone and a further demonstration of Azimut’s commitment to pursue its plan to expand into the broader U.S. financial industry. Sanctuary Wealth, founded in 2018 by Jim Dickson, currently has 7 billion dollars (equivalent to 6 billion euros) of billable AUM and further assets under advisement from institutional clients bringing the total to close to 12 billion dollars. Dickson is the visionary who led the development and launch of the innovative, hybrid RIA model and partnered independence network. Prior to Sanctuary, he spent 20+ years in senior leadership roles at Merrill Lynch.

Sanctuary has established itself as the leading platform for the next generation of wealth managers in the U.S., who are breaking away from traditional wirehouses and brokerage firms to own, operate and grow their own businesses. Through an ecosystem of partnered independence, advisors have the resources and services they need while enjoying the economies of scale afforded by larger traditional platforms. The Sanctuary team includes employees dedicated to transitions as well as ongoing operations support to ensure an optimal experience for the advisor, their clients and employees. Sanctuary also provides its partner firms the means to grow through strategic opportunities where they can acquire and roll up existing practices in partnership with Sanctuary.

The Azimut and Sanctuary partnership will focus on the development of a best in class network of breakaway advisory teams. Sanctuary will also continue to invest in the growth of its partner firms, and in strategic acquisitions of other RIAs and wirehouse practices across the U.S. The strategy and success of Sanctuary since inception has been exceptional. Their national community includes 41 partner firms, spans 17 states and employs more than 100 advisors serving over 7,000 households.

The wealth management industry in the US is in the midst of major change with as much as 2,4 trillion dollars of assets “on the move”. The initial target for SWG is the wirehouse breakaway advisors going independent, with an estimated 469 billion dollars of AUM. Secondly, Sanctuary will focus on retiring advisors with another1.6 trillion dollars of AUM. The last segment is the smaller (growth-challenged) independent RIAs who are looking for operational support and / or a transition plan, with another pool of 348 billion dollars of AUM. Custodians are also fostering the independence movement as it helps build their market share against traditional wirehouses. Custodians’ preferred growth partners are consolidators and aggregators versus individual RIAs.

Subject to the regulatory approval by the appropriate authorities, AZUS will acquire a 55% stake in Sanctuary through a reserved capital increase in order to finance a mutually agreed business plan. The remaining stake will continue to be in the hands of senior management as well as financial advisors. The agreement contemplates that Azimut and Sanctuary’s current management team will cooperate and grow the business in the US over the medium-long term, and provides for call/put option rights as well as a further investment in the business linked to certain achievements.

Jim Dickson, CEO of Sanctuary, comments “The changes currently underway in the wealth management industry due to a surge of retiring advisors and a massive intergenerational transfer of assets presents our firm with unprecedented opportunity. By partnering with Azimut, Sanctuary Wealth is well-positioned to capitalize on this once in a lifetime opportunity to grow and invest alongside our partner firms. We are most fortunate to have a strategic partner offering significant patient capital, whose independent and entrepreneurial culture aligns with our own to provide the right resources to accelerate the growth of our advanced platform in both size and scale.”

Pietro Giuliani, Chairman of Azimut Group, comments “Azimut’s DNA is made up of independence, entrepreneurship and value creation for both clients and shareholders. We found all these same values in Sanctuary and are thrilled to be partnering with such like-minded professionals. Not only is Sanctuary an extremely admired firm, but it is made of some of the best senior leaders, talents and financial advisors in the United States. We are committed to helping Jim and his team achieve their greatest business potential, leveraging our long-standing expertise in asset management, private markets and a global presence in more than 17 countries around the world. Thanks to this milestone transaction, Azimut is on the right path to create an integrated and successful business in the United States made up of a leading wealth management firm like Sanctuary, a unique and best in class private markets business like Azimut Alternative Capital Partners, and in the near future a top performing traditional asset management platform.”

NN Investment Partners Appoints Saúl Santamaría as Senior Business Development Manager

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saúl santamaria — Foto cedidaSaúl Santamaría, Senior Business Development Manager del equipo de distribución de US Offshore de NN IP. . NN IP ficha a Saúl Santamaría para el cargo de Senior Business Development Manager

NN Investment Partners (NN IP) has appointed Saúl Santamaría to the role of Senior Business Development Manager as part of the US Offshore Distribution Team, effective as of 12 October 2020. He will report to Iván Mascaró Guzmán, Director Business Development for Latin America and US Offshore, and will be based in The Hague, explained the asset manager in a press release.

In this new role, Santamaría will be responsible for building and maintaining strategic relationships with key wirehouses, independent broker dealers, registered investment advisors and regional private banks to support growing demand for core capabilities like sustainable investments. He will also help NN IP to promote new investment ideas of strong structural conviction for the long term. NN IP highlighted that his appointment emphasizes its commitment to expanding Americas Offshore business.

“I am thrilled to have Saúl working at NN IP as part of our US Offshore distribution team. Not only does he have ample experience in the US Offshore and Latam markets, but I identify a strong alignment with our commercial philosophy -promoting high conviction investment theses in the context of a transparent approach- and our drive to promote fresh and challenging ideas to the market”, said Mascaró. In his view, Santamaria’s “in-depth experience” in working with world-class asset managers will help in successfully expanding NN IP’s offering in the growing offshore market.

Meanwhile, Santamaría stated that he is “happy to join NN IP” and looks forward to contributing to the company’s development in the US Offshore market through active management and sustainable solutions. “I strongly believe NN IP’s investment philosophy offers a breath of fresh air that entices investors to think differently about how they can sustainably build their portfolios. I am proud to be part of that discussion”, he added.

Santamaría has 14 years of experience in the global asset management industry. He joins NN IP from Compass Group, where he was Head of US Intermediaries and responsible for leading the distribution efforts of Wellington Management funds for the US Offshore market.

He started his career in 2006 at Société Générale’s Risk Management department in Paris. In 2010 he joined Amundi as a sales manager and two years later he was appointed as Head of Distribution for Latin America, based in Santiago de Chile. In September 2014, Amundi opened its first office in Mexico City and appointed him as its Managing Director. In 2017, he moved to Miami with the Carmignac as a Business Development Manager, where he remained until 2019 when he joined Compass Group.

Santander Combines Openbank and Santander Consumer Finance to Create a Global Digital Bank

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JMC_4673 — Foto cedidaAna Botín, presidenta de Banco Santander.. El Santander fusiona Openbank y Santander Consumer Finance para crear un banco digital global

Banco Santander’s group executive chairman, Ana Botín, announced plans to create a global native digital consumer bank with the combination of Openbank and Santander Consumer Finance. The entity stated in a press release that this is one of its three initiatives to become “the best open financial services platform”, and it was revealed by Botín last week in at the annual general meeting with shareholders.

This global native digital consumer lending business builds on Santander Consumer Finance’s scale and presence in Europe as well as the Openbank digital platform. “SCF and Openbank are two businesses with excellent potential for growth. SCF, Europe’s consumer finance leader, serves over 20 million customers in 15 markets. Openbank is outperforming -and outgrowing- European digital banks in deposits, with a full-fledged retail product suite marketed on an innovative, scalable and efficient banking platform, a software built by us”, Santander’s chairman said.

Another initiative aims to implement a common operating and business model across all markets under the name of “One Santander”, a process which is already under way at its four banks in Europe. Botín pointed out that, with this new model, they will “simplify products and services to improve the customer experience; and also boost innovation”, taking advantage of their four digital capabilities to redesign distribution and automate their processes on a common platform.

Lastly, the third initiative seeks to create payment solutions to compete with large platforms. In that sense, Santander will combine its payments businesses into a single, autonomous and wholly-owned company, which “with the scale, the right talent, processes and governance, will form a powerful ecosystem of payment solutions”.

Banks have a “critical” role

Botín outlined these plans in her speech during the Group’s annual general meeting celebrated last week, where shareholders approved the capital increase to distribute new shares equivalent to 0.10 euros per share as additional compensation for 2019, to be paid this year. This would bring total shareholder compensation for the year to 0.20 euros per share.

In the meeting, Santander’s chairman also pointed out that banks have “a critical role” to play in the COVID-19 crisis. “We are part of the solution”, she added, going on to underline how banks can contribute to “mobilizing the resources needed to get the country up and running as soon as possible, channeling liquidity to projects which create jobs, and helping shape the digital, sustainable economy”.

Botín expressed conviction that the company will come away from this crisis stronger: “We are determined to help businesses and communities across the world, to build back better, and use this as an opportunity to address global challenges such as inequality and climate change. This is the right thing to do and the path to generate value for our shareholders”, she concluded.

Swetha Ramachandran (GAM): “The Pandemic Has Triggered a More Sustainable Behavior; Consumers Are Looking to Buy Less, But with Better Quality”

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GAMWomen_0 — Swetha Ramachandran, Investment Manager in the European Equities team and Head of the GAM Global Luxury Brands strategy. Swetha Ramachandran, Investment Manager in the European Equities team and Head of the GAM Global Luxury Brands strategy

The virtual forum “The Power of Diversity: Women at GAM,” held by GAM Investments from the 28^th September to the 2^nd October, was attended by Swetha Ramachandran, Investment Manager in the European Equities team and Head of the GAM Global Luxury Brands strategy, as well as responsible for research in the consumer goods sector, both in commodities and discretionary.

As Swetha Ramachandran explained during her presentation, there are three factors why the consumption of luxury goods has persisted during the pandemic. The first is that, during times of uncertainty, consumers revert to trusted brands that provide a sense of confidence and security. Secondly, the luxury sector continues to attract new consumers, with the Baby Boomer generation embracing online spending, and with growing Chinese consumerism beyond its Tier 1 and 2 cities. Thirdly, the pandemic has triggered a trend for more sustainable behavior, with consumers looking to buy less, but with better quality.

Intersecting Trends

In addition to the sustainability factor and the circular economy, the luxury sector is supported by a growing middle class looking for aspirational consumption in emerging economies, particularly in the Asian region. As well as the demographic and lifestyle changes happening among the Millennial and Z generation, and among the older generations, who can devote a greater part of their income to luxury spending.

The attractiveness of these stocks lies in their ability to have exposure to the rapid growth of emerging economies and in particular to the consumer sector, a sector that has a much higher growth rate than the rest of the components of GDP. In addition, most of the stocks in which GAM Global Luxury Brands invests are listed on both European and US stock exchanges, so their capital costs are at developed economy levels, thus benefiting from very low capital costs.

The growth of the emergent consumer

Globally, the middle class spends about $35 billion and by the year 2030 could be spending an additional $29 billion to reach $64 billion, representing about a third of the global economy.

While this middle class grows at a rate of 0.5% in developed economies such as Japan, the United States or the Eurozone, in countries like China and India it shows a growth rate of 6%. If the current rate of growth continues, it is estimated that by 2030 Asia will represent two thirds of the global middle class. As such, the population of China and India will represent about 43% of the middle class by that time.

Currently, China accounts for 35% of global luxury consumption and is responsible for 90% of its growth; while Japan and other Asian countries account for 21% of the global luxury market share and 20% of its growth.

Based on age, the so-called Generation Y (Millennials) and Generation Z are the two generations that are most inclined to spend in the luxury goods sector. Particularly in regard to the Asian and Southeast Asian generations, as the average age of the Asian consumer is 28, while the European or American luxury goods consumer is 40 and 45, respectively.

It is particularly the Chinese Millennial generation consumer who is the biggest spender on luxury brands. This is mainly explained by the rapid generational change that has taken place in the country over the last 40 years. The birth control program of one child per couple, implemented in 1979 in China, makes the Chinese Millennial the only beneficiary of the wealth accumulated by previous generations. As a result, 70% of the millennial generation in China owns their own home, as opposed to 35% in the United States and Europe. This means that once they start working, most of their income is disposable income, and a large part of this is for luxury consumption.

Another reason for their increased propensity to consume is consumer sentiment. In the last 30 years, China has experienced a growth in GDP per capita from the standpoint of purchasing power growth of about 17 times, a figure that compares with less than 5 times in the United States and Europe. This represents that the attitude of Chinese Millennials towards spending is that the future is going to be better than that of their parents’ generation, which fuels their appetite for living well and for consuming premium brands. This is one of the characteristics that differentiate them from past generations that grew up in a China where there was much more economic adversity and more frugal consumption patterns.

Beyond China

While within the next 5 to 10 years China will be the major consumption driver in the luxury goods sector, it doesn’t mean that it will be the only growth factor. If we take into account the combined population aged under 30 of India, Southeast Asia (Thailand, Vietnam, Indonesia and the Philippines), Brazil, Russia, the Arab Emirates and Saudi Arabia, it is 2.3 times more than the population of the same age in China. The only difference is the lower purchasing power of these countries compared to the Asian giant.

However, strong growth in consumer purchasing power is expected in these countries, especially in the Asian region, so that in the long term they could become very attractive consumers for the luxury goods sector. Consumers in the “mass affluent” sector, defined as those consumers with both the income and the intention to greatly increase their consumption of luxury products, will grow to 20% of the population by 2030.

Meanwhile, India is a long-term scenario. Historically, despite having a similar population size to China in absolute terms, China accounts for one-third of global luxury consumption while India barely approaches 3% or 4%. The main reason is that household income is distributed in a pyramidal fashion with a ridiculously small upper class at the apex and a broad base with lower incomes. But this income based population pyramid is being transformed; in fact, a significant increase is expected in the upper and upper-middle class income segments, which at present represents 1 in 4 households, and by 2030 is expected to represent 1 in 2, with some 70 million fewer households in the lower income segment.

Credit Suisse AM and Equilibrium Capital Group Launch a Platform for Sustainable Real Assets

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solution-860229_1920 — Pixabay CC0 Public Domain. Schroders se une a la iniciativa Global Impact Investing Network (GIIN)

Credit Suisse Asset Management and Equilibrium Capital Group, sustainability infrastructure and resource management leader, have joined forces to launch a platform of sustainable real assets that will allow them to expand the resources and capital available to industries and businesses that share their commitment to sustainability.

Credit Suisse revealed in a press release that this partnership follows its establishment in July of an executive board-level function Sustainability, Research & Investment Solutions (SRI). SRI has a commitment to provide at least 300 billion Swiss francs of sustainable financing over the next decade in fulfillment of the bank’s and its clients’ desire to deploy capital sustainably.

In support of this global initiative, Credit Suisse AM and Equilibrium will jointly develop and manage a sustainable infrastructure and resource management platform. The collaboration will allow them to combine Credit Suisse’s global reach and expertise in sustainability with Equilibrium’s industry leadership “in building pioneering, institutional, sustainability-driven real asset and resource management capabilities”, they explained.

Climate change mitigation

“Equilibrium is an ideal partner for our franchise given our shared history in sustainability, alternatives and real assets. This partnership marks another landmark in Credit Suisse’s sustainability strategy to help address pressing environmental challenges”, commented Eric Varvel, Global Head of Credit Suisse AM.

Marisa Drew, Chief Sustainability Officer and Global Head of Sustainability, Strategy, Advisory and Finance at Credit Suisse, said that they are “delighted” to support this collaboration in pursuit of their shared mission to mobilize capital for good. The announcement “builds on Credit Suisse’s long history of ground-breaking sustainability strategies, from co-founding one of the early leaders in microfinance and impact credit, to integrating sustainability into real estate portfolios, and innovating in the fields of conservation and energy transition finance.”

Meanwhile, Dave Chen, CEO of Equilibrium Capital, pointed out that they are excited to partner with Credit Suisse on this mandate to address the changing resource infrastructure landscape. “While we cannot reverse climate change completely, we can mitigate its impact by creating more sustainable infrastructure. By managing the environmental risks around food production, waste, water and energy, we can foster greater stability and security in those areas”, he added.

Allfunds Obtains the Fed’s Approval to Open a Representative Office in Miami

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miami-1409763_1920 — Pixabay CC0 Public Domain. La FED aprueba la solicitud de Allfunds Bank para abrir su oficina de representación en Miami

Allfunds Bank continues its international expansion process. Yesterday, the Federal Reserve Board approved their application to establish a representative office in Miami (Florida). The new office will be led by Laura González and will serve as Allfunds hub for US offshore activity.

The statement released by the Board says that the office will act as a liaison with U.S. clients and prospective clients of the firm. Also it will “market and solicit new business for banking products and technological services provided by Allfunds”.

The Board thinks that the firm appears to have the experience and capacity to support the Miami Representative Office. “Taking into consideration Allfunds’ record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, it has been determined that financial and managerial factors are consistent with approval of Allfunds’ application to establish the office”, they pointed out.

In a press release, Allfunds informed that González joined the firm in 2011 and has a wealth of knowledge on US offshore after working several years with the Latam market. Currently she serves as Allfunds Global Head of Wealth Management and prior to that she was appointed Head of Iberia and Americas at Allfunds covering both the strategic direction and the firm´s expansion model across the region. She also successfully led the opening of the Allfunds´ Brazilian office.

“We continue to fulfill our expansion plan. The opening of this office is a very important step for the company as it is the first office in the United States. This milestone reinforces our leadership as the world’s leading wealthtech and fund distribution platform and our commitment to the North American market”, said Juan Alcaraz, CEO of Allfunds.

Allfunds has several representative offices in South America and the Middle East and operates branches and subsidiaries in six countries. Its foreign operations include subsidiary companies in Brazil, Luxembourg, and Switzerland; branches in Italy, Singapore, and the United Kingdom; and other representative offices in Brazil, Chile, Colombia, and the United Arab Emirates.

With total assets of approximately $2.5 billion, Allfunds is a Spanish bank providing clearing, settlement, and administration services through a platform offered to financial services firms, including banks, wealth managers, broker-dealers, insurance companies, fund managers, and pensions. It is the largest investment fund administration platform in Europe based on assets under administration, with over $615 billion.

GAM Hires Jill Barber as New Global Head of Institutional Solutions

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GAM announced the appointment of Jill Barber for the newly-created role of as Global Head of Institutional Solutions. In its quarterly results, the firm revealed that she will join them on 2 November 2020 and will partner with Jeremy Roberts, Global Head of Distribution, to lead sales and distribution.

Hiring Barber has to do with GAM’s intention to focus on growth and cross-selling opportunities between investment management and private labelling. The firm pointed out that further simplification of the business will also bring additional opportunities for efficiency gains in 2021 and 2022.

“The growth pillar of our strategy is progressing well with high levels of client interaction and a strong pipeline of growth opportunities. To support these efforts, we have hired Jill Barber to partner with Jeremy Roberts and lead sales and distribution, focusing on institutional and wholesale clients respectively. We are also seeing encouraging signs of success from collaboration between private labelling and investment management using capabilities from across the firm”, said GAM in its statement.

Before her appointment, Barber was global head of institutional at Jupiter AM for three years, prior to which she worked at Franklin Templeton Investments. Peter Sanderson, group chief executive at GAM, pointed out that she has “an excellent reputation across the industry, in-depth knowledge of the institutional market and demonstrable success in delivering solutions for clients”.

The asset manager also revealed that they will announce shortly a new appointment of the Global Head of Sustainable and Impact Investment, who will lead the sustainable investment strategy and strengthen their client ESG proposition.

Jupiter Opens its First Office in the United States for its New Subsidiary

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denver-767050_1920 — Pixabay CC0 Public Domain. Jupiter AM ubica en Denver su primera sede en Estados Unidos

Jupiter Asset Management announced the opening of its first office in the United States, for its recently created US subsidiary – Jupiter Asset Management US LLC (“JAM US”). Three Jupiter employees, including two newly appointed team members, will be based in the office in Denver (Colorado) as the firm initiates its expansion within the onshore US institutional market.

In a press release, the asset manager pointed out that Taylor Carrington has joined the firm as head of US distribution and managing director for JAM US. Reporting to Warren Tonkinson, managing director, distribution, he will lead the firm’s sales efforts in the onshore US institutional market. With 19 years’ experience in asset management, Carrington joins from Allianz Global Investors, where his most recent position was head of North America, institutional client team. “His appointment marks Jupiter’s first step into this client segment, and an important expansion of its international distribution profile”, said the firm.

Initially, he will spearhead the US onshore distribution of NZS Capital’s global growth strategies, following the agreement of the strategic partnership in late 2019, under which Jupiter is the exclusive global distributor of its products. Teh asset manager revealed that Carrington has known the NZS investment team and its client base for many years, having previously worked with NZS co-founders Brad Slingerlend and Brinton Johns at Janus Capital Group.

Following receipt of the appropriate regulatory approvals, he will also lead the distribution of Jupiter’s investment strategies to the onshore US institutional market.

As part of the initiative to build out the US infrastructure, the firm has also hired Tracy Pike as head of investment oversight at JAM US. As stated in the press release, subject to regulatory approval, her primary responsibility is to oversee the delegation of investment activities to NZS Capital in relation to the NZS strategies, or Jupiter Asset Management Limited in the UK.

Pike brings over 24 years’ industry experience and was previously head of sub-advisor oversight at Charles Schwab Investment Management. Prior to this, she was a senior product manager at Janus Capital Group, where she worked closely with Carrington and the NZS investment team. Pike will report to Katharine Dryer, Jupiter’s deputy CIO.

A credit research hub

Joining them in the Denver office will be Joel Ojdana, a US credit research analyst on the fixed income strategy. He has worked at Jupiter since July 2018 and has over twelve years’ experience in investments. Previously based in London, he has made “a meaningful contribution to the firm’s US credit research – an important pillar of Jupiter’s £12.7 billion unconstrained bond offering”, pointed out the asset manager. Ojdana will be Jupiter’s first research analyst based in the US and he will continue to report to Luca Evangelisti, head of credit research, remaining an integral member of Jupiter’s fixed income team.

Jupiter revealed that during 2021, they will be actively exploring the opportunity to establish a local US credit research hub and potentially expanding the team based there, with Ojdana leading this initiative.

A “vital” local presence

“The US institutional market is incredibly significant, and I’m thrilled that we’ve been able to open our office in Denver. Under Taylor and Tracy’s experienced leadership, there is a brilliant opportunity to expand meaningfully, offering both NZS and in time, Jupiter strategies to US institutional investors”, said Tonkinson.

In his view, establishing a local presence is vital to achieving success in this market and ensures their new US clients will receive the highest level of customer service. “The office opening also represents a key milestone in Jupiter’s international growth”, he added.

Meanwhile, Carrington commented that, having worked in the US institutional market for many years, he is confident that Jupiter’s “broad, high-conviction and genuinely active” fund range will appeal to a wide number of sophisticated investors looking to navigate global markets. “The opportunity to initiate Jupiter’s expansion in the region, as well as to work with the NZS team again, is incredibly exciting and I look forward to helping Jupiter becoming a significant participant in this market”, he said.

PIMCO and GE Capital Aviation Services Create an Aviation Leasing Investment Platform

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model-planes-1566822_1920 — Pixabay CC0 Public Domain. PIMCO y GE Capital Aviation Services crean una plataforma de inversión en el sector de arrendamiento de aeronaves

PIMCO and GE Capital Aviation Services (GECAS), a business unit of GE, have reached a preliminary agreement to develop an aviation leasing platform to support up to $3 billion in aircraft asset financings. The firms announced in a press release that the transaction is subject to customary closing conditions and receipt of required regulatory approvals.

This strategic investment platform will enable GECAS and PIMCO-advised accounts to acquire “new and young fuel-efficient aircraft to meet the needs of a diverse set of global airlines over many years”, they explained. The platform looks to provide “much-needed financing” for airlines which are looking to upgrade their fleets.

The portfolio will initially focus on narrowbody aircraft while allowing flexibility to invest in attractive opportunities in the widebody market. PIMCO and GECAS will consider a range of investment criteria including an airline’s assets and credit quality and also geographic factors.

PIMCO is already one of the world’s largest investors in aviation-backed debt. Both firms think that its presence in aviation financing markets combined with GECAS’ leadership role in the aircraft-leasing segment will provide “enormous flexibility” to fund the global airline industry. GECAS will source transactions, act as servicer and provide asset management services for the platform.

Essential liquidity for a critical industry

“As the airline industry struggles with the effects of the COVID-19 pandemic, the PIMCO-GECAS platform will inject essential liquidity into this critical industry by providing financing solutions at a time when there are fewer traditional financing options for airlines,” said Dan Ivascyn, PIMCO’s Group Chief Investment Officer.

In his view, aircraft remain an attractive asset class in a critical infrastructure sector supported by solid long-term growth drivers. He also pointed out that GECAS’ expertise as a world class aircraft lessor aligns with PIMCO’s “longstanding investment strategy” in aviation finance.

Meanwhile, Greg Conlon, president and CEO of GECAS, claimed to be “delighted” to team up with a premier institutional investor such as PIMCO in this strategic relationship which he thinks will enable “opportunistic plays” to support airline customers around the globe.

“While GECAS maintains an industry-leading position, this platform will ensure we can continue providing our airline customers with the aircraft needed to sustain their franchises”, he added.