Wikimedia Commons Roque Calleja. Roque Calleja Moves Back to NY as Head of BlackRock Alternative Specialists (BAS) for Latin America
Roque Calleja will move to New York next April, as Head of BlackRock Alternative Specialists (BAS) for Latin America. In this role he will work closely with Sara Litt, who has been a member of the BAS Latin America team since 2016 and will report to Armando Senra, Head of Latin America at BlackRock.
In his new position, Calleja will be responsible for strategy and fundraising for BlackRock’s alternatives platform working closely with Latin American institutional and wealth clients across hedge funds, private equity, real assets and private credit.
Calleja has worked for BlackRock in Mexico since 2014, first as vice president and since 2017 he has been co-director of the Institutional Business together with Giovanni Onate, who will lead the business individually when Calleja leaves. According to an internal memo to which Funds Society had access, “During this time, BlackRock has become the leading asset manager for active mandates in Mexico and one of the leading asset managers for local and international alternative investments… This appointment reflects BlackRock’s continued focus on alternatives as a strategic growth area and the growing demand from clients across the region for alternative assets.”
Serna added: “Latin American clients are increasingly relying on alternative investments as a critical component of their asset allocation in order to build resilient, diversified portfolios that can enhance long-term returns. BlackRock’s alternatives platform offers clients unparalleled breadth across alternatives asset classes, a global footprint, and robust sourcing capabilities, which combined with our risk management platform positions us well to deliver to clients best in class alternatives solutions.”
Calleja joined BlackRock in 2009 as a member of BlackRock’s iShares business in Iberia. He later moved to New York where he supported BlackRock’s Latin America and Iberia business and was responsible for managing the retail offshore wealth business. He has a BA degree in business administration and a Master’s degree in Business Strategy from the Francisco de Vitoria university in Madrid, Spain. He also holds a master’s degree in alternative investments and Hedge Funds by the Instituto de Estudios Bursatiles (IEB) university in Madrid.
BlackRock’s alternatives platform currently manages over $172 billion in client assets and comprises a global team of over 800 investment professionals sourcing and structuring both direct and fund investments.
Photo: Shenandoah National Park. 201 Global Asset Managers Can Now Try to Woo Mexican Pension Funds
It is official, Afores can now invest in international mutual funds. The meeting and authorization of the Risk Analysis Committee (CAR) that international managers, afores and the regulator have been waiting for since 2017, has already taken place and, as a result, the guidelines by which afores can invest in mutual funds with active strategies can be consulted in only 12 pages.
In summary, in order to be elegible the manager should have at least 10 years of experience managing investment vehicles or investment mandates, as well as at least 50 billion dollars in assets under management. The same amount that applies to managers looking for an investment mandate. According to the CAR document, this requirement, which is fulfilled by the 201 largest asset managers in the world, can be modified by the Investment Committees of the Pension Funds by “considering criteria such as the experience of the administrator in the management of assets in the international markets of the strategy object of investment, the performance of the Fund, as well as additional criteria determined by their own Investment Committees.”
The fund in particular must have at least 2 years of operation since its inception and more than 100 million dollars in assets. In addition to being open funds of an Eligible Country for Investments and having a benchmark.
Although the guidelines do not indicate that the daily composition of the funds should be known, a condition with which several players were not comfortable, they do mention that the net value of the assets of the fund should be known daily.
The fund itself may use derivatives to reduce costs, manage liquidity, marginally facilitate the replication of the index or sub-index or for risk management but not to increase returns, leverage or synthetically replicate the benchmark.
In addition, to preserve the active nature of the strategy, investment in other funds or ETFs will not be allowed.
This resolution marks a milestone in the way Afores can invest and has been in the process for several years, as well as the increase of the 20% limit on investment in foreign securities, which the CONSAR confirms that they are still working to achieve. For this to change, there needs to be change to the law, which is now underway, but without a doubt, the approval of the investment in international funds will change the market in Mexico and the way of investing the afores, for the benefit of the workers.
Wikimedia CommonsInterior del Palacio de Bellas Artes de México. The CERPI Boom in Mexico Should Continue in 2019
The total assets under management of the Mexican Pension Funds, AFOREs, reached 179.274 million dollars in January 2019, of which 10.774 million dollars belong to structured investments in just over 100 instruments, that is, 6.01% of the resources are invested in Development Fiduciary Securitization Certificates (CKDs) and Investment Project Fiduciary Securitization Certificates (CERPIs) that reached 741 million dollars through 19 issues at the end of January 2019. In the accumulated of the year (to February 22), two more were added raising 48 million dollars.
The potential amount of these CERPIs can reach 5.776 million dollars considering the maximum amount of the series A issue (capital calls) and the maximum amount of the issuance of additional series contemplated by CERPIs.
The CKD has allowed the Afores to participate in private equity through a mechanism listed on the stock exchange since 2009.
The AFOREs through the CKDs and the CERPIs, have participated in infrastructure projects, energy, real estate developments, forestry projects, private equity investment in companies, as well as financing.
The CERPIs emerged in 2016 as a complement to the CKDs that allow resources to be collected from funds and companies to invest in a wide range of projects.
The CERPI seeks to solve many of the limitations of the CKD, to have:
A more flexible capital call structure,
Most appropriate corporate governance requirements (the technical committee does not have to approve investments), and
Minor disclosure requirements.
Between 2016 and February 22, 2019, 21 CERPIs have been placed. In 2016, the first CERPI was born, the MIRA issuer, a real estate company focused on the development of mixed uses in Mexico. In 2018 there were 18 CERPIs and in the first two months of the year (until February 22) two more were added (Blackstone and Spruceview). The boom observed since 2018 is due to the fact that in January 2018 the regulation was relaxed to allow investment in CERPIs that finance projects outside the national territory in up to 90% of the issue.
The possibility of co-investing with the AFOREs in national and international projects has attracted internationally recognized firms such as:
Blackrock. Investment management company established in 1988 and is the largest asset management company in the world with 5,315.409 million euros according to the firm Investment & Pensions Europe, IPE
Blackstone. He was born in 1985. He manages assets for 361.000 million euros (place 49 in 2018 according to IPE).
KKR. American firm with more than 40 years of experience and with managed assets exceeding 140.622 million euros (place 131).
Partners Group. Founded in Switzerland in 1996. It manages 61.936 million euros (place 174).
Lexington Partners. He is one of the largest independent administrators in the world focused on secondary transactions of private capital and co-investments. Since 1990, Lexington has raised more than 38.000 million dollars according to the placement prospectus (page 172), among others.
In addition to the diversification there is a transfer of knowledge from global investment managers to the AFOREs for their joint participation in investment projects. Among the CERPIs that are in the approval process of the financial authorities are:
Acon LATAM Holdings which is a diversified investment fund of private capital that operates in the United States, Mexico, Brazil and Colombia;
Paladin Realty Administrador (PALADINCPI) a trust owned by Paladin Realty Management, a private equity fund manager focused on real estate investments;
HarbourVest Partners Mexico a subsidiary of the fund manager that was created in 1982; HarbourVest Partners.
Grupo Agricultura, Agua y Ambiente, a subsidiary of Renewable Resources Group (RRG), an asset management company with a focus on agriculture and other sustainable resources; among others that are in process according to information from the Mexican Stock Exchange.
It can be expected that this boom will continue in 2019.
Wikimedia CommonsCourtesy photo. Over Seven Million Delinquencies
A decade ago, during the financial crisis of 2008-2009, more than 5.5 million Americans were unable to pay their car loan instalments and were more than 90 days late with their payments. Now there are more than seven million people in the United States who can’t pay their car loans, seemingly illogical in the current situation of economic growth and very low unemployment (4% compared to 10% in 2009).
Around 86% of Americans use a private car to get to work. This gives you an idea of how important it is to have a car in most parts of the United States and why most people prioritise payment of their car loans over their mortgage.
As a result, some economists warn that these loan default figures published by the New York Federal Reserve Bank could be just the tip of the iceberg when it comes to problems in the economy and that we could find ourselves in a situation similar to that of the subprime mortgage crisis.
Some significant data: 90% of the value of new vehicle sales is paid through a financial instrument (a loan or a lease); The total outstanding car loans in the USA is more than a trillion; the number of new loans for vehicle purchases in 2018 was $584 billion (the highest nominal figure in 19 years); according to sector reports, the average price of a new car is approaching $36,000, while the average family income in 2018 was $62,000; the average length of a vehicle purchase loan has grown to 64 months.
At first sight, all these figures can sound alarming and reminiscent of the 2008-2009 financial crisis. However, as with any statistical data, we need to put them in the appropriate context and look at the whole picture. To do this, it is important to emphasise that, despite the fact that the absolute number of defaults has increased, the non-performing loan ratio ended 2018 at 4.5%, below the 5.3% peak reached in 2009. Another key factor in evaluating the situation of vehicle loan debt is the quality of the creditors: new loans were mainly granted to people with a higher credit score, which means that 30% of outstanding car purchase loans were given to borrowers with the highest credit score.
Neither should we ignore the fact that the increase in the absolute number of loans is due to the good health of the economy and has gone hand-in-hand with an increase in car sales, meaning that the percentage of financed purchases has remained relatively stable. Finally, we need to put into the context the size of the vehicle purchase loan market (just over a trillion dollars) by comparing it to the mortgage debt market ($12 trillion).
It is undeniable that, by analysing all the figures in-depth, we can reach conclusions on the unequal access to economic growth for certain population sectors (for example, the increase in non-performing loans in the population under 30, a sector also overburdened by student loans) or on the need for infrastructure to facilitate public transportation. However, it seems unreasonable to assert that an increase in non-performing vehicle loans is leading us to the threshold of a global financial crisis such as that of 2008-2009 caused by the selling of subprime mortgages.
Patrick Dwyer, Miami Area Winner 2019. The Best Advisor in Florida is...
The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research, spotlights over 3,000 top advisors across the country who were nominated by their firms—and then researched, interviewed and assigned a ranking within their respective states.
Those advisors that are considered have a minimum of seven years experience, and are ranked using an algorithm that weights factors like revenue trends, assets under management, compliance records, industry experience and those that encompass best practices in their practices and approach to working with clients. Portfolio performance is not a criteria due to varying client objectives and lack of audited data.
In Florida, for the Coral Gables and Miami Area 51 advisors made the cut. The top 2 come from Merril, Patrick Dwyer and Louis Chiavacci, while on the third place we find Adam Carlin from Morgan Stanley Private Wealth Management.
For Northern Florida, 100 advisors made the list, with Merril’s Michael Valdes at the top. He was followed by Clarke Lemons from WaterOak Advisors and Bob Doyle from Doyle Wealth Management.
94 advisors from South Florida were included on Forbes list. At the top are Thomas Moran from Wells Fargo Advisors, Sal Tiano from JP Morgan Securities and Don d’Adesky from The Americas Group of Raymond James.
Photo: maxpixel CC0. The Fed is Looking to Prepare a Plan to Stop Reducing its Balance
The Federal Reserve, which at its meeting on January 29 and 30 decided to keep the reference rate unchanged, said in its minutes, published this Wednesday, that there is greater concern about the risks to the economic growth of the US and that it is open to preparing a plan to stop reducing its balance.
The FOMC continued with the message that it would be “patient” to decide when and how to adjust policy to a growing set of risks, including the slowdown in growth in China and Europe, Brexit, trade negotiations and the effects of the five-week shut-down of the United States government, pointing out to a wait and see aproach about how the economy unfolds with the current policy, indicating that for now it has suspended interest rate increases.
The minutes also show that they are prepared to be more flexible in reducing their overall balance, made up of a 4 trillion dollars portfolio of bonds and other assets: “Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.” they point out.
Pixabay CC0 Public DomainPamjpat. Asian Countries Dominate When It Comes to Passport Power in 2019
Japan goes into the new year holding 1st place on the Henley Passport Index, with citizens enjoying visa-free/visa-on-arrival access to 190 destinations. In a further display of Asian passport power, Singapore and South Korea now sit in joint 2nd place, with access to 189 destinations around the globe. This marks a new high for South Korea, which moved up the ranking following a recent visa-on-arrival agreement with India. Germany and France remain in 3rd place going into 2019, with a visa-free/visa-on-arrival score of 188.
The US and the UK continue to drop down the Henley Passport Index — which is based on authoritative data from the International Air Transport Association (IATA) — and now sit in joint 6th place, with access to 185 destinations. This is a significant fall from the 1st place position that these countries held in 2015. Denmark, Finland, Italy, and Sweden now hold joint 4th place, while Spain and Luxembourg are in 5th. As they have done for much of the index’s 14-year history, Iraq and Afghanistan remain at the bottom of the ranking, with access to just 30 visa-free destinations.
Turkey’s recent introduction of an online e-Visa service has resulted in some interesting changes to the overall rankings. As of October 2018, citizens of over 100 countries (including Canada, the UK, Norway, and the US) must apply for an e-Visa before they travel to Turkey, instead of being able to do so on arrival. While this specific change means that a number of countries have dropped slightly in the rankings, it does not alter the overwhelmingly positive effect of the wider global tendency towards visa-openness and mutually beneficial agreements. Historical data from the Henley Passport Index shows that in 2006, a citizen, on average, could travel to 58 destinations without needing a visa from the host nation; by the end of 2018, this number had nearly doubled to 107.
Dr. Christian H. Kälin, Group Chairman of Henley & Partners and the inventor of the Passport Index concept, says this latest ranking shows that despite rising isolationist sentiment in some parts of the world, many countries remain committed to collaboration. “The general spread of open-door policies has the potential to contribute billions to the global economy, as well as create significant employment opportunities around the world. South Korea and the United Arab Emirates’ recent ascent in the rankings are further examples of what happens when countries take a proactive foreign affairs approach, an attitude which significantly benefits their citizens as well as the international community.”
Citizenship-by-investment countries consolidate their respective positions
As in 2018, countries with citizenship-by-investment (CBI) programs continue to hold their strong positions. Malta, for instance, sits in 9th spot, with access to 182 destinations around the world. St. Kitts and Nevis and Antigua and Barbuda hold 27th and 28th spot respectively, while Moldova remains in a strong position at 46th place, with citizens able to access 122 countries. A recent agreement signed between St. Kitts and Nevis and Belarus, due to come into effect in the coming months, will further strengthen the St. Kitts and Nevis passport, and enhance the travel freedom of its citizens.
Dr. Juerg Steffen, the CEO of Henley & Partners, says: “The enduring appeal of investment migration programs shows that more and more people are embracing alternative citizenship as the best way to access previously unimagined opportunities and improve their passport power. Additionally, it is no surprise that countries are increasingly looking to launch CBI programs, which attract talented individuals and bring enormous economic and societal benefits.”
You can consult your country’s position in the following link.
Photo: Onsen. Multi-Asset Funds did Not Work in 2018 because they Largely Replicated what Advisers Were Doing Themselves
Multi-asset funds failed to protect investors from the impact of volatile equity markets in 2018, according to the Natixis IM Global Portfolio Barometer.
Adviser portfolios delivered negative returns across all regions, driven by falls in equity markets. But the analysis of investor portfolios in seven markets, conducted by the Natixis Portfolio Research & Consulting Group, found that multi-asset funds did not provide diversification as expected, and instead had very high correlations to adviser portfolios. This suggests multi-asset funds largely replicated what advisers were doing themselves.
Equities were the largest contributor to negative returns in all regions, costing around 3-5% on average – except in Italy, where advisers had much lower equity allocations. However, multi-asset funds were the second largest detractor, costing 0.5-2% on average, and particularly affecting France, where these funds have traditionally been very popular.
Alternative investments, like real estate and managed futures, were more resilient to volatility than traditional asset classes, but still contributed marginally to portfolio performance at best, due to lacklustre performance and low allocations. Real assets contributed little except in the UK, where property funds were a positive contributor to portfolios.
Matthew Riley, Head of Research in the Portfolio Research and Consulting Group at Natixis IM, commented: “It’s natural for investors to seek shelter from volatile markets by diversifying portfolios, but it is clear from our analysis that, in 2018, the majority of multi-asset funds fell short and largely failed to diversify, which only added to portfolio losses”.
“Our findings show that investors really need to look more closely when selecting a multi-asset fund, ensuring that the fund is aligned with their investment objective. This due diligence should include checking the fund’s correlation to their existing portfolios, as well as to bonds and equities, to make sure it will improve the risk-return profile of the portfolio.”
Italy showing most resilience to volatile markets
In stark contrast to 2017, advisers in all regions suffered negative portfolio performance in 2018 with the impact of falling equity markets and muted fixed income returns taking their toll. Italy was the most resilient market, with estimated losses of 3.2% for the average adviser portfolio, due to a much lower allocation to equities. Advisers in Italy had an average equity exposure of just 20%, while the UK and the US had a more bullish stance, with equity weightings of over 50% in moderate risk portfolios.
Currency risk continues to weigh on portfolios
In 2017, the Global Portfolio Barometer revealed the impact of currency risk on performance. And, while slightly reduced, it remained an important factor in 2018, benefitting European investors compared to their US counterparts. Currency moves remain an often overlooked area of risk, but when considering a more internationally exposed portfolio, not paying attention to it can have a significant impact on overall returns. For instance, in 2018 a European investor allocating to US equities would have experienced a small positive return of 0.3% in euro terms – a US investor would have lost 5%.
The quest for true diversification continues…
In short, the findings of the Global Portfolio Barometer highlight the impact that the return of volatility had on markets and investor portfolios, with portfolio risks potentially rising from the extraordinarily low levels seen in 2017. Multi-asset funds simply failed to provide diversification, which should be food for thought when considering the relationship between diversification, risk and returns in adviser portfolios.
The Mirabaud Group, the banking and finance group founded in Geneva in 1819, has obtained the necessary authorisations from the Central Bank of Uruguay to open two Wealth Management subsidiaries. Both located in Montevideo, Mirabaud Advisory (Uruguay) SA will offer Mirabaud’s services to local clients, while Mirabaud International Advisory (Uruguay) SA will provide services to clients from other Latin American countries.
These openings strengthen Mirabaud’s wealth management presence and follow the creation of Mirabaud Asset Management (Brasil) Ltda in São Paulo earlier in the year which marked Mirabaud’s arrival on the South American continent. Both Uruguayan companies will be managed by Fabio Kreplak, with the support of Thiago Frazao, Limited Partner. According to the company, these openings represent a further step in Mirabaud’s international development strategy.
Nicolas Mirabaud, Managing Partner and Head of Wealth Management for the Mirabaud Group, is “delighted with the opening of these two new subsidiaries in Mirabaud’s bicentenary year. For 200 years Mirabaud has always focused on serving the interests of its clients and protecting their assets by offering them investment solutions tailored to their needs. In recent years our Latin American client base has grown, so it was natural for us to establish a presence closer to them in order to serve them better. Opening these subsidiaries in South America once again demonstrates that Mirabaud maintains its entrepreneurial family spirit.”
Thiago Frazao, Head of Wealth Management for the LATAM market, emphasises how “Mirabaud’s diversified and personalised offering meets the needs of clients looking for confidence, stability and financial performance. Mirabaud is present on four continents and in ten countries and can call on a network of experts covering the various fields of wealth management. With their comprehensive knowledge of the South American market and Swiss wealth management expertise, Fabio Kreplak and his team are fully integrated into the Mirabaud culture and approach.”
Fabio Kreplak, who gained extensive experience in Latin America at UBS and then at Julius Baer, is “honoured to join Mirabaud and contribute to its development from Montevideo. Mirabaud has an excellent reputation among finance professionals, who recognise the firm’s tailor-made approach, international expertise and standards of excellence, which are essential assets in a booming Latin American market. Our clients will be able to benefit from the full range of investments and services offered by the Wealth Management team.”
The team based in Montevideo is expected to reach half a dozen employees during the course of this year.
Foto: NPS CC0. Investors Trust Opens Insurer in Puerto Rico
Investors Trust welcomes ITA International Insurer, the most recent member of its group. International Insurer is an insurance company in Puerto Rico, a jurisdiction that the firm considers ideal for insurers and reinsurers in Latin America, Europe and other international markets.
“As a United States Commonwealth, Puerto Rico’s free market economy is subject to both federal and state regulations designed to protect free market-competition; specifically, but not limited to, the insurance and banking industries. This position further stabilizes Puerto Rico as an attractive domicile for international insurance business and provides legal peace of mind for companies and individuals.” said the company in a statement.
Investors Trust has also established an International Financial Entity (IFE) in Puerto Rico to consolidate all banking and custody transactions for the group of insurance companies, ITA International Financial Services Corporation.
“The need for greater diversity and new jurisdictions has led Investors Trust to reposition itself as a multi-jurisdictional insurance group. With the establishment of ITA International Insurer in Puerto Rico, clients now have more options to choose a plan based on their specific needs and preferences.” said the company that anticipates further growth in 2019 to support their multijurisdictional structure.
