Photo: Ennor. Alvaro Morales Appointed New Head of the Santander Global Private Banking Team
Santander is currently experiencing an overhaul of its Private Banking division. Amongst the most important changes is Alvaro Morales’ promotion to Head of Santader’s Global Private Banking team. He will continue to be based out of Miami, where up until now, he served as Head of Santander International Private Banking.
According to an internal memo by Angel Rivera, Head of Retail and Commercial Banking for Banco Santander, to which Funds Society had access, “The Retail and Commercial Banking division will also play a central role in the development of the Group’s Private Banking business, in the direct management of International Private Banking and in the support given to domestic private banks in the various geographies, taking greater advantage of the synergies of our international platform and all of the countries.”
The aim, according to the memo, is to continue improving the specialization of Santander Private Banking’s advisory service model with a segmented offer and a personalized specialist service model that provides each customer tailored solutions.
Morales has been working close to Santander since 1999 when he joined the group as Regional Director for Banco Banif. In 2007 he moved to London to run the UK’s Private Banking business of the bank. By 2009 he became Head of Santander International Private Banking and moved to Miami.
Carlos Díaz will remain in charge of products and market intelligence and will work with Álvaro in managing this unit. Blanca Vilallonga will now will be responsible for coordinating the division’s activities, implementing new ways of working, monitoring projects, ensuring compliance with work plans and measuring the impact they have on the organization.
Through the same internal memo Rivera signaled the following appointments:
Angel Rivera will directly assume leadership of Digital Transformation coordinating with the area of Innovation and with each country. It is a shared responsibility throughout the Group. Alberto Fernández Tomé will lead the Digital Solutions team, and Julián Colombo will continue to head the CRM and Business Intelligence team.
Fernando Lardies will be in charge of the new Network Banking project, wheras Javier Castrillo will be in charge of the Commercial Strategy and Best Practices team which includes:
Ignacio Narvarte who will be in charge of Means of Payment (issuing and acquiring).
Francisco del Cura who will remain in charge of Insurance
Frederico Bastos who will remain in charge of Businesses
Ignacio Gomez-Llano who will remain in charge of Quality and Customer Satisfaction
The memo also included Rivera’s appreciation to Gonzalo Algorri, former group director of Global Private Banking Santander, “for his contribution to the development of the Private Banking business and to all our colleagues who have left the Bank in recent weeks, for their contributions.”
CC-BY-SA-2.0, FlickrPhoto: Carlescs79, Flickr, Creative Commons. Santander AM Expands Selection to Passive Strategies
The Research and Selection team of Santander Asset Management (SAM) has started covering passive vehicles, on the back of demand for these strategies.
The move will see the Spanish firm’s recommended list or “manager matrix” increase from about 300 to almost 400 strategies, of which about 80 names will come from the passive sphere.
“This move [including the passive sphere] makes sense, it’s something that we have been discussing for a while, and finally we decided to merge both, passive and active within the same research team. I think it makes total sense,” José Maria Martinez-Sanjuán, head of Manager Research and Selection at Santander Asset Management told InvestmentEurope. “The fact is that there’s more demand, so we have to respond from a research point of view,” he said.
The growth in the ETFs segment illustrates investors’ bullish demand for passive strategies. According to ETFGI, assets invested in ETFs/ETPs listed globally reached a record high of $3.1trn (€2.7trn) at the end of April 2016.
This compares to $2.9trn in 2015, and $1.5trn in 2011 — a growth of 106% over the last five years. “If you see the flows of the industry, you will see that ETFs are only growing. There’s also a new wave of smart beta coming now to the market, so we need to be aware of this and understand the market evolution,” he said.
Martinez-Sanjuán said fee reduction plays a key role on the growth for passive vehicles, along with the ability to implement more easily strategic allocations through a core-satellite portfolio. Following this trend, the team led by Martinez-Sanjuán has developed a research process for passives, and it has just started to cover these strategies. “The coverage of passive vehicles is not as time consuming as the active world, but I guess that covering both gives you the global picture of what is going on in the industry and it is a value added piece of information for the investors,” Martinez-Sanjuán said.
“This is to help our various clients, so we can have a global view of any strategy, active or passive,” he said. Early this month, it emerged that SAM made two new appointments within its selection team. Last month, Wee-Tsen Lee joined Santander from Barclays Wealth to be responsible for manager selection global & US equities. In addition, Pryesh Emrith was promoted within Santander in March, to be in charge of US & global fixed income and multi-asset.
The two new appointments are based in the group’s London headquarters and work for the Research and Selection team, which works within SAM’s Global Multi-Asset Solutions team and alongside Santander Bank.
SAM manages around €20bn as an asset manager, and a further €20bn are assets under advice. The firm advised a further €8bn for institutional clients.
. Pinebridge Investments Wins Key Industry Award From Institutional Investor Magazine
PineBridge Investments has been named Floating-Rate Bank Loan Fixed Income Manager of the Year at the Institutional Investor US Investment Management Awards. PineBridge received the award at a gala event on 19 May 2016 at the Mandarin Oriental Hotel in New York City.
Steven Oh, Global Head of Credit and Fixed Income said, “We are honored to receive this recognition from Institutional Investor, and proud of the value we have been able to deliver to our clients, through an experienced and stable team that has navigated market challenges through multiple economic cycles. ”
The Institutional Investor US Investment Management Awards, now in their seventh year, recognizes US institutional investors for their innovative strategies, fiduciary savvy, and impressive short and long-term returns, as well as US money managers in 39 asset classes and strategies that stood out in the eyes of the investor community for their exceptional performance, risk management, and service.
According to Institutional Investor, the winners were chosen from a short list of top-performing managers across a range of investment strategies identified by the magazine’s editorial and research teams in consultation with eVestment, a leading provider of institutional investment data analytics. Investment strategies were evaluated on such factors as one-, three-, and five-year performance, Sharpe ratio, information ratio, standard deviation and upside market capture. More than 1,000 leading US pension plans, foundations, endowments and other institutional investors were also surveyed and voted for the top-performing managers in each strategy over the past year.
PineBridge received the Global Balanced/Tactical Asset Allocation Manager of the Year Award in 2015.
CC-BY-SA-2.0, FlickrPhoto: OTA Photos. Nikko Asset Management Launches Japan Focus Equity Strategy
Nikko Asset Management has launched a Luxembourg domiciled Japan Focus Equity UCITS fund managed by Yuki Watanabe.
The Japan Focus strategy aims to achieve long-term capital growth by investing in a portfolio of more than 30 stocks. The team takes an active investment approach based on thorough fundamental research, analysing long term structural trends and identifying companies that benefit from them.
The UCITS fund is based on an existing strategy domiciled in Japan, which has been managed by Watanabe since August 2012. As of 31 March, 2016, the fund has returned 26.15 per cent annually since September 2012 compared with an annualised 21.24 per cent rise in the TOPIX Total Return Index.
“Our Japan Focus fund has been launched in response to investor demand for specialist expertise in actively managed investments in Japan,” says Watanabe, Senior Fund Manager of the Nikko AM Japan Focus Fund. “We have strong relationships locally which provide our team with unique insights into the underlying companies, and the ability to tap into opportunities that may have otherwise been overlooked.”
The fund provides access to Nikko Asset Management’s proven investment team and market leading resources. The company has approximately 200 investment professionals operating in 11 countries, nine of which are based in Asia.
CC-BY-SA-2.0, FlickrPhoto: Vinoth Chandar. Missing the Target?
With the popularity of target date funds swelling assets to more than $763 billion at the end of 2015, defined contribution plan sponsors now have a sea of choices. But many are still trying to navigate the target date fund landscape based on common myths, which could steer them off course from their participants’ best interests. It’s time to dispel the myths and get back to what we think matters most based on participant time horizons and risk profile – asset allocation and robust risk management.
Myth 1: Target date funds that are passively managed have less risk.
The move to passive management, driven in large part by fee pressure, is undeniable. And, 50% of plan sponsors surveyed in the 2015 MFS DC Investment Trends Study think that passively managed funds have less risk than their active counterparts. But here are two problems: First, passively managed funds take the same risk as the market and often concentrate on stocks that become overvalued. Second, there is actually no such thing as a passively managed target date fund.
While some target date funds invest exclusively in passive funds, the fund managers still make active decisions with respect to asset class allocation, underlying fund selection, glide path design, portfolio rebalancing and risk management. On the latter, recent volatility reminds us just how important those active management decisions can be, particularly with respect to strong risk management.
Myth 2: Target date funds managed tactically can avoid market downturns.
The truth is, not many target date funds take this approach because adding value consistently through tactical asset allocation is not easy. In fact, target date fund managers have few opportunities to make market or asset class calls, because they are constrained to making decisions based on the underlying funds.
Here’s the concern: tactical investing done in a material way can change a fund’s risk profile. That happens inadvertently to funds that fail to rebalance after relative market performance causes deviations in the funds’ asset classes or underlying fund weights. Allowing the markets to dictate a fund’s tactical asset allocation this way can be dangerous – with potentially negative surprises for investors expecting a very different risk profile.
Myth 3: Target date fund glidepaths can be built based on the “average” participant.
Constructing a glide path that is optimal for a representative participant, is by definition sub-optimal for everyone but that participant. It’s like being a shoe manufacturer who makes only size nine shoes because that’s the average. The trouble is, the shoes don’t fit most of the population.
Glidepaths by design are meant to accommodate a wide range of investors. So, the discussion shouldn’t really be about “to” or “through” glidepaths or a one-size-fits-all participant profile, given how dramatically demographics vary from plan to plan. Instead, we need to make the right asset allocation decisions for the end investor. That means building a portfolio that properly balances capital appreciation against principle preservation in relation to the time to the target date. We believe glidepaths should reflect a high level of risk tolerance early on and a high level of risk aversion as the target date approaches. Studies show that 80% of participants take their money out of the plan within three years of retirement. So, a glide path that reaches its final resting spot 15 years past that target date creates a very aggressive “to” portfolio for investors who leave the fund right at or shortly after retirement.
Myth 4: You can judge a target date fund manager’s skill based on shorter track records.
Target date funds are by their very nature long term investments and investors seem to get that. A recent report from Morningstar called “Encouraging signs for target-date funds” suggested that target date fund investors might be more patient than other fund investors. As evidence, they pointed to target date fund investor results that were 74 basis points higher than their funds’ total returns, compared to the negative return gaps experienced by other fund investors who trade in and out. So, if investors are more willing to stay the course long-term in a target date fund, why are more than 50% plan sponsors looking at three-year track records, as we found in a recent study(iv)? To get a more complete picture, see how a target date fund has performed peak to peak or trough to trough – through a full market cycle.
Myth 5: Risk management is an afterthought.
When it comes to long-term outperformance, minimizing losses on the downside is just as important as capturing the upside. Many target date fund investors found that out the hard way after the global financial crisis. The fact is, there is greater persistence in risk than in return. So if you get the risk side of the equation right, you can manage a target date fund’s risk profile more effectively through time. That takes a sound investment process where risk management is baked in at every level.
As target date funds continue to evolve and grow in popularity, it’s easy to lose sight of the features that align best with participant needs. We believe putting a priority on active risk management and asset allocation will help plan sponsors make choices managed for their participants’ long-term horizons.
Ryan Mullen is MFS Senior Managing Director, Head of Defined Contribution Investments.
Photo: AndyCastro, Flickr, Creative Commons. Eastspring Investments to Become Master Agent of Vontobel AM in Taiwan
Vontobel Asset Management reaches next milestone in Asia: Eastspring Investments will become Master Agent and will sell its mutual funds in Taiwan.
In Taiwan, Eastspring Investments is one of the leading asset managers for retail investors, providing investment solutions across a range of asset classes including equities, fixed income, and multi asset.
The cooperation will broaden the access of Vontobel Asset Management to the retail market in Taiwan and provide Eastspring’s clients with the opportunity to invest in Vontobel’s active investment products.
“We are very pleased that Eastspring has chosen Vontobel Asset Management as a partner for retail distribution in Taiwan. We believe this cooperation agreement is a win-win for both sides, allowing Eastspring to service the financial needs of its clients by offering further investment opportunities. Vontobel Asset Management has a strong partner in Taiwan with deep market knowledge and experienced staff,” said Ulrich Behm, CEO of Vontobel Asset Management Asia Pacific.
“We are delighted to provide Taiwan retail investors with access to Vontobel Asset Management’s funds. More than 82 percent of Vontobel funds are ranked in the top quartiles within their respective peer groups,“ said Ms Loretta Ng, CEO of Eastspring Investments Taiwan.
Vontobel Asset Management is a globally active asset manager with a multi-boutique approach. Founded in 1988, Vontobel Asset Management comprises six investment boutiques: Quality Growth Equities, Global Thematic Investing, Fixed Income, TwentyFour, Multi Asset Class Investing and Harcourt focusing on alternatives. As of December 2015, client assets totalled approximately USD 100 bn.
Photo: Yuichi Alex Takayama. Nikko Asset Management Appoints Yuichi Alex Takayama as Global Head of Sales
Nikko Asset Management has appointed Yuichi Alex Takayama as Global Head of Sales (International Business), the Tokyo-headquartered asset manager announced today. Concurrently serving as Head of International Business Development and Sales Planning Division, he will collaborate closely with overseas unit heads and senior sales managers in formulating the company’s international sales strategies.
He has more than 20 years of asset management experience, spanning Tokyo, New York and London, mainly as a portfolio manager and senior analyst for Chuo Mitsui Trust & Banking (now Sumitomo Mitsui Trust Holdings, Inc.) and Mizuho Trust & Banking Co., Ltd. His most recent postings were as Chief Executive Officer of the European unit of Tokio Marine and Asset Management Co., Ltd., and Head of International Sales.
“We are delighted to welcome Yuichi to our team. His expertise in major global markets and track record in international sales and leadership will help us build our position as Asia’s premier global asset manager,” Hideo Abe, Director and Executive Vice Chairman of Nikko Asset Management said.
. Don’t Confuse Price Momentum with Business Momentum
When a stock price tumbles, investors often think that something is really wrong with the company. But that can be a mistaken assumption—especially as ETF-oriented investors are buying broad sectors rather than individual companies.
Kurt Feuerman, CIO—Select US Equity Portfolios at AB and James T. Tierney, Jr., CIO—Concentrated US Growth at AB, explain that momentum is a funny thing. Share price momentum isn’t necessarily an indicator of business momentum. Sometimes a stock is falling simply because investors are taking profits after its outperformance, or because a portfolio is changing its risk profile in a volatile market. There are countless reasons why share prices move. Both managers believe that last year’s narrow market is a case in point. “Investors might assume that the underperformance of a large swath of the US stock market means that most companies are in bad shape. But there is another plausible interpretation. It could also mean that there are a lot of buying opportunities in undervalued companies that have much better businesses than is widely believed. Distinguishing between price momentum and business momentum is one of several ways that active investors can capture excess returns over long time horizons.” They write in theor company’s blog.
Healthcare Swings Ignore Company Fundamentals The healthcare sector provides a good example. Fears about potential drug-pricing controls have been a recurring theme during the US presidential campaign.
Back in September 2015, when Hillary Clinton announced with a tweet her intention to impose controls on prescription drugs, investors in pharmaceutical companies reacted instantly. It didn’t matter that she hadn’t even been nominated as a presidential candidate or that the political hurdles to her proposals would be formidable. That day, shares of drugmakers in the US and Europe fell sharply.
Among those companies was Zoetis, which tumbled by 11% over the following week—more than the broader US pharmaceutical sector did. But investors had missed something. Zoetis manufactures animal health products, so it probably wouldn’t be a target for pricing controls on medicines for people—and it’s long-term growth prospects hadn’t changed.
Over the following month, the healthcare sector continued to underperform the S&P 500 Index. Biotech stocks were also hit, including companies like Biogen and Celgene, which are expected to grow their earnings (and innovation pipeline) by at least 10% annually over the next five years.
Despite the furor about drug-pricing controls, nothing has changed in the business prospects of many pharmaceutical companies. The downward stock price momentum was fueled by speculation about a potential shake-up of industry dynamics, without any real consideration of individual company fundamentals, cash flows or earnings power.
Assessing Technology Momentum Share price momentum has also created a conundrum for investors in the technology sector. In early 2015, some of the large and more mature (“legacy”) US technology companies were trading at very low price/earnings multiples. Some investors may have seen this as a buying opportunity. Yet over the next several months, these companies’ share prices continued to move even lower. In this case, the companies were facing significant challenges, as the evolution of information technology was weighing on growth at their underlying businesses. Here, price momentum may indeed have been a reflection of business momentum, in our view, so it’s important for investors to assess the two separately, and to keep in mind that just because a stock is cheap, it doesn’t mean that it can’t get cheaper.
Rallies May Mislead Investors Similarly, not every stock that rallies sharply has a healthy underlying business. Take energy stocks as an example. Over the past year, shares of energy companies have tended to move up and down in close correlation with the oil price. But just because the oil price has rebounded in recent weeks, it doesn’t mean that every energy company has a resilient underlying business.
In their view, “some exploration and production companies have weaker business dynamics and could still struggle to grow their earnings even if the oil price continues to climb. But we believe that some of the larger integrated companies have higher-quality balance sheets and more scope to cut costs, which could help to minimize the earnings impact of continued volatility in oil prices.”
“Instead of blindly trading stocks based on price swings, it’s important to scrutinize the fundamental business prospects of each one in order to ensure that the stock’s long-term earnings path is sustainable. Passive portfolios will be vulnerable to swings in momentum by holding every stock in the benchmark. By being attuned to shifting momentum, active equity managers can aim to avoid false signals from sharp swings in share price, especially those driven by flows of exchange-traded funds. And when momentum surges upward, active equity managers can make tactical trims to positions in richly valued holdings, raising cash temporarily in order to redeploy into attractive stocks when the prices correct,” they conclude.
Photo: NathanLanier, Flickr, Creative Commons. Old Mutual Confirms that It Has Received Approaches from Third Parties to Acquire its Stake in OMAM
The London-based financial services firm Old Mutual said on Tuesday that it was approached by several potential buyers interested in its controlling stake in its Boston-based business OM Asset Management.
Following a report from the Financial Times on speculation that the Old Mutual board has endorsed a deal to sell its 66% stake in the US business to Affiliated Managers Group, Old Mutual said it has continued to assess its options but had not finalized any agreement.
“In response to media speculation, Old Mutual can confirm that it is continuing to assess the options available to it with regard to the preferred route to effect the managed separation announced on 11 March 2016. We will update the market as and when appropriate. As a consequence of the decision to proceed with the managed separation of Old Mutual, we expect to receive interest in our assets periodically. With regard to OM Asset Management plc, Old Mutual confirms that it has received approaches from third parties to acquire its stake in OMAM. There can be no certainty that these approaches will lead to any transaction or any certainty as to the terms on which any such transaction might proceed. Further statements will be made if and when appropriate”, said in a news release on Tuesday.
The company, which is listed in London and Johannesburg, said in March that it would split into four main businesses (Old Mutual Wealth, Old Mutual Emerging Markets, Nedbank and OM Asset Management) by the end of 2018.
CC-BY-SA-2.0, FlickrPhoto: Photo Philde. Amundi And Oddo & Cie Reach An Agreement On The Acquisition Of Kleinwort Benson Investors
Amundi, Oddo & Cie and Kleinwort Benson Investors (KBI) today announced that they have signed a definitive agreement whereby Amundi is to acquire an 87.5% stake in KBI from Oddo & Cie, while the management team of KBI will acquire a 12.5% stake.
KBI, a subsidiary of BHF Kleinwort Benson Group which was recently acquired by the Oddo group, is a fast-growing equity management firm, headquartered in Dublin, Ireland with offices in Boston and New York and employing 62 people. Its highly experienced investment team manages 7.6 billion euros of assets as of 31 March 2016, mainly across global equity capabilities. KBI has delivered an excellent performance track record over the years, and enjoyed dynamic growth of its assets under management over the past few years (CAGR 2011-15: +28%).
KBI’s clients are well diversified between institutional, subadvisory and third party distributors. The firm has developed successfully in North America which represents 52% of assets under management by client domicile, while Ireland and UK account together for 26%, Continental Europe 14% and Asia 8%.
In 2015 KBI posted net revenues of 31 million euros and a net income of 9 million euros.
Amundi and KBI are highly complementary in terms of product and geographic focus. KBI’s global equities expertise will strongly augment Amundi’s equity franchise. Likewise, KBI will leverage Amundi’s strong Retail and institutional presence in Europe, Asia and the Middle East.
The transaction benefits from the full support of KBI’s management team, who will hold a material stake in the company. Going forward KBI will retain its distribution, operating and portfolio management autonomy. Sean Hawkshaw will continue as Chief Executive Officer and Noel O’Halloran as Chief Investment Officer. All employees are expected to remain with the firm.
The transaction is fully in line with Amundi’s financial criteria for acquisitions: the deal will be immediately accretive to Amundi’s EPS and will comply with the target of an expected return on investment superior to 10% within three years.
In parallel with this transaction, Amundi and Oddo & Cie will strengthen their cooperation, namely via the cross selling of their investment expertise.
