Belgian companies Petercam Institutional Asset Management and Degroof Fund Management Company have merged on 4 January to form one entity called Degroof Petercam Asset Management (Degroof Petercam AM).
The merger comes in the aftermath of these between Belgian groups Bank Degroof and Petercam that has taken place in October 2015.
Degroof Petercam AM has €25bn of assets under management and tallies 140 employees.
Its management board is composed of president Hugo Lasat, Tomás Murillo, Thomas Palmblad, Guy Lerminiaux, Philippe Denef, Peter De Coensel and Vincent Planche.
Photo: Sarath Kuchi
. Houston and Washington DC: The Best Cities in the US to Get Rich
Not in every city you can build a fortune. Even if the biggest cities in the US are the most attractive for those willing to do it, you should analyze a series of criteria in order to choose the right one. Houston, Washington DC, Cleveland, Detroit, and New York are the best 5 cities in the country to build a fortune, according to Bankrate. Dallas-Fort Worth, Baltimore, Miami, Minneapolis-St. Paul and Chicago, complete the Top 10.
In order to rank the 18 largest metro areas in the country, Bankrate analyzed after-tax savable income, the job market, human capital (indicating available educational opportunities for career advancement), access to financial services, participation in retirement savings plans, and the local housing market in each city.
CC-BY-SA-2.0, FlickrPhoto: Scott Beale. Henderson: “Companies That Are Reliant Solely on A Cyclical Upturn to Grow Their Revenues Present an Elevated Level of Risk”
Ian Warmerdam and Ronan Kelleher, Managers of the Henderson Global Growth Strategy, believe that concentrating on secular growth in 2016, particularly within innovative themes, while maintaining a strict valuation discipline, is a prudent approach to generating attractive long-term returns.
What lessons have you learned from 2015?
2015 has again felt like a year of mediocre global economic growth, broadly speaking, and we believe that companies that are reliant solely on a cyclical upturn to grow their revenues present an elevated level of risk. This year has reinforced our belief that concentrating on truly secular growth, while maintaining a strict valuation discipline, is a prudent approach to generating attractive long-term returns.
Are you more or less positive than you were this time last year, and why?
We claim no ability to predict the short-term direction of the markets so our strategy remains unchanged. We continue to operate with our five-year investment horizon at a stock level and have confidence that our philosophy and process will continue to deliver strong absolute and relative returns over this longer-term timeframe.
What are the key themes likely to shape your asset class going forward and how are you likely to position your portfolios as a result?
Our strategy remains to avoid making major macroeconomic calls, and to instead focus on using our bottom-up approach to find companies that are benefitting from underappreciated secular growth and high barriers to entry, at attractive valuations. As we look into 2016, we continue to see compelling investment opportunities within our five existing themes: Healthcare Innovation, Internet Transformation, Emerging Markets Growth, Paperless Payment and Energy Efficiency.
Within Healthcare Innovation, for example, we are attracted by the demographic changes at play as an ageing global population struggles to contain ever rising healthcare costs. Increases in life expectancy mean that the global 60+ age group is expected to double by 2050 to two billion people. CVS Health, the US pharmacy chain, provides an integrated healthcare service for its customers and looks set to benefit from these demographic shifts.
Rightmove is a leading online UK property listings company that sits within our Internet Transformation theme and should continue to benefit from the structural shift in advertising spend from offline to online. Within Energy Efficiency investments include companies that increase vehicle efficiency such as Continental, a Germany-based automotive supplier, Valeo, a multi-national automotive supplier based in France, along with Delphi, a US auto component manufacturer.
Photo: AndyCastro, Flickr, Creative Commons. Monaco and China Pressure the US to Apply FATCA
On December 15 and 16, Monaco and China signed the multilateral OECD MAP agreement on automatic exchange of information, therefore, raising the number of jurisdictions that will automatically exchange information to 77.
Both countries will exchange information in 2018 about data of 2017.
According to the law firm Broseta, “the signing of the Multilateral MAP by a country such as China will probably increase the pressure on the US to bilaterally apply FATCA and, therefore, to exchange automatic information with countries with which the US has FATCA agreements”.
CC-BY-SA-2.0, FlickrPhoto: BCE Offcial. Markets’ Addiction to Central Bank Support Leaves Investors Stunned
Markets have become increasingly volatile this year and seem to be much more driven by investor sentiment rather than economic fundamentals. In the past years, markets have developed an addiction to central bank support and their reaction to changes in monetary policy stances has become unpredictable and often dramatic.
This year we saw a couple of good examples. On August 24, or “Black Monday”, Chinese equity markets dropped nearly 9% in one day followed by the news that China’s central bank was not quickly planning to bail out markets again after already pledging hundreds of billions of dollars for this purpose earlier. Naturally this sent ripples throughout global markets, including Europe and the US. On Black Monday, the Dow Jones dropped 1,000 points at opening, the largest drop ever.
The latest example is from December 3, the day that ECB President Mario Draghi announced additional stimulus measures in order to boost the Eurozone economy and inflation. However, markets had created the image of “Super Mario”, the central banker who has proven to be able to overachieve the market’s already high expectations. In September and October, Draghi had hinted at “QE2”, an extension of the ECB’s bond buying program, partly as an answer to China’s woes potentially threatening the Eurozone economy. Markets had therefore been anticipating a substantial additional stimulus package at the central bank’s December meeting, Draghi’s status in mind. Super Mario however managed to underachieve this time and delivered less than the market consensus had expected. The market reaction therefore was one of declining stock markets, a spike in the euro exchange rate and, most notably, a sharp rise in government bond yields. The yield on the German 10-year Bund rose by as much as 20 basis points in a matter of hours, a rise of almost 50%!
It may be obvious that such a highly volatile environment presents major challenges for investors. We have seen quite some examples now of central banks having difficulties communicating their intentions to the markets. And it is clearly not unlikely that more examples will follow. From a portfolio risk management perspective, these kind of occasions emphasize the importance of a well-informed, unbiased and active asset allocation. Given the substantial volatility spikes as mentioned above, more and more investors choose to delegate their allocation decisions to specialised multi-asset teams.
As we saw ECB easing expectations being priced into the government bond market, we decided to underweight German Bunds in our multi-asset portfolios already in the first part of November. In the weeks that followed, we also took some risk off the table by neutralising our equity and fixed income spread positions. Divergence between ECB and Fed policy is – although well telegraphed to the markets – coming to the surface more clearly now. The announcements from both central banks hitting the markets in December, combined with lower-than-usual market liquidity, was for us reason enough to opt for a relatively light asset allocation stance as we move towards year-end.
Valentijn van Nieuwenhuijzen is Head of Multi-Asset at NN Investment Partners.
CC-BY-SA-2.0, FlickrPhoto: jo.sau
. All-Consuming Asia: A Retail Revolution Story
Did you know that Chinese online shoppers spent some $5.7 billion on a single day in November last year; that more and more well-heeled Indian consumers prefer to buy their tea from a pharmacy; or that urban Thais visit a hypermarket at least once a week and spend around half their monthly bills on groceries?
For most of us this is the sort of random information usually reserved for a pub quiz, but for fund managers these are valuable insights into consumer behaviour that reflect some of the changes that have occurred in Asia over recent years.
China’s meteoric rise has changed the world from the price we pay for consumer goods, to the global demand for natural resources, and even the flow of international capital. Much has been written about how policymakers there are promoting domestic consumption as a future driver of growth, but in fact the nation’s consumers have been flexing their muscles for some time.
E-commerce crazy China also happens to be the world’s biggest smartphone market with some 98.8 million shipped in the first three months of this year alone. The country is the world’s biggest car market and, with India, vies for the title of the world’s biggest market for gold.
However, it’s easy to get overly fixated on China. India is another country where reform is on the agenda and where a growing urban middle class is changing the way people spend their money. This is important because people who live in cities tend to earn and spend more.
While only three-in-10 Indians are classified as ‘urban’ in census statistics, urban consumers account for more than 70 per cent of the market for so-called fast moving consumer goods (FMCGs). These consumers are developing new patterns of retail behaviour.
For example, pharmacies have emerged as the fastest growing ‘old economy’ sales channel for FMCGs. Chemists attract a more upmarket customer who seems to prefer buying packaged teas, fruit juices and healthy foods from a man in a white lab coat.
Elsewhere, the 10-nation Association of Southeast Asian Nations, better known as Asean, has developed into something resembling a single market of some 625 million consumers. This has helped the region to emerge quietly from China’s giant shadow.
There has been a shift away from raw materials extraction towards economic activities further up the value chain. Where China talks of rebalancing, Asean has mainly found a happy medium of exporting and recycling wealth at home in the form of growing consumer demand.
Populations are young
Incomes have grown from a low base and there is a huge pent-up demand for housing, consumer durables, transport and banking services. Populations, as is common throughout the emerging markets, are young.
Domestic consumption accounts for around 70 per cent of economic growth in the Philippines, and has done so for some time, according to Jaime de Ayala, chief executive and chairman of Ayala Corp, the country’s oldest conglomerate. Remittances from overseas Filipinos have been a strong driver of middle income consumer markets such as telecoms, real estate and other services.
Meanwhile, the investment case for Indonesia, Asean’s biggest member, is closely tied to its population of some 254 million people. Over half of all Indonesians live in cities and this number increases by some 300,000 every year.
What makes all this even more attractive to us is that consumer businesses aren’t subject to stifling government controls, as tends to be the case with more ‘strategic’ sectors such as defence, utilities or aviation. This means competition exists and innovation can follow.
Clearly not everything is perfect. For one, Chinese growth is decelerating. This may be a good thing in the long run because double-digit growth rates were, in hindsight, unsustainable. But in the short term the whole world suffers.
Asia is struggling to regain momentum in part because of its reliance on Chinese demand. While growth rates are still higher than in other parts of the world, corporate earnings are falling, which may affect jobs and wages.
In particular, Asian economies that are more reliant on foreign investment are being penalized by indiscriminate capital outflows from the region. However, there are lots of people in Asia who are getting richer. Many have a disposal income for the first time in their lives and want to spend this money. The most successful companies have already figured out a way to tap into these fundamental changes.
While Asia must overcome many immediate challenges, an investor would do well to remember the longer term trends that are changing the lives of billions of people across the region every day. That’s because these changes will end up making someone some decent money.
CC-BY-SA-2.0, FlickrNick Sheridan is european equities manager at Henderson. Henderson: “Still Fundamental Value in Euroland Equities”
Henderson european equities manager Nick Sheridan explains why he tries to set aside the sentiment of short-term uncertainty when looking for value, and why he believes that the eurozone remains a prime area to seek out investment opportunities at the start of 2016.
What lessons have you learned from 2015?
Probably the most important lesson from 2015 is the importance of trying to look beyond the emotional impact of short-term news flow, when it comes to valuing stocks. Investors have had to deal with a bewildering series of ‘big news’ events, from the optimism surrounding the European Central Bank’s QE programme to unexpected shocks (the Greek debt crisis; uncertainty over Chinese growth, Volkswagen’s emissions bombshell). As ever these short-term sell-offs provided good buying opportunities for those discerning investors willing to focus on what matters: value.
Are you more or less positive than you were this time last year, and why?
While it is true that the recovery in Europe has been slower and more erratic than hoped, recent news has been reasonably upbeat. Eurozone PMIs are a 54-month high, German industrial output is improving and regional consumer prices are up – all signs that suggest solid growth in the region over the next few months. Although recent earnings in Europe have on the whole been a touch disappointing, many companies have upgraded their expectations for 2016. The question now is whether investors will be patient enough to wait for this earnings recovery to come through.
What are the key themes likely to shape your asset class going forward and how are you likely to position your portfolios as a result?
Our bottom-up strategy is designed to set aside the sentiment and incorporate in-depth analysis of meaningful measures to help identify those stocks that are best placed to outperform. Market volatility, short-term news flow and unexpected events can contribute to a degree of change, but we tend to focus on measurable factors, such as earnings/cash flow, dividends and the balance sheet.
At the heart of the process is very much a focus on value. What price you pay at the beginning of a holding period ultimately dictates your returns. Should market volatility continue to increase, this will create pricing disparities, offering a potentially rich vein of opportunities to invest in quality companies at attractive valuations.
CC-BY-SA-2.0, FlickrPhoto: Rosanna Galvani
. Safra Sarasin expands Total Return team
Swiss private banking group Safra Sarasin has announced the appointment of Stéphane Decrauzat, and Vincent Rossier to head its Total Return team as of Janaury 2016.
Decrauzat joins from RAM Active Investments, where he spent the last eight years as fixed income manager. Rossier joins from Pictet Wealth Management, where he held a number of positions in the fixed income asset mamangement team.
In addition, the group also confirmed the hire of Yann Schorderet as quantitative strategist to the CIO office. He joins from Mirabaud & Cie, where he was also responsible for investment strategy.
Serge Ledermann, member of the Bank’s Executive Committee and head of Asset Management Switzerland, comments on the appointments: ”We are very pleased to welcome these managerial appointments and new skill sets, which not only will enable us to strengthen our existing teams but above all will allow us to provide new asset management expertise. The current financial market environment, with the virtual disappearance of positive yield curves, in fact calls on us to adapt our product range both within the fixed income space and in multi-asset management.”
CC-BY-SA-2.0, FlickrPhoto: Ana Patricia Botín, Chairman of Banco Santander. World Travel & Tourism Council
. Santander Totta, Portugal ́s Second Private Bank After Banco Banif's Acquisition
With the aim of providing continuity to Banco Internacional de Funchal (Banif) and safeguarding the interest of its customers, the Bank of Portugal, the resolution authority, decided to award Banco Banif’s business to Banco Santander Totta, a subsidiary of Banco Santander. Following this decision, as of today, the businesses and branches of Banco Banif will become part of the Santander group.
The transaction will be carried out via the transfer of a large part (the commercial banking business) of Banif’s assets and liabilities to Santander Totta. Banco Santander Totta will pay EUR 150 million for Banco Banif’s assets and liabilities, which are transferred having been adequately provisioned. Meanwhile, other assets and liabilities remain in Banco Banif, which is responsible for any possible litigation resulting from its past activity, for their orderly liquidation or sale.
The acquisition of Banco Banif’s businesses positions Banco Santander Totta as Portugal’s second privately-held bank, after BCP-Milenium, with a 14.5% market share in loans and deposits. Banco Banif contributes 2.5 points in market share and has a network of 150 branches and 400,000 customers. Banco Banif is particularly important in the archipelagos of Madeira and the Azores, where it has very high market shares.
Ana Botín, chairman of Banco Santander, said today: “The acquisition of Banco Banif is another example of Banco Santander ́s commitment to Portugal, one of the group ́s main countries. We are fully committed to the economic development of Portugal and make available all our capacity to help people and businesses prosper in the communities where we operate.”
This transaction has an immaterial impact on the Santander group’s capital and a slightly positive impact on profit as of year one.
CC-BY-SA-2.0, FlickrPhoto: Andy Morffew
. Old Mutual Global Investors Brings Emerging Market Debt Fund in House
Old Mutual Global Investors, part of Old Mutual Wealth, has announced that John Peta, Head of Emerging Market Debt, will take over as fund manager on the US$168 million Old Mutual Emerging Market Debt Fund, effective from 21 January 2016, subject to regulatory approval.
The Fund, which is currently sub-advised by Stone Harbor Investment Partners LP is a sub-fund of the Dublin domiciled Old Mutual Global Investors Series. Its objective, to achieve asset growth through investment in a well-diversified portfolio of fixed and variable rate debt securities issued in emerging markets, will remain unchanged.
OMGI believes investors in the fund will benefit from John’s wealth of emerging market debt investment experience. He joined the business in March 2015 and has managed the US$115 million Old Mutual Local Currency Emerging Market Debt Fund since April 2015. He started his career in fixed income in 1987 and has spent 18 years specialising in emerging market debt investing.
OMGI has also proposed a change to the investment policy of both the Old Mutual Emerging Market Debt Fund and the Old Mutual Local Currency Emerging Market Debt Fund. This change, which will be effective 21 January 2016, subject to regulatory and shareholder approval, will allow the manager to increase the use of derivatives.
John Peta comments: “I look forward to taking on the management of the Old Mutual Emerging Market Debt Fund and identifying areas for growth opportunities. As we move into 2016, I believe emerging market debt will be an appealing investment for those looking to benefit from attractive yields across various regions, including Asia, Latin America and the Middle East”
Warren Tonkinson, Managing Director, Old Mutual Global Investors comments: “John Peta has a great deal of experience managing emerging market debt funds, which investors in the Old Mutual Emerging Market Debt fund are set to benefit from. By increasing his flexibility to use derivatives, John will have greater freedom in his portfolio management style; something we believe will deliver additional client value.
“I’d like to take the opportunity to thank Stone Harbor for their support in managing the fund until now.”
