Lombard Odier IM and ETF Securities Launch Emerging Market Local Government Bond ETF

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Lombard Odier IM y ETF Securities lanzan un ETF sobre deuda pública emergente con enfoque fundamental
Foto: Doug8888, Flickr, Creative Commons. Lombard Odier IM and ETF Securities Launch Emerging Market Local Government Bond ETF

Lombard Odier Investment Managers, a pioneer in smart beta fixed income investing, and ETF Securities, one of the world’s leading, independent providers of Exchange Traded Products (“ETPs”), have listed their emerging market local government bond ETF on the London Stock Exchange.

This fourth addition to the range of fundamental, fixed income ETFs, is designed to provide exposure to local government currency debt of emerging markets and developing countries, using fundamental factors that assess issuers’ creditworthiness to identify those that we believe are best-placed to repay their debt.

Today, emerging sovereign bonds offer an appealing yield-to-maturity as interest rates in advanced economies are likely to remain low for longer. In addition, unlike market-cap benchmarks, which reward the most-indebted borrowers, our fundamental focused approach is designed to deliver quality-based diversification and includes exposure to India and China (the two largest emerging market countries).

Kevin Corrigan, Head of Fundamental Fixed Income, Lombard Odier IM commented:“We are extremely pleased to introduce our emerging market local government bond ETF to the European market. As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally weighted approach provides greater quality-focused diversification for investors. Lombard Odier IM has over five years of experience in fundamentally-weighted fixed income investing and our partnership with ETF Securities enables us to offer a wide range of investors an innovative approach to investing in emerging debt markets.”

Howie Li, Co-Head of CANVAS, ETF Securities added: “The suite of ETFs that we have brought to the market with Lombard Odier IM aim to capture the increasing shift towards more cost-effective investment solutions but, at the same time, provide an improved risk-adjusted return profile. Our first three products, launched in April, were well received and investors have already expressed their interest in the launch of this innovative emerging market ETF. With bond liquidity increasingly being a source of concern, investors in ETFs have extra liquidity support from the secondary market to help mitigate this. This liquidity support coupled with the ability to trade intraday makes the ETF vehicle an ideal access route into fixed income at a time when liquidity matters.”

 

The Asian Devaluation Race Is On

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Asia vuelve a repuntar: ¿Qué está pasando?
CC-BY-SA-2.0, FlickrFoto: Dana Riza. Asia vuelve a repuntar: ¿Qué está pasando?

The decision by the PBoC to introduce the new FX regime serves two purposes, explains Global Evolution in its last analysis. First, the move should be seen as a step forward to comply with SDR eligibility. The IMF recently declined the Chinese calls for letting the CNY become a SDR currency as the fund criticized the gap between the CNY’s market level and daily fixings. In fact, the IMF and the US Ministry of Finance have both welcomed the Chinese policy shift.

Secondly, economic growth is in retreat and the export sector is in dire straits judged by recent export data. A weaker CNY could help stem the growth decline although most would agree that the 2.7% adjustment in USD/CNY since Monday August 10 will not make much of a difference, points out the firm.

Still, if the market believes that the CNY should weaken leading to capital outflows the CNY adjustment may have more legs in the weeks and months to come. The PBoC will lean against disruptive currency volatility but welcome a weaker currency as long as capital outflows are manageable and the CNY depreciation takes place in a controlled and orderly fashion. Inflation is a no worry for now. July’s headline CPI inflation may have increased to 1.6% YoY from 1.4% YoY in June but PPI inflation declined to minus 5.4% from minus 4.8% thereby hitting the lowest level since autumn 2009. To put things short, says Global Evolution, what we now have in China is a managed float and who can blame the Chinese authorities for letting markets determine the value of their currency.

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Sin embargo, si el mercado cree que el yuan se debilitará esto provocará la salida de capitales y el ajuste de la divisa china podría continuar en los próximos meses. El Banco Popular de China luchará contra la volatilidad de la moneda, pero estará a favor de una divisa más débil, siempre y cuando las salidas de capital sean manejables y la devaluación del renminbi se lleva a cabo de una manera controlada y ordenada.

La inflación no es una preocupaciónpor ahora, afirma Global Evolution. La inflación subyacente del mes de julio podría haber aumentado hasta el 1,6% interanual desde el 1,4% interanual en junio, pero la inflación de los precios de producción industrial disminuyó hasta -5,4% desde -4,8%, marcando el nivel más bajo desde el otoño de 2009. Para resumir, lo que tenemos ahora en China es una fluctuación controlada y quién puede culpar a las autoridades chinas por dejar que los mercados determinen el valor de su moneda.

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Who is exposed?

“The genie is out of the bottle and the Asian devaluation race is on as illustrated by the Vietnamese central bank’s decision to devaluate the Vietnamese dong by 2%. Elsewhere in Asia, depressed commodity prices will allow for easy monetary policies with central bankers happy to see their respective currencies staying weak and competitive”, explain the firm specialized in emerging and frontier markets debt.

In emerging Asia, Singapore, South Korea and Malaysia are the countries that are most exposed to the Chinese business cycle whereas in Latin America Chile stands out with an export to China worth around 7% of GDP.

In Asian frontier universe Mongolia stands out with an export exposure to China worth more than 30% of GDP whereas in Africa, Angola and Republic of Congo are the countries most exposed.

What are the consequences?

Asian local fixed income should perform well as headline CPI inflation stay subdued. The tricky part is FX, growth, the banking sector and budget performance. “We believe that local Asian currencies have limited upside potential over the next few months and have cut Asia significantly in our local currency strategies. India and Indonesia are the two countries where we still hold some exposure with our strongest conviction trade being India and with Indonesia offering a notable carry in compensation for currency risks”, point out.

“As to Asian hard currency debt, sovereign debt stocks are low and we do not see roll over risks as a problem (with FX reserves being amble). Spreads may face upside pressure should the overall economic outlook deteriorate but that is only a mark-to-market risk. Distressed market pricing or defaults are highly unlikely. Asia constitutes 23% in the typical hard currency benchmark (JPMorgan EMBI GD) and we typically hold only around 15% of AuM in Asian “pure” sovereign debt (no quasi-sovereigns) across funds within our hard currency strategy due to zero-weighting of China, Malaysia, India, Mongolia and Pakistan. Therefore we believe that our Asian exposure in hard currency debt is highly manageable”, concludes.

Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Stragtegies in the Americas Region.

Investec Wealth & Investment Strengthens Research Team with Four New Appointments

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Investec Wealth & Investment refuerza su equipo de research con cuatro nuevas incorporaciones
CC-BY-SA-2.0, FlickrPhoto: Esparta Palma. Investec Wealth & Investment Strengthens Research Team with Four New Appointments

Investec Wealth & Investment is pleased to announce the appointment of four new members to its research team. Dominic Barnes joins as a fixed income portfolio manager, Esther Gilbert as a fixed income analyst, while Marcus Blyth and Adrian Todd both join as fund selection specialists.

The decision to further strengthen IW&I’s research team stems from its conviction that increased market volatility over the medium term will create more challenging conditions in which to generate meaningful risk-adjusted investment returns for its clients. IW&I’s research team has, therefore, broadened its coverage to include an expanded range of sophisticated collective and fixed income instruments. The additional complexity of these products requires greater breadth and depth of resource in order to ensure they are thoroughly analysed for their suitability.

John Haynes, Head of Research at Investec Wealth & Investment, said: “I am delighted to welcome Dominic, Esther, Marcus and Adrian to the research team. They bring significant expertise in the fixed income and collectives sectors and will enhance the capabilities and performance of an already well-resourced team. Best-in-class research is an integral part of the service we offer our clients and gives Investec Wealth & Investment a significant advantage in the UK wealth management industry.”

Prior to joining IW&I, Dominic was a Director at Credit Suisse Private Bank & Wealth Management and, before this role, a Fixed Income Specialist at Merrill Lynch International. Esther joins IW&I from AXA Investment Managers, where she was a Portfolio Manager and Fixed Income Investment Analyst covering a range of securities such as global bonds, High Yield, emerging market debt and convertibles.

Marcus Blyth joins from Kleinwort Benson, where he covered collective investment schemes across all sectors. Adrian Todd joins from private bank Coutts, where he analysed third-party funds across discretionary investment portfolios globally.

 

Bruno Colmant, New Head of Macro Research at Bank Degroof Petercam

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Bruno Colmant se incorporará al Comité Ejecutivo del grupo resultante de la fusión entre Bank Degroof y Petercam
Photo: TrentStrohm, Flickr, Creative Commons. Bruno Colmant, New Head of Macro Research at Bank Degroof Petercam

Bruno Colmant will join the executive committee of the group that will result from the merger between Bank Degroof and Petercam, subject to regulatory approvals.

He will be appointed Head of Macro Research at Bank Degroof Petercam and will also perform some specific assignments as Group Economic Advisor.

Bruno Colmant holds a PhD in applied economics sciences and is a commercial engineer from the Solvay Business School Economics & Management (ULB). He is a member of the Académie Royale de Belgique. He holds a Master of Sciences from the Purdue University (USA) and a Master in Fiscal Sciences (ICHEC-ESSF).

Bruno Colmant began his career at Arthur Andersen, Dewaay and Sofina. He was managing director at ING (1996-2006), Cabinet head of the Belgian Finance ministry (2006-2007), CEO of the Brussels Stock Exchange, member of the management committee of NYSE Euronext and chairman and CEO of Euronext Brussels (2007- 2009) and Deputy CEO at AGEAS (2009-2011). Since 2011 he is academic advisor AGEAS and partner of the consulting firm Roland Berger.

He is a member of the Central Council for the Economy and lecturer in finance at the Vlerick Management School, UCL and at the Solvay Business School Economics & Management (ULB).

More Than a Slowdown

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China: ¿Estallido de la burbuja o exceso de pánico?
CC-BY-SA-2.0, FlickrFoto: Yi Yuan Ma. China: ¿Estallido de la burbuja o exceso de pánico?

China’s slowdown has been going on for five years now. After the extensive stimulus measures that kept China safe during the U.S. credit crisis of 2008 (and that benefitted the whole world), a growth decline was simply inevitable, points out Maarten-Jan Bakkum, Senior Strategist, Emerging Market Equities at NN Investment Partners. “Policy makers and economists agreed that China should rebalance its economy, with less dependence on investment and export growth and greater importance for consumer spending. In this process, overall growth would decline, but that would obviously be fine if growth would be more balanced and sustainable.”

It soon became clear that Chinese policy makers were only marginally interested in rebalancing the economy in the short term. The credit-driven investment model, in which the primacy for the most important economic decisions lies with the government, remained intact. The sectors with the largest excess capacity were rarely addressed, as local governments had major economic interests in those sectors. Overcapacity became even more significant in industries like steel and aluminum, and in parts of the housing market as well. “It gradually became clear that the economy only became more dependent on credit. So the most urgent measure – reducing the debt level in the economy – came to nothing. Since the massive stimulus package in 2008, the debt ratio has increased by 85 percentage points. This is unprecedented anywhere in the world, and leads to a significant risk of a credit crunch,” reminds Bakkum.

With the recent correction on the Shanghai stock exchange and the mini-devaluation of the renminbi, NN Investment Partners has clear that the confidence in the Chinese government is declining significantly, leading to stronger outflows and further increasing economic problems. “For the first time in decades, people begin to realise that the government in Beijing no longer has complete control over the economy. The capital flight is very difficult to stop.

Over the past sixteen months, China has faced outflows of about 700 billion euros. The authorities have clearly been overtaken by developments. Their monetary stimulus has not been enough to offset capital outflows. This makes an economic recovery increasingly unlikely, which in turn leads to more capital flight and makes further rate cuts necessary. In this process, the renminbi needs to depreciate further. But this would have undesirable effects on the financial system, as companies have accumulated a foreign debt of roughly 3 trillion US dollars during the years of renminbi appreciation,” explains the senior strategist.

“For a long time, investors considered a sharp slowdown in growth to be the biggest risk in China. In recent months, the focus has slowly shifted to a systemic crisis. This creates great uncertainty in the financial markets. And it’s not just affecting emerging markets. Finally, the realisation begins to dawn that there is a real risk of a Chinese credit crisis” concludes Bakkum.

Deutsche Asset & Wealth Management Expands Suite of International Currency-Hedged ETFs

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Deutsche Asset & Wealth Management amplía su gama internacional de ETFs con cobertura de divisa
Photo: Santcer. Deutsche Asset & Wealth Management Expands Suite of International Currency-Hedged ETFs

Deutsche Asset & Wealth Management announced the launch of six currency-hedged exchange traded funds (ETFs) on its Deutsche X-trackers platform:

 

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Within internationally invested portfolios, currency fluctuations can have a significant impact on overall risk and return. Investors seeking purer exposure to the underlying investments of any international market can potentially reduce risk with a currency-hedged investment. Deutsche X-trackers currency-hedged, international equity ETFs offer investors a variety of potential investment solutions from broad core international holdings to targeted investments in specific countries. The ETFs seek currency-neutral market-cap exposure to designated international markets.

“As a European-based bank, we have been able to leverage our local insight to offer the most comprehensive suite of currency-hedged international equity ETFs in the US,” said Fiona Bassett, Head of Passive in the Americas. “We will continue to strategically expand our suite, providing strategies that meet the demands of investors.”

Offering the broadest suite of currency-hedged ETFs in the US, Deutsche’s X-trackers US platform has experienced breakthrough success. With assets totaling USD 20 billion as of August 7, 2015, the Deutsche X-trackers platform has increased by approximately 365% since year end, and continues to be among the fastest growing exchange-traded fund (ETF) franchises in the US.

Earlier this month, the Deutsche’s X-trackers US platform improved its market share position to a top-10 ETF provider in the US. The firm’s global exchange traded products platform is now the world’s fifth largest, with approximately USD 76.9 billion in assets under management as of June 30, 2015.

Latin American Corporates Under Pressure: Downgrades Outpaced Upgrades by a Ratio of 3.5x

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Malos tiempos para la deuda especulativa en Latinoamérica: las bajadas en calificaciones crediticias superan en 3,5 veces a las mejoras
Photo: Any Fuchok. Latin American Corporates Under Pressure: Downgrades Outpaced Upgrades by a Ratio of 3.5x

Fitch Ratings expects operating cash flows of Latin America credits to remain under stress during 2015. Governments have increased taxes on consumers and corporates in response to falling revenues. External conditions also remain weak, especially for oil, copper and iron ore.

‘Fitch foresees another tough 12 months for Latin American corporates and that the ratio of downgrades to upgrades will not reach a level of parity until the second half of 2016,’ said Joe Bormann, Managing Director at Fitch. ‘During the first seven months of 2015, downgrades for Latin American corporate issuers outpaced upgrades by a ratio of 3.5x; this compares with a downgrade ratio of 2.4x in 2014; 1.6x excluding Argentina.’

Refinancing risk is elevated for small, high-yield corporates rated ‘B+’ or lower that have issued bonds of less than US$ 400 million. Positively, exposure to this risk is light in 2015 and 2016. Posadas (Mexican hotel chain owner of Fiesta Americana) was the only high-yield issuer with a bond due in 2015, and it repaid its bond in January. Arendal (Mexican company specialized in the construction of pipelines and industrial plants, US$ 80 million), Ceagro (Brazilian commodities trading company, US$ 100 million) and Marfrig (Brazilian food processing company, US$ 375 million) are the ‘B’ rated issuers with non-benchmark-sized bonds maturing in 2016.

While there was only US$ 6 billion of Latin America debt amortization during 2015, this figure rises to US$ 14.2 billion in 2016 and to US$ 27.6 billion in 2017. High-yield issuers’ debt accounts for US$ 4.8 billion of the 2016 debt and US$ 14.1 billion for 2017. During 2017, nine issuers in the speculative ‘B’ and lower categories face US$ 11 billion of debt maturities. About US$ 9.2 billion of this is PDVSA debt, which is subject to high repayment risk.

Loomis Sayles Joins UN’s Responsible Investment Initiative

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Loomis Sayles se une a la iniciativa socialmente responsable de Naciones Unidas
Photo: Philippe Put. Loomis Sayles Joins UN’s Responsible Investment Initiative

Loomis, Sayles & Company, a subsidiary of Natixis GAM, announced that it is a signatory to the United Nations-supported Principles for Responsible Investment (PRI) Initiative. The PRI is recognized as the leading global network for investors who are committed to integrating environmental, social and governance (ESG) considerations into their investment practices and ownership policies.

As a signatory to the PRI, Loomis Sayles volunteers to work towards a sustainable global financial system by adopting the PRI’s six aspirational Principles for Responsible Investment, which includes incorporating ESG issues into investment analysis and decision-making processes; including ESG issues into ownership policies and practices; and reporting activities and progress towards implementing the six Principles.

 “In 2013, Loomis Sayles senior management resolved to establish company-wide integration of ESG considerations into every team’s investment process. We did this independently and proactively, in order to ensure our business practices reflect the environmental, social and governance values that we, as an organization, believe are essential to creating a viable and enduring global financial system,” said Kevin Charleston, Chief Executive Officer.

Loomis Sayles adopted a set of guidelines and principles that articulate the interaction of its principal goal of providing superior investment results for its clients, as well as the satisfaction of its fiduciary duty under ERISA, and the use of easily accessible high quality inputs on ESG matters by its investment professionals. These inputs are meant to be used by the investment professionals in the benefit and risk analyses that inform their investment recommendations and decisions.

“We are delighted to welcome Loomis Sayles to the PRI,” said PRI managing director, Fiona Reynolds. “By putting ESG matters at the heart of their business, they have already demonstrated their commitment to responsible investment. Joining the PRI further underscores that commitment.”

Receding Systemic Risks, But Cautious Risk Appetite

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Retroceden los riesgos sistémicos, pero el apetito por el riesgo sigue siendo prudente
. Receding Systemic Risks, But Cautious Risk Appetite

The Lyxor Hedge Fund Index was up +1.3% in July. 8 out of 12 Lyxor Indices ended the month in positive territory, led by the Lyxor CTA Long Term Index (+4.6%), the Lyxor Global Macro Index (+2.6%), and the Lyxor Variable Bias Index (+2.3%).

“Receding systemic risks following the Greek deal and the stabilization of the Chinese stock market haven’t opened a risk-on period. Instead the focus has shifted on the implications from the Chinese slowdown and from the Fed’s normalization.” says Jean- Baptiste Berthon, Senior Cross-Asset Strategist at Lyxor AM.

A macro month with markets left in the passenger seat driven by highly speculative catalysts. They were bound to follow the unpredictable jolts of the intensifying Greek saga ahead of the July 20th repayment deadline. The eleventh hour deal allowed a recovery in risky asset. 3000 km away from there, the Iran nuclear deal was another speculative catalyst with severe implications for the energy sector. Far East, the acceleration of the Chinese stock crash unsettled emerging markets and global assets, with concerns of a domino effect from the unwind of trading margins.

L/S Equity funds were strongly up overall, except for Asian funds. The – temporary – settlement of the Greek saga and the second down leg in commodities selectively favored Europe and to some extent Japan. Both regions also enjoyed a strong earning season. European L/S equity managers outperformed in July, benefiting from a strong beta contribution and exploitable themes. All of them were up in July. By contrast, the US trading environment was more challenging, facing a pending start of the Fed’s normalization and a poor Q2 earning season. However, the drop in US correlations and increased fundamental/company- specific pricing allowed US managers to extract a strong alpha both on their shorts and their longs. Almost all of them ended the month up. The laborious stabilization process in Chinese stock market continued to erode Asian managers’ returns. They were however much better protected than during the first phase of the Chinese de-bubbling.

Event Driven funds returns lagged. Merger Arbitrage underperformed Special Situation funds. The overall US regional bias of the strategy played out adversely. The poor US earning season added volatility in key healthcare, media and tech deals. It offset gains locked on the completion of DirectTV vs. AT&T operation or on the announcement of the Teva vs. Allergan jumbo deal. Such environment was much more challenging to navigate for Merger arbitrageurs. While Event Driven funds’ exposure to the resources sectors was limited, the magnitude of the collapse in energy and base metals in July was unexpected. It hit positions among both Merger Arbitrage and Special Situation funds. Besides the cautiousness building up on illiquid positions ahead of the Fed’s normalization didn’t help. The resilience of the liquid activist stakes allowed Special Situation funds end the month flat or so.

Quite an honorable performance from the L/S Credit Arbitrage funds. Very conservatively positioned, managers dodged most of the accelerating deterioration in the energy sector. They also were little affected by concerns rapidly building up in US credit market, both in IG (mainly from resources issuers) and in HY (factoring in poor earnings). They delivered increased P&L on their shorts. They were also able to benefit from the opportunity window opening in European periphery spreads, following the eleventh hour Greek deal.

CTAs outperformed in July thriving on commodities. They were initially hit by the cross-asset reversals following the surprise referendum announced in Greece. They fully recovered the lost ground thereafter. Their selective directionality paid off. The largest gains were recorded on their short energy, and their long on European risky assets.

They recorded milder gain on their long USD positions and their long US and UK bonds. In balance, gains in these bonds were eroded by losses in European bonds.

Global Macro funds performed well in constrained markets. Unlike CTAs managers, commodities were not key contributors. But they were well positioned to benefit from an environment with lower systemic risk, but concerned by the pace of global growth recovery. Renewed weakness in oil added support to reflation zones. To that regards, their overweight on Eurozone vs. US equities paid off. The volatility during the month was managed through their rate exposure, which provided a hedge. By month end, they held a zero net exposure to European bonds, and a 15% US net bond position.

U.S. On Track To Break $70 Billion In Venture Capital Funding In 2015

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El capital riesgo norteamericano superará los 70.000 millones en inversiones en 2015
Photo: Ian Sane . U.S. On Track To Break $70 Billion In Venture Capital Funding In 2015

After reaching a record high of $56.4B spent in 2014, the U.S. is on track to smash that record and break $70B in Venture Capital (VC) spending by the end of 2015, according to “Venture Pulse Q2´15”, a report from KPMG International and CB Insights. With $36.9B already invested in the first half of the year, the final total money spent by VCs in 2015 could mark a five-year high for the U.S.

According to the report, the U.S. has collectively seen more than $15B invested in four of the last five quarters, including more than $18B in both quarters of 2015 (which contained large deals to airbnb, Zenefits, and Wish, among others). In addition, Q2’15 was a banner quarter for Unicorns – VC-backed companies with valuations in excess of $1 billion. During Q2’15, 24 VC-backed companies achieved Unicorn status (up from just 11 in Q1), including 12 in the U.S. and nine in Asia. Much of the growth in the number of Unicorns can be linked to the availability of late-stage funding.

“Activity is high and should remain so, with 2015 shaping up to be a record year,” said Brian Hughes, National Co-Lead Partner, KPMG LLP’s Venture Capital Practice. “This is driven by a number of factors, including low interest rates, strong participation by corporate investors, and new capital sources such as hedge and mutual funds. Companies are staying private longer and growing to an immense size as a result of access to investment and stronger investor interest, combined with a trend toward late stage mega-rounds.”

Hughes added, “While many analysts are predicting a slight decrease in VC investment in the months ahead, we believe the strength of such fundamental growth drivers have created strong conditions for continued investment.”

The reseach also shows that 55 percent of all VCs in Q2’15 were based in either California, New York, or Massachusetts; Deal activity in California continues to top 400 per quarter (488 in Q2 ’15); and New York has now outpaced Massachusetts in 4 of the last 5 quarters (142 to 117 in Q2 ’15), with the exception of Q1’15 when both states had the same number of deals (121).

In the past year, Internet companies have dominated the marketplace of VC-backed deals, and, in Q2 ’15, they have continued to trump all other sectors with 45 percent of the share, followed by Mobile & Telecommunications (16 percent), Healthcare (14 percent), Non-Internet/Mobile Software (6 percent), Consumer Products & Services (3 percent) and all other sectors (15 percent).

According to the report, Internet companies also topped other sectors based on dollar shares, jumping from 34 percent in Q1 ’15 to 51 percent in Q2 ’15. This increase was primarily led by airbnb’s $1.5B financing in late June. Mobile companies’ dollar share followed with 14 percent in Q2 ’15 (a decrease of 13 percent from Q1 ’15). This decrease can be attributed to Uber’s multiple billion dollar financings in Q1 ’15 compared to the largest Mobile financing of Q2 ’15 (Snapchat at $337M).

“Numerous disruptive technologies and applications are also spurring interest and investment from the VC community,” said Conor Moore, National Co-Lead Partner, KPMG LLP’s Venture Capital Practice. “The growth of new on-demand platforms continues to be particularly robust.  This trend, which escalated with Uber and airbnb, is now expanding into new verticals and well beyond North America.”

The analysis by KPMG and CB Insights also found that early-stage deals into VC-backed companies remained steady at 49 percent in Q2’15, while seed deal share dropped to a five-quarter low of 24 percent. Average early-stage deals were $5.3M in Q2’15, breaking $5M for the first time in five quarters. 

Additionally, mid-stage (Series B – Series C) deal share reached a five-quarter high, accounting for 26 percent of all deals to U.S.-based VC-backed companies. Interestingly, average late-stage (Series D+) deals in North America rose for the third consecutive quarter, with an average late-stage deal size of $56.3M in Q2’15. This can be partially attributed to the rise of mutual funds, hedge funds, private equity firms and corporations in recent mega-financings.

Moore added that “the availability of these late-stage mega-deals continues to delay potential IPO exits. If companies can raise similar amounts of money through private financing, many companies will opt for it.”