Photo: Cheezepie, Flickr, Creative Commons. S&P Dow Jones Indices Launches First of Its Kind Index Tracking the Debt of the S&P 500® Companies
S&P Dow Jones Indices (“S&P DJI”), one of the world’s leading index providers, has launched the market’s first ever index that tracks the debt of the S&P 500 companies. S&P 500 Bond Index is priced in real-time throughout the day and directly corresponds to movement in the U.S. bond market. The Index offers previously unavailable intraday transparency to the pricing of debt on America’s most influential companies.
S&P DJI has contracted with Thomson Reuters to provide end-of-day prices, as well as terms and conditions data.
The introduction of the S&P 500 Bond Index allows for side-by-side analysis of the performance differential between U.S. equity and bond markets, a direct comparison that was unavailable until this launch. Weighted by the market value of the bonds and with a maturity requirement of greater than one month, the S&P 500 Bond Index is liquid enough to also serve as the basis for potential exchange traded products and structured products.
“S&P Dow Jones Indices is introducing the S&P 500 Bond Index at a critical juncture as two major trends converge,” says J.R. Rieger, Head of Fixed Income, for S&P Dow Jones Indices. “First, global markets are grappling with the potential end of a six-year bond rally, the end of which could have significant ramifications for portfolio debt holdings. Second, regulatory changes resulting from Dodd Frank, the post-Libor landscape, and Basel III for example, have many concerned about diminished liquidity in the bond markets. As a result, the market is begging for an intra-day measure that can provide broad transparency into company debt and that is liquid enough to potentially trade throughout the day via exchange traded and structured products.”
“We are delighted that S&P Dow Jones Indices will use our fixed income end-of-day pricing in conjunction with our comprehensive and high quality bond terms and conditions data for their new S&P 500 Bond Index,” says Marion Leslie, Managing Director, Pricing & Reference Services at Thomson Reuters. “Thomson Reuters is committed to partnering with the market’s leading service providers, ensuring market participants are able to benefit from our award winning content via multiple partners, platforms and applications.”
The S&P 500 Bond Index currently tracks the debt of 430 S&P 500 companies reflecting over $3 trillion in debt outstanding and $3.8 trillion in market value. S&P DJI is publishing over 20 years of daily historical data on the S&P 500 Bond Index on its website, www.spdji.com. The complete methodology for the Index is also posted to this site.
CC-BY-SA-2.0, FlickrPhoto: European Parliament
. Three Elements Key to Watch After the Greek Population Voted "NO"
The Greek population voted “NO” by a comfortable margin (61%- 39%) and handed the Syriza government another political victory. This will probably energize Prime Minister Tsipras and his team, but will also create huge uncertainty over the future of Greece in the Eurozone and lead to intensifying immediate economic hardship in Greece. At this time it remains unclear if and when banks will be able to re-open. Also, it might well be that deposit and savings haircuts (of those people the Syriza government claims to protect) will be on the table to prevent complete banking sector meltdown.
Without a deal in the near-term between Greece and its creditors, a renewed and sharp recession in Greece seem likely. Both length and depth of such a contraction are still very uncertain and will depend on the evolution of domestic politics within Greece, the ability to get some kind of a deal that will allow for Greece to stay within the Eurozone or the social and political stability in the aftermath of Grexit.
Three elements now key to watch
NN Investment Partners thinks there are three elements will be key to watch in the ECB’s policy response to this political crisis. The way the Emergency Liquidity Assistance (ELA) is managed (to what extent will it remain open for Greek banks), the application of haircuts to the collateral that Greek banks need to post at the ECB and new measures to tackle liquidity issues in other parts of European financial markets. The balance between these three potential ECB measures will be crucial for the sentiment in financial markets and, thereby, the degree of damage to the European economy.
“In the end, however, we have a high conviction that the ECB is willing and able to limit lasting damage from short-term contagion into other European markets. Especially since it is now operating against backdrop of a more unified political front in all of the other member states of the Eurozone that will allow for effective political support for creative policy action, if needed”, point out the firm.
This basically means that significant declines in some market segments (peripheral equities/bonds, European equities, the euro) over the next couple of days cannot be excluded, but also that Eurozone break-up risk remains very small. The latter is a completely different situation than 2-3 years ago and therefore leads to different investment conclusions. As long as the global cycle remains on track, the upcoming period of market volatility might provide an entry point for investors once visibility on the future direction for Greece increases and the accompanying policy response is clear.
“In the short-term, it keeps us cautiously positioned and more focused on reducing rather that adding risk. However, we’ll keep our asset allocation stance “close to the middle” and would only move more defensive once we see significant contagion in combination with disappointing policy response. For now, the latter is not our base case. As soon as more visibility on politics, policy and the impact on the global cycle is there, it could well be that we move back towards a more risk-on stance later in the summer. Obviously the situation remains very uncertain and we will be monitoring very closely if additional changes in our allocation stance are needed once the facts change in an unexpected way”, concluded.
. Standard Life Investments Expands Multi Asset Team
Standard Life Investments, the global fund manager, is pleased to announce that Gerry Fowler has been appointed as Investment Director, Idea Generation, within the Multi Asset Investment (MAI) Team.
Gerry, who was previously Global Head of Equity and Derivatives Strategy with BNP Paribas, will be part of the 57 strong team providing idea generation, investment recommendations and detailed implementation strategies for the range of MAI funds. Gerry will report directly to Guy Stern, Executive Director of Multi-Asset and Macro Investing at Standard Life Investments.
Commenting on the appointment, Guy Stern said: “Gerry is a highly skilled strategic analyst with a wealth of experience in equities and equity derivatives and will add to the already impressive range of knowledge and experience within the MAI team. Our Absolute Return and Multi Asset mandates draw on a range of sophisticated investment strategies investing across all asset classes. I’ve no doubt that Gerry’s depth of knowledge will add to our research capability and idea generation for our whole offering.
“Over the last 18 months we have launched four new Multi Asset products, the team is well resourced and we have excellent collaboration across all the fund management teams globally supporting the long term performance of our funds. We constantly strive to provide investors with the best possible solutions and that means having the right people in place to help understand and meet investor’s needs and expectations.”
CC-BY-SA-2.0, FlickrPhoto: Susanne Nilsson. Get Used to Periods of Higher Volatility
At the recent market peak, in late April, holders of 30-year German bunds were enjoying year-to-date returns of 23%. The dramatic reversal since then has entirely wiped out these gains: this is hardly the sort of behaviour one would expect from Europe’s premier ‘risk-free’ asset.
In our view, this phenomenon was caused by a crowd-surge into eurozone deflation/ quantitative easing (QE) trades and then a ‘rush for the exit’, when investors realised just how overpopulated and overvalued these trades had become. Overshooting markets do not always need a fundamental trigger to spark a reversal, but the rise in eurozone inflation in May, when core CPI rebounded to a 1-year high, certainly added some urgency to the unwind.
Morality check
We wonder whether today’s bund investors could learn some lessons from the Japanese government bond (JGB) market of the early 2000s. Having trended lower for more than a decade, 10-year JGBs troughed at 0.4% in June 2003. Even though Japan endured a grim eight-year decline in gross domestic product from that point, anyone who bought JGBs at the yield low in 2003 made just 1% per annum over those eight years and was in loss for the first four years of the trade. The moral of the story is: once economic stagnation is priced in, bond returns can be low and volatile, even if the economy continues to disappoint.
Furthermore, when we look at the eurozone today, we see an economy that is recovering, not stagnating. Consensus forecasts for 2015 growth have been rising for six months and inflation forecasts have been rising since February. Looking ahead, we expect more of the same as the impact of euro weakness, lower oil prices, easier credit conditions, and diminishing fiscal austerity kick in. Even though European Central Bank QE will continue to exert downward pressure on eurozone bond yields well into 2016, economic recovery is now emerging as a force that will act in the opposite direction.
Growing pains
Although bunds have seen the biggest swings this year, all the major government bond markets have followed the same pattern, with Q2 shaping up to be the worst quarter for sovereign bonds in almost 30 years. As is the case with eurozone bonds, the recent sell-off began as an unwinding of Q1’s euphoria, but more recently, has begun to reflect improving economic data, particularly in the US.
Following a disappointing start to 2015, US data have significantly improved over the last few weeks. A number of key series – retail sales, payrolls, job openings, consumer confidence, and homebuilder surveys – have surprised to the upside, suggesting the economy is regaining momentum and pulling away from Q1’s soft patch. We think this trend will continue in coming months, prompting the US Federal Reserve to raise interest rates before the year is through and keeping upwards pressure on US bond yields.
We see the recent sell-off in government bonds as largely correcting Q1’s overshoot. If our base case scenario of continued global recovery is realised, we do not expect to see Q1’s yield lows again during this cycle and think yields will grind higher in H2. Higher yields will not necessarily undermine risk assets if they reflect improving economic conditions. However, investors would do well to take note of Mario Draghi’s recent comment: “Get used to periods of higher volatility”.
Paul O’Connor is Co-Head of Multi Asset within the Henderson Multi-Asset team.
CC-BY-SA-2.0, FlickrPhoto: Giuseppe Milo
. Old Mutual Global Investors will Launch an Offshore Global Equity Income Fund
Old Mutual Global Investors announces its intention to launch the Old Mutual Global Equity Income Fund during the summer of 2015, subject to regulatory approval. The Fund, which will be managed by Ian Heslop, Amadeo Alentorn and Mike Servent will be a sub-fund of the Dublin domiciled Old Mutual Global Investors Series plc umbrella fund. This product will be core to Old Mutual Global Investors’ UK and offshore client base.
The Fund’s objective will be to achieve a total return through a combination of income and capital growth. The Fund will be designed to deliver a total return by targeting dividend yield and capital growth through a highly diversified global equity portfolio. The Fund will aim to provide monthly income above the benchmark (MSCI All Countries World Index). The investment team pursue a dynamic investment process, focused on stock selection through analysis of fundamental company data, but taking account of the macro environment and investor sentiment. The unique approach will generally provide significant diversification from concentrated, style-biased global equity income funds.
Ian Heslop, Head of Global Equities, comments: “We are really excited about the forthcoming launch of our Global Equity Income Fund. We believe that our unique approach to stock selection realises the appeal of being invested in a truly diversified fund. Unlike some of our peers who remain heavily weighted towards certain sectors, we are able to seek out compelling investment opportunities wherever these exist globally, irrespective of sector, country or region. We are also flexible so that the prevailing conditions and outlook can be incorporated in our process to ensure we have the greatest scope to deliver sustained outperformance. We believe our investment approach should therefore deliver an above industry level of monthly income whilst continuing to deliver capital growth”
The Fund benefits from the investment team’s strong, proven performance-driven culture which leverages a dynamic process, including continuous monitoring of the whole market in order to capture value across the broadest spectrum of larger-capitalisation stocks. The investment team will offer a significantly different source of alpha in global equity markets, run from the same platform as the multiple award winning Old Mutual Global Equity Fund, Old Mutual Global Equity Absolute Return Fund and the Old Mutual North American Equity Fund.
Warren Tonkinson, Head of Global Distribution, adds: “This is another important development for Old Mutual Global Investors, one that focuses on meeting the needs of our clients. From talking to investors it is very apparent that income generating strategies continue to be in demand and we have received a number of client requests for our highly respected, award-winning global equities team to launch a global equity income strategy. The investment performance track record this team, which consists of Ian, Amadeo and Mike, has delivered for investors in their current funds is outstanding. We are confident that the new fund will be equally successful.”
Old Mutual Global Investors is currently reviewing the UK Domiciled Old Mutual Global Equity Income Fund which is sub-advised by O’Shaughnessy Asset Management, LLC.
Sophie del Campo, Managing Director, Natixis Global AM, Iberia, Latin America and US Offshore. Courtesy photo. Natixis GAM Announces Completion of DNCA Finance Acquisition
Natixis Global Asset Management recently announced the completion of the acquisition of DNCA Finance (DNCA), expanding its list of global affiliates and strengthening its position in European retail markets
As an affiliate of Natixis Global Asset Management, DNCA, a well renowned European investment management company, will have access to Natixis Global Asset Management’s centralized global distribution capabilities. DNCA will immediately broaden its European footprint, entering new markets including Spain and expanding its business in Germany and Switzerland. DNCA will maintain its independence while over time expanding its global presence as an affiliate of Natixis Global Asset Management.
DNCA has seen important growth in the last 2 years, tripling its assets from €5 billion to €16.5 billion today. Through the acquisition, DNCA will maintain its independent management approach and will offer institutional and retail investors expertise in European equities, long only and absolute return, multi-asset, convertible bonds and euro-zone bonds.
“The combination of DNCA’s proven track record, solid investment performance, controlled risk profile and strong brand name will make a substantial contribution to the further expansion of Natixis Global Asset Management’s multi-affiliate model and our strategy of growing the business in the European retail marketplace,” said Pierre Servant, CEO of Natixis Global Asset Management and member of the senior management committee of Natixis in charge of Investment Solutions.
“As an affiliate of Natixis Global Asset Management we will be able to replicate the success that we have had in France and Italy over the past 15 years and step up our international expansion. We believe that Natixis’ centralized global distribution platform will help us develop our retail and institutional business and provide investors with a range of simple and understandable funds that deliver results that strengthen their portfolios,” said Eric Franc, CEO of DNCA Finance.
Fernando Perez-Hickman, Marina del Corral, Emilio Estefan, Lauro Bravar - courtesy photo. Sabadell Bank, “Ponce de Leon” Business Excellence Award 2015
The Spain US Chamber of Commerce recently celebrated the 2015 “Ponce de Leon” Excellence Business Awards, rewarding the successful internalization of Spanish and American companies with investment or business in both countries.
Fernando Pérez-Hickman, Managing Director of Sabadell Bank, received the “Ponce de Leon” Business Excellence Award which recognizes the Spanish company investing in the United States. Meanwhile sustainable energy company, Smart Solar, won first place in the American company category sending their director Daniel Higueras to receive the “Ponce de Leon” Business Excellence Award. In addition, Spanish firms BBVA and IE Business School won second and third place, while U.S. company CISCO Systems, came in second. Morrison Infrastructure and La Dorada, tied for the third place.
Also, the winners of the youth entrepreneur program were announced during the event by Marina del Corral, Secretary of Emigration and Immigration. A competition carried out by the Chamber under the support of the Ministry of employment and Social security of Spain. The Audiovisual production “La Panda Productions” won first place, followed by “Juntos Salimos” in second place and “US Architect”, in third place
Emilio Estefan received, on his and his wife’s behalf, receive the “Ponce de León” award for their exceptional contribution to Hispanic Heritage in the U.S., from the hands of the consul-general of Spain in Miami, Cristina Barrios, and the Mayor of the city, Tomás Regalado, who valued the effort of Hispanics working in the USA as a key piece in the country’s growth. The renowned international designer, Cristóbal Gabarrón, was the creator of this honorary award.
The president of the Spain US Chamber of Commerce in Miami, Lauro Bravar, affirmed feeling “proud to recognize these relevant companies showing interest and for the continued success that the Spanish and American companies are achieving in both countries; In addition, we have the good example of Gloria and Emilio Estefan. We think that it is crucial to support the entrepreneurial spirit among young Spaniards residing in the United States through our contest for entrepreneurs.”
This event was possible with the support of Greenberg Traurig, and companies such as Mapfre, City National Bank, Domingo Alonso Group, First Bank, IE Business School and TotalBank; Pernod Ricard and Vinaméricas which provided the wine during the lunch.
Place Vendome, Paris.. Carmignac Adds US-Oriented Global Expertise in Communications, Media, Internet and Information Technology
As part of the ongoing recruitment drive conducted over recent years, Carmignac is once again boosting its fund management team with the arrival of a senior fund manager, David Older.
David Older will work in London, commencing on July. Working alongside Edouard Carmignac, he will be in charge of global fund exposure to Communications, Media, Internet and Information Technology. David will also contribute to generating investment ideas for other Carmignac funds.
Edouard Carmignac, Founder of Carmignac : “Thanks to David Older joining our team alongside our analyst Tim Jaksland, we are significantly increasing our investment expertise in Communications, Media, Internet and Information Technology stocks, four key sectors in our current positioning that will shape tomorrow’s world. We are also gaining considerable experience in alpha generation and long-short management, which will help us generate performance under all market conditions and give us the complete range of risk management expertise.
The ability to manage market risks has become a hallmark of Carmignac’s management style, particularly in 2002, 2008 and 2011 in Carmignac Patrimoine. This risk management culture has gradually permeated all the Carmignac family of funds, becoming an integral part of our brand, henceforth Carmignac Risk Managers. The complexity of financial markets is such that managing risks, now more than ever, represents a vital aspect of long-term asset management, aimed at helping our clients grow their savings. Carmignac is relentlessly endeavouring to enhance its expertise in this area.”
David Older, 45 years old, spent the past 12 years at SAC Capital/Point72 Advisors in New York, most recently as co-Sector Head of the Communications, Media, Internet and Technology vertical. Prior to this, Mr Older was an Investment Banking Associate in the Communications and Media group at Morgan Stanley. He gained an MBA at Columbia University, New York, following a BA from McGill University in Montreal.
CC-BY-SA-2.0, FlickrPhoto: Ana Montreal. Man Group Change Chairmanship of Remuneration Committee
Man Group has announced that Phillip Colebatch, Senior Independent Director, will resume the role of Chairman of the Remuneration Committee from 1 July 2015, replacing John Cryan who took on the role from Mr Colebatch in May 2015.
This reflects the change in Mr Cryan’s circumstances following the announcement of his appointment as Co-Chief Executive Officer of Deutsche Bank with effect from July 2015. Mr Cryan will continue to serve as a non-executive director of Man Group and as a member of the Nomination Committee but he will no longer be a member of the Remuneration Committee.
Man Group is currently undertaking a search to appoint an additional non-executive director to take up the role of Remuneration Committee Chair.
Phillip Colebatch was appointed to the Board as a non-executive director in September 2007 and is the Senior Independent Director. John Cryan was appointed to the Board as a non-executive director in January 2015.
Claude Ewen. Courtesy Photo. Columbia Threadneedle Investments Appoints Sales Director in Luxembourg
Columbia Threadneedle Investments announces the appointment of Claude Ewen as Sales Director Luxembourg with immediate effect.
In his role, Claude will be responsible for broadening and deepening relations with Luxembourg-based professional investors. Claude will report to Prosper van Zanten, Country Head for the Benelux.
Claude has over 10 years’ experience in the Luxembourg financial market. He joins Columbia Threadneedle Investments from Fidelity Worldwide Investment where he had been senior sales manager since October 2009. Before that, Claude was portfolio manager for several years at Lux- Investment Advisors (now BCEE-Asset Management) where he contributed to the strategic and tactical asset allocation of UCITS funds and discretionary client portfolios and where he had responsibility for the analysis of the energy, commodities, industrial and utilities sectors. Claude started his career in 2000 at Banque et Caisse d’Epargne de l’Etat, Luxembourg as client relationship manager. He graduated from Louis Pasteur University of Strasbourg with a Master in Economics and Business Management.
Gary Collins, Head of Wholesale Distribution for EMEA and Latin America at Columbia Threadneedle Investments, said: “I am delighted to welcome Claude Ewen to our Benelux team. Claude has spent several years building and nurturing relationships with Luxembourg-based professional investors. We look forward to benefitting from his experience and insight as we grow and harness our presence in this market, significant both in its own right and as a central decision-making hub in Europe”.
