Visit to The Bay Area: Wear, Watch and Pay

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Tres tendencias de consumo digital a punto de eclosionar
CC-BY-SA-2.0, FlickrPoto: Takuya Oikawa . Visit to The Bay Area: Wear, Watch and Pay

An important area of focus in the Robeco Global Consumer Trends Equities fund is the emergence of the digital consumer. Consumers are spending more and more of their time and money on internet as a result of the strong growth in smartphones, tablets and other internet-linked gadgets. They are also using social media such as Facebook and Twitter more often and e-commerce is absorbing a larger portion of their monthly budget.

Where better in the world to get up to speed with developments relating to the digital consumer than the Bay Area of California? San Francisco and of course Silicon Valley – the technology Valhalla located on the south side of the bay – fall within this metropolitan area of more than seven million inhabitants. “The Bay Area is the place to be – not only is this where the head offices of the major players such as Google and Apple are located, leading conferences in the field of technology are also held here”, said Jack Neele, portfolio manager of RobecoGlobal Consumer Trends Equities fund.

Neele visited Morgan Stanley Technology, Media & Telecom Conference in San Francisco where as many as 240 representatives from the industry and 1200 investors gathered to discuss the major developments in these three sectors. “The combination of technology and media made it a useful visit, because an increasing amount of media consumption is occurring via the internet. On the last day of the conference we went to Silicon Valley by bus to visit some companies, one of which was Apple. We had an appointment there to talk to the financial top man, Luca Maestri, about the company’s future prospects”, related the portfolio manager.

The growth of mobile internet was a focus area again this year and three verbs dominated the discussion – wear, watch and pay. What are the most important developments from the perspective of the fund? That is the Jack Neele opinion:

1. Apple Watch – the most important wearable developed to date – as yet its impact is limited: The new Apple Watch is in the shops this month. Its market potential has fueled numerous discussions among analysts and investors. Some see it as a revolutionary product like the iPhone, of which there are currently around 300 million in use worldwide. Apple Watch should also ensure that the company enters new markets, such as the luxury goods sector. But others see the Apple Watch as a niche product with limited potential, a gadget like the many mobile fitness apps currently available. Which group is right?

I have taken up my own position somewhere between the two. Given Apple’s expected sales of USD 225 billion in 2015, I don’t expect the Apple Watch to make a significant contribution to the company’s earnings.

However, Apple Watch is the first wearable that consumers really want. Wearables are a new generation of mobile devices that can be worn on ones body. The Apple Watch has many handy functions like being able to phone easily, receive messages and retrieve your boarding pass, in addition to medical applications to monitor heart rate and blood pressure.

The Apple Watch’s major breakthrough will come when telecom companies start to offer it in combination with the iPhone. A bundling of the Apple Watch with a phone subscription could encourage many people to strap on this device. But initially the Apple Watch will only be sold in the Apple Store. In other words, I don’t expect to see the real breakthrough just yet.

2. Innovation is making video increasingly important on social media: Video for mobile internet is increasing in importance and Facebook is in a strong position. More hours of video are now being watched on Facebook than on Google subsidiary, Youtube. Most of the videos on Facebook are user generated content, for example, homemade footage of an Easter egg hunt that you can share with family members. But in the future Facebook may well start offering other content such as films and sport.

Facebook and Youtube both show advertising films, but the first offers important advantages from the user’s perspective. The users themselves click on the Facebook advertising films by choice, whereas the YouTube viewer is subjected to unsolicited commercials. I therefore expect Facebook to have considerable success when it comes to online video.

Another company that is betting heavily on video through new innovations is Twitter. Through a subsidiary company it has devised peer-to-peer streaming. This means that users can send live pictures via their telephones to their contacts. So you can watch live with someone. For example, footage of disasters or even football matches.

3. Market for mobile payments is growing rapidly and undergoing major changes. Firstly, I expect targeted takeovers by Paypal, which will be split off from eBay and gain a separate market valuation. I expect a higher valuation than it currently has under eBay, as Paypal is growing at a faster pace. This higher valuation can be used to help fund new acquisitions to bolster its market position. By issuing new shares the company can finance takeovers.

Facebook is also becoming more active in the field of peer-to-peer payments. The company announced that you can make payments to your friends via the Facebook Messenger chat function. A handy application, for example, if you go out for dinner with friends and want to chip in to pay a collective bill. This extra functionality is strengthening Facebook’s position in the market.

My visit to the Bay Area confirmed my impression that the technology, media and telecom sectors are all undergoing major changes, and that the latest developments are further strengthening the market positions of major players like Apple, Twitter and Facebook.

This publication is intended to provide investors with general information about Robeco’s specific capabilities, but it is not a recommendation to buy or sell specific securities or investment products.

Schroders Launches EM Multi-Asset Fund

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Schroders lanza una estrategia multiactivos de mercados emergentes
CC-BY-SA-2.0, FlickrPhoto: Moyan Brenn. Schroders Launches EM Multi-Asset Fund

UK asset manager Schroders has announced the launch of a new multi-asset fund aimed at offering investors access to emerging markets.

The Schroders ISF Emerging Multi-Asset Income Funds, which is managed by portfolio manager Aymeric Forest invests globally in equities, bonds and other emerging market asset classes, including derivatives.

The share of stocks or equities within the overall portfolio can fluctuate between 30 and 70%.

“The price to book ratio of, for example, the valuation of emerging market equities is currently still 50% below that of the US S&P 500 index” comments Forest.

The fund aims to achieve an annualised return of 7% to 10%with a volatility of 8% to 16%.

Access the Presentations and Photos from Pioneer Investments’ Due Dilligence Conference for UBS and Morgan Stanley in Dublin

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Acceda a las presentaciones y fotos de la conferencia de due dilligence de Pioneer Investments para UBS y Morgan Stanley en Dublin
CC-BY-SA-2.0, FlickrCourtesy Photo. Access the Presentations and Photos from Pioneer Investments’ Due Dilligence Conference for UBS and Morgan Stanley in Dublin

On May 20-22nd Pioneer Investments hosted its exclusive due diligence conference at the Powerscourt Hotel in Dublin for UBS and Morgan Stanley attendees.

The event, attended by a select number of 70 financial advisors from UBS and Morgan Stanley with long-standing ties and business with Pioneer, was aimed to provide promising insights into timely portfolio management strategies and to highlight how to address the growing need for income generation. All copies of the event’s presentations and photographs are available on the dedicated event microsite (click here).

Pioneer Investments thanks all participants of the event and remains committed to providing best in-class solutions to meet various clients’ investment needs, along with outstanding service and support.

Simler Hire Further Strengthens Investec Asset Management

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Investec AM ficha a Justin Simler como director de Inversiones para reforzar el equipo de multiactivos
CC-BY-SA-2.0, Flickr. Simler Hire Further Strengthens Investec Asset Management

Further growing its established Global Multi-Asset Team, Investec Asset Management has appointed Justin Simler as Investment Director. Simler brings with him an extensive track record dedicated to multi-asset product management. He will join the firm’s multi-asset investment capability under the leadership of team co-heads Michael Spinks, Philip Saunders and John Stopford. Tailored to both institutional and advisor clients, the range includes both unconstrained multi-asset income solutions and total return strategies, including the Investec Diversified Growth and Emerging Market Multi-Asset strategies, which aim to achieve investors’ most widely sought investment outcomes.

Simler joins from Schroder Investment Management where he spent ten years, most recently as Global head of Product Management for Multi-Asset where he was responsible for developing the product range, distribution, and management of client experience for the multi-asset business.

Michael Spinks, co-Head of Multi-Asset, commented: “We are excited about Justin joining the team given the considerable impact he brings in terms of team and business growth potential.”

He will be responsible for further building Investec’s Multi Asset capabilities globally and working with clients to develop tailored investment solutions. This will also involve both channel and geographic expansion in response to high demand for both income and growth-orientated, emerging market and broad multi-asset solutions globally.

The range includes a series of multi-asset investment solutions, catering to clients’ investment goals in an environment where low interest rates, inflation and uncertainty make the search for growth, income and capital preservation increasingly relevant.

“A growing number of clients want to target outcomes defined in terms of risk and return” said Michael Spinks. “With over 20 years of multi-asset investment experience within the team, our core investment capabilities are firmly established, and Justin Simler will play a key role in helping to grow this business.”

Pemex and BlackRock Sign Memorandum of Understanding to Develop Energy Related Infrastructure in Mexico

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Pemex y BlackRock trabajarán juntos para desarrollar infraestructuras relacionadas con la energía en México
CC-BY-SA-2.0, FlickrPhoto: El coleccionista de instantes. Pemex and BlackRock Sign Memorandum of Understanding to Develop Energy Related Infrastructure in Mexico

Pemex and BlackRock have signed a Memorandum of Understanding (MOU) to accelerate the efficient development and financing of energy related infrastructure projects of strategic importance to Pemex. Through this MOU, BlackRock, a preeminent asset manager with global infrastructure investment capabilities and a local presence in Mexico, will provide industry expertise, risk management capabilities and sources of financing to support Pemex’s mission to enhance its market position and maximize its value to Mexico.

Jose Manuel Carrera, Corporate Director of Strategic Partnerships and New Ventures, of Pemex commented, “Through this MOU Pemex will stimulate new projects with efficient financial solutions.”

Jim Barry, global head of BlackRock Infrastructure said, “BlackRock is very excited to partner with Pemex in its pursuit of efficient financing solutions for its energy infrastructure project pipeline. In Mexico, where BlackRock is already the leading international asset manager with $25 billion of AUM, we are committed to building the leading infrastructure investment platform for the benefit of our local and international clients.” BlackRock’s global Infrastructure platform manages more than $6 billion in invested and committed assets in debt and equity strategies.

Armando Senra, BlackRock’s head of Latin America and Iberia commented, “We believe that Mexican infrastructure presents a substantial investment opportunity for our clients and builds on BlackRock’s long-standing presence in Mexico while demonstrating the Firm’s on-going commitment to the region.”

Henderson Accelerates Australian Growth Plans With Acquisition of Perennial Fixed Interest, Perennial Growth Management and 90 West

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Henderson GI acelera sus planes en Australia con la compra de Perennial Fixed Interest, Perennial Growth Management y 90 West
CC-BY-SA-2.0, FlickrPhoto: PaulDAmbra, Flickr, Creative Commons. Henderson Accelerates Australian Growth Plans With Acquisition of Perennial Fixed Interest, Perennial Growth Management and 90 West

Henderson Group has agreed to acquire 100% of Perennial Fixed Interest Partners Pty Ltd and Perennial Growth Management Pty Ltd from IOOF Holdings Ltd and the employee-shareholders of each company. The two companies have combined Assets Under Management (AUM) of £5.5bn (A$10.7bn).

In a separate transaction, Henderson has increased its ownership of 90 West Asset Management Pty Ltd from 41% to 100%. 90 West has AUM of £0.2bn (A$0.3bn) in global natural resources equities funds and segregated mandates.

Highlights

  • These acquisitions accelerate Henderson’s strategy to grow and globalise its business, taking its Pan Asian AUM to 11% of the Group’s total from £4.0bn (A$7.8bn) to £9.6bn (A$18.7bn).
  • Perennial’s fixed income and equities expertise will significantly extend Henderson’s offering to Australian clients, adding domestic investment management capability to Henderson’s globally focused offerings and providing a broader platform for future growth in the Australian market.
  • The Perennial transactions create an opportunity to forge a strong relationship between Henderson and IOOF, one of Australia’s leading wealth management and advice platforms.
  • Full ownership of 90 West will enable Henderson to benefit from the pipeline of new business the firms have created together, both in Australia and globally.
  • On completion of these transactions and the sale of its 40% interest in TH Real Estate which completed on 1 June, Henderson’s capital position will improve by £40m. Henderson will update the market on its capital position at its Interim Results on 30 July 2015.

Transaction structures

As part of the Perennial transactions, IOOF receives an upfront consideration and a deferred component dependent on future business performance, payable after two and four years.

In all three businesses, the employee-shareholders will receive a significant majority of their consideration through deferred earn-out structures to be paid four years post completion, with the quantum dependent on future business performance. Key investment professionals in all businesses have signed long term employment contracts with Henderson.

All transactions will be funded from existing cash resources.

The 90 West transaction closed on 29 May 2015, and the Perennial transactions are expected to close in the fourth quarter of 2015. Following these acquisitions, Henderson will continue to build out its distribution and business operations in Australia to deliver growth for new and existing businesses and teams.

Andrew Formica, Chief Executive of Henderson, said: “Developing our presence in Australia is a strategic priority for Henderson. These acquisitions will give us recognised domestic investment management capabilities to complement our global offering and take us into the Top 30 of Australian asset managers. They help us build scale in our Australian business well ahead of our previous expectations. On completion, we will more than double our AUM from Pan Asian clients and have around 40 investment professionals based in the region, managing money on behalf of local and international investors. This is another important step towards achieving our ambition to become a truly global asset manager.”

Glenn Feben, Managing Partner of PFI, said: “Our team is delighted to be joining Henderson. For us to become part of a truly global fixed income team will provide real benefits to our investment team and to our clients.”

Lee Mickelburough, Head of PGM, commented: “We see a strong cultural alignment with the team at Henderson and look forward to being part of an independent, investment-led firm, which will help us focus on investment performance for our clients and navigate our path to future growth.”

David Whitten, Executive Chairman of 90 West, said: “Over the last two years, we have formed a close relationship with Henderson, both in Australia and worldwide. We have seen the value they bring to our business. We are thrilled to be part of Henderson, and are now better positioned to deliver to our clients and to grow.”

Azimut Australian Subsidiary Acquires Pride Advice

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La filial australiana de Azimut compra la firma Pride Advice
CC-BY-SA-2.0, FlickrPhoto: Les Haines. Azimut Australian Subsidiary Acquires Pride Advice

Azimut today has signed an agreement to acquire the entire capital of Pride Advice via its Australian subsidiary, AZ Next Generation Advisory Pty Ltd. The agreement includes a share swap of 49% of Pride’s equity for AZ NGA shares and a progressive buy back of these shares over the next ten years. The remaining 51% stake will be paid to the founding partners in cash over a period of two years. This second agreement follows the recently announced deal reached with Eureka Whittaker Macnaught and confirms AZ NGA’s objective of consolidating Australian financial practices providing wealth management services to retail, HNW and institutional clients in Australia.

AZ NGA was established in November 2014 and is part of Azimut Group, Italy’s leading independent asset manager, established in 1989 and today operating in 13 countries with more than EUR 34bn (equivalent to A$ 48bn) in AuM.

The Pride Group was established in 2003 by Brett Schatto and manages over A$ 180mn of assets under advice (equivalent to EUR 128mn), and provides services to over 1,700 clients. Pride employs 9 staff in its Adelaide based operations offering a comprehensive range of financial planning services including investment and asset allocation advice, retirement planning, insurance, and strategic financial planning advice to its client base. Together with EWM and Pride AZ NGA’s business model will assist clients from the Sydney, Brisbane and Adelaide offices and grow the distribution reach by attracting financial planners as well as continuing its consolidation plan.

The total value of the transaction considering both the cash and share swap entails a purchase price of around 2.5mn. The closing of the transaction is expected to occur within the next few weeks upon satisfaction of some conditions precedent provided in the sale and purchase agreement. Pride operates under the Australian Financial Services License regime overseen by ASIC; the acquisition is not subject to the approval of the local authority. Pride will continue to be lead by CEO Brett Schatto who has entered into long term arrangements to ensure continuity of service.

Paul Barrett, AZ NGA CEO states: “Pride Advice is a leading professional financial planning firm as well as a very fast growing business. Brett is a pioneer in modern professional financial planning and we are thrilled to have Pride in our stable of firms.”

Brett will also be appointed board member in AZ NGA. Brett Schatto says: “We are delighted to be involved with such an exciting project. We are looking forward to working with Azimut and AZ NGA in continuing to deliver great results for our clients.“

Capital Strategies Partners, a third party mutual fund distribution firm, holds the distribution of AZ Fund Management products in Latin America.

Jon Aisbitt to Step Down as Man Group Chairman in 2016

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Jon Aisbitt dimitirá como presidente de Man Group en 2016
CC-BY-SA-2.0, FlickrPhoto: Glyn Lowe. Jon Aisbitt to Step Down as Man Group Chairman in 2016

Man Group announces that Jon Aisbitt intends to step down as Chairman and as a director of Man Group plc in May 2016 at the Company’s Annual General Meeting (AGM). A committee of the Board, led by the Senior Independent Director, Phillip Colebatch, will identify his successor.

Jon Aisbitt was appointed to the Board as a non-executive director in August 2003 and was appointed Chairman in September 2007.

Jon Aisbitt, Chairman of Man Group, said: “It has been a privilege to lead the Board over the past eight years, and I am very proud of the progress the firm has made in diversifying and repositioning for further growth. I would like to thank my fellow Board members and the executive team at Man Group for their support and commitment. I will leave Man Group in the hands of an experienced, dedicated management team, and with a first-class Board, with whom I will continue to work over the next year to help ensure a smooth succession process.”

Emmanuel Roman, CEO of Man Group, said: “On behalf of our shareholders and everyone at Man Group, I would like to thank Jon for his exceptional service and dedication to the firm over the past 12 years. Jon’s leadership of the Board through significant change for Man Group has been invaluable. He has been a great support, guide and challenge to me personally as we have worked very hard to reposition the business. Jon’s decision to step down at next year’s AGM is part of a well-considered succession plan and allows the Board the time and flexibility to find the right candidate to succeed him.”

Man Group also announces that John Cryan will succeed Phillip Colebatch as Chairman of the Remuneration Committee following today’s AGM. John Cryan was appointed to the Board as a non-executive director and as a member of the Remuneration Committee and Nomination Committee in January 2015. Phillip Colebatch will continue to serve as a non-executive director and as Senior Independent Director.

European Equities: After the Bond Fall

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Renta variable europea: tras la caída de la renta fija
CC-BY-SA-2.0, FlickrPhoto: Blu News. European Equities: After the Bond Fall

The recent sharp fall in bond prices, which saw yields on German bunds climb to a six-month high of 0.72% on 13 May 2015, caused a long-anticipated consolidation in European equities. It also helped the euro to strengthen, stopping the US dollar rally in its tracks, in spite of continued nervousness over Greece.

Along with these moves, the oil price rallied and many stocks that outperformed during the first part of the year went into reverse. This triggered warnings that the equity rally may be over. I disagree: I think this has been a necessary breather, before we see a continuation of better economic and profits news over the next few months.

The return of pricing power

There are signs that inflation is picking up. European Central Bank (ECB) President, Mario Draghi, flagged up at the ECB Governing Council meeting on 15 April that inflation rates are expected to “increase later in 2015 and to pick up further during 2016 and 2017”. This is good news for equities – suggesting a return of pricing power. It is also positive for economies, because a moderate level of inflation is probably the most palatable way to begin eroding the vast amount of government debt built up globally over the past 25 years or so.

Inflation is, however, not good news for those who, spurred by deflationary fears, bought any of the high number of bonds that have started to trade on negative yields. These so-called “crowded trades” (where a position, whether short or long, is held by a large number of investors) look fine until there is a stampede for the exit. So perhaps there has been an element of this in recent moves.

Economic indicators remain supportive

For the medium and long-term investor it is perhaps more important to look beyond short-term trading noise and consider whether the gradual improvement in economies will continue. Recent data shows that European economies are getting better, albeit slowly, and an expected interest rate hike in the US may be postponed due to the country’s weak start to this year, impacted by port strikes and bad weather. This should reassure investors that US monetary policy is likely to remain accommodative.

It is clear, however, that European markets have moved on. The MSCI Europe Index 12-month forward price/earnings (P/E) ratio is close to 16x earnings – higher than average, but not necessarily a cause for concern as long as P/Es in the US remain higher. Furthermore, European companies are at the start of a period of recovery for profits. Even if inflation reaches 2% in the coming years, if the “rule of 20” (a view that the stock market is correctly valued when the average P/E plus the rate of inflation equals 20) holds true, European markets can become more expensive in terms of P/E ratios. From a dividend perspective, yields on European equities also remain well ahead of those on German 10-year government bonds (3.1% average for the MSCI Europe Index, as at 30 April 2015, versus 0.6% for bunds, as at 15 May 2015).

European politics: certainty and uncertainty

On the political side, the election of a Conservative government in the UK maintains the status quo. There is a risk that the new government could be pulled towards the Right by those members with an anti-Europe, anti-welfare mandate, but my suspicion is that David Cameron and his allies know that UK elections are won and lost in the middle ground. There is a possibility that the “in/out” referendum on Europe, scheduled for 2017, could go the wrong way for markets (i.e. the UK decides to leave Europe), but my view remains that the UK is better off in a properly functional European Union. I also accept, as do most European leaders, that Europe needs to undertake further serious – and successful – reforms.

Greece, as always, remains a problem. The impasse between Prime Minister Alexis Tsipras, who refuses to accept the need for fundamental reforms, and the International Monetary Fund and ECB, who have refused to provide further financial support until reforms begin, looks set to continue. If Greece wants to stay in the euro, it must adopt reforms and prove that it is heading in the right direction, as far as budget stability is concerned. Sadly, the current Greek government has reversed the progress made by previous administrations, making the situation even worse for the long-suffering Greek people.

The European story continues

Putting it all together, recent signs of strength in European economies, coincident with weaker-than-expected growth in China and the US, have led to a logical shift in sentiment. Further good news should be still to come from European equities, including an increase in merger and acquisition activity, while the ECB continues to press ahead with its monetary stimulus programme. Furthermore, the current trend, whereby money is flowing from bonds into equities, should continue. This is hardly surprising given the different expectations for each asset class over the next 12 to 18 months.

In my view it is too early to be scared about a return to a slightly more normal economic environment. But we remain wary of the “crowded trade” effect, which is likely to fuel bouts of higher market volatility from time to time.

Tim Stevenson is manager of the Henderson Horizon Pan European Equity Fund at Henderson GI.

BNY Mellon Dynamic Total Return Fund Now Available to European Investors

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BNY Mellon lanza en Europa el fondo Dynamic Total Return Fund, que hasta ahora sólo estaba disponible en Estados Unidos
CC-BY-SA-2.0, FlickrPhoto: Hendrik Dacquin. BNY Mellon Dynamic Total Return Fund Now Available to European Investors

BNY Mellon Investment Management announced the launch of a UCITS Dynamic Total Return Fund. The launch gives European investors access to the successful Dynamic Total Return strategy which was previously limited to US investors. The US vehicle has recently passed through the USD$1 billion mark off the back of very strong performance and has been the number one fund in the Morningstar Multialternative universe over five years.

The BNY Mellon Dynamic Total Return Fund is the latest addition to BNY Mellon’s multi-asset range and will replicate the strategy of its US counterpart with the aim of keeping pace with global equity markets while also managing volatility and cushioning any market falls. 

The Dublin-domiciled UCITS fund is aimed at investors seeking to achieve managed growth with a lower drawdown. The portfolio primarily uses futures to gain exposure to global equity and bond markets. It also invests in more specialist asset classes such as currencies, commodities and inflation-protected securities. The Fund will be managed by the multi-asset team at Mellon Capital Management, one of BNY Mellon’s investment boutiques, and led by Vassilis Dagioglu. Dagioglu is also lead manager on the US vehicle.

Matt Oomen, Head of European Distribution at BNY Mellon Investment Management EMEA, commented: “We are seeing significant and growing client demand for multi-asset investment solutions. The Dynamic Total Return Fund provides our clients with access to an equity-like target return product alongside our existing suite of absolute return and total return products. It fits perfectly into our range as we continue to build out our offering in this space. The European launch of the Dynamic Total Return Fund gives clients the opportunity to invest in a strategy with a 10 year track record and the chance to benefit from Mellon Capital’s 25 years’ experience in the multi-asset space.”

Vassilis Dagioglu, Lead Manager of the BNY Mellon Dynamic Total Return Fund, said: “The Fund is a diversified growth fund which seeks to profit from mis-pricings across assets and between markets. Using forward-looking valuation models which incorporate expectations for future cash flows, we apply our fundamental analysis in a systematic process on a big scale, on a frequent basis, and with a strong emphasis on downside risk control. Allocations are consequently spread across a range of equity, bond, currency and commodity market exposures and dynamically adjusted as forecasts evolve. As one of the top performing funds in the Morningstar Multialternative universe, we are pleased to be able to offer this product to European investors within a UCITS structure.”

The Fund is part of BNY Mellon’s Global Fund range and is available to investors in Germany, France, Italy, Switzerland, Spain, Portugal, Denmark and the Netherlands.