Photo: SEC. SEC Names David Grim as Acting Director of the Investment Management Division
The Securities and Exchange Commission announced that David Grim has been named as Acting Director of the Division of Investment Management. He replaces Norm Champ, the division’s former director, who left the SEC at the end of January.
“Dave has served with distinction for nearly 20 years in the Division of Investment Management,” said SEC Chair Mary Jo White. “The Commission and investors will benefit tremendously from his extensive legal knowledge, deep roots in the work of the division, and his managerial expertise.”
Mr. Grim has been the division’s Deputy Director for the past two years where he has been responsible for overseeing all aspects of the division’s disclosure review, rulemaking, guidance, and risk monitoring functions.
“As a part of the Division of Investment Management for my entire career, I have witnessed first hand the exceptional talent and dedication of my colleagues. It is a privilege to work with Chair White, the other Commissioners, and the staff as we continue to carry out our important mission,” said Mr. Grim.
Mr. Grim joined the SEC in September 1995 as a Staff Attorney in the division’s Office of Investment Company Regulation. In January 1998, he moved to the division’s Office of Chief Counsel and was named Assistant Chief Counsel in September 2007.
Mr. Grim graduated cum laude with a degree in Political Science from Duke University and received his law degree from George Washington University, where he was Managing Editor of the George Washington Journal of International Law and Economics.
The SEC’s Division of Investment Management works to protect investors, promote informed investment decisions, and facilitate innovation in investment products and services through oversight and regulation of the nation’s multi-trillion dollar asset management industry.
Photo: Winnie Chwang, portfolio manager at Matthews Asia. Matthews Asia’s Winnie Chwang to Participate in Miami Summit
Winnie Chwang, portfolio manager at Matthews Asia, is set to present her views on Chinese companies when she takes part in the Fund Selector Summit Miami 2015, at the Ritz-Carlton Key Biscayne on 7-8 May.
Chwang will focus on China’s economic growth and rebalancing, and the resulting wave of small cap investment opportunities in some of the fastest growing segments of the economy, including health care, education, e-commerce, and other services industries.
The manager is seeking to take advantage of these opportunities through the Matthews China Small Companies fund.
Chwang not only is a portfolio manager, but also co-manages the firm’s China strategy. She joined the firm in 2004 following an MBA from the Haas School of Business.
The Funds Society Fund Selector Summit Miami 2015 will bring key fund selectors, primarily from the Miami area but also from other locations where decisions are made regarding the US Offshore market, together with top-performing Asset Managers to explore the latest portfolio management strategies and investment ideas. The Summit is designed specifically for key fund selectors who want to benefit from the knowledge of leading fund managers. You may access further information through this link.
Photo: Dennis Harvis. India’s Prospects Brighter as Modi Gets Serious about Reforms
India offers many investment opportunities but is often stymied by its perceived hostile business climate. Since taking office in May last year ending ten years of a Congress-led government, Prime Minister Narendra Modi has demonstrated that he is eager to revive India’s economy, which has been in the doldrums suffering from a large current account deficit, spiralling inflation, poor infrastructure, as well as having unfriendly business laws and regulatory environment.
While the reforms introduced have so far been incremental, Modi has now promised “unlimited” economic reforms. Recently, the PM opted to push through reforms via ‘ordinances’ – a temporary executive order while parliament is in recess. Six weeks after parliament reconvenes, an ordinance must be approved by parliament or be reissued. We think this could be a game changer for India as Modi is showing he means business and will not be deterred by parliamentary obstruction.
Key reforms include:
Insurance: Raising the foreign investment limit in insurance to 49% from 26%. This could potentially attract up to US$ 7-8 billion from overseas investors, providing a major boost to the industry.
Land acquisition: Making it easier to acquire land for projects such as power,defence, industrial corridors, social infrastructure and housing for the poor. These projects no longer require consent of 80% of landowners during acquisition.
Coal mining auction process: The repromulgation of the ordinance on coal will facilitate e-auction of coal blocks for private companies and allot mines directly to the state. This removes a big overhang for the sector and will boost coal production.
Auction of minerals: All minerals other than coal will be allocated through auctions instead of an allotment basis. This will aid transfer of leases and allow a bigger scale of operations for mining companies and attract global majors.
In our view, India is one of the most positive markets in Asia. From a macroeconomic perspective there are reasons to be cheerful. GDP is forecasted to grow at a respectable 6.4% this year, while inflation appears to be under control, with the CPI remaining within the RBI’s target of 6% retail inflation by January 2016. Additionally, the manufacturing sector has been strengthening over recent months. While this more optimistic view for India is reflected in stock prices, following the recent market correction Indian equities appear to be reasonably valued now relative to historical valuations.
In the short term, lower commodity prices should be positive for corporate earnings. Lower oil prices would significantly benefit India as an oil importing country; resulting in more savings for consumers, reducing imports, improving the fiscal deficit and increasing foreign exchange reserves. Longer term, progress on reforms could provide a boost to equity markets and support the already positive macroeconomic investment case for India. Similar to many other countries within Asia, demographics, relative fiscal strength and a higher rate of growth should ensure India’s attractiveness to investors.
The Henderson Horizon Asian Growth Fund remains overweight India as we believe our investments in selected financial, consumer, pharmaceutical and IT services companies can continue to generate significant profit growth and superior returns over the next few years. Clearly the risk is that the economic reforms stall but the companies that we hold have delivered impressive returns even in a weaker political environment. Our current favoured holdings include HDFC and affiliate HDFC Bank, Tata Motors, fast moving consumer goods manufacturer Dabur, and software business, Tech Mahindra. We have also initiated a position in Lupin. The pharmaceutical has broad geographic exposure and a strong pipeline, and is also one of the fastest growing major generics companies in the key US market.
Andrew Gillan and Sat Duhra are Portfolio Managers of the Asia ex Japan Equities team at Henderson Global Investors. Andrew Gillian will be speaking in Miami Beach in the investor’s brunch, which will precede the II Funds Society Golf Tournament, on March 13th, 2015. If you are a professional investor and would like to register for this event, please contact info@fundssociety.com
Photo: Simon & His Camera. Investec Asset Management Extends Relationship with State Street
Investec Asset Management has extended its relationship with State Street Corporation for another seven years to provide full middle office and fund accounting services across the UK, South Africa, Luxembourg and the United States.
Investec Asset Management is a specialist investment manager providing investment products and services to institutions, advisory clients and individuals. Their clients include pension funds, central banks, sovereign wealth funds, insurers, foundations, financial advisers and individual investors.
Kim McFarland, chief operating officer of Investec Asset Management, said: “State Street has always worked with us as a partner and understands the constant evolving needs of our business and the industry. We were keen to continue our relationship to ensure State Street’s excellent support.”
John Campbell, head of Global Services for UK, Middle East and Africa at State Street said, “We are very proud to have been able to support Investec Asset Management during their phenomenal growth over the past ten years and are delighted that they have chosen to continue our successful partnership.”
“There is a new battleground for today’s asset managers,” continued Campbell. “Our recent research revealed that more than three quarters of asset managers are embarking on a fundamental shift in their business strategy in response to changing client demands.”
CC-BY-SA-2.0, FlickrPhoto: OTA Photos. Investec: Japan Receives Industrial Output Boost
Japan’s industrial output edged higher in December, suggesting the world’s third-largest economy may be turning the corner after a recession brought on by a hefty sales tax hike. Data released last week showed manufacturing production increased by 0.3 per cent in December from a year earlier and by one per cent from the month before.
But inflation slowed to 2.5% from a year earlier, compared with 2.7% in November.
Tackling deflation
Prime Minister Shinzo Abe has made pushing prices higher the main focus of economic policies aimed at ending years of deflation that have discouraged corporate investment and hobbled growth. Japan returned to recession last year, shrinking in both the second and third quarters of 2014. The surprise slump prompted Mr Abe to call a snap election to renew his economic policy mandate, a poll that he won in December.
Now it seems the country’s mighty industrial base could be returning to health.
Flag of Japan
The Ministry of Economy, Trade and Industry said that, on top of the rise in production, there was also a 1.1% rise in shipments of goods compared with November and a 0.4% increase compared with a year earlier.
There was also a run-down in the inventories held by businesses, which shrank by 0.4% compared with November, suggesting a pick-up in demand.
The ministry said: “Industries that mainly contributed to the production increase are, first, electronic parts and devices, second, information and communication electronics equipment, and third chemicals, excluding drugs, in that order.”
It added: “Industrial production shows signs of increase at a moderate pace.”
Production forecast improves
The ministry published also its “survey of production forecast”, which it describes as “one of the useful economic indicators, which reflect changing business conditions and provide a view of where the economy is heading in the near future”.
The latest forecast found planned production this month was expected to be 6.3% higher than in December, but to be 1.8% lower in February than in this month.
The same survey in December forecast a 5.7% rise in production this month compared with December, so the expected level of output has risen by 0.6% points.
CC-BY-SA-2.0, Flickr. Lorenzo Parages Appointed Head of Distribution by March Gestión de Fondos
March Gestión de Fondos, one of the largest Spanish private bank-owned asset managers, named Lorenzo Parages as its head of Distribution – responsible for the promotion of MGF funds in UK, Germany, Austria, Spain, Italy, Luxembourg and Latin America.
Prior to joining the Spanish asset management company, Parages was in charge of Allfunds Bank’s investment services operations in Latin America. Formerly, Parages worked in the equity sales division of Banco Urquijo, a Spanish private bank, before pursing his career at Axa Investments as financial advisor, then in several UK firms such as BSN Capital Partners, BlueCrest Capital Management and CMD.
March Gestión de Fondos CEO Jose Luis Jimenez said Parages would help maintain the rapid growth the firm has seen in Spain and overseas since the beginning of the financial crisis, namely a fourfold increase in asset under management since 2008.
He also commented: “Thanks to strong performance, we see continuing support for our range of global equity and bond products not only in Spain but also in Italy and increasingly in Latin America. With Germany being particularly supportive of investment in family business focused funds, we see potential for strong growth there too. In the UK, we are working towards establishing a more permanent base and so Lorenzo´s experience in London will prove particularly helpful.”
CC-BY-SA-2.0, FlickrPhoto: Honest Reporting. Fear of the Foreign
Investors are on edge. We’re barely into the New Year and markets have been left shaken by the Swiss franc’s biggest ever one-day move; an election win for a populist party that’s demanding to renegotiate Greece’s relationship with the European Union; more evidence of a slowdown in China; and worries that cheap oil reflects weak global demand rather than a turf war between producers. Against this uncertain backdrop investors are looking again to central bankers for coordinated action, yet policymakers look set to move in opposite directions.
Stock pickers hoping this year will herald a painless transition back to a world in which central bankers and liquidity play reduced roles in determining investment returns will most likely be disappointed. All this uncertainty is making it harder for the US Federal Reserve to decide when best to raise interest rates in the first step of so-called monetary policy ‘normalisation’, even as Europe and Japan remain committed to further stimulus.
More recently emerging markets have suffered. Within six months what had been a narrative of slow recovery has turned once again into an exercise in spotting the weakest link. Like predators isolating the weakest member of the herd, short-sellers are already said to be rounding on the currencies, bonds and equities of selected emerging markets.
Many of the arguments that sustain the critics have been around for a while: a rising dollar makes assets in ‘riskier’ parts of the world less attractive to international investors; countries that rely on foreign capital to plug gaps in current account deficits will come under pressure; higher US interest rates force emerging economies to follow suit despite sluggish growth.
All of which is true, to a degree. But emerging economies are still growing faster than most developed ones and will do so for many years to come; emerging economies are in better shape today because they began reducing current account deficits after the ‘taper tantrum’ of 2013, when the suggestion of an end to Fed stimulus policies caused a panic; and emerging markets hiked interest rates following the taper tantrum and so, with the collapse of oil prices driving deflationary pressures, actually have room to cut. At the country level, most emerging countries are well- positioned to handle the latest tempest.
Yet, now there’s a new concern – the level of corporate debt denominated in foreign currencies. The argument goes like this: ever since the global financial crisis, emerging market companies have gorged on cheap debt, especially dollar debt. So with the dollar (and now the Swiss franc) surging higher, corporate borrowers face ever more expensive debt repayments, even as revenues slow and show no sign of imminent recovery.
The numbers certainly look scary. From 2009 until last year, dollar- denominated borrowing by the private sector in the emerging markets increased more than 100 per cent, or by more than $1 trillion. With memories of the global financial crisis still fresh for many people, it is only right that the risks of excessive debt shouldn’t be lightly dismissed.
However, these numbers need to be reappraised within the proper context. While some economies may still be ‘emerging’ in terms of governance and market liberalisation, they now rank in size with the biggest. The obvious example is China which, by one measure, overtook the United States last year as the world’s largest economy.
All emerging markets grew rapidly over the past two decades and once the size of these economies is taken into consideration, a very different picture emerges. In fact, external emerging market debt as a percentage of gross domestic product (GDP) has been remarkably stable – around 40 per cent – since 1995. Meanwhile, external emerging market debt (as a percentage of GDP) that’s attributable to the private sector has been almost flat over the same period and remains well under 10 per cent.
That’s not to say it isn’t an issue. Debt levels – the total level of all borrowing – need to be carefully monitored. Let’s not forget that the lion’s share of debt in emerging markets is still denominated in local currencies and there has been an expansion of all debt. But we don’t think that existing levels of foreign debt specifically represent a systemic risk.
Another reason for our view is because a lot of this foreign currency debt is linked to borrowing by commodities companies, especially those in the oil and gas sector. Sharp falls in commodity prices are a problem, but it is also an industry in which dollar borrowing is matched by dollar revenues, so the danger of a currency mismatch of the type we saw in the 1997/98 Asian crisis is greatly reduced.
Of course, high-yield Chinese property bonds are now in the spotlight with Shenzhen-based Kaisa Group Holdings having missed a coupon payment and its creditors scrambling to protect their interests. Chinese companies have become some of the biggest issuers of foreign currency bonds as they sought to sidestep credit curbs at home. But investors still recognise that, on this occasion, the problems are company-specific and panic hasn’t spread to the larger developers. We’re still confident in the ability of the authorities to manage debt levels.
The coming year will be challenging for many markets, not just those in the developing world. However, we feel that most emerging markets are set to benefit from oil prices at current levels (although oil exporters are obviously big losers) and companies will continue to make steady progress trimming fat to operate more efficiently. Sure, investor sentiment remains poor and this won’t help with capital outflows, but with price-to-book valuations well below the five and 10-year averages we think there is plenty of value.
Column by Devan Kaloo, Head of Global Emerging Markets, responsible for the London based Global Emerging Markets Equity Team at Aberdeen AM
Photo: BTC Keychain. Bitcoin and Altcoin Transactions Will Shrink by More Than Half in 2015
A new report from Juniper Research has found that the value of all cryptocurrency transactions will fall sharply this year to just over $30 billion, compared with over $71 billion in 2014.
According to the report, the surge in altcoin transactions in 2014 was overwhelmingly attributable to brief spikes in activity during the first quarter in Dogecoin, Litecoin and Auroracoin. By the end of the year, daily dollar values of these transactions were at less than 5% of their earlier peak.
However, the report argued that the introduction of licensed, regulated exchanges could lead to a stabilization in currency values and with it an increase in retail transaction adoption. It pointed out that in an unregulated marketplace, consumer confidence had been eroded by the demise of the Mt Gox exchange in February 2014 and the recent theft of nearly 19,000 Bitcoins from BitStamp hot wallets.
Nevertheless, despite the fact that PayPal has now begun to allow US consumers to purchase digital goods via Bitcoin, the report argues that the scale of the challenges facing Bitcoin is so great that it will struggle to gain traction beyond a tech-savvy and/or libertarian demographic.
Real Time Transaction Settlement Opportunity
Instead, it identifies a longer term role for cryptocurrency protocols in the wider payment space. According to report author Dr Windsor Holden: “It is likely that we will see the technologies behind cryptocurrency deployed in areas such as real-time transactional settlement. Ripple Labs is already focusing overwhelming on that approach and in the medium term we may see a role evolution to this end amongst other cryptocurrency players.”
Photo: Allan Ajifo. Alternative Ucits Demand Reaches Record High
The alternative UCITS sector has grown strongly in 2014, increasing by 41%YoY to a total of €224.3bn, according to the latest Alceda UCITS review.
The study also highlighted that managed futures were the best performing alternative UCITS strategy, with the index gaining 14.3% while event driven strategies declined by -2.7%.
Overall, 2014 was a challenging year for active managers with the AH Global UCITS Index which encompasses a total of 498 funds, returning only 1.3% in 2014, compared to the almost 6% gains seen in 2013.
Michael Sanders, CEO and chairman of the Board at Alceda Fund Management S.A., said: “These results show the ongoing attractiveness and demand for alternative UCITS strategies globally with investors increasing allocations and managers, in particular in the US, choosing UCITS to target European investors.
“In addition, the recent implementation of the AIFM Directive has resulted in a greater focus on UCITS with managers looking to build sustainable distribution strategies for their products.”
Manuel Sánchez Castillo. Photo: Linkedin. Manuel Sanchez Castillo, New Head of International Wealth Management for Latin America at BBVA Compass in Miami
As reported to Funds Society by sources close to the financial institution, Manuel Sanchez Castillo has been appointed Head of International Wealth Management for the Miami office of BBVACompass as well as head of the Latin American Offshore Private Banking project of the firm, while continuing with his duties as director of UHNW for the entire international segment.
Sanchez Castillo is replacing José Ramón Rodriguez, who has been promoted to Director of International Wealth Management, based in Houston, a position which until recently was held by Hector Chacon.
The executive joined BBVA Compass in 2013 to head a new department targeted at UHNW clients in Latin America. With over 20 years experience in the industry, Sanchez Castillo, has worked at Banco Santander for most of his professional career, first from Spain, and for the past 12 years in Miami, first as head of Investment Management, and later as head of Investment Advisory. During his time in Madrid he worked at Santander Asset Management, and Banesto Fondos as head of International Equities.
In 2009, Sanchez Castillo was appointed Head of Santander’s Private Wealth division. In 2011 he moved to BNP Paribas Wealth Management in Miami as director of Key Clients Latam, until joining BBVA Compass in April of 2013. Sanchez Castillo has a degree in Economics from the Universidad Complutense de Madrid (UCM).
