With cryptocurrency reaching $3 trillion in market capitalization in 2021 before falling back to $2 trillion amidst market volatility in early 2022, it is increasingly important for market participants, including asset managers and advisors, to engage and take a view, according a new Cerulli white paper, Cryptocurrency: Navigating a Frontier Asset Class for Advisors and Asset Managers.
The study suggest that nearly half of advisors indicate they expect to use cryptocurrencies by client request at some point in the future.
For advisors, cryptocurrency is increasingly too impactful to ignore as their clients—and not only younger ones—are likely to be interested in the offerings.
80% of financial advisors report they are being asked about cryptocurrencies, while only 14% are using or recommending cryptocurrencies.
Only 7% of advisors report that they currently use cryptocurrency based on their own recommendation, with a slightly higher 10% reporting they use cryptocurrency by client request. In the next two years, advisors expect their use of cryptocurrency to change—45% expect they will be using cryptocurrency at some point per clients’ requests.
Despite the growing interest from investors, advisors remain skeptical of the asset class.
“Many simply don’t understand or believe in the cryptocurrency as an investment,” states Matt Apkarian, senior analyst.
Apkarian adds: “Advisors commonly believe that the definition of an investment involves the expectation of real return. Given the fact that crypto assets do not represent claims on a stream of income, advisors often believe that the assets lack the ability to be valued, or that they lack growth expectations.”
In addition, structural factors make it difficult or impossible for advisors to commit to the incorporation of cryptocurrency in their strategy.
According to the research, many firms don’t offer investment options for cryptocurrency through their platforms, forcing advisors who want access to direct their clients to use outside platforms.
“This inhibits advisors from exercising discretion on cryptocurrency assets and places a burden on the client for a portion of their planning,” remarks Apkarian. They also face opaque regulatory and tax guidelines. “Advisors encounter mixed messaging and poor information from a tax and regulatory compliance standpoint. For what currently exists as a tiny sliver of some portfolios, advisors may see an imbalance in their return on time spent versus the investment,” he adds.
At the same time, product development for cryptocurrency is occurring rapidly, for both investment products and platforms used to access cryptocurrency. According to the research, cryptocurrency-focused organizations realize the significant complexity that has come as a byproduct of rapid growth, and some are working to develop standards that aid in understanding for investors.
“Advisors owe it to their clients to understand the world of cryptocurrency, so at the very least they have reasoning to support their viewpoint for not including it in their portfolios—a simple lack of understanding of cryptocurrency is not doing the client justice in assessing investment opportunities available,” Apkarian concludes.
Morgan Stanley announced that it will limit its brokers to 90 days per year to perform remote work.
The wirehouse is looking to get staff back in the office and fulfill supervisory duties, according to several inside sources familiar with the changes consigned by Advisorhub.
The policy changes will take effect July 1st.
Morgan Stanley CEO’s James Gorman has been a strong advocate of the move back to the office. Gorman has repeatedly reiterated that “anyone who goes to a restaurant should also come to the office and learn from their peers.”
Brokers requesting additional time to work remotely will have to demonstrate an alternative work location. Eligibility for a remote office will be based on criteria such as length of service or membership in production-based recognition clubs and senior approval.
Those working from an alternate remote location will also be subject to additional monitoring requirements, such as periodic remote inspections.
It is uncertain how many brokers will be able to opt for alternative jobs, a Morgan Stanley spokesperson told the U.S. media outlet.
On the other hand, flexibility options will differ from employee to employee depending on their role and eligibility.
This measure may cause some brokers to leave the company. Especially if some competing firms such as UBS Wealth Management USA are taken into account.
The Swiss firm has said it will not force U.S. brokers to return to their position. Bank of America, on the other hand, called its employees back to the office on March 1, although brokers were exempt from this policy.
PIMCO has hired Jaime Estevez in Miami as Account Manager.
The advisor comes after six years at BlackRock as a member of BlackRock’s offshore sales team for its Miami distribution business, according to his LinkedIn profile.
According to industry sources, Estevez will be part of the team that serves Latin American clients.
In the team he was part of at BlackRock, he covered the US Offshore market, Uruguay and Argentina.
Prior to BlackRock, Estevez worked at Highland Capital Management within their sales team in Dallas, Texas.
In addition, his first Finra booking was in 2014 for Fidelity.
Insigneo, has appointed a new Head of Investment Products, Mirko Joldzic, who joined the firm today, based in the firm’s Miami Headquarter reporting to Javier Rivero, Insigneo’s president and COO.
Mr. Joldzic will be responsible for leading the investment product team and setting the strategic direction of the Asset Management product range, including the development of new products, banking/lending opportunities and collaborating across the organization to identify opportunities and enhancements that will competitively differentiate Insigneo’s product offering.
He also will be supporting the development of new business opportunities and contributing to Insigneo’s recent expansion in Latin America and throughout the United States, according the company’s statement.
Rivero said: “I am happy to welcome Mirko to the Insigneo leadership team as we continue to build our product offering to provide Investment Professionals with a robust platform that is unparalleled in the market.”
Mr. Joldzic has an extensive background in financial services, most recently at Raymond James. He was also part of key teams at world renowned organizations such as UBS, Barclays Wealth and Investment Management, J.P. Morgan and Bank of America. He has a BA of Science Finance from Montclair State University and additionally holds the series 7 and 66 licenses.
“I am excited to join Insigneo and take on this new challenge in my career. I have been following Insigneo in the marketplace and its growth trajectory. I look forward to contributing to the long-term growth plans of the firm. I am also thrilled to join a firm, and a leadership team, whose focus is to offer innovative product solutions and exemplary service to our network of Investment Professionals and help them realize their goals.” said Joldzic.
Selecting high yield securities has always required heightened due diligence but when ESG factors are included, the analysis is even more challenging.
Potential developments such as prospective environmental regulations, carbon taxes, social change and pressure on corporate governance, disproportionately affect high yield companies. This is partly because their higher levels of leverage mean the effects of change can be magnified in asset valuations.
Investors today rely heavily on data, but disclosure and data linked to environmental, social and governance metrics can be less comprehensive in the high yield space than for other types of security.
However, this makes this area of the market arguably an untapped ESG opportunity, especially given the huge swathes of capital that have already flooded into mostly tech-driven equity ESG plays.
Drilling down
To invest in the high-yield market through an ESG lens involves sophisticated data harvesting and analysis.
This is increasingly the case given the rising supply of ESG or sustainability bonds being issued by high yield firms.
It’s crucial to isolate a firm’s ESG risks and consider what measures the issuer is putting in place to mitigate these and whether they are comprehensive enough to mitigate the potential downside.
One key element is how well a company’s senior leadership team can adapt to the new paradigm and recognise ESG factors in its pay, policies and performance indicators. These can be positive pointers for investors who are increasingly evaluating the wider costs and opportunities which different businesses and sectors face.
Some may already be sustainable, others may need to pivot, whilst some may be dinosaurs destined for terminal decline.
Making the journey
It’s vital to view sustainability as something that must be achieved rather than simply excluding any firm that doesn’t already have perfect ESG credentials.
One could make the argument that some companies with the most progress to make in respect of their ESG credentials could deliver the most outsized gains, as well as having the greatest marginal gain for society and the environment.
As these companies mature and become ESG leaders, their valuation metrics are likely to improve.
This notion is supported by studies which have shown that bonds from companies with higher ESG scores outperformed those with low ESG scores during the 2008/09 financial crisis.
So, doing well by doing good brings benefits during bad times as well as good.
Achieving equilibrium
It’s also vital for investors to balance their portfolio with securities from companies that have to, and importantly can, make big strides in terms of their sustainability credentials, with those that have already made them.
Opportunities to invest in such companies will make ESG debt more compelling and encourage a significant capital reallocation into sustainable debt.
ESG assets under management hit $35 trillion globally in 2020, according to Bloomberg Intelligence, with ESG debt funds accounting for just $3 trillion of this.
However, ESG bonds are now widely viewed as one of the key growth areas in the sustainable investing space, with predictions that by 2025, they could account for $11 trillion of a total $50 trillion ESG fund market.
The momentum and sea change is already happening; investors may want to assess the opportunities now before the ESG debt space becomes as crowded as its ESG equity peer.
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Lila Fekih & Mark Remington, Co-Portfolio Managers, New Capital Sustainable World High-Yield Bond Fund
EFG Asset Management (EFGAM) is an international provider of actively managed investment products and services to financial intermediaries and institutional investors around the world.
EFGAM’s New Capital funds and strategies offer a focused range of actively managed, specialist strategies across equity, fixed income, alternative and multi-asset within both developed and emerging markets. The strategies are available in a variety of structures including AIFs, CITs, SMAs and UCITS, and are available through vehicles domiciled in Ireland, Luxembourg, Switzerland, Hong Kong and the United States.
EFGAM manages approximately USD 32 billion (as of December 2021) on behalf of clients.
For professional investors / trade press only. Not to be used with or distributed to retail clients.
Past performance is not indicative of future results. The opinions herein are those of EFG Asset Management (“EFGAM”) as of the date of this article and are subject to change at any time due to market or economic conditions.
Wells Fargo announced today $1 million in donations across three nonprofits to enable humanitarian aid for Ukraine and Ukrainian refugees, as well as support services for U.S. service members and their families across the globe.
The funding was distributed among the American Red Cross, World Central Kitchen and the USO.
American Red Cross, in coordination with the global Red Cross network including the International Federation of Red Cross and Red Crescent Societies (IFRC), International Committee of the Red Cross (ICRC) – A global first responder, the Red Cross is distributing food, water, first aid supplies, medical supplies, clothing and other urgent support as well as providing temporary shelter to people affected by the crisis.
World Central Kitchen provides meals in times of crisis. Their team is currently serving tens of thousands of meals to Ukrainian families fleeing their homes as well as those who remain in country.
The USO is rapidly responding with support for American service members in Eastern Europe with call centers, hygiene and meal kits, care packages, and other essentials. It also offers resources that provide care and comfort to U.S. service member families during this stressful time.
In addition, the company is making it easier for its employees to support these organizations through its internal employee giving system. Wells Fargo is also amplifying employee generosity to these organizations through its Community Care Grants program, allowing donations of up to $1,000 to qualify for additional grant dollars to further extend impact.
“In times like this, it’s important we come together to support those most impacted,” said Wells Fargo CEO Charlie Scharf.
Scharf adds: “We appreciate the nonprofits on the ground and hope our grants will enable them to accelerate getting humanitarian aid to those who require it most. At the same time, we want to support our nation’s military, which is often called upon in times of need, and we will continue to provide essential services for service members and their families.”
Both Mariscal Lozano and Bestard arrive from UBS’s Coral Gables office.
As for Bestard, who has more than 25 years in the Miami industry, he has worked at UBS since 2013 when he arrived from Morgan Stanley where he served from 2007 to 2013, according to his BrokerCheck records.
The advisor started in 1997 at Lehman Brothers where he worked for 10 years until 2007.
Mariscal Lozano started in 1999 at Lehman Brothers and moved to Morgan Stanley in 2007 where he worked until 2013 when he moved to UBS. Always based in Miami, according to his Finra profile.
Finally, Rivera, also with Miami experience, started at Morgan Stanley between 2008 and 2015. He then moved in 2015 to Jefferies until late last year, according to BrokerCheck.
Foto cedidaParesh Upadhyaya, Director of Fixed Income and Currency Strategy at Amundi AM.. Paresh Upadhyaya (Amundi): "Mi apuesta es que la Fed seguirá subiendo los tipos hasta septiembre"
Paresh Upadhyaya is Fixed Income and Currency Strategy director and a portfolio manager at Amundi Asset Management. He also leads Amundi Pioneer’s currency research effort from Boston and advises the firm’s global fixed income and equity investment staff on currency-related issues. With a degree in economics and international relations from Boston University and an MBA in finance from Boston College, he has held multiple senior positions at other asset managers and is an authority on fixed income and equity investing, sovereign debt, currencies and monetary policy. On 8 March, Funds Society had the opportunity to interview Mr Upadhyaya to discuss the economic impact of the war in Ukraine, especially the influence of this crisis on inflation, global monetary policies, fixed income and currency investment, as well as the company´s strategy for the current environment.
Fernando Moldenhauer, for Funds Society: Mr Upadhyaya, inevitably the first question has to be about the impact that the current situation in Ukraine is prompting on global economy. As you know we already came from an increasing inflation situation that has been now exacerbated by hikes on energy and commodities prices. We also have the sanctions issue, so the question is: how this situation is going to impact on global economy and on global stock markets? Can it pose a threat to the post-COVID recovery?
Paresh Upadhyaya: Great question. I think what we’re seeing is a geopolitical shock to the global economy. Global economy growth expectations, estimated at 4%, have been cut by at least half a percent or more. The surge in commodity prices is going to hurt, particularly countries that are big importers of commodities, especially oil importers. The other transmission mechanism for slowing global growth is through tightening financial conditions. Financial conditions have been excessively accommodative throughout the world, but those conditions are now beginning to tighten. Global monetary policy began to tighten up last year, but this year is going to start to gain more momentum with the US and the G10 economies entering the tightening cycle, joining much of the emerging markets that began their tightening cycle last year. So the combination of all those factors is going to lead to a weaker growth. I think we are still growing above the trend, but the risks are clearly to the downside and the greater the potential escalation in the Russian-Ukraine conflict, the greater the uncertainty.
FM: Given the current situation. Do you think the FED and other central banks will postpone their tightening policies in an attempt to soften the crisis?
PU:The issue that I think all central banks are facing and this is especially true for the Fed and the ECB, is that inflation has overshot their forecasts by multiples, not just a little, but by a lot. And there are a number of factors that go beyond just very strong domestic growth. The supply chains have aggravated the inflation situation, the demand for goods caused by the pandemic that have really driven up goods prices and energy. In the US we have the tightest labor market in decades while in Europe the unemployment rate is actually below the pre pandemic levels and we could see wages really began to pick up beginning September onwards.
Headline inflation is over 7% and will keep increasing, only starting to rolling over in late Q2 or early Q3. In the US, the risk of a wage inflation spiral is a fact. All of that suggests that even if the Fed wants to be a bit cautious given the external events with Russia, the domestic inflation situation, which is really a global issue, will prevent them from going slowly or more cautiously on rate hikes. So I think at the March meeting the Fed will hike by 25 basis points, and if I was to hazard a guess, my bias is still that the Fed will continue to hike at every meeting and maybe in September they will began to reevaluate if they continue the hiking at every meeting or not.
FM: We have recently seen the first movements of an approach between US and Venezuela government to study the possibility of increasing the Venezuelan oil imports to counter an eventual ban on Russian imports. Would that be an effective measure to avoid the negative effects of the prices hike?
PU: Venezuela is one that is believed to have one of the largest, if not the largest, untapped reserves of oil in the world. But Venezuela is only one of the countries where we can see sort of an increase in output. The other big 800 pound gorilla in the room is Iran, and there was some optimism among some that this may actually increase the odds of an Iranian nuclear deal, which would allow for a huge increase in supply to come into the markets. There are also rumors of President Biden flying out to Saudi Arabia to meet with Mohammed Bin Salman to try to see if Saudi Arabians can boost their output. All of that will not be enough to offset Russia, which is one of the top five largest exporting markets, but it would certainly help alleviate the situation.
FM: Let´s focus now on Amundi Asset Management´s experience with Rusia. Do you still have exposure to the country or you had already left it before the crisis? Did the sanctions impacted you?
PU: Fortunately we were not positioned in Russia. We have been investing in Russia over the last 10 years, but it has always been more tactical than strategic. We actually got out of those bonds on the local currency bonds about a year ago for fear of potential sanctions bills by the US Senate. We weren’t sure when the US would turn on and pass those bills, but one thing that has been sort of a constant trend when analyzing the Russian credit is the threat of sanctions that has been hanging over the country´s head since the invasion of Crimea.
FM: Let’s now open the door for a more in-depth analysis of fixed income markets. How do you think all this situation is impacting this particular sector?
PU: There is this tug of war that’s taking place between geopolitics that is giving a clear flight to quality safe haven status to sovereign bonds, like US treasuries. The precarious inflation situation is very destabilizing as a macro force, and it´s putting upward pressure on yields. Therefore, you will notice that the price action in US Treasuries and in global yields in general, has been very choppy, with sharp spikes up and down.
I think the general bias is that once we get a better handle of the situation or the markets have fully priced in the most likely outcome of the Russian-Ukrainian event, yields will continue to move higher, and therefore we favor being underweight duration in a lot of our core strategies. I would say that we’re still not there yet because I still think there could be a potential series of escalations that could lead to further rallies in Treasuriess or further flight to quality to Treasuries.
FM: As the company´s director of Fixed Income, what can you tell us about Amundi´s approach and latest products on fixed income. Is there any innovation or fund in particular you would like to present to the audience?
PU:So I would say there is a flagship fund, which is this strategic income fund, which is the one that I directly help to manage. And there, as I described earlier, our core strategic holding is to remain underweight duration, to be cautious on spread product, especially at investment grade, where we remain underweight because we think from a valuation perspective it´s hard for us to see yields fall any further. Once the Fed begins its tightening cycle, we think investment grade spreads will widen. On the other hand, we are overweight in high yield spreads, because we are cautiously optimistic that high yield can avoid some other churn that could take place.
FM: What about emerging markets? Given the current situation, is it a good idea to invest on them? What´s the Amundi vision on fixed income and currency investment in emerging markets right now?
PU: I would say that for emerging markets I think we’re going to be cautious for the moment, but emerging market equities and emerging market fixed income securities are already among the worst performing, if not the worst performing asset class in markets. So there is a good deal of pessimism that I would say is already reflected in emerging markets securities. Not to say it can’t get worse, there’s always a risk it could get worse, but I think we’re getting to the point that I think is going to begin to attract bottom fishing in various asset classes. I think what we need some more clarity on the Russian-Ukrainian war. Does this remain localized or is it starting to expand beyond the current war zone? That I think will really answer the question whether this is the time to start buying emerging markets across the board or if it´s time to start buying EM currencies against the dollar and selling the dollar against G10 currencies.
FM: OK, good. So I guess for your answer that you are cautious about the evolution of the euro and the dollar, you think they are going to be resilient. So can you talk a little bit about the new strategies, new approaches that Amundi is presenting regarding currency investment, or your current favorite products or vehicles of currency investment?
PU: On the currency side, you know the dollar has been on a bull market that I think will receive renewed momentum during the Russian-Ukrainian war as a dollar bill benefited from flight to quality. But I I think that the market is now beginning to price in a pretty healthy tightening cycle by the Fed, though I think we still have more to go to take us back to neutral and then even to restrictive territory. So there is still a little more upside to go in the dollar, but I think we’re getting close to where we may be seeing a consolidation in the dollar bull market and I would be looking for opportunities to begin to fade.
Foto cedidaEvento Global Markets Outlook de StoneX
Copyright: Stonex. ..
StoneX held its Global Markets Outlook at the Hyatt Regency in Orlando on March 3rd, where they presented the most important topics to watch out for this year.
In a context of inescapable war, the most important topics were based on inflation, ESG investment, commodity prices and the explosion of the crypto world.
The event was attended by almost 500 people from the following countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, France, Great Britain, Mexico, Panama, Paraguay, Peru, Spain, United States, Dominican Republic and Uruguay.
Inflation call to Switzerland and the emerging markets
Inflation is the talk of the industry, and the StoneX event was no exception.
In this regard, Vincent Deluard reviewed the macro view and came to several conclusions. The first, and the one that has been heard the most in recent days, is that it is very difficult for inflation to moderate in the first boreal.
Moreover, Deluard explained that bank credit, labor shortages and wealth shock will drive inflation in 2022.
On the other hand, a devaluation of Asian currencies, especially China, is to be expected and he also concluded that monopolies and the rise of the Gig Economy will create a direct dependence between prices and wages.
Finally, the expert stressed that a portfolio of Swiss and emerging assets should be the new 60/40 portfolio.
Commodity prices and South America
One cannot talk about commodities without taking China into account. In this regard, Blu Putnam, Chief Economist of CME Group, commented that the Asian giant generated a super revolution in the price of commodities, but warned that it is not the same economy of a few decades ago.
On the other hand, Putman talked about South American farmers. The expert said that normally when we see high prices “we think that farmers will have good yields”.
However, the CME Group executive warned that producers will have many high costs, such as fertilizers.
“Farmers will have to think very, very carefully, because although they will sell at higher prices, they will have much higher costs,” he said.
Finally, he made a point about the weather and the La Niña phenomenon in Argentina that could bring problems with drought to producers in that South American country.
In relation to the criteria for ESG investment, Vincent Deluard, Director of Global Macro Strategy at StoneX and economist Andrew Busch, former CMIO and former US government official, discussed the pros and cons of this type of investment and its performance in portfolios.
Among several of the arguments made in favor of ESG, the importance of following company ratings was highlighted. On the other hand, it was noted that if demand continues to grow, production will have to respond to that demand, making it more difficult to maintain parameters.
Foto cedidaJosé Castellano dará el relevo a Jamie Hammond como responsable de Distribución Internacional de iM Global Partner.. José Castellano abandona su puesto como Deputy CEO y responsable de Distribución Internacional de iM Global Partner
José Castellano, until now Deputy CEO and Head of International Distribution at iM Global Partner, is leaving the firm. As of April 4th, 2022, he will remain as Senior Advisor of the firm.
According to iM Global Partner’s statements to Funds Society, his mission will be to assist the firm in its future developments. Jamie Hammond will take over from Castellano as head of International Distribution.
“Jose has decided to distance himself from the intense daily management required by his role as ‘Deputy CEO, Head of International distribution’. From April 4th, 2022, he will become Senior Advisor of iM Global Partner with the main mission of helping the company in its future developments,” the company explains.
From the firm, they add: “We would like to strongly thank Jose for his very significant contribution within iM Global Partner in building its international distribution network. We are also happy that he has agreed to remain active on behalf of iM Global Partner.”.
Castellano said: “Obviously I also thank Philippe Couvrecelle for envisioning and leading very passionately and successfully this amazing company.”
Jamie Hammond will take over from Castellano as head of International Distribution. Hammond is a veteran and one of the best-known distribution executives in the business, with a great track record and experience, and who fully shares iM Global Partner’s vision and values. He currently heads the firm’s EMEA Distribution area and is Deputy CEO.
Extensive experience
Castellano joined the firm in March 2021 to support iM Global Partner’s development outside the United States. At that time, he joined directly for the dual role of Deputy CEO and Head of International Business Development. He has extensive experience in the sector, having spent 25 years in the distribution business in this industry.
Within his professional career, it is worth highlighting his time at Pioneer Investments, where he spent 17 years and was one of the main distribution executives for the Asia Pacific, Latin America, United States and Iberia regions. Under his leadership, these regions experienced the highest growth worldwide, making the fund manager one of the most important players in each of these markets. Prior to joining Pioneer Investments in January 2001, he was head of Morgan Stanley’s private equity group for two years and head of Wealth Management for another seven years at Morgan Stanley. José Castellano holds a degree in finance from Saint Louis University and several postgraduate degrees from Nebrija University and IE.
Hammond has more than thirty years of experience in the sector. Prior to joining iM Global Partner last summer, Hammond worked at AllianceBernstein Limited (UK) as Managing Director and Head of the EMEA Client Group. He joined AB in January 2016 as head of EMEA Sales, Marketing and Customer Service Functions. Prior to that, he spent 15 years at Franklin Templeton Investments, where his last positions were CEO of UK regulated entities and Managing Director for Europe. He joined Franklin Templeton in 2001 following the acquisition of Fiduciary Trust Company International, where he was Sales Director responsible for mutual fund development in Europe. Prior to that, Hammond held the position of Head of National Sales at Hill Samuel Asset Management, the asset management division of Lloyds TSB Group.
