Foto cedidaLucy Thomas, nueva responsable de Inversión Sostenible de UBS AM.. UBS AM ficha a Lucy Thomas como nueva responsable de Inversión Sostenible
UBS Asset Management (UBS AM) has announced the appointment of Lucy Thomas as Head of Sustainable Investing. Based in Zurich, she will be responsible for leading the delivery of the sustainability and impact strategy; and will report to Barry Gill, Head of Investments.
“As a leading global asset manager, we have a critical role to play, both in providing our clients with the investing solutions they need to meet their sustainability goals and helping to shape the future of the industry. During her 20-year career, Lucy has worked as an asset owner, asset manager, and asset advisor and brings extensive experience working with clients and leading the integration of sustainability factors into the investment process globally”, said Gill.
Thomas has 20 years of experience in the industry and joins UBS AM from TCorp, the financial markets partner of the New South Wales government in Australia, where she was Head of Investment Stewardship. Prior to that, she was Global Head of Sustainable Investment at Willis Towers Watson (2014-2018). She started her career as an analyst on the graduate program at Morgan Stanley.
Meanwhile, the new Head of Sustainability Investing claimed to be “delighted” to be joining UBS AM, a team with “a leading combination” of culture, capabilities and commitment to sustainability. “We are at an inflection point in our industry where creating value for clients, society and the planet has never been more crucial”, she concluded.
Foto cedidaJohn William Olsen, gestor del fondo M&G (Lux) Positive Impact.. John William Olsen: “Hay un viento de cola a largo plazo para las soluciones medioambientales y sociales”
John William Olsen, manager of the M&G (Lux) Positive Impact fund, believes that all investments have an impact on people and the environment. Now that investors are aware of this, he thinks that fund managers have a great opportunity to boost SRI. In this interview, we discuss with him how they are tackling this challenge and how it is reflected in the strategy he manages.
1. Why do you think impact investing has become an easy way for investors to invest sustainably?
All investments have an impact on people and the environment, whether positive or negative, intentional or unintended. Impact investing involves setting impact objectives alongside financial return objectives and quantifying and measuring these over the period of investment. Defining the impact that is (or is not) wanted and constructing a portfolio to meet the objectives enables investors to seek both financial return at the same time as aligning capital with broader objectives. With this, clients can put their money to work with a purpose.
2. Normally when we think of impact funds we relate it to equity funds. Why does it seem to be a type of strategy that fits better in this asset class? Is there room for a greater presence of fixed income in impact funds?
All parts of the investment chain have a role to play when it comes to impact investing – from catalytic capital such as blended finance, through to private assets and then listed equity and credit. Some asset managers, such as M&G, can play across that whole sphere, with an end-to-end impact financing approach.
Impact investing is growing rapidly. The Global Impact Investing Network’s latest surveys estimated the size of the market at $715 billion, with 36% of impact capital invested in private debt and 16% in private equity. While the majority of impact assets are in these two asset classes, impact investing across public equity, real assets and public debt is on the rise. But whether we are talking about early stage private asset investments or public listed investments, there are some crucial principles to impact investing that all investors should adhere to: intentionality, additionality, materiality and measurability.
3. In this regard, what is most relevant?
Every impact investment should be made with purpose to deliver positive outcomes that will support the United Nations’ Sustainable Development Goals. The investment must make a positive contribution to solving a challenge – investing in businesses that are bringing something new, innovative and additional to addressing that challenge. It’s also key to look at how the investment materially impacts the outcome that you’re looking to generate. And last, but not least, measurement is crucial.
4. In the current context, and looking ahead to 2022, what role can and will impact strategies play in investors’ portfolios? Why?
There is a long way to go in orienting towards a more sustainable and equitable society, but while there are obstacles and uncertainties, there is a palpable sense of hope as we continue to emerge from the COVID-19 crisis. The next nine years hinge on whether political leaders, companies and investors can help drive the shift to bouncing back in a resilient and equitable way – redesigning the future and pulling out all the stops to reach the UN’s 2030 deadline. An increasingly engaged population of concerned citizens also has a critical role to play in embracing behavioural change and holding these other actors to account. The world has pledged to ‘build back better’ – and we must keep that promise. We think investment strategies that are addressing these challenges will only gain in importance.
5. Taking the M&G – M&G (Lux) Positive Impact fund as a reference, we see that it invests in six areas. Why have you chosen them?
The fund embraces the United Nations Sustainable Development Goals framework and invests in companies focused on six key areas, mapped against the SDGs. These are: climate action; environmental solutions; circular economy; better health, saving lives; better work & education; and social inclusion. The SDGs provide a solid, excepted framework for determining material impact areas, and help frame the measurement of how those positive impacts are being achieved. It is estimated that by 2030 delivering capital to the SDGs could be a $12 trillion investment opportunity.
6. What’s your portfolio construction process?
Selection begins with a global universe of over 4,000 stocks, which is then initially screened for minimum liquidity and market-cap criteria, as well as screening out companies that are not capable of delivering demonstrable positive impacts to society. From this remaining pool of stocks the team ‘screens in’ a watch-list of some 150 impactful companies that can be purchased if the timing and price are right. These companies are analysed under the team’s ‘III approach’, examining the Investment case, Intentionality and Impact of a company to assess its suitability for the fund. As part of this analysis, it scores companies on these III credentials, and requires above-average results for consideration within the watch-list, as well as consensus agreement of a company’s merits from the entire Positive Impact team.
7.I understand that the areas in which the fund invests have in common that they are megatrends or, at least, part of the secular growth. What is your outlook for them?
We believe there is a long-term tailwind for environmental and social solutions. On the social side, the pandemic has shone a harsh spotlight on a range of development challenges and highlighted the need to step up efforts to achieve the UN Sustainable Development Goals. On the environmental side, we have seen an increased focus on reaching net-zero and a surge of ‘green deals’ worldwide. We believe that companies that offer solutions that help address the world’s biggest societal challenges are well positioned for the future decades of growth.
8. Taking this fund as an example, how do you measure the impact and does the investor show interest in this information?
We focus on each company’s given impact, assessing how its business activities are aligned to specific societal impact challenges that we have identified as both needing investment and being investable by public equity investors. We test the company’s stated purpose or mission statement, asking: “is positive impact genuinely a part of the business’s DNA and a demonstrable part of its corporate strategy? Or is it just good PR?” We assess whether the company’s actions demonstrate clear alignment with that purpose, and weigh up positive impacts versus negative impacts, in particular excluding any company whose activities represent an overwhelmingly negative impact that counterbalances any positive impacts it may deliver.
We start with a qualitative assessment of a company’s business: what is it doing to address a particular impact challenge, and how much of its business is aligned to that challenge? While this assessment is qualitative, the UN Sustainable Development Goals (SDGs) have provided a more quantitative framework for investors, and we map every company’s business activity to these goals. Importantly, we use the 169 underlying targets to give this analysis greater focus.
9. What are the main changes you have made to the fund in the last year and how are you preparing for next year?
We have further shifted the portfolio towards the ‘under-served’ and ‘under-addressed’, to help ensure that the impacts being delivered are truly additional and material, while also steering the portfolio towards ‘C’ companies, as represented by the IMP+ACT ‘ABC’ classification system: ‘A’ investments act to avoid harm; ‘B’ benefit stakeholders; and ‘C’ contribute to solutions. We expect this shift will continue into next year and beyond.
Pixabay CC0 Public DomainJonathan Roger. Jonathan Roger
Smart cities aren’t just about robotics and futuristic design. To be truly smart, they also need to protect and promote the health of their inhabitants – a task that’s all the more pertinent in the wake of the Covid-19 pandemic, which saw busy, crowded metropolises reporting some of the highest rates of infection.
In all, a smart city can reduce the disease burden by up to 15 per cent and reduce greenhouse gas emissions by around 10 per cent, research from consultants McKinsey shows (1).
According to the Pictet-Smart City Advisory Board, it’s not just about healthcare but also about taking care of the population’s health even before they get sick. The aim is to create an environment that promotes healthy living. It’s a priority for planners and regulators, and an opportunity for businesses and investors, according to the Advisory Board members, who dialled in from cities across the globe.
Pollution is a major challenge. More than 80 per cent of city dwellers are exposed to air quality that breaches WHO’s limits, with the problem particularly acute in low- and middle-income countries (2). Air pollution, in turn, is a major cause of illnesses and diseases, accounting for some 4.2 million deaths a year (3).
A holistic approach is needed. That includes more parks and greener buildings – both figuratively, in terms of reduced emissions and improved efficiency, but also literally, using plants within construction projects.
Businesses are increasingly embracing the innovation challenge. The 51-storey Jian Mu Tower in Shenzhen, China, for example, will provide 10,000 square meters of space for aeroponic farming, growing everything from salad greens to fruit and providing enough sustainably-produced food for some 40,000 people. These plants will absorb 200,000 kg of CO2 a year, as well as helping to shade the building, thus improving its energy efficiency and reducing the need for air conditioning.
Another way to reduce pollution is to encourage people to use alternatives to petrol-guzzling cars. That could mean making better use of existing public transport infrastructure, including sensors and apps to encourage people to travel at quieter periods – something that may be increasingly possible thanks to the advent of flexible working. (Conventional trains in Europe, for example, run on average at 35 per cent of capacity (4). They may be full during rush hours, but there is plenty of room at other times.)
Micromobily – from bikes to scooters – not only reduces the need for cars but can also have health benefits for users. By 2030, the micromobility market could be worth up to USD500 billion, according to consultants McKinsey (5). The trend can be further accelerated with more infrastructure – like secure parking and charging points – as well as with better city design.
Waste management, clean water and sanitation are also key. As an island with limited freshwater resources and limited land, Singapore is one of the leading innovators, with initiatives such as a new deep tunnel sewage system and high-grade reclaimed water. NEWater, the name Singapore’s Public Utilities Board gives to its highly treated reclaimed wastewater, is purified through a multi-stage process – including microfiltration, reverse osmosis and ultraviolet disinfection – and used in industry and for air conditioning. During dry periods it is also added to reservoirs, where it is mixed with raw water, treated again and supplied to consumers’ taps.
Accommodating ageing
Covid-19 highlighted the need for healthcare infrastructure. This is a growing area of the economy – Singapore, for example, has doubled its healthcare spending over the past decade.
Cities need to provide easy access to everything from basic diagnostic centres and strengthened early-stage outpatient treatment capacity to acute hospitals and assisted living. Technology can help, bringing access to diagnostics via apps, enabling doctors to consult colleagues remotely or speeding up diagnosis and drug discovery with the help of machine learning. The growing telehealth universe includes companies such as Teladoc Health Inc, which diagnoses, recommends treatment, and prescribes medication for routine medical issues through phone and video consultations (6).
Care for the elderly is becoming increasingly important as populations age. Of the 238 million people aged 65 and over in OECD countries, some 43 per cent live in cities (7). A key focus is on assisting people to stay in their homes even when they can no longer be fully independent. Swiss non-profit Spitex, for example, provides millions of hours of home care and assistance each year, offering services which range from changing bandages and administering medicine to meal delivery and wheelchair hire.
Technology also helps the elderly stay healthy and independent for longer – something that Lucerne’s iHomeLab has focused on. Its CleverGuard, for example, uses non-intrusive appliance load monitoring (NIALM) technology to analyse current and voltage. It detects any unusual patterns in the use of electrical appliances, including any unexpected inactivity which could be a sign of help needed. The iSens light sensor, meanwhile, can be installed next to the bed and used to alert carers of any abnormality in movement.
Last but not least, city infrastructure needs to be able to cope with the next pandemic – including plans and facilities for quarantine accommodation, for the isolation for the mildly ill (to reduce pressure on hospital beds), for the rapid conversion to ICU beds and for centres to distribute masks and vaccines.
Sustainable cities are one of the UN’s Sustainable Development Goals, and health is a key part of that – from reducing the adverse environmental impact of cities to ensuring access to green spaces and sustainable transport systems. The Covid-19 pandemic has made these targets all the more urgent. Investors can help drive the change, embracing a growing number of opportunities and innovations.
(1) Theoretical improvements in key KPIs if a “smart city” concept is being applied. Source: McKinsey Global Institute analysis, 2018
(2) WHO, “Global Urban Ambient Air Report”, 2016
(3) “Global, regional, and national comparative risk assessment of 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks, 1990-2015: a systematic analysis for the Global Burden of Disease Study”, Forouzanfar et al.
(6) Teladoc Inc is part of the Pictet-Smart City portfolio
(7) OECD, “Ageing in cities”
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.
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Patria Investments, leading alternative asset manager in Latin America, has recently announced the launch of a new growth equity strategy through a partnership with Kamaroopin, a private markets investment group previously affiliated with Tarpon Investments and led by Pedro Faria.
As reported by the Brazilian firm in a press release, the partnership is structured in two stages. First, establishing a minority stake during a joint fundraising campaign, and then a full business combination contingent on fundraising success and certain other requirements.
“Growth Equity is highly complementary to our flagship private equity business, and expands our product offering to meet a key area of investor demand. We are excited to partner with Pedro and the Kamaroopin team on this new initiative that will broaden Patria’s presence across the private markets value chain. Our investment philosophies are highly aligned with a sector-based focus, and a commitment to being not just investors, but company builders”, ” said Alexandre Saigh, Patria’s CEO.
With market size of more than 15 billion dollars in Latin America, Venture Capital and Growth Equity strategies are in high demand. Venture Capital transaction volume in Brazil has grown at a CAGR of more than 40% over the last decade, with transaction value reaching 6.6 billion dollars in 2021.
A new partner
Kamaroopin was created in 2018, and currently has three invested portfolio companies where they partner with great entrepreneurs as investor operators to drive growth through single minded consumer focus and tech-enabled business models. Their portfolio has generated a 2.7x gross multiple based on June 2021 valuations, led by their signature first investment in Petlove, the #1 digital Petcare platform in Brazil. Kamaroopin’s current portfolio amounts to nearly BRL 1 billion (or more than 175 million dollars) in assets under management, and they are profitable on a Fee Related Earnings basis at current size.
Faria, its founding partner, highlighted that Kamaroopin was founded within the SK Tarpon ecosystem, with the mission to be company builders, operating as true partners of entrepreneurs and teams. “We are taking a step further with the association with Patria, the leading alternative investment firm focused on Latin America. We are inspired by their team leadership and successful investment model. We will strengthen our ability to back many more companies and build consistent and lasting business legacies”, he added.
The details of the transaction
While detailed financial terms of the transaction have not been disclosed, the structure will comprise two stages. The first one includes an agreement to acquire a 40% minority stake in Kamaroopin’s existing businessfor cash consideration, which upon closing will launch a joint fundraising campaign for a new Growth Equity fund.
The second stage would trigger the acquisition of the remaining 60% stake for equity consideration, contingent on achieving pre-defined fundraising objectives, and fulfilling certain other requirements. Should the requirements for the second stage not be satisfied, both firms would have optionality to unwind the transaction.
Patria Investment believes that the agreement will have minimal impact on its near term Distributable Earnings, with the exception of an attractive performance fee opportunity on Petlove. As part of the partnership, it will be entitled to participate in the crystallization of Petlove´s eventual performance fee, in a structure that was designed to provide the best alignment of incentives among all parties.
Upon the closing of stage two of the transaction, Kamaroopin’s earnings would be fully consolidated, and including revenue from the new fund, the strategy is expected to be profitable on both a Fee Related Earnings and Distributable Earnings basis with significant room to scale moving forward.
Pixabay CC0 Public Domain. Los inversores institucionales esperan que el “gasto de venganza” y los bancos centrales impulsen los mercados en 2022
The world’s institutional investors are confidently heading into 2022 armed with tactical strategies to counter their expectations of rising inflation, interest rate hikes and higher stock, bond and currency volatility, according to a survey by Natixis Investment Managers.
The study shows that 62% of institutional investors expect pent-up demand for big-ticket items will be a significant driver of growth in 2022 – dubbed ‘revenge spending’. However, most believe that policy makers ultimately hold the keys to economic recovery and that those policies are behind the current imbalance in supply and demand, inflation, and distorted stock valuations. In this sense, nearly 68% believe that once central banks stop printing money, the long bull market will come to an end, but not in the year ahead.
This conclusions are based in the answers of 500 institutional investors who collectively manage more than $13.2 trillion in assets for pensions, insurers, sovereign wealth funds, foundations, and endowments around the world. Natixis IM has found that institutional investors plan to make few broad changes in their overall allocation to stocks (39%), bonds (37%), cash (5%) and alternatives or other (19%) in the year ahead. Instead, they are positioning themselves to make tactical moves.
Inflation, interest rates and the hunt for yield
Seven in ten investors say rising inflation is a top portfolio risk, though they are more likely to believe it is structural (55%), resulting from a combination of loose monetary policy and low interest rates, rather than cyclical (45%). The survey shows that inflation poses a number of long-range economic issues, but interest rate policy presents institutional teams with more immediate investment challenges, with 64% of respondents citing interest rates as a top portfolio risk.
“Over a decade of low rates, and some even sinking into negative territory during the pandemic, have sent institutions on a hunt for yield”, says Natixis IM. That’s why private assets and alternatives have been sought after in 2021 with 84% of institutional investors now investing in private equity, 81% private debt and 81% in infrastructure. For 2022, information technology (45%), healthcare (41%) and infrastructure (40%), followed by energy (34%) are the most attractive sectors.
However, 45% of respondents think private assets will offer a safe haven in the event of a market correction, as private markets continue to rise into record territory. Besides, 69% of those surveyed are concerned that institutions have taken on too much risk in their pursuit for yield.
The study reveals that high volatility and distorted valuations mean active management is the preferred strategy. “Active management will be central for institutional investors wanting to be selective in finding the best opportunities and to achieve better risk-adjusted returns. Three-quarters of those surveyed say their active investments outperformed the benchmarks over the past 12 months”, points out Natixis IM.
Lastly, institutional investors are also warming up to digital assets, with 28% already investing in cryptocurrencies, and four in 10 believe a digital asset to be a legitimate investment opportunity.
The re-opening of trade: winners and losers
As for the economic context, 56% see supply chain disruptions as the greatest risk to recovery. According to the study, central banks play an outsized role in market performance for institutions and 47% see less supportive policy as a risk; and “while traditional economic factors are the biggest risks right now, new variants, like the newly discovered Omicron variant, still rank number three on their list of economic risks”.
Despite this, 60% say they believe that life will return to pre-Covid normal after the pandemic, which is expected to be reflected in trading trends. Institutions are less focused on streaming and digital products, predicting instead that we will see in-person experiences, such as theatres, restaurants, and travel, outperforming at-home trade, such as online shopping and Netflix.
The asset manager highlights that 59% of institutions believe the energy sector will outperform in 2022 as economic recovery drives up demand. Nearly half (49%) see healthcare outperforming in response to the demand from Covid and subsequent vaccine drives around the world.
The pandemic also impacted the outlook for the information technology sector, which was thrown into sharp focus during lockdowns when working from home drove the need for home IT solutions. On the other hand, traditionally defensive markets are expected to be the biggest underperformers, with 35% of institutional investors predicting real estate will underperform and 27% utilities.
“Revenge spending will prove to be a real driver in 2022. There’s real pent-up demand from consumers who are in the market for big-ticket items, but we expect supply chain disruptions will continue to drive up prices. However, sustained economic growth is riding on central banks, which currently hold an outsized role in market performance. The majority of institutional investors see the long bull market coming to an end once central banks pull back on supportive measures”, commented Andrew Benton, Head of Northern Europe at Natixis IM.
He also pointed out that generally, institutions are looking into 2022 with optimism. “But high volatility across the stock market, rising inflation and interest rates are keeping investors on their toes, increasingly pushing them to allocate more tactically to navigate the current environment”, he added.
Foto cedidaCarlos Alberto Morales, CEO de ADEPA. Carlos Alberto Morales, CEO de ADEPA
For ADEPA, European fund services firm, Latin America is at the heart of its internationalization strategy and the gateway is Chile, where it recently announced the purchase of services firm Planes.
Now, with one foot in Santiago, the firm’s CEO, Carlos Alberto Morales, reveals that ADEPA aims to conquer the mature local asset management industry with two businesses: back-office outsourcing and a platform that is able to launch its own vehicles in Luxembourg.
In an interview with Funds Society, the executive explains that they are currently in the process of integrating the structure of Planes with that of ADEPA at a global level -the firm has operations in Luxembourg, Spain and Italy- in order to launch what they call a NAV Center in Chile. This hub, he explains, will operate with the firm’s international standards and will be in charge of calculating the funds’ quota values. For the medium term, the star products will be its trading services and the international platform.
Two pillars
“We are talking about a dual strategy: giving local and also international support. That is our strategy for Chile,” says Morales. On the back-office services side, ADEPA’s CEO sees great potential for growth, considering that outsourcing this area is not a frequent practice in the Andean country.
Morales believes that the firm is distinguished by the fact that it offers a service that brings together all the functions -such as operations, reporting and calculation of quota value- which allows fund managers to concentrate on their core business: asset management. Along these lines, he assures that the benefits for fund managers include economy of scale, reduction of operating risks, improvement of corporate governance practices, and optimization and cost structure, converting a fixed cost into a variable cost.
On the international funds side, ADEPA offers investment managers to develop their European business, launching through the firm’s SICAV structure its own funds in Luxembourg, with the European firm taking care of the operational side, legal responsibility and representation before the funds’ regulators. In that sense, the company identifies the growing interest of Chilean investors in offshore products as a potential boost for the business. “We are seeing a continuous launch of European products, especially in Luxembourg, from AGFs in Chile, and our role is very important there,” says Morales.
Latin American expansion
“Latin America is a key part of our strategic development for the coming years,” says ADEPA’s CEO. For them, Chile is just the starting point, selected for the maturity of its fund industry. The European firm thinks that the attractiveness of the region comes from the evolution they are seeing in the region’s fund industries, at different levels. In addition to this, there is a growing interest in Luxembourg as an international platform, which is in line with ADEPA’s international experience.
Morales emphasizes that, in addition, this is a region in which the fund administration services industry, the niche in which they participate, is underdeveloped, especially by large international groups. Regarding the company’s next step in Latin America, he highlights that they are sounding out different markets, focusing mainly on the countries of the Pacific Alliance.
Although nothing has been defined, the CEO believes that the next destination could be Mexico. This country, he says, “has similar characteristics in terms of local fund industry and interest in international products”.
After a year of its launch, Kandor Global, the Miami-based RIA serving ultra-high net worth clients worldwide, is strengthening its decentralized service model for increasingly globalized families as it plans to expand into Switzerland and seeks the best investment assets for its clients.
Based in Miami, the firm has already amassed over 500 million dollars in assets under management. On the occasion of its anniversary, Funds Society asked Guillermo Vernet, CEO and founder, three questions.
1. Where do you currently see the greatest potential for wealth management? What projects does Kandor Global have?
UHNWs (ultra high net worth individuals) are increasingly becoming global citizens and have families living in different countries. The freedom to live wherever they want comes with significant tax implications that can vary depending on the family member.
Most of Kandor Global’s clients are currently domiciled in the U.S. or in Latin American countries. In recent years, many of the Latin American clients have moved to the U.S. and established residency. Now there is a wave moving to Europe, especially Spain, where they have long-standing relationships, children going to college or simply because of their European origins.
We understand that our clients value a local point of contact and physical access to their preferred booking center. For this reason, Kandor Global has prioritized different locations around the world. We have established a presence in the U.S. as our base location, expanding into Latin America and Spain to offer accessibility to our customers.
We see our next expansion opportunity in Switzerland. For our clients’ profile, it’s a key financial epicenter. Many have well-established relationships with bankers that they wish to maintain. In addition, Swiss clients will find value in the sophisticated, holistic and independent service that Kandor Global offers.
In Switzerland, there is a consolidation of the wealth management industry. There is increasing pressure from Swiss regulators, as in the rest of the world, to ensure total independence to better serve clients. Firms have found themselves in need of reinventing themselves, expanding their services to offer more independent investment alternatives, as well as more customized and consolidated reporting than in the recent past. The move to Switzerland provides the best opportunity for Kandor Global to offer its services and it is already having conversations to acquire local companies underway.
2. When proposing products and strategies to clients, what assets are you prioritizing? What are clients asking for?
Our approach is to understand our clients’ needs and risk profile, and achieve a holistic view of their assets when designing an optimal investment strategy. We look for alternative investment options with the level of liquidity that can be assumed by the client.
When working with multigenerational clients, it is easier to develop a strong long-term view and many are willing to try new investment instruments. In working with Latin American clients who have sold their businesses, we found that they were used to regular, high returns. Now, when they invest the proceeds generated by the sale of the business, they are looking for a similar return while maintaining or even increasing their capital.
We have seen a strong appetite for private investments, with two out of three clients including private investments in their portfolios in varying degrees of weighting. Results to date demonstrate solid performance for the level of risk. We provide our clients with a rigorous plan with diversification by seniority, geographies and sectors, and then select funds with different investment sizes.
Some clients have shown interest and have been active in crypto investments. We offer support by selecting money managers that fit three criteria: deep experience in institutional investments in different asset classes, including Crypto; being multi-currency within Crypto; and acting as hedge funds so they can hedge risk and participate in other areas of blockchain applications.
3. What has changed in your portfolios with the fear of inflation?
Inflation has reduced the expected return of fixed income in the short term, making it difficult for the traditional 60/40 investment model to achieve expected returns. Some investors have managed the situation by investing in riskier assets, producing a disconnect from where they invest and their risk profile.
To help our clients protect themselves from inflation, we look for other investment options, such as real estate vehicles. Within fixed income we add assets, such as floating rate senior loans, which are less vulnerable to inflation. In conclusion, we evaluate underweight fixed income and overweight equities as conditions change.
In 2021, the assets that grew the most globally were ESG investing and cryptocurrencies. But in Latin America the wealth management industry approaches the new world of decentralized finance with caution and some mistrust. That is why Daniel Vegue Domínguez, one of the founders of BlockAssetManagement.com and Estating.com, travels through the region explaining the revolution we have underway, as he did during an interview with Funds Society at the Sofitel Hotel in Montevideo.
The first thing is credentials, and both Vegue and the senior staff of Block Asset Management come from the world of finance, with eminent careers in Welath Management, Asset Management or the stock market. They came to the world of cryptocurrencies because they are convinced that, thanks to Blockchain technology, units of value can be expressed differently and in a totally reliable way.
“Soon we will be able to exchange Amazons, Free Markets or Apples because every company or collective will be able to issue their units of value without going through central banks, in a reliable digital system, which will give them independence and totally global investment capacity,” he explains. With cryptocurrencies, or decentralized finance (DEFI), there is a moment when the veil disappears and you start to have a clearer vision of what is happening and how to take advantage of the opportunities.
The first fund dedicated to blockchain and digital assets
Block AM”s first initiative came in 2017, with the creation of the first fund of funds dedicated to Blockchain and Digital Assets. It took them several months to register it in Luxembourg, explains Vegue, because it was a complete novelty.
The strategy belongs to the world of Alternatives and consists of investing in all the companies participating in that investment boom that is exploding on us in 2021, with a return of 300% this year, something that, according to Vegue “is the norm for the stage of maturity in which the selected companies are at.”
Undoubtedly, this ability to find the companies and managers in the sector, understand them and incorporate them, is the most valuable treasure of the fund, which has a low entry fee, as it accepts participants starting at $10,000. The strategy is aimed at sophisticated qualified investors, being an alternative fund.
“Investing in the digital/crypto asset market is a very specialized investment. A new, immature, unregulated in many regions, fast growing and high risk/reward asset class. However, it has evolved at an incredible pace since the emergence of Bitcoin in 2009. The market now consists of thousands of crypto assets and hundreds of digital asset funds. Navigating these selections is extremely challenging. How do investors manage risk? How do you conduct in-depth due diligence? How can you achieve diversification? Can you reduce volatility?” the firm’s website highlights.
At first glance, the offer seems perfect for the new generations, or for those clients who have made their wealth in the technology industry and are looking for a novel offer. But appearances can be deceiving, and investors over 60 are being very receptive to the offer: “They have already lived through a revolution, they know that everything can change, they understand what is happening,” explains Vegue.
Currently, most of the fund’s participants are in Latin America, but there is also a strong presence of British or European expatriates. Registered in one of the most prestigious jurisdictions, Luxembourg, it is an alternative product (AIF), audited and denominated in dollars and euros.
Estating, the first step towards a global real estate market
At the moment, Vegue’s main endeavor is a more recent initiative: Estating, the embryo of a global real estate exchange, fully decentralized. “Financial advisors and their clients are looking for reliable and easy-to-manage real estate products. And they are right, the biggest market in the world (bigger than fixed income and equities) is real estate, but we don’t know it because it is not banked,” explains the financier.
From this premise, the idea of creating a Real Estate Nasdaq was born, an idea that has a key player: Martin Halblaub, creator of the Swiss digital stock exchange (SDX) and one of the founders of Estating.
Estating, firm launched 20 months ago, aims to enable investment in apartments and houses in the luxury segment in various cities around the world. The client buys part or all of the unit, and the company takes care of the securitization, the conditions of the partnership when it is a shared property, the rental arrangements and the distribution of an annual coupon. Blockchain technology guarantees reliability and transparency.
Vegue thinks that the future lies in people being able to “save in a unit of Real Estate value”, worldwide, without obstacles. Currently, the entry is from 50,000 dollars, but Estating intends to democratize and gives an example: the firm recently made the smallest securitization in history, a garage, as a symbol of what starts small and becomes something big.
Foto cedidaEmily Askham, Chief Marketing Officer, International en Natixis IM. . Natixis IM ficha a Emily Askham para el cargo de directora de Marketing Internacional
Natixis Investment Managers has appointed Emily Askham as Chief Marketing Officer, International. Based in London, she will start on January 12th and will support Natixis IM’s strategic ambitions to become the most client centric asset manager globally.
In a press released, the asset manager has explained that Askham will work closely with Natixis IM’s distribution teams and affiliate managers driving marketing strategies that deliver engaging, relevant and differentiated campaigns for both existing clients and new customers.
She will join Natixis IM in an expanded role and will be responsible for both Institutional as well as wholesale & retail marketing. In addition, she will oversee digital, content & advertising, roadshows, events and the RFP team. Askham will report to Joseph Pinto, Head of Distribution for Europe, Latin America, Middle East and Asia Pacific.
On the client side she will translate the business strategy into appropriate marketing programs focusing on the customer throughout their investment journey, in close coordination with the Customer Experience team. She will also work with the product teams to help improve all areas of the clients pre-sales experience, accelerating the timeframe from initial sales concept to ‘go to market’ execution.
“To support Natixis IM’s objective of developing the business in a sustainable manner in all regions, Emily will streamline our marketing efforts across the board, accelerating our speed to market and supporting the needs of our clients as well as sales team. She will be responsible for expanding our digital presence enhancing our customer engagement. She has a strong track record in the industry and will play a key role in our ambition to become the most client centric asset and wealth manager and I am delighted to welcome her”, commented Pinto.
Askham brings more than 12 years of marketing expertise to her new role. She joins from AXA Investment Managers where she spent nearly 7 years, rising to the position of Global Head of Retail and Wholesale Marketing since 2019. She has been the recipient of a number of industry awards in marketing effectiveness and campaign innovation and most recently receiving a placement on the ‘High Performers Mentoring Program’ by the AXA IM Management Board. Prior to AXA IM, she worked for M&G Investments.
Foto cedidaIgnacio Calle, CEO de SURA Asset Management. Ignacio Calle, CEO de SURA Asset Management
A few days away from closing the door on 2021, SURA Asset Management is happy with its results. Having 21 million clients throughout Latin America and the expectation of closing the year with an AUM growth of between 4% and 5% -which leaves them with close to 150 million dollars-, the firm describes this as “a good year”. Now, close to the arrival of 2022, the firm’s CEO, Ignacio Calle, comments in an interview with Funds Society on the plans and priorities of Grupo SURA’s asset management arm for the short term.
For the executive, this has been a year of “tremendous recovery” in the region in general, in a period where “people have realized the importance of saving”. Therefore, going forward, the Colombian firm is strengthening the offer for its different client segments, relying on tools such as advanced analytics to manage the process.
Latin American affluent
SURA AM’s targeted offering efforts are aimed at its three main client segments. While they have plans for the mass – which includes investors with less than $30,000 of investable wealth – and high net worth – where the most sophisticated capital tends to be – it is the middle group that most catches their attention at the moment.
In their own nomenclature, at SURA they call the group of clients with between $30,000 and $1 million “affluent”. “It is a very important segment for us,” Calle explains, adding that it is “the main segment” they are working on. That range of investors, he says, is one where they feel “very competitive” and where they are focusing their search with a reinforcement of analytics. The goal is to be able to carry out a multi-channel onboarding that allows the use of the infrastructure of SURA’s different platforms.
Offshore business
Internationalization is one of the main pillars of SURA’s growth plans. With its SICAV already installed in Luxembourg, the firm expects to migrate its main funds to the prestigious European market in the short term. “The idea is to start locating them between this quarter and the first quarter of next year,” describes the executive.
Initially, reveals Calle, the pioneering products will be Latin American fixed-income and equity funds, with a focus on the Pacific Alliance markets. In the future, they do not rule out the possibility of expanding this offer. On the international investments side, the firm’s top executive points out that they have almost doubled the AUM they had in offshore products on international platforms, such as Pershing.
“A part of the population that previously did not have access to the offshore market has been growing into that segment,” he says, and this increased diversification has been supported by more products with “adequate” costs for clients.
Other markets
Regarding the next steps in SURA AM’s internationalization, there are two countries that are drawing their attention, in particular: Brazil and the United States.
In the case of the Latin American country, the fund manager’s idea is to enter from the Investment Management business, where they concentrate their institutional business, offering Brazilian fixed income and equity products to complement their current offer, anchored in the Pacific Alliance.
As for the U.S., they are evaluatingthe opening of an office. Although it is an idea they are sounding out, and there are no definite formulas, the CEO explains that the idea is to have a registered advisor in the country.
A technological focus
An important part of SURA’s future plans is technology. Although the pandemic accelerated the company’s digitalization process, to the point that 97% of transactions are now carried out digitally, the fund manager plans to develop new tools. According to Calle, they are currently working on an investment platform based on robo-advisory technology. Through this tool, a robot would build and modify people’s portfolios to meet their financial goals over time, based on the onboarding process and the client’s profile.
“We have some levers for technology, which are advanced analytics, artificial intelligence, mobility, digitalization and robotics,” he highlights. Along these lines, SURA AM plans to make an investment of around 60 million dollars over the next five years. That is only the in-house investment, emphasizes the executive, which does not rule out that there may be growth on the inorganic side.
Looking at the opportunities offered by the fintech world, Calle assures that there is room to work with these technology companies, either through alliances or acquisitions.
