Pixabay CC0 Public DomainNimalan Tharmalingam . Nimalan Tharmalingam
Neuberger Berman, a private, independent, employee-owned investment manager, has announced the appointment of Sarah Peasey in the newly created position of Director of European ESG Investing.
Based in London, she will report to Jonathan Bailey, Head of ESG Investing, and will work directly with the investment teams to further incorporate ESG principles across asset classes and to enhance long-term value for clients.
Peasey joins Neuberger Berman from Legal and General Investment Management (LGIM), where she served as Head of Responsible Investment Strategy – Investments. There she worked closely with the CIO to drive long term responsible investment strategy, with a focus on research and portfolio management across all investment capabilities, whilst also providing the investment perspective to support product innovation and shape client solutions. Prior to this, she was an Investment Strategist and head of fixed income investment
‘‘Sarah brings with her more than a decade of investment experience and we’re thrilled to have her on board as we continue to engage our European clients on important sustainability topics like net zero. She will work with our investment teams across the region to continue to innovate their approach to ESG investing”, Bailey commented.
Meanwhile, Dik van Lomwel, head of EMEA and Latin America, pointed out that Neuberger Berman has a long history of integrating ESG into investment processes while helping their clients achieve their investment goals. “With Sarah’s extensive experience, we hope to further generate sustainable, long-term returns for our clients through our approach to ESG, as seen in our recent £1.3bn climate transition-related multi-asset credit mandate from the Brunel Pension Partnership which is designed to align Brunel’s portfolio with the Paris Climate Agreement”, he concluded.
Foto cedidaPaul Troussard, Victoire Dubrujeaud y Delphine Cadroy. Paul Troussard, Victoire Dubrujeaud y Delphine Cadroy
To support the development of its High Yield credit and Large Cap equities expertise, La Française AM, the securities investment manager of the group La Française, has announced in a press release the arrival of three new talents.
Victoire Dubrujeaud and Delphine Cadroy have joined the High Yield team, led byAkram Gharbi, Head of High Yield Investment, within the credit division, headed by Paul Gurzal, Head of Credit. The asset manager believes that they will both enhance the strong development of La Française AM’s expertise in fixed maturity funds, which represents more than 1 billion euros in assets under management (as at 31/05/2021).
Dubrujeaud, High Yield Fund Manager, will bring “a solid knowledge of the high yield market” acquired over ten years of experience, mainly as a credit analyst. She began her career at Amundi Asset Management as an Investment Grade Credit Analyst, specialising in the consumer, distribution and healthcare sectors, before diversifying into High Yield in the chemicals, metals and gaming sectors. In 2017, she joined SCOR Investment Partners as a High Yield and Leveraged Loans Analyst, then became Fund Manager/High Yield Analyst at ODDO BHF Asset Management in 2019 where she managed nearly 2 billion euros in fixed maturity funds.
Cadroy, High Yield Fund Manager, joins La Française AM after five years of international experience beginning in London with Société Générale as an analyst in syndicated loans, before joining Amazon, then Moody’s as an Analyst in Leveraged Finance, responsible for a portfolio of twenty companies, rated high-yield and operating in the healthcare, business services and consumer sectors.
Besides, Paul Troussard has joined the Large Cap Equities team to strengthen the coverage of the euro zone, under the direction of Nina Lagron, Head of Large Cap Equities, who said that his arrival will allow them to “focus on the team’s new sustainable investment themes.”
Troussard, Large Cap Equities Fund Manager, spent more than four years at Clartan Associés as a European equities fund manager, all sectors. There, he developed an expertise in extra-financial analysis by participating in the implementation of an ESG (Environmental, Social and Governance) investment strategy and in the launch of a sustainable European small and mid-cap fund.
Pixabay CC0 Public DomainLa cuarta ley de la inversión. La cuarta ley de la inversión
If You Have Long-Term Goals, You Must Think Long-Term.
“It’s not timing the market, it’s time in the market that matters.” —Financial services industry adage
After years of education, decades of experience, and a lifetime of insight and perspective, Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania and author of the 1994 book, Stocks for the Long Run, needed just five words to summarize, as the quote indicates, what wise investors have always known: investing is a long-term proposition.
Unlike bonds, which represent a debt of the issuing company, shares of stock represent ownership, or equity in the issuing company. When an investor buys a bond, she knows that the company will compensate her with regular interest payments, in return for the use of her money. Those who invest in stock do so with the hope that as a company becomes successful, the company’s stock will appreciate in price and shareholders will see their investment increase in value.
Studies have shown that the individuals who earn the best investment returns—despite economic changes and market fluctuations– are investors who buy stock and remain invested for the long term. While most investors know intellectually that investing in stock is a long-term proposition, emotionally they want an instant winner. If they don’t get one, they’ll move on to the next opportunity. That short-term, hit-and-run thinking negatively affects investor returns and we have the numbers to prove it.
For more than 25 years, Dalbar, a financial services market research firm, has studied investor behavior and success by comparing individual investors’ performance to investment market performance. Dalbar’s studies have demonstrated time and time again that individual investors earn less than investment indices.
One Dalbar study for the time period ending in 2013, compared investors’ returns to the returns of the S&P 500 Index. In the study they discovered that between 1983 and 2013, the S&P 500 returned an average 11.1% per year while, over the same time period, the typical stock mutual fund investor earned an average of 3.69% per year. Of the difference, Dalbar attributed 1.4% to mutual fund expenses and the rest to investors’ poor timing decisions. But how do we know that short-term thinking is negatively affecting investor returns?
This chart from Dr. Daniel Crosby’s book, The Laws of Wealth: Psychology and the Secrets to Success demonstrates, that on balance, equity investment holding periods since the 1940s have generally declined. Specifically, compare the 8-year average holding periods of the 1960s to the 2010s when investor holding periods averaged just 5 months.
Three ways investors can avoid falling into the short-term investor mindset:
Work with a financial advisor who understands you and your life goals. Increases in life expectancy require investors to have financial and investment plans that assume they will live until age 100, which means that some of us may be retired for 30 or 40 years. In addition to focusing on your goals, your advisor will recommend investment strategies and securities that fit your needs.
Become a student of stock market history (just a student, not a professor). Compare short-term (1-5 year) market performance to long-term performance (5+ years). Notice that, while markets can fluctuate dramatically over a one- or two-year period, those dramatic fluctuations become small hiccups when you consider longer time periods.
Avoid looking at your investment accounts every day, because what you see on any given day may cause you to take unnecessary action like selling a security. Greg Davies, the head of Behavioral Finance at Oxford University studied investment account values and found that if an investor looks at her account values every day, 41% of the time she will see they are down in value; the investor who looks at their accounts every 5 years will see their account is down 12% of the time; and the investor who looks at their account every 20 years will never see they have lost money.
When Jeremy Siegel titled his book, Stocks for the Long Run, he gave us the answer to investor success. But his book’s title didn’t explain the critical role financial advisors play in ensuring that the habit of long-term investing is widely adopted.
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Founded in 1982, Thornburg Investment Management is a privately-owned global investment firm that offers a range of multi-strategy solutions for institutions and financial advisors around the world. A recognized leader in fixed income, equity, and alternatives investing, the firm oversees US$45 billion ($43.3 billion in assets under management and $1.8 billion in assets under advisement) as of 31 December 2020 across mutual funds, institutional accounts, separate accounts for high-net-worth investors, and UCITS funds for non-U.S. investors. Thornburg is headquartered in Santa Fe, New Mexico, USA, with additional offices in London, Hong Kong and Shanghai.
Esteban Morgan has joined DAVINCI Trusted Partner as Sales Manager for Argentina, the financial services firm’s founders, Santiago Queirolo and James Whitelaw, confirmed to Funds Society.
Morgan will be responsible for serving the Argentine clients of DAVINCI, a company that currently distributes the strategies of two international asset managers: Allianz Global Investors and Jupiter Asset Management.
“It is essential for us to have a local presence in Argentina. It is a strategically important decision that reinforces our commitment to our clients and allows us to continue with our growth plans in the region. Additionally, the pandemic continues to make travel difficult, so we are excited to bring Esteban on board so that we can be closer to the advisors who have always been with us,” explained Queirolo, Managing Director of DAVINCI Trusted Partner, at the company’s Montevideo headquarters.
Morgan holds an Economic degree from Universidad Torcuato Di Tella (Buenos Aires) and in 2018 he approved the master’s in finance courses from the same university. In 2019 he performed satisfactorily the Level 1 exam from the CFA Program. With more than 8 years’ experience in the financial sector, Esteban started his career in the Portfolio Personal’s commercial team (PPI).
Recently he worked as a VP in the Santander Argentina Investment Banking team participating in the execution of multiple structured finance transactions including syndicated loans, debt capital markets issuances, export & agency finance loans and corporate finance for main banks clients. This year he was appointed as responsible for leading Sustainable Financing alternatives, advising clients in green loans certification and compliance with ESG standards.
Meanwhile, the firm maintains its international expansion plans in the other relevant Latin American markets. “We have restructured our team to deepen our presence in key markets such as Chile, Peru, Colombia, Panama and Brazil. As health protocols allow, we will begin to visit our clients and present Jupiter Asset Management’s strategies,” explained Whitelaw, Managing Director of the firm created a year ago.
CC-BY-SA-2.0, FlickrSantiago de Chile y Cordillera de los Andes. ,,
Aberdeen Standard Investments (ASI) has announced this week that it has signed a partnership agreement with Excel Capital (XLC) to strengthen its presence in the Latam wholesale market, after more than 10 years of “fruitful joint collaboration” in the institutional Latam market.
The asset manager has highlighted in a press release that as a result of this deal, Excel Capital will support its wholesale efforts in Argentina and Uruguay with immediate effect, and Chile, Colombia and Peru, effective October 1st2021.
With employees in more than 40 locations worldwide, ASI currently manages a total of 629.4 billion dollarsof assets on behalf of governments, pension funds, insurers, companies, charities, foundations and individuals across 80 countries (as of 30 June 2021). Its full range of solutions span equities, multi-asset, fixed income, liquidity, sovereign wealth funds, real estate and private markets.
The US Offshore market and the Latam Wholesale markets are covered by ASI´s US Offshore and Latam Wholesale Team led by Menno de Vreeze, split between Miami, New York and Brazil and which has been covering the region for many years. “Indeed, in the last years, the team has been building a great foundation on the Wholesale side in LATAM with signing many agreements and already raising considerable assets”, says the press release.
Launched in 2015, and with clients’ assets of 4,355 million dollars currently invested (as at the end 2020), XLC is a company dedicated to mutual fund distribution private equity placements throughout Latam (ex-Brazil). Over the last years, it has been building a strong Latam Wholesale team, co-led by Jose Tomas Raga and Macarena Leon, and has achieved great success with raising assets for some international asset management companies in Chile, Colombia and Peru.
“We are very excited about this new partnership agreement with XLC which comes following a great momentum achieved in the last years in the LATAM wholesale market for us. For that reason, we deem now the time has come to go to the next level and strength our footprint with a local Sales team on the ground to further raise our profile”, commented Menno de Vreezewho is responsible for the US Offshore and Latam Wholesale Market.
In his view, the XLC team has “strong credentials and reputation” in that market, and will work very closely with their US Offshore team in the US to deliver “a world class service” to existing clients and prospects. “Besides, XLC has been already working for many years successfully with us on the institutional side in Latin America with my colleague Linda Cartusciello (Senior Business Development Manager)”, he added.
Meanwhile, Gaston Angelico, Managing Partner of Excel Capital, said that they are “proud” that ASI continues to trust them as their strategic partner in Latam to further develop its asset management business, now giving them the opportunity to work together in the wholesale market, in addition to the already-existing institutional relationship.
“This deeper and stronger partnership with ASI is a core business to XLC, as our strategy is focused on providing highest possible quality sales service to regional clients and investors, direct client support through local teams and offices in each of the countries that we cover, as well as facilitating access to all the best-in-class products that ASI offers”, he concluded.
Lastly, Cristian Reynal, Managing Director of Excel Capital pointed out: “When I learnt we’d be distributing ASI funds, I immediately decided to take the leap. Their well-known brand and wide range of products has been a recipe for success in the territory. As a competitor in the past, I often came across their emerging market debt funds as well as their Asian/Chinese equities’ strategies. I’m glad to be on the same team now!”.
Pixabay CC0 Public Domain. China y Estados Unidos impulsan el crecimiento y la recuperación del sector del lujo
After a year in which the only increase in consumption was recorded in the upper part of the luxury consumer pyramid, whose market share doubled compared to the previous year, the global market is gradually recovering and is estimated to return to pre-pandemic levels by 2022, according to the “True-Luxury Global Consumer Insight”, a report by Boston Consulting Group and Altagamma.
Their conclusions show that thepushcomesaboveallfromUSconsumers, whose luxury purchases have restarted more quickly than expected, thanks to the strong government support, and from Chinese consumers, who confirm the trend towards the repatriation of purchases, started during COVID-19.
This recovery is due to a “rebound effect”: the desire for luxury increases in post-pandemic. In this sense, the report shows that spending expectations of high-end consumers in the 12 months are generally positive: the consumers’ feeling is slightly oppositefor personaland experiential luxury, with the first one expected to benefit from domestic consumption, and experiential luxury forecasted to be increasingly supported by abroad spending.
MillennialsandGen.Zaretheother growth drivers and will account for 60% of total consumers by 2025. Among the major trends in consolidation: the increasing virtualization of luxury (new digital tools for engaging the consumer), the polarization of values between Western and Eastern styles, an omnichannel-centered distribution system and a growing attention towards the values of brands, in terms of environmental sustainability and inclusiveness.
“The report shows positive signs for 2021, beyond expectations. China and especially the US are driving growth with more than a third of international consumers planning to increase spending on high-end goods and experiences, including travel. The sector has shown solidity and quickly captured the new socio-cultural trends. Sustainability is certainly one of these, but the strong virtualization of the luxury experience is also striking, as highlighted by the success of sales in livestreaming and by gaming, a sector that reached the value of $178 billion in 2020”, says Matteo Lunelli, President of Altagamma.
If Europeans are cautious about domestic spending and more pessimistic about foreign spending for the next 12 months, US and Chinese consumers stand out for their optimism, placing themselves as potential growth drivers of the personal luxury market in the near future.
“Americans are back” comments Sarah Willersdorf, Managing Director and Partner at Boston Consulting Group. In this sense, she points out that US consumers are bullish on both domestic and abroad luxury consumption expectations, showing Americans are poised to regain their importance in the Global Luxury market. Such renewed optimism is expected to produce a share increase versus pre-covid forecasts of +2-3 p.p., estimated at 19-21% by 2025.
“Consumers from China are also planning to increase their spend but also continuing to repatriate it, with an acceleration here as well versus pre-pandemic estimates in terms of share, amounting to +3-4 p.p., to reach 43-45% in 2025. Brands will need to take a strategic stance towards these two consumers clusters that, besides diverging tastes in terms of style, entail different implications in terms of marketing and distribution footprint investments”, she adds.
The report highlights that virtualization of luxury is an increasingly defined reality that can pose great opportunity of additional revenues stream for the brands. “Particularly gaming: amongst the 39% of consumers who have claimed to be aware of the existence of virtual online games that involve a luxury brand, 55% of them state to have bought in-game items. Amongst them, 86% state to have then purchased the corresponding physical version”, it says.
Other trends that stand out are the boost of social and live commerce (i.e. livestreaming), with the interactions between customersandbrandsbecomingincreasinglydirectand digitally focused; and clienteling 2.0, the importance of the “human” touch. “Compared to last year, a personalized “touch” remains key for consumers when reached across all digital and physical avenues by a brand, confirming the need for brands to create a more 1-1 relationship with the customer across all touchpoints”, concludes the report.
Corporate moves continue in the global asset management industry. The Goldman Sachs Group has announced that it has entered into an agreement to acquire the Dutch asset manager NN Investment Partners (NN IP) from NN Group N.V. for approximately 1.6 billion euros (1.87 billion dollars), consisting of a base purchase price of 1,515 million.
This amount doesn’t include a ticking fee and excess capital of 50 million euros to be distributed in the form of a dividend before completion, so the final figure could rise to €1.7 billion. The transaction is expected to close by the end of the first quarter of 2022, subject to regulatory and other approvals and conditions, reveal the statements released by both firms.
As part of the agreement, NN Group and Goldman Sachs Asset Management will enter into a ten-year strategic partnership under which the combined company will continue to provide asset management services to NN Group.
The combination of the complementary investment capabilities of NN IP and Goldman Sachs will create a full suite of asset management products that can be offered to clients through the distribution networks of both parties. At the same time, NN IP has highlighted that its “leading position” in responsible investing will strengthen Goldman Sachs Asset Management’s sustainable investment strategy, product offerings and client solutions.
A stronger European business
NN IP is a leading European asset manager based in The Hague, Netherlands, with approximately $355 billion in assets under supervision and $70 billion in assets under advice. It offers a broad range of equity and fixed income products, with a strong ESG integration across its business. Besides, it is a top-ranked ESG manager in Europe and 75% of its assets under supervision are ESG integrated. With a heritage dating back almost 175 years, NN IP employs more than 900 professionals in 15 countries and combines the use of data and technology with fundamental analysis in its investment processes.
NN IP’s employees will join Goldman Sachs Asset Management following the closing of the transaction and both firms expect that the Netherlands will become a significant location in GSAM’s European business. “We believe that their expertise will strengthen our fund management and distribution platform across retail and institutional channels in Europe and support us in delivering long-term value to clients”, said Goldman Sachs in its press release.
In their view, NN IP is highly complementary to their existing European footprint and will add new capabilities and accelerate growth in products such as European equity and investment grade credit, sustainable and impact equity, and green bonds.
Goldman Sachs has $2.3 trillion in assets under supervision globally, and this transaction will bring assets under supervision in Europe to over $600 billion, aligning with the firm’s strategic objectives to scale its European business and extend its global reach.
As a result of the agreement, Satish Bapat will step down from his role as a member of the Management Board of NN Group. He will continue to lead NN IP in his role as CEO.
A strategic partnership
Meanwhile, the combination with Goldman Sachs gives NN IP a broader platform to accelerate its growth and further improve the offering and service to its clients. It will also allow NN Group to continue its cooperation with NN IP and to benefit from the strengths and complementary product propositions of Goldman Sachs.
As part of the agreement, GSAM will enter into a long-term strategic partnership agreement with NN Group to manage an approximately $190 billion portfolio of assets, reflecting the strength of the business’ global insurance asset management capabilities and alternatives franchise.
The partnership will establish Goldman Sachs as the largest non-affiliated insurance asset manager globally, with over $550 billion in assets under supervision, and the acquisition will provide a foundation for further growth in the firm’s European fiduciary management business, building on the success of its platform in the United States and United Kingdom.
“This acquisition allows us to accelerate our growth strategy and broaden our asset management platform. NN IP offers a leading European client franchise and an extension of our strength in insurance asset management. Across their offerings they have been successful in integrating sustainability which mirrors our own level of ambition to put responsible investing and stewardship at the heart of our business. We look forward to partnering with the team at NN IP as we focus on delivering long-term value to our clients and our shareholders”, commented David Solomon, Chairman and CEO of Goldman Sachs.
Meanwhile, David Knibbe, CEO of NN Group, pointed out that they have a “longstanding and successful” shared history with NN IP. “We value this strong and constructive relationship that we have and we look forward to further building on it in a new form. This transaction brings together two international asset managers, each with many decades of investment experience. We have found a strong and professional partner in Goldman Sachs, providing an environment in which our NN IP colleagues can continue to thrive, while the combined investment expertise and scale will enhance the service offering to their clients, including NN Group”, he added.
Foto cedidaPaul Camp, head de Global Treasury Management Group en Wells Fargo. Foto cedida
Wells Fargo has named Paul Camp head of its new Global Treasury Management unit. Most recently CEO of Treasury Services at BNY Mellon, he will join the company in November and will dually report to Perry Pelos, CEO of Wells Fargo Commercial Banking, and Jon Weiss, CEO of Corporate & Investment Banking.
This new role brings together Wells Fargo’s Treasury Management and Global Payment Solutions teams into one organization that provides global cash management and payments services. “By combining these businesses, Wells Fargo will be able to leverage its capabilities more effectively to help clients manage their funds and process payments worldwide”, says the company in a statement accessed by Funds Society.
The current head of Treasury Management & Payment Solutions, Danny Peltz, a 31-year veteran of Wells Fargo, and will retire on Dec. 15.
“Over Paul’s 21-year career, he has experience at industry-leading global financial institutions and in technology startup environments, focused on delivering the best solutions for clients. He has a deep background in treasury management and payment solutions, which are strategic growth opportunities for the company,” said Pelos.
Meanwhile, Weiss pointed out that Camp brings “valuable expertise” to this role where he will develop a strategy focused on growth and innovation, serving large, medium, and smaller businesses alike. “We are excited to have him join later this year to lead our efforts to enhance products and services that are foundational to our client relationships”, he added.
At BNY Mellon, Camp led an organization that offers global payments, trade services, cash management, and foreign exchange services in 36 countries. Before that, he served as the CFO, treasurer, and EVP of Financial Operations at Circle, a fintech focused on secure technology to use and store money.
He’s also held senior-level roles in transaction services and cash management at both JP Morgan Chase and Deutsche Bank. Camp holds a B.A. in classical studies from Dartmouth College and an MBA from Harvard Business School. During his time at BNY Mellon, he was recognized for his work on diversity, equity, and inclusion issues and looks forward to continuing that work at Wells Fargo.
Pixabay CC0 Public Domain. Los tres mitos más comunes sobre la inversión sostenible
The conversation around sustainable investing, or ESG (environmental, social, and governance) investing has rapidly taken on increased importance. Over the past year, the pandemic has proven the value of incorporating sustainability into corporate practice – and that extends beyond just environmental factors to social and governance policies. By incorporating ESG factors into their corporate structure, companies have not only been able to cope during challenging times, but also now have a social license to continue operating in the future.
Just as the signing of the Paris Agreementi in 2015 to combat climate change was a turning point for global sustainable affairs, the global pandemic is reinforcing structural change. The world is moving towarda stakeholder economyii, where companies seek to serve the interests of consumers, employees, suppliers, and communities as a whole.
More and more people, both globally and locally, are joining the conversation about sustainable investment strategies, and more asset management firms believe it’s important for financial advisors to do the same. The first step is to help guide investors by addressing misconceptions about sustainable investments and ESG.
To do this, we spoke with Jordie Olivella, Head of Distribution and Commercial Strategy for BlackRock’s Offshore Wealth business, to debunk three of the most common myths he hears from clients when it comes to sustainable investing.
Myth 1: Sustainable investing means sacrificing returns
Even before COVID, studies showed that sustainable investing can pay off, but last years’ market volatility was a litmus test, further demonstrating the resilience of sustainable products. Over the course of 2020, companies with better ESG profiles provided resilience in portfolios and outperformed lower-rated peers.
“In the first quarter of the year 94% of a globally representative set of sustainable indices outperformed standard indices. Extend that performance to the whole of 2020, and 81% of that same set of indices outperformed,” points out Jordie Olivella.
Myth 2: There aren’t any standards
It is true that definitions of “what is sustainable” can vary depending upon which investor or investment manager you speak to. At a global level, standardization should take into account three stages, according to BlackRock: the way in which companies report information, methodologies for obtaining an ESG rating, and the classification of financial products. BlackRock uses standardized methods to create indexed products that provide options for investors’ various financial and sustainable goals, from simpler methodologies such as negative screening that only eliminate certain industries to strategies that seek out investments by subject or impact.
“At BlackRock we’re committed to providing investors with full transparency about the sustainable objectives and characteristics for all of our investment strategies. We’re committed to providing the sustainable building blocks of investment portfolios, so that all investors have sustainable options,” says Jordie Olivella.
Myth 3: It costs more to invest with ESG products
Most investors assume it’s more expensive to invest in sustainable products, but that’s not always true. According to BlackRock, the management costs of sustainable funds and ETFs are often equivalent to, and in some cases, lower than standard products.
“iShares sustainable ETFs are on average five times less expensive than actively managed sustainable mutual funds, and as flows into sustainable products continue, these costs will keep falling,” weighs in Jordie Olivella
As the shift to sustainable investing progresses it’s important to understand the facts. Flows into sustainable strategies show no signs of slowing down – according to BlackRock 2020 Global Sustainable Investing Survey, global clients are planning on doubling their allocations into sustainable strategies over the next five years.
“Now is the opportunity to understand the facts behind sustainable investments and get ahead of the demand,” concludes the firm.
In Latin America: this material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds may not have been registered with the securities regulator of Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay or any other securities regulator in any Latin American country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico thus is subject to strict rules. For more information on the Investment Advisory Services offered by BlackRock Mexico please refer to the Investment Services Guide available at www.blackrock.com/mx
The U.S. equity market set a record high during the last week of July with the benchmark S&P 500 index closing higher for the sixth consecutive month, overriding fears of rising inflation and a potential slowdown in economic growth.On July 19, the U.S. Business Cycle Dating Committee announced that the COVID-19 induced two month U.S. recession from March to April of 2020 was the shortest on record, putting the 1980 February to July recession in second place.
Upcoming key events include Fed Chairman Powell’s keynote speech at the Jackson Hole Economic Symposium on this year’s theme “Macroeconomic Policy in an Uneven Economy,” on Aug. 26, which follows the July jobs report that came out on August 6th. Goldman Sachs economists “expect the Fed will first hint that it intends to decrease the size of its $120 billion monthly asset purchases at its September meeting, formally announce tapering in December, and begin tapering in early 2022.” Chairman Bernanke’s 2013 ‘taper tantrum’ statement that the Fed “could in the next few meetings take a step down in its pace of purchases” started a five-day, 40 basis point rise in the 10-year UST yield to 2.6% and 5% drop in stocks.
GAMCO’s Private Market Value (PMV) with a Catalyst™ stock research ideas highlighted as ‘stock picks’ during BARRON’S 2021 Midyear Roundtable, published in the July 19, issue, were: CNH Industrial (CNHI) that recently purchased Raven Industries (RAVN), a leader in precision-agriculture technology, Mexico’s TV network Grupo Televisa (TV) popular with the Spanish-speaking population, Deutsche Telekom (DTE) with a valuable stake in T-Mobile US (TMUS), Vivendi (VIV) a play on music streaming, ViacomCBS (VIACA) a restructuring play, Liberty Braves Group (BATRA) with John Malone at bat, Madison Square Garden Sports (MSGS) with James Dolan up, and Traton (8TRA) a truck maker spun out of Volkswagen with 25% of the Class 8 truck market in Europe, and now in the U.S. via its purchase of Lisle, Illinois based Navistar Inc.
Looking to M&A, Willis Towers Watson (WLTW) and Aon (AON) mutually agreed to walk away from their all-stock, $30 billion merger. Willis Towers Watson agreed to be acquired by Aon in March 2020 and terms of the deal called for Willis Towers shareholders to receive 1.08 shares of Aon for each share. In June, the U.S. DOJ filed suit to block the deal even though the European Commission had already granted conditional regulatory approval after the parties had agreed to sell overlapping business units that generated billions of dollars in revenue. Following efforts to negotiate additional divestitures to mollify the DOJ, an impasse was reached with the regulator and the parties opted to continue as separate companies. Willis Towers Watson received a $1 billion termination fee from Aon as a result, and will use the funds to buy back $1 billion of its stock. The unexpected move resulted in spreads widening on other mergers in sympathy.
Although this was a shock to the M&A market, we believe conditions are strong for continued strength building off of the record $2.8 billion from the first half of the year. Favourable dynamics remain in place, including historically low interest rates, accommodating debt markets, substantial dry powder held by private equity firms and management teams looking to better compete in an overall evolving global marketplace. While more deals do not necessarily translate to outsized returns, it, coupled with these various drivers, certainly provides for an encouraging landscaping and backdrop for investment opportunities within a portfolio like ours.
Rounding out our outlook with the convertibles space, the global convertible market saw some weakness in July, weighed down by a few large Chinese issuers. While some of these issues are now more attractively priced, we continue to view them cautiously. July was also the worst month for new issuance globally in nearly two years with only $3.4 billion of convertibles pricing. We are confident that issuance will pick back up as companies exit quiet periods around earnings and we approach typically busier fall months. The fundamental reasons for increased convertible issuance are still quite intact with low interest rates, increasing equity prices, and favourable tax environments available to most potential issuers.
To summarize, GAMCO continues to expect more deals — mergers, spinoffs, and other forms of financial engineering. Stocks should continue to do well with politicians spending to ensure a good economy for the midterms, and convertibles are an appealing way to stay invested in equities with the benefit of asymmetric risk exposure.
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To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
GAMCO MERGER ARBITRAGE
GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.
Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.
Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.
Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.
Class I USD – LU0687944552 Class I EUR – LU0687944396 Class A USD – LU0687943745 Class A EUR – LU0687943661 Class R USD – LU1453360825 Class R EUR – LU1453361476
GAMCO ALL CAP VALUE
The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.
GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise. The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach: free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.
Class I USD – LU1216601648 Class I EUR – LU1216601564 Class A USD – LU1216600913 Class A EUR – LU1216600673 Class R USD – LU1453359900 Class R EUR – LU1453360155
GAMCO CONVERTIBLE SECURITIES
GAMCO Convertible Securities’ objective is to seek to provide current income as well as long term capital appreciation through a total return strategy by investing in a diversified portfolio of global convertible securities.
The Fund leverages the firm’s history of investing in dedicated convertible security portfolios since 1979.
The fund invests in convertible securities, as well as other instruments that have economic characteristics similar to such securities, across global markets (but the fund will not invest in contingent convertible notes). The fund may invest in securities of any market capitalization or credit quality, including up to 100% in below investment grade or unrated securities, and may from time to time invest a significant amount of its assets in securities of smaller companies. Convertible securities may include any suitable convertible instruments such as convertible bonds, convertible notes or convertible preference shares.
By actively managing the fund and investing in convertible securities, the investment manager seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market.
Class I USD LU2264533006
Class I EUR LU2264532966
Class A USD LU2264532701
Class A EUR LU2264532610
Class R USD LU2264533345
Class R EUR LU2264533261
Class F USD LU2264533691
Class F EUR LU2264533428
Disclaimer: The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.
