Foto cedidaMariano Belinky, Ex-CEO de Santander AM.
. Mariano Belinky ficha por Motive Partners como industry partner
The private equity firm Motive Partners, focused on financial technology, has announced the appointment of Mariano Belinky as an Industry Partner. The company has revealed in a press release that he will focus on areas that bring “strategic value” to its investment mandate.
Based primarily in the London offices, Belinky will focus on originating and diligencing transactions across financial technology, seeking to spot trends ahead of time, and sourcing deals and capabilities that can support the growth of Motive’s portfolio companies.
Motive Partners believes the adoption of new digital channels, innovative processes and game-changing technologies “will yield value-creating opportunities for forward-thinking alternative investment firms“. This appointment demonstrates its intent to continue building capabilities to support its platform’s mission of outsized returns, focusing on operator and innovator led value creation.
“We believe technology has the ability to unlock huge value for investment firms. All aspects will evolve, from how we invest to how we interact with our portfolio companies and clients”, commented Rob Heyvaert, Founder & Managing Partner at Motive Partners. In this sense, through Motive Create and Belinky’s appointment, they are seeking to extend their edge, as they “weaponize financial technology ideas” to empower their operations and portfolio companies by embedding these new financial capabilities to transform operations and gain scale.
Meanwhile, Belinky claimed to be “extremely excited” to join the firm and contribute to further accelerate its growth and those of its portfolio companies. “Fintech has reached a maturity point as an industry, and I believe Motive as a platform is uniquely positioned to capture the immense opportunities the space has created. I’m looking forward to joining forces with a terrific team of Investors, Operations and Innovators to make it happen”, he added.
Prior to joining Motive Partners, Belinky was the Global CEO of Santander Asset Management where he led the turnaround of the company since its re-acquisition from Warburg Pincus and General Atlantic. Prior to this, he co-founded and ran InnoVentures, Santander Group’s $400m fintech-focused global venture capital fund. Belinky has also been a junior partner with McKinsey and Company, where he advised global banks and asset managers across Europe and the Americas, and he was previously part of the research technology team at Bridgewater Associates.
Pixabay CC0 Public Domain. Descarbonización: el coste de pasar de la inacción a la inversión y al crecimiento económico
The first week of COP26 has yielded some positive announcements about decarbonization, reducing methane emissions and access to clean energy by 2030. However, the success of this summit will be determined by the levels of commitment, policies and financing that are mobilized.
In the opinion of Eva Cairns, Head of Climate Change of abrdn, hardly any clear action plans to achieve the objectives have been detailed and there are no legally binding implementation mechanisms. “We need action plans to halve emissions by 2030 and not just offer vague long-term ambitions. This also applies to the 130 billion dollars promised by the financial community on Financing Day to reach the zero emissions target by 2050. Discussions on the climate financing promise of $100 billion for the developing world are underway and are expected to be fulfilled by 2022 based on Japan’s increased commitment. Much more is needed to reflect the obligation of the developed world to help mitigation and adaptation in the developing world,” warns Cairns.
Moving from general objectives to concrete actions because, according to Bank of America, inaction also has a high cost. In one of its latest research, the form argues that climate change is not an abstract problem but affects the world economy mainly through storms, floods, droughts and sea level rise. “There are also indications that climate change and its reduction play a role in the recent rise in energy prices. Given the prospects for regulation, investment in dirty energy capacity is likely to be low and dependent on high prices. Meanwhile, green energy is not increasing fast enough to fill the void. Changes in wind and rain patterns seem to have affected the supply of wind and hydraulic energy, while China has imposed restrictions on emissions from power plants, causing shortages of electricity. All this underscores the importance of making the transition well. In fact, some economists consider carbon taxes to be one of the most effective ways to promote a more natural transition,” the firm says.
In fact, it is estimated that the potential impact of not acting could mean a loss of more than 3% of GDP each year until 2030, which would increase to $69 trillion in 2100; and a loss of 5% of the value of the global stock market ($2.3 trillion) permanently eliminated by the revaluation of climate policy, with a potentially extreme impact on the profits of companies in certain sectors.
If inaction has a cost, the energy transition that leads economies to achieve zero net emissions and decarbonize their production systems also has a cost. The International Energy Agency (IEA) estimates that achieving zero emissions will cost $150 trillion over the next 30 years, or 5 trillion annually. But BloombergNEF (BNEF) raises the figure to 174 trillion dollars or 5.8 trillion a year, that is, about three times the current investment received by the energy system.
“Most of this item will go to the electrification of various human activities and the electricity system (between 3 and 5 trillion a year until 2030), while hydrogen will gain ground until 2040/50 (0.5 trillion annually). The decarbonization of non-energy emissions, such as agriculture and land use, will need even more capital. This will require job mobility between sectors, which can be a challenge given the requirements to retrain employees and the challenges of labor supply in the short term, which can lengthen the transition,” Bank of America clarifies.
All this investment could be an opportunity to boost employment and GDP. But, according to Bank of America, climate change studies focus on the wrong side of the economy: the impact on aggregate demand and not on productive capacity. “For example, the latest IEA report argues that moving towards zero net emissions would reduce employment in the traditional energy sector by 5 million people by 2030, but would add 14 million jobs in the clean energy sector,” the firm explains. These reports argue that “the increase in jobs and investment stimulates economic production, which translates into a net increase in world GDP until 2030.” World GDP growth is, on average, 0.4% higher in the period from 2020 to 2030.
The drawback would be that inflation could be between 1% and 3% higher, according to the IEA. Bank of America experts disagree, as they believe that by the time climate change mitigation efforts are underway, the world economy will probably be close to full employment, as is likely to be the case in the United States. Therefore, “to staff the industry means removing workers from the rest of the economy. At the same time, the construction of green energy infrastructure will require more than double the investment in the sector, from approximately 2% of current GDP to an average of 4.5% in the period 2020-2030. In addition, in the long term, although this transformation offers opportunities, accelerating the transition to a low-carbon economy too fast could harm growth, closing sectors at the expense of others and competing for resources when the economy is close to full employment,” they explain.
In the short term, central banks could accommodate the increase in demand, allowing their economies to overheat. Hence the estimate of the IEA in the increase in inflation. However, Bank of America experts also do not agree with that estimate: “If the Federal Reserve allows the economic potential to be permanently overcome, inflation will not only increase, but could take an upward trend. As in the 1970s, there will be a feedback loop between price inflation, wage inflation and price expectations,” they explain.
Driving decarbonization
All experts and analysts agree that the holding of COP26 is a unique opportunity to delve into these reflections and draw up coordinated plans to achieve decarbonization. This is the topic of the latest report by Goldman Sachs Investment Research, which identifies five questions of interest to be addressed at this conference.
Carbon pricing: It is a key instrument for decarbonization, but it also has to be a fair instrument, which prevents carbon leakage and provides greater confidence and transparency for voluntary compensation. According to the entity, the reduction of carbon emissions alone is unlikely to achieve Net Zero’s ambition for carbon by 2050. “We believe that carbon offsets are a crucial driver for carbon elimination through nature-based solutions and direct carbon capture, contributing about 15% to the decarbonization of emissions from the most difficult sectors to debate by 2050. We believe that discussions around higher standards, greater supervision and better liquidity of voluntary carbon credits worldwide could contribute to creating an efficient path to zero net carbon,” they explain.
Consumer choice: Governments could impose the disclosure of the carbon footprint in products/services and set standards in a coordinated manner at the global level, which would allow consumers to choose low-carbon products and manage their carbon budgets. In his opinion, “it is a missed opportunity to take advantage of consumer pressure on global companies to decarbonize their value chain, finance carbon offsets and aspire to a zero net carbon label.”
Capital market pressure: According to his report, the ESG boom is pushing capital towards decarbonization, but regulatory uncertainty and lack of global coordination are generating structural underinvestment in the key sectors of materials, oil and gas and heavy transport, which increases price inflation and concern for affordability.
Net Zero: Net Zero’s national commitments and further carbon reductions by 2030 will be at the center of intergovernmental discussions. “We have modeled two paths to Zero Net Carbon by sector and technology, and we see the importance of clean technology ecosystems, including renewable energy, batteries, hydrogen, carbon capture and the circular economy,” he argues.
Technological innovation: In their 1.5° C scenario, they estimate that $56 trillion in investments in green infrastructure is needed to reach the Zero Net Carbon target by 2050, which represents approximately 2.3% of world GDP at its peak.
Foto cedidaJohn Fraser, responsable de Crédito Estructurado Global de Tikehau Capital.. Tikehau Capital nombra a John Fraser socio y presidente de sus estrategias globales de crédito estructurado
Tikehau Capital has announced the appointment of John Fraser as Chairman of its Global Structured Credit strategies, based in New York. In a press release, the firm has highlighted that the designation reinforces its commitment to its CLO business and supports its expansion into the US market.
In this newly created role, Fraser will advise senior Tikehau Capital team members in growing the firm’s existing structured credit businesses including its U.S. and European CLO platforms. He will also help develop and launch new business lines within the structured credit space. His entrepreneurial and institutional experience will support Tikehau Capital Structured Credit and overall company brand building and product marketing including interaction with investors.
Since the creation of its CLO business in 2014, Tikehau Capital has a proven track-record in the structured credit space, in particular through the completion of over 2 billion euros (2.31 billion dollars) in new issuance across five CLOs in Europe and the launch of its first CLO in North America in September 2021.
“We are delighted to welcome John in Tikehau Capital’s teams as we continue to build on the success of our European CLO and Structured Credit strategies in order to expand our offering into the US market. John brings a unique and rare combined entrepreneurial and institutional journey and deep CLO expertise, and we look forward to leveraging his experience as we grow to meet investors’ evolving needs”, said Mathieu Chabran, co-founder of Tikehau Capital.
Fraser brings 30 years of experience in the CLO business. He joins from Investcorp where he was an independent member of its Board of Directors since 2019. Most recently, he was managing director and head of Investcorp’s U.S. credit business, where he was responsible for managing all aspects of U.S. loan-focused credit investments including portfolio management, fund raising, and operations.
From 2012 to 2017, he was managing partner and CIO of 3i Debt Management US LLC. In 2005, he founded Fraser Sullivan Investment Management, LLC, which was subsequently sold to 3i Group. Fraser also previously held management positions with Angelo Gordon, Continental Bank, Merrill Lynch Asset Management and Chase Manhattan Bank North America.
Fraser claimed to be excited to join Tikehau Capital’s team. “The firm’s prospects for growth in the U.S. and global credit markets are impressive, supported by a respected global brand, talented and committed people, an expanding international investor base and its willingness to use balance sheet resources to back new initiatives. I look forward to being part of and adding to the future success of Tikehau Capital”, he added.
Foto cedidaNick Ring, consejero delegado para EMEA de Columbia Threadneedle.. Columbia Threadneedle Investments confirma el cierre de la adquisición del negocio de gestión de activos en EMEA de BMO
Last April, Columbia Threadneedle Investments announced the acquisition of Bank of Montreal’s EMEA asset management business (BMO GAM EMEA). Seven months later, the transaction has now been completed and adds 131 billion dollars to Columbia Threadneedle to bring total assets under management to 714 billion dollars.
In a press release, the asset manager has revealed that the acquisition enables them to build further strength and capability in areas of increasing prominence in the European and global asset management landscape, such as responsible investment. Both firms “combine complementary strengths to create a world class RI capability based on creating value through research intensity, driving real-world change through active ownership, and partnering with clients to deliver innovative solutions”, they say. Together, they manage total assets of 49 billion dollars in RI funds and strategies across asset classes.
Another area that has been reinforced with this transaction is alternatives, since they have established a global business of more than 47 billion dollars, including real estate in the UK, Europe and the US, infrastructure, private equity and hedge fund offerings. Columbia Threadneedle believes that they are now “well set to respond to increasing demand from clients for less liquid, diversifying assets both as standalone strategies and within bespoke solutions”.
Lastly, they have strengthened their capacity of offering investment solutions. Columbia Threadneedle has longstanding relationships with large and complex clients delivering regulatory sensitive portfolios (such as Solvency II and Basel III) for insurance companies and banks as well as customised solutions for sub-advisory partners, while BMO GAM (EMEA) has a top four LDI business in Europe as well as an established fiduciary management business. “Together our Solutions business represents the point of entry of more than 200 billion dollars of client assets, or almost 30% of our expanded AUM”, the asset manager points out.
The acquisition also adds the BMO GAM (EMEA) managed investment trusts and its established multimanager range to Columbia Threadneedle’s offering. Separately, the transaction will result in certain BMO US asset management clients moving to Columbia Threadneedle, at a later date subject to client consent.
“This strategically important acquisition accelerates our growth in the EMEA region and secures our position as a significant global asset manager. Our established strengths in core asset classes and our strong, long-term performance track record are complemented by key strategic capabilities that improve our ability to meet the evolving needs of our clients”, commented Nick Ring, CEO, EMEA, at Columbia Threadneedle.
He also highlighted that their combined team of more than 2,500 people share a client-centric culture, a collaborative and research-based investment approach, and a long-held commitment to responsible investment principles. “Together, we look forward to embracing our role as active investors to drive change, deliver client outcomes and continue to make our own contribution to a sustainable future”, he concluded.
Pixabay CC0 Public Domain. Las 500 mayores gestoras del mundo alcanzan los 119,5 billones de dólares en activos gestionados
Assets under management (AuM) at the world’s 500 largest asset managers have reached a new record of 119.5 trillion dollars, according to a new research from the Thinking Ahead Institute. This represents an increase of 14.5% on the previous year when total AuM was 104.4 trillion dollars.
The chart shows that Blackrock has retained its position as the largest asset manager in the ranking, followed by Vanguard holding its second place position for the seventh consecutive year. Of the top 20, 14 are U.S. managers, accounting for 78.6% of the top 20 AUM.
On the whole, passive investments represent 26%, an increase of 16.2% compared to a 15.4% growth in actively managed AUM. According to the research, passively-managed assets under management among the largest firms grew to a total of 8.3 trillion dollars in 2020, up from 4.8 trillion in 2016.
It also shows that asset managers have been addressing the growing demand from more sophisticated asset owners, for more complex and tailored investment solutions. Outsourced CIO, Total Portfolio Approach (TPA) and ETFs have all been popular sources of growth for the world’s top managers, to meet clients’ increasing requirements for returns.
“We have witnessed unprecedented change within the investment industry – accelerated dramatically by the pandemic. In particular, sustainability is no longer just a luxury for some firms. Instead, during the pandemic, asset managers from all corners of the world have became even more aware of the interconnectedness of the financial system with society and the environment”, commented Roger Urwin, co-founder of the Thinking Ahead Institute.
In his opinion, asset managers have always had the ambition to develop and innovate: “We have seen this particularly with ESG mandates, which increased by 40% in 2020. The biggest contributor to this was the growth in ESG ETFs”.
Main trends
Among other trends, the research also found that half of managers increased the proportion of minorities and women in top positions, over the course of the last year and that client interest in sustainable investing increased across 91% of the firms surveyed. Besides, 78% of managers increased resources deployed to technology and big data and 66% increased resources deployed to cyber security.
The number of product offerings increased for 70% of surveyed firms, and aggregate investment management fee levels decreased for 25% but fee levels increased for 21%. Lastly, a majority of managers (59%) experienced an increase in the level of regulatory oversight.
Pixabay CC0 Public DomainCriterios ESG. Sostenibilidad
Environmental, social and governance fund proliferation is usually fueled by the marketing mantra that investors can “do well by doing good.” While that’s no doubt true, ESG criteria are all too often a check-the-box exercise at both the fund and the company levels. Many ESG funds default to outsized tech holdings or include companies that talk the ESG talk but fail to walk the walk, otherwise known as “greenwashing.”1 Conversely, ESG data vendors often tag some firms with low sustainability ratings, even as those companies make genuine and concerted efforts to improve their sustainability.
Such “ESG momentum” plays can become great investments both in terms of their sustainability and return potential. But properly assessing their relative progress across sectors and culturally diverse geographies, particularly in emerging markets, is no easy task. We believe sound judgment is just as crucial in ESG research as in traditional financial research. In the following Q&A, Thornburg Portfolio Manager Charlie Wilson, who co-leads the firm’s emerging market strategies, explains how the team defines and conducts ESG research, which is part and parcel of its traditional financial research and ongoing company monitoring.
Q: Many ESG-focused funds seem to start with negative screens that simply filter out companies in potentially problematic industries. How should ESG filters be implemented?
CW: Our research broadly aims to capture the costs of both positive and negative externalities. That’s why we don’t just conduct negative screens. Positive externalities can be reflected in lower cost of capital thanks to decreased liability risks, while negative externalities can manifest in higher capital costs due to, say, high energy intensity, water usage or greenhouse gas emissions.
Enhancing traditional financial analysis with extensive ESG-derived metrics gives a fuller financial picture, which can inform a more realistic discount rate and allow for more accurate earnings and cash flow projections, in our experience. Generally, we just think companies whose strategy or business model is based on amplifying positive externalities while reducing or eliminating negative externalities will benefit from higher confidence in the sustainability of free cash flow generation, a lower cost of capital, and the potential to increase reinvestment opportunities over time.
Q: Does market volatility within emerging markets create a particularly favorable environment for truly active managers?
CW: These regions have less mature capital markets and a smaller institutional investor base; they have higher economic cyclicality and currency volatility; more regulatory and political risks, not to mention uneven ESG standards. The high frequency of factor rotations between growth and value in EM in a way also speaks to the volatility in the space.In many situations, these elements also work together to amplify investor optimism or pessimism, driving stock prices farther away from fair value than might be observed in developed markets. In EM these inefficiencies and dislocations exist across sectors, geographies, market capitalizations, levels of business quality, and investment styles such as value, growth and quality. We aim to exploit these inefficiencies by marrying each investment team member’s broad expertise, deep fundamental analysis, and insights on non-financial business characteristics with the ability to assess the impact of externalities and better gauge risk and reward across a huge opportunity set—the index alone comprises more than two dozen countries.
* Based on the Eurozone domiciled segment of the MSCI World Index
Source: FactSet and Sustainalytics
Q: How does that work at the stock level?
CW: In our stock selection process, we focus on vibrant companies with attributes that we believe mitigate business-related risks: durable firms with a leading or growing market position; strong, quality leadership and governance; and the ability to fund their own growth, so they are usually free cash flow positive. They must also trade at attractive prices for us to establish or add to a position, so we also have some margin of safety.
We also build in a macro overlay due to currency risk sensitivities, which depend largely on domestic current account or fiscal deficits, or both, local benchmark interest rates and inflation. In these instances, the price targets of our positions must meet, if not exceed, our return hurdle rates based on potential local currency depreciation, as our investors are mostly U.S.-dollar based. But there are always at least a few great companies to be found in countries that are passing through a rough patch economically; those firms that demonstrate resilience in the tough times tend to thrive over full market cycles and can be excellent investments.
Lastly, every position must offer a “path to success,” catalysts or milestones that should propel it to close the discount we see in our assessment of its intrinsic value. Having clear milestones makes it easier to track the progress of our investment thesis on each stock in the portfolios.
Q: You run rather concentrated strategies of just four to five dozen positions. Doesn’t that generate greater volatility at the portfolio level? How does your portfolio construction process address that?
CW: Well, again, it starts at the stock level. You would be surprised how a strong company in a promising market can not only survive but thrive in challenging economic times, taking share from other, less thoughtful competitors that don’t address the needs or interests of all stakeholders. By the way, those include not just clients, shareholders and majority owners, but obviously employees, suppliers and local communities. Now at the portfolio level, we think we can better achieve our performance goals by making larger, more meaningful investments in a highly select, and well diversified, set of our best ideas. By focusing capital in our highest-conviction stocks, our portfolios naturally have fewer holdings, larger average weights, and more capital in the top ten positions, which usually make up just more than 40% of the portfolios.
So, on portfolio construction, while we’re always aware of absolute and benchmark- relative volatility, for us it’s rather secondary to the longer-term return potential of the portfolios. We do think our portfolio construction helps to mitigate the impact of volatility by diversifying our investments across market segments with different underlying business drivers. Given our stock selection, the portfolios tend toward quality and growth, but their diversification goes beyond standard country parameters.
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.
PUENTE, a wealth management and capital markets firm – with its headquarters in the United Kingdom and presence in the United States and Latin America – announced that Fernando Recalde will be the new CEO of the Group.
To date, Recalde served as Country Manager of Larraín Vial in Argentina and, for the last 20 years, held different roles in structuring, trading and distribution in New York. In his extensive career, his time as Director and President of Merrill Lynch Argentina also stands out.
“I am very excited to join a firm with the recognition and trajectory of PUENTE. The growth project we are considering for the next five years is very challenging, but we have professionals with the experience, knowledge and commitment necessary to achieve it,” said Fernando Recalde.
For his part, Federico Tomasevich, main shareholder, said: “I am very satisfied with the evolution that Puente had in the last 10 years thanks to the team of leaders and professionals of excellence that we have. To date, we manage more than 2.5 billion dollars in assets under administration in Wealth Management, we trade more than 15 billion dollars in Institutional Trading and in the last five years and we have structured financing in the Capital Markets for more than 5 billion dollars in more than 400 transactions.”
Tomasevich had been serving until now as CEO and Chairman of the Board of Directors of Puente Holding UK, he will now focus on the strategic management of the group.
“We have great expansion plans in Latin America and the United States for the next five years. With Fernando’s appointment as CEO of the Group, I will dedicate myself – from the presidency of the Group and together with the rest of the board – to the strategic management of PUENTE,” Tomasevich said.
Foto cedidaJerome Powell, president of the Federal Reserve. Con el tapering de la Fed en marcha, el mercado pone el foco en la inflación y las subidas de tipos
The United States Federal Reserve (Fed) yesterday met the expectations of the market and analysts by announcing that it will begin to reduce its purchases by US$15 billion a month. Officially, tapering begins, but the Fed has not specified or committed to any calendar, keeping its flexibility to adjust the pace of purchases in 2022.
This is an important fact because it allows the Fed an accelerated reduction if inflation turns out to be harder than expected, although the adjustment can occur in any direction. “From now on, the pace of purchases is most likely to slow by $15 billion a month: $10 billion in Treasury bonds and $5 billion in mortgage-backed securities. Most likely because the Fed is open to adjusting those reductions at future meetings if the economic outlook demands it,” clarifies Christian Scherrmann, Economist for the United States for DWS.
In a sense, Jon Day, Manager of Newton, part of BNY Mellon IM, explains that this flexibility will allow the Fed to increase or reduce the rate of the reduction based on the data; that is, how transitory inflation is. “The Fed has taken its first steps on the path of hawkishness, but it is still far behind its counterparts from the north of the border (Bank of Canada), on the other side of the ocean (Bank of England) and the south (Bank of the New Zealand Reserve), so patience remains the key word,” Day points out.
The positive note was that the market naturally welcomed the announcement. In the opinion of Víctor Alvargonzález, Founding Partner and Chief Strategy Officer of Nextep Finance, the market reaction has been logical given how the Fed has prepared this moment. “It began with the launch of probe balloons by Fed members, more than six months ago. Then, at the end of the summer, at Jackson Hole, he announced his intention to reduce his bonus purchases, but kindly and gradually. And he confirmed it at subsequent meetings. Thus, when it has finally announced the closure of the monetary tap, the market had it discounted in prices and has reacted even upwards, due to the tranquility of a predictable monetary policy without surprises,” he explains.
For his part, Carlos del Campo, a member of Diaphanum’s Investment department, considers that the dovish position shown by the monetary institution continues to weigh in the market: “Powell insisted that the high inflation is due to transitory factors and not to a very tight labor market, as Phillips’ curve used to historically suggest. In our opinion, the Fed is behind the curve and does not want to surprise the market, but if the labor market accelerates its improvement and inflation persists at these levels, Powell should accelerate the withdrawal of stimuli if he does not want to lose its credibility,” adds.
The focus on inflation
In the opinion of Paolo Zanghieri, senior economist at Generali Investments, what was a little more surprising was the reiteration of the opinion that the upturn in inflation is largely “expected as transitory” and caused by imbalances in supply and demand related to the reopening of the economy. “This deserved an added paragraph in the press release, as well as the explicit mention of supply bottlenecks and labor shortages as main factors of slow employment growth and volatility of activity data. But the Fed continues to believe that the mitigation of these limitations and advances in vaccination will allow strong employment and activity growth and contribute to moderating inflation,” Zanghieri adds.
For Benjamin Melman, Edmond de Rothschild AM’s Global CIO, the nervousness of inflation is mitigating. According to Melman, the continuous rise in energy prices and prolonged capacity limitations raise doubts about the transitory nature of inflation: “These questions are gaining ground and many central banks, such as the Bank of England, are now reporting a faster-than-expected cycle of rate increases. The Fed and the ECB, which have recently modified their inflation targets, in particular so as not to have to react automatically when inflation temporarily exceeds 2%, do not rush. At the moment, the main indicators show that there is no derangement of long-term inflation expectations of economic agents or investors, which justifies the current assessment of transitional inflation and, therefore, the inertia of the two large central banks.”
From PIMCO, Tiffany Wildin and Allison Boxer, Economists for the United States of the asset management firm, consider that precisely inflation risks put the Fed in an uncomfortable situation. As they explain in their latest analysis, inflation that remains high for a longer period, even if attributed to temporary factors, increases the risk that longer-term inflation expectations will also adjust upwards, something that the Fed wants to avoid. “In fact, it is likely that in the coming months they will test the patience of its members, and we see a significant risk that expectations of Fed rate increases will be further advanced when the Fed’s next economic projections are published in December,” they point out.
It should be remembered that, during the press conference, Powell continued to affirm that inflation is probably transitory, but he also emphasized the willingness and ability of the Fed to act to control inflation if necessary. “Although we are still waiting for US inflation to return to the Fed target by the end of 2022, the additional months of inflation above the target increase the risk that inflation expectations will accelerate beyond the levels consistent with the 2% target, something that the Fed will want to avoid. Consequently, effectively communicating the monetary policy prospects in the coming quarters is likely to be a challenge for the Fed for this and several other reasons,” add PIMCO experts.
In this sense, Axel Botte, Global Strategist of Ostrum AM, an affiliated manager of Natixis Investment Managers, considers that the Fed is risking inflation. As he highlights, the wording of the inflation risk assessment has changed slightly: “The factors that affect prices are expected to be transitory. Therefore, monetary policy makers are less sure that high inflation will not persist. Powell believes that there is still room for improvement on the employment front, although wages have rebounded strongly in the third quarter. In essence, the Fed is taking risks with inflation and the markets recognize that it would have to act even more convincingly if inflation does not slow down.”
According to Brian O’Reilly, Head of Market Strategy at Mediolanum International Funds Ltd (MIFL), the Committee noted that “substantial progress” has been made to reach the mandate of the Federal Reserve, but at the press conference President Powell emphasized that the way will depend on the data. “Following recent economic better than expected data, the fall in unemployment and still high and persistent inflation (above the Fed’s objective), it is not clear why the Federal Reserve continues to use extraordinary measures to support the economy. Now the pressure will increase on Christine Lagarde to justify the ECB’s transitional vision of inflation,” says O’Reilly.
Expectations about rates
In the opinion of Anna Stupnytska, Global Economist at Fidelity International, the focus is now on the question of what this means for official interest rates. “At the Jackson Hole summit in August, Fed President Jerome Powell explicitly recognized two different tests for tapering on the one hand and rate increases on the other, breaking the link between the two. But since inflation has continuously surprised the rise since then, the Fed’s thinking must have changed towards a greater probability of an earlier takeoff, which could begin as soon as quantitative easing ends,” Stupnytska adds.
During his speech, Powell made it clear that “this is not a good time to raise interest rates because we want to give the labor market time to improve even more,” an argument that readjusts expectations about future rate increases. In the opinion of Hernán Cortés, partner of Olea Gestión and co-manager of the Olea Neutral fund, the market begins to discount a possible increase in the intervention rate in June 2022 and another in December 2022. “It is possible that the Fed will take the rate hike slowly, as it did when announcing the tapering in 2013 and delaying the first increase to 2015. Nor should we forget that monetary expansion has been historically exceptional, with the Fed increasing the balance sheet by four trillion dollars in the last two years, while between 2008 and 2018 it increased it by three trillion, from one trillion to four trillion,” Cortés clarifies.
Finally, according to Scherrmann, although the decision to start the exit from his very accommodative monetary policy is the main news, market participants are already looking at the implicit substantive orientation after the Fed’s announcement. “The most likely trajectory of inflation and the Fed’s assessment in this regard may be the real question of the moment. Looking at the updated statement, the Fed clings to the narrative that the current high inflation largely reflects factors that are expected to be transitory,” he explains.
Foto cedidaGolin Graham, director de Estrategias Multiactivos y co-director de Soluciones Multiactivos Sostenibles de Robeco.. Robeco nombra a Colin Graham nuevo director de Estrategias Multiactivos y co-director de Soluciones Multiactivos Sostenibles
Robeco has announced the strategic expansion of its Sustainable Multi Asset Solutions capability with the appointment of Colin Graham as Head of Multi Asset Strategies and Co-Head of Sustainable Multi Asset Solutions. In this newly created role, he will be “essential to the growth” of the team, said the firm in a press release.
Graham brings a 25-year track record of investment performance, team leadership and innovation in Global, European and Asian multi asset solutions. Most recently he was Chief Investment Officer, Multi Asset Solutions at Eastspring Investments (part of Prudential plc). Prior to this, he was Chief Investment Officer, Multi Asset Solutions for BNP Paribas Asset Management in London, and Managing Director, Co-Head of Global Multi Asset Strategies at Blackrock.
Robeco highlighted that the appointment further bolsters the Sustainable Multi Asset Solutions team, which is expanding to 15 dedicated investment professionals. The team provides wholesale and institutional clients with bespoke outcome-oriented solutions to achieve their financial and sustainability goals, both in an asset-only and asset-liability matching context. It currently manages approximately 15 billion euros (17.37 billion dollars) in assets globally, including multi asset funds, discretionary multi asset solutions, and bespoke liability and cash flow driven fixed income solutions.
“We’re very pleased to welcome a seasoned investment professional like Colin to our team. His extensive international experience and proven track record will undoubtedly bring our Sustainable Multi Asset team to the next level. I am confident that with the expansion of the team and Colin joining, we can continue to provide our clients with sustainable investment solutions that meet their objectives”, commented Remmert Koekkoek, Head of Sustainable Multi Asset Solutions.
Lastly, Graham claimed to be “delighted” to join Robeco, as it’s a company that he has admired for their long-standing and genuine commitment to sustainability and future-oriented solutions. “Clients are increasingly looking beyond traditional risk and return metrics; they want their capital to be sustainably deployed and to have a positive and measurable impact on the environment and wider society. We have a compelling offering and I’m delighted to be joining Robeco to contribute to its growth”, he concluded.
A new agreement signed by HMC Itajubá –HMC Capital’s Brazilian branch– will grant Latin American investors access to boutique CRUX Asset Management’s specialized strategies.
According to a press release, the agreement with the London-based firm will allow HMC Itajubá to distribute their strategies, that have strong investing capabilities in Asia, Europe, and the UK.
CRUX is an active equity investment manager with 1.7 billion pounds in AUM (over 2.3 billion dollars). Established in 2014, the firm’s three core equity teams focus on Europe, the UK and Asia, with a bottom-up, high-conviction stock selection approach.
According to their press release, HMC will distribute CRUX’s strategies, including two of their outstanding funds: the CRUX Asia ex-Japan Fund, which was launched in October 2021, and the CRUX China Fund. Both vehicles are managed by Ewan Markson-Brown, who joined the London-based manager in September 2021 and has spent over 20 years managing emerging markets and Asia portfolios.
This distribution agreement strengthens HMC Itajubá’s goal of representing leading fund managers, offering specialized investment opportunities to its clients in Chile and Brazil.
“CRUX Asset Management is one of the top boutique asset managers. We look forward to working with them and are proud to represent and help expand the firm’s presence in Latin America and to offering our clients access to top fund managers with a long and consistent track record of positive alpha” said Nicolás Fonseca, Head of Institutional Sales in HMC.
“We are pleased to partner with HMC Itajubá and to have the opportunity to expand our international distribution to new potential clients”, said CRUX’s CEO, Karen Zachary. “Investors may find additional diversification and yield benefits in our UK, European and Asian equity offerings which could help to position portfolios for the mid and late cycle environments”, she added.
HMC Capital has offices in Chile, Perú, Colombia, México, Brazil and the United States, and has 15 billion dollars in assets under management and distribution from institutional, multilateral & private investors.
