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May 2019CONTENTS
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LEADER
INVESTMENT EUROPE
An Open Door Media publication
Editorial
Editorial director: Jonathan Boyd
Events
Head of events: Alex Whiteley
Fund selector relationship
executive, Iberia:
UPCOMING EVENTS
Tel +44 (0) 20 3727 9922 Tel +44 (0) 20 3727 9923 Angela Oroz InvestmentEurope launches its first Summit for
Iberia correspondent: Event manager: Lucy Wilson Tel +44 (0) 20 3727 9920
Eugenia Jiménez Fund selector relationship manager, fund selectors in Iberia at the end of May (30-31). A
Tel. +44 (0) 20 37 27 9948
Tel +44 (0) 20 3727 9930 DACH: number of visits have taken place beforehand to meet
DACH correspondent: Marketing Alexandra Laue
Ridhima Sharma Head of marketing: Rebecca Hancock Tel +44 (0) 20 7484 9768
those interested in attending as delegates (see our
Tel +44 (0) 20 3892 7911 Tel +44 (0) 20 3727 9924 Fund selector relationship executive, Travel Diary section in this and last month’s issue).
French-speaking markets Digital marketing executive: France, Romandie & Belux:
Catalina Butnariu Thereafter, in June the events programme moves
correspondent: Alexandre Duransseau
Elisabeth Reyes Tel +44 (0) 20 3727 9927 Tel +44 (0) 20 7484 9784 to Oslo for a Roundtable event on 5 June, and a
Tel +44 (0) 20 7484 9720 Fund selector relations HR manager Summit event in Rome on 6-7 June. The Italian event
Production Head of fund selector relations: Maria Margariti will particularly target fund selectors working in the
Phil Turton Vanessa Orlarey Tel +44 (0) 20 3727 9925
Tel +44 (0) 74 7393 4144 institutional market.
Commercial Chairman
Managing director: Louise Hanna
Head of fund selector relations, Nordics:
Nicholas Rapley ESG as a topic will be addressed by the Pan-
Patrik Engström
Tel +44 (0) 20 3727 9929 Tel +44 (0) 20 3727 9940 Tel +44 (0) 20 3727 9939 European ESG Summit taking place in Zurich on
Head of sales: Eliot Morton Fund selector relationship manager, Email: firstname.surname@odmpublishing.com 13-14 June. This will include a structured event
Tel +44 (0) 20 3727 9945 Italy & Ticino:
EMEA business development programme designed to address key questions such
Luisa de Vita
manager: Mathieu Gaussen Tel +44 (0) 3727 9932 as how to gauge/measure ESG factors including
Tel +44 (0) 20 3727 9928
their impact on portfolio performance over time and
No part of this publication may be reproduced, how to integrate sustainability into the investment
stored in a retrieval system or transmitted in any
form or by any means without the prior written process.
permission of the publisher. Photocopying or
PPA PUBLISHING INNOVATOR OF THE YEAR 2015
other reproduction is prohibited without the Details of these and other events can be found at:
publisher’s permission. Action will be taken www.investmenteurope.net/events.
where this occurs.
Distributed by Open Door Media Publishing Ltd.
People
moves
around the
industry
FRANCISCO ARISTEGUIETA
MATTHIEU DAVID together to further develop
State Street appoints head of HSBC’s Global AM’s multi-asset
international business Candriam appoints investment capability, ensuring
State Street Corporation global head of Financial that it tailors its investment
has appointed Francisco Institutions and strategies to meet the varying
Aristeguieta as chief executive Partnerships needs of a wide range of
officer for its international Candriam has appointed clients across geographies, in a
business. Matthieu David (pictured consistent and coherent way.
Aristeguieta, who will join the right) as global head of Little will focus mainly on the
company in July, will report to Financial Institutions and investment process, including
State Street president and CEO, Partnerships, in addition to economic and asset allocation
Ron O’Hanley and become a his current role as head of research and investment
member of the management Candriam’s Italian branch – strategy; Bertrand will focus
committee. effective 1 April. mainly on risk budgeting,
Initially based in Hong Kong, The newly created role is to portfolio construction and
Aristeguieta will be responsible coordinate the development fulfilment.
for all of State Street’s business of distribution activities for business development in Italy, Both of them will report to
activities outside of the US Global Financial Institutions which in the last five years has Chris Cheetham, global CIO at
including driving strategy, (GFI) in all countries in which seen AUM grow by over 207%, HSBC GAM. Bertrand will be
stewarding client engagement, Candriam operates – from exceeding the €7bn mark. based in Paris; Little in London.
developing talent, pursuing Europe to North-America Prior to being appointed They will retain their current
growth opportunities and and Asia – in order to increase head of Candriam’s Italian roles respectively as head of
increasing market share as well Candriam’s partnerships with office in 2015, David was head multi-asset France, and head of
as deepening relationships with global banks, insurance and of External Distribution Italy investment strategy.
local government officials and distribution companies that at BNP Paribas Investment
STEWART BENNETT
regulators. have a strong international Partners. Previous roles were
He will work in partnership footprint. held at Fortis, La Compagnie BMO GAM creates new
with State Street’s global David will continue to be Financière Edmond de global aternatives role
business partners to deliver responsible for Candriam’s Rothschild and AXA. BMO Global Asset Management
solutions, expertise and insights has appointed Stewart Ben-
to clients worldwide. nett to a newly created role of
He joins State Street from analyst at BlueMar Capital Heslop joins from Columbia global head of Alternatives – for
Citigroup where he most Management, and financial Threadneedle, where he a business line including pri-
recently served as CEO of its analyst at A&G Funds. He managed European smaller vate equity, real estate and real
Asia business, overseeing started his career at the Spanish companies strategy for almost estate securities.
60,000 people and a third of the law firm Cuatrecasas, first in the a decade, reaching assets of Bennett, who was expected to
company’s earnings. firm’s banking and insurance some £2.7bn (€3.11bn), as well join in May, has been charged
department and later in its as global smaller companies with developing and executing
JAVIER MARTÍN
M&A unit. equities strategy of some £514m the manager’s alternative
Gala Capital announces new (€593m). investments global growth
MARK HESLOP
head of equity investments strategy.
JEAN-CHARLES BERTRAND &
Madrid-headquartered private Jupiter appoints European He reports to Kristi Mitchem,
JOE LITTLE
investment management team equity manager CEO of BMO Global Asset
Gala Capital has appointed Jupiter Asset Management has HSBC GAM appoints Management.
Javier Martín as head of equity appointed Mark Heslop as a co-CIOs for multi-asset Bennett has 25 years of
investments, as the Spanish European equity manager and HSBC Global Asset experience in investment
financial website RankiaPro small company specialist. Management (HSBC GAM) banking and private equity,
reported. Subject to regulatory has appointed Jean-Charles including 10 years as a partner
Martín joins Gala Capital approval, Jupiter plans to Bertrand and Joe Little as global and head of the Financial
from Metagestión, where he launch European smaller co-chief investment officers of Institutions Group at Ondra
worked as an equity analyst. companies fund in September multi-asset. Partners, the London based
Previously, he held various 2019, following Heslop’s As co-CIOs, Bertrand and independent investment
roles including senior equity arrival. Little will continue to work banking firm.
events.investmenteurope.net/esgsummit
Fund
watch and
product
launches
Groupama AM reshapes money market fund (institutional only), Luxembourg, the Netherlands,
Groupama Asset Management has renamed its money Norway, Singapore, Spain, Sweden, Switzerland and the
market fund – Groupama Cash Equivalent – as Groupama United Kingdom – is managed by Harin de Silva, Dennis
Ultra Short Term Bond fund, in line with a change of Bein, and Monisha Jayakumar, who all are part of WFAM’s
strategy. Analytic Investors team. It is the fourth international fund
It has been reshaped into an ultra-short term bond offered by Analytic Investors.
fund, which continues to be eligible as a cash equivalent www.wellsfargoassetmanagement.com
– requiring investments into short-term, liquid, easily
convertible assets that a relatively insensitive to variation BrickVest launches first active-strategy fund
risk. London-based online real estate investment platform
The €1.27bn strategy looks to investment grade fixed BrickVest has launched an active strategy fund series,
income and money market instruments, denominated in Harvest Active funds.
euros. The first fund of the series, Harvest Active 1 is currently
www.groupama-am.com open for acquiring a minority stake in a core asset
portfolio located in Slovakia and the Czech Republic. This
Wells Fargo AM unveils two Ucits equity funds has been done in partnership with HB Reavis, a real estate
Wells Fargo Asset Management (WFAM) has launched developer with a strong presence in CEE, Germany and
Global Multi-Asset Income and Global Factor Enhanced the UK.
Equity fund as sub-funds to the Wells Fargo (Lux) After this initial investment, the fund has a mandate
Worldwide fund. to actively source and trade shares in the underlying
Both are Ucits compliant and available to institutional investment on the secondary market. This strategy aims to
and retail investors. generate enhanced returns by acquiring shares below net
The Global Multi-Asset Income fund – available asset value, while providing liquidity to the shareholders.
in Austria, Finland, France, Germany, Ireland, Italy, www. brickvest.com
Luxembourg, the Netherlands, Norway, Spain, Sweden,
Switzerland and the United Kingdom – represents Actis AM launches fund to combat climate change
the WFAM Multi-Asset Solutions team’s first international Actis Asset Management has launched Impact Carbon
fund, managed by WFAM portfolio managers Kandarp Long/Short Equity fund, investing in firms which aim to
Acharya, and Petros Bocray, among others. reduce greenhouse gas emissions per euro of sales.
The Global Factor Enhanced Equity fund – available It will be run by managers David Letellier, Alexandre
in Austria, Finland, France, Germany, Ireland, Italy Ferci and Christophe Gautier, and aims for net exposure
to equities of between -20% and +20%. The long book
will comprise stocks selected according to three criteria:
Man GLG launches credit multi-strategy alternative fund greehouse gas emissions per euro of sales, financial
Man Group’s discretionary investment management business Man GLG has analysis and technical analysis. The short book will
launched Credit Multi-Strategy Alternative – a global multi-strategy long/ comprise futures contracts.
short credit Ucits fund offering access to a credit strategy established some www.actis-am.fr
two decades ago.
The fund aims to generate an absolute return over rolling three-year Falcon AM and Universal Investment launch mixed fund
periods with a low correlation to equity, credit and interest rates. It runs 10 Frankfurt-based Falcon Vermögensverwaltung and
distinct underlying credit strategies investing across Asia, Europe and the Universal Investment have launched Falcon Stability
US, focused on convertible arbitrage, long/short credit and capital structure fund, offering private and institutional investors access
arbitrage. to a derivatives arbitrage strategy. This aims to eke out
Managed by Chris Huggins, the fund allocates capital between strategies profits by exploiting price differentials between financial
based on qualitative and quantitative factors, including macro-economic, derivatives in all market phases, while maintaining non-
fundamental and market information considerations. Huggins is supported correlation with other asset classes.
by a team of 24 dedicated investment professionals with deep asset class Authorised for distribution in Germany and
and region specific expertise, and asset managers based on the ground in Switzerland, the fund aims for a return of at least 4% by
their respective investment regions. cost, with target volatility at a maximum 5%. An annual
www.glgpartners.com income distribution is planned.
www.falconinvestment.de
events.investmenteurope.net/iberiansummit
Recently, shareholders in Royal Dutch yields may have an indirect effect on income, with ‘yield’ being the nexus”.
Shell have enjoyed a dividend yield of this dynamic, but equities do not nec- “The meaning of ‘yield’ has shifted
5.8-5.9% depending on whether they essarily have to generate lower returns from the internal rate of return (IRR)
own securities in Amsterdam, London simply because government bond or return on an asset (ROA), to various
or New York. yields are low– see, for example, the measures of cash flow comprising
For the pensioners of Europe, this 1950s.” assets and non-assets. Central banks’
may be particularly helpful given, for Brian Singer, head of Dynamic Allo- suppression of market interest rates
example, the negative rate of -0.4% on cation Strategies, William Blair, also have made investors talk – and think
deposits offered by the European Cen- points to an element of “confusion in – about yield as a result of central
tral Bank or -0.25% on its repo rate by the industry about interest rates and bank policy—to include any purported
Sweden’s Riksbank.
So, if there is such a gap between
interest paid on deposits and dividend “YIELD IS STILL
yields of some of Europe’s biggest
and most cash generative companies,
VERY MUCH
where does that leave fixed income VALID, BUT IT IS
instruments?
The challenge is illustrated in the MORE ACCURATE
charts for US government debt (see
page opposite) which show national
WHEN APPLIED
debt rising since the sharp drop in yield TO POSITIVE
in the last quarter of 2008.
YIELDING
DIFFERENT FORMS INSTRUMENTS”
OF RISK Pierre Mouton. Notz, Stucki
Steve Bleiberg, portfolio manager
at Epoch Investment Partners, says:
& Cie
“If you take the view that the return
that equities generate is simply the
return on bonds plus a nebulous
‘equity risk premium’ then yes, lower
bond yields would imply lower
equity returns.
“Our view is that this kind of additive
approach to forecasting equity returns
is incorrect, because it assumes that
bond risk and equity risk can be mea-
sured in the same single dimension
(price volatility).
“We believe equity risk and bond
risk are different forms of risk, and that
equity returns come from the ability of
companies to earn a return on invested
capital that is higher than their cost of
capital. Changes in government bond
source of cash flow. Only when cen- US NATIONAL DEBT that the 10 year yield is kept artificially
tral banks’ manipulation ends might lower by zero or negative yields outside
market participants return to more tra- 22 the US and QE activity. Bond purchases
$trn
ditional definitions.” Public debt by the Fed, the ECB and the BoJ pushed
“We are unconvinced about the 18 Intergovernmental holdings yields down, making the curve more
central banks’ abilities to raise rates prone to inversion. The large yield dif-
to what we see as long-term sustain- 14 ferential between Germany and Japan
able levels. This makes us less negative on one side and the US on the other
on bonds in countries with very low 10 side keeps a lid on any yields increases
rates. These yields may look unsustain- in the US. But I do not think ‘this time
able, but central banks do not see low 6 is different’.
real rates as harmful and, therefore, “An inverted yield curve should still
perceive little incentive to raise rates,” 2 be an indication of a recession. Further-
Singer adds. 2005 2008 2011 2014 2017
more, if investors believe an inverted
yield curve is a predictor of a reces-
INTERPRETING THE sion, it could become a self-fulfilling
YIELD CURVE US GOVERNMENT DEBT YIELD 2008 prophecy.”
One of the challenges stemming, then Mark Benstead, head of Active Credit
from this untraditional era of mon- 5 Solutions at Legal & General Invest-
%
etary policy is how to interpret what ment Management, says: “With nega-
the yield curve suggests. tive yielding government debt recently
Erick Muller, head of Product and rising back to its historical high levels
4
Investment Strategy at Muzinich & of circa $8.5trn and 15% of the euro
Co. notes that historically the curve corporate market also yielding nega-
has been considered a good indicator tively you could easily be forgiven for
of economic cycles, with inversion 3 thinking that the generally accepted
often associated with high prob- LT Composite (>10 Yrs) definition of yield, ie, a positive income
ability of recession, but that there are Treasury 20-Yr CMT return is no longer valid. Indeed yields
reasons to challenge conventional are regularly cited as being much
wisdom. 2 too low and therefore they must rise
Jan 2008 Apr 2008 Jul 2008 Oct 2008
“We believe an inversion of the causing capital losses for investors.
yield curve provides very incomplete “We do not ascribe to that view.
information. For instance, the lag US GOVERNMENT DEBT YIELD 2019 Yields are low for a multitude of rea-
between the inversion itself and a sons, not just central bank buying of
recession occurring is far from stable 3.5 bonds which after all, with the notable
%
Yann Lepape, senior portfolio man- money at work’; the problem is that
ager Flexible Bonds at Vontobel, sug- “CENTRAL BANKS in an ageing western world, objectives
gests that the practical challenge is the
absolute low level of yields combined
ARE NOWADAYS clearly diverge: governments need to
issue debt to finance the welfare state,
with the historically low level of vola- TERRIFIED BY and at the same time retirees need safe
tility. In this context, it means putting returns on their investments to finance
more weight to ‘relativity’. THE IDEA OF their improved life expectancy.
“Our methodology did not change
in itself, but we put more weight to
BREAKING THE “Ideally, governments would issue
debt at low or zero yields and retirees
relativity. It changed the sources of per- BUSINESS invest in acceptably yielding securities.
formances of our funds: less duration This mismatch, especially in countries
oriented, and more relative value.” CYCLE” or economic zones where the banking
Robert Tipp, head of global bonds Bastien Drut, system is not rock solid, could have
and chief investment strategist at CPR AM been anticipated by observing what
PGIM Fixed Income, says: “Central has happened in Japan during the last
banks have backed out of the mar- 25 years: lower and lower yields, ageing
kets to varying degrees and yet the population, more and more savings
yields remain low. So there is a good slowdown. As a consequence, yields chasing ‘safe’ assets yielding less and
chance that the ‘financial repression will remain what constitutes a chal- less.
is keeping yields low’ story is a red lenge for asset managers.” “Maybe this conundrum could have
herring. That may be keeping inves- been avoided, or at least postponed, if
tors from accepting the real drivers SELECTOR COMMENTS the global financial crisis had not hap-
of low yields: presumably these are Pierre Mouton, who heads the Long pened. Too much debt by governments
globalisation, demographics, high debt Only Strategies at Notz, Stucki & Cie, which need to spend more and more
levels, inequality, etc. — and these are feels that the generally accepted defini- can only be supported if yields are at
not going away.” tion of yield is still valid. zero or super low, so if the developed
“As a global multi-sector investor “We live in an unprecedented era markets policy makers really started to
we have to analyse bonds taking into of negative yielding assets in fixed- spend less, hence issue less debt, this
account all factors: yield and credit income investments which must not financial repression could be changed
spread, likely yield changes, including make us forget that yield is paramount and monetary conditions come back to
roll down and spread changes, hedging when measuring the profitability of an normality.”
costs, etc. The new environment of investment. Mouton adds: “It is extremely dif-
low yields still includes bouts of vola- “You could feel very smart having ficult to see this happening in the near
tility. So the opportunity for adding doubled your money on an investment future, especially in the eurozone and
value through active management is made 25 years ago but this capital gain in Japan. But ideally this financial
as high as ever. But expectations for equals to a 2.8% annualised yield over repression should be changed so that
yield levels given the macro backdrop the period. You would have done much the price of money gets back to normal
have to be ‘re-benchmarked’, marked to better by holding a long term govern- levels. In our view it is completely
market. There’s no way around that.” ment bond. absurd to lend money to a government
Bastien Drut, senior strategist at CPR “The funny thing today is that nor- and accept paying for it; how could
AM, says: “First, I think it is impor- mally yield has a positive connotation, the future be more certain than the
tant to underline that central banks so when you buy today a negative present?”
are nowadays terrified by the idea of yielding instrument like a German 5 Mouton comments that it would be a
breaking the business cycle. We are in year BOBL, it is difficult to define the “betrayal” of clients to put their money
a kind of permanent risk management notion of yield associated to it. So, let us into negatively yielding assets, but adds
mode where central banks give up any say that, yes, the notion of yield is still that there are pockets of value still in
will to tighten the monetary policy as very much valid, but it is more accu- the fixed income space worth consid-
soon as there is a risk. rate when applied to positive yielding ering, such as AT1 securities in Europe.
“One of the consequences is that the instruments.” “Otherwise, still looking at fixed
relationship between the yield curve Like portfolio managers themselves, income investments, we are forced to
and recession might be broken. In the Mouton also feels that there is a dis- accept lower returns on good quality
previous cycle, the Fed did not hesitate cussion to be had as to the monetary instruments – but not negative returns
to hike the fed funds four times after objectives that have given rise the – like everybody else. So if we have to
the first yield curve inversion and by question of yields. buy a single-A rated bond with a 0.5%
doing so to precipitate a recession in “Financial repression finally aims yield to maturity, which we wouldn’t
the US. Nowadays, the Fed has already at conducting money to the real have done some years ago, we do buy
said that it would not hike this year, economy by killing the rentier and it.”
without any serious sign of economic pushing all investors to ‘put their Mouton agrees that there is an
important question in the debate on Rita Cabaço, Wealth Management macroeconomist, IM Gestão de Ativos,
what constitutes a ‘correct’ yield on cer- strategist, Millennium bcp, agrees with sees a secular downward trend in yields
tain assets in terms of the implications the point that central banks are helping since the 1990s, which “do not neces-
for considering other asset classes. governments pay less interest on their sarily compromise the validity of the
“This is an important point as the debt, ditto companies or individuals yield concept”, yet which have left mar-
universal discounting factor, although with mortgages or other forms of debt. kets expecting lower rates.
not the only one, is the US 10 year But it has come at a cost. “The nature and length of the 2008
T-Bill; the lower it goes in terms of “Although the measures imple- financial crisis entrenched expecta-
yield, the higher valuations can go mented in the height of the financial tions of low real interest rates. It is now
on ‘long duration’ equities which are or sovereign crises were important to widely acknowledged by investors that
generally to be found in ‘quality’ and stabilise financial conditions, the mag- policy rates are to remain lower in the
‘growth’ sectors. nitude and time length of the measures current cycle, when compared with
“The strong outperformance of is highly controversial. For example, is previous cycles.”
growth versus value observed during it really critical – let alone beneficial in The danger now, however, is that
the last few years should not come as the long run – to charge banks – and while rules of thumb such as as “don’t
a surprise then. There are some equity then their clients – on their deposits fight the Fed” or “don’t fight the ECB”
valuation metrics that can be directly with the central bank and push some remain appealing to investors, central
compared to government bonds or bond yields into negative territory?” banks’ policy toolboxes seem void,
fixed income yields: dividend yield, Raul Póvoa, fund selector at Banco Andrade says, increasing investors’
earnings yield, free cash flow yield, just Invest, still believes the generally anxiety in the wake of a sharp eco-
to cite a few. accepted definition of yield is valid, and nomic slowdown or even a recession.
“There again, when comparing an that the yield curve is a reliable leading “The exhaustion of monetary policy
equity dividend yield to a government indicator of economic activity. But he may require political compromises and
bond yield, you can place your prefer- too picks out the policies of central proactive fiscal policies, which could be
ence between good yield with equity banks, of seeking to stabilise financial of difficult implementation.”
risk or bad yield with government risk. markets and foster economic growth, Pablo Valdés, partner and invest-
He cites an example from Switzer- as having come at a cost. ments analyst at Orienta Capital in
land: “Do you prefer to hold Nestlé, “In this environment of low yields, Madrid, notes the success historically
which is a very safe company, expen- stocks tend to be cheap relative to of the yield curve inversion indicating
sive by many measures, but paying you bonds, mostly because of the bond a recession and warns against thinking
2.5% in dividend annually; or the Swiss overvaluation. But in absolute basis, that “this time is different”.
10 Year government bond ‘giving’ you stocks are still not cheap. So we tend to “If you join the ‘hunting for yield’
a negative 0.32% yield? In our opinion, focus more on profit and global growth environment, you must be conscious
the choice is easy. expectations rather than central bank that you might be increasing your risk
“The impact of lower yields in fixed liquidity conditions going forward. profile and buying riskier assets when
income cannot be ignored, and we def- “We still favor a cautious, patient they are yielding the least in historical
initely accept paying higher prices for position in high quality defensive terms. So, falling prisoner to market
good equities consequently, especially growth and reduced exposure to conditions and looking for higher
as in our opinion, low yields are set to cyclical beta.” yields implies a huge risk for inves-
last for a while, especially in Europe.” Luís Andrade, fund selector and tors. Nevertheless, following a barbell
strategy may be a good choice.”
Dirk Söhnholz, managing director,
“ALTHOUGH THE MEASURES Diversifikator, suggests that on the
IMPLEMENTED IN THE HEIGHT assumption the generally accepted
definition of yield is still valid, and that
OF THE FINANCIAL OR the focus of macro policymakers on
SOVEREIGN CRISES WERE yield can hardly be changed in practice,
the debate on what constitutes ‘correct
IMPORTANT TO STABILISE yield’ is irrelevant.
“Relevant is only the expected yield.
FINANCIAL CONDITIONS, And the expected yield on most fixed
THE MAGNITUDE AND TIME income investments is too low to
include them in a portfolio at all, since
LENGTH OF THE MEASURES even low return fixed income has a sig-
nificant risk of loss. ■
IS HIGHLY CONTROVERSIAL”
Rita Cabaço, Millennium bcp A longer version of this article features
on www.investmenteurope.net.
THOMAS ROMIG
Thomas Romig joined Assenagon
Asset Management in March 2015
having been head of multi-asset
management at Union Investment
based in Germany since 2009. Previ-
ously, he worked at Allianz Global
Investors from 1997.
Romig graduated from the Univer-
sity of Nuremberg where he gained a
masters in Business Administration and
is a certified european financial analyst.
Romig is a member of the
InvestmentEurope Editorial Board.
No risk, no gain
Assenagon, an active asset manager for institutional Romig adds: “To illustrate our current thinking, however,
investors, specialises in proactive management of capital we have been expecting markets to get more volatile,
market risks. more dispersed, for a couple of years now. Skilled long/
It offers complete fund-based risk management for cli- short equity managers tend to perform well in this kind
ents to achieve their target returns even within a defined of environment, which is why we currently run active
risk budget. It has offices in four locations: Luxembourg, positions in this segment.”
Munich, Frankfurt am Main and Zurich.
Assenagon’s multi-asset team oversees some €2.5bn CIRCULAR METHOD
of asset under management, split across several fund In order to judge a manager’s skill, Assenagon follows
vehicles. In addition to active strategies, the business a circular approach, permanently going back and forth
manages portfolios targeting money market-like returns. between qualitative and quantitative analysis.
The client base derives from across the institutional Frequent questions asked in the qualitative space
spectrum, including family offices to insurance companies include which edge the manager might be equipped with,
and pension funds to large invest- which exogenous factors he /she
ment banks. It offers a varied range of is exposed to and how his process
services and sector specific knowledge “WE HAVE BEEN works. On the quantitative end, there
of requirements and regulatory condi- is interest in the desired risk/return
tions, which help in meeting the needs EXPECTING profile and how that might match the
of investors from any segment. MARKETS TO GET manager’s track record.
When setting up a conserva-
TRI-SOURCE SELECTION MORE VOLATILE, tive fund, Assenagon also looks
During the selection process, Assenagon
identifies funds from three sources,
MORE DISPERSED, at the magnitude and timing of
drawdowns. Are these phases to be
notes Thomas Romig, managing director FOR A COUPLE OF expected given the manager’s expo-
and head of Multi Asset Portfolio Man- sure to certain risk factors or do they
agement. YEARS NOW” occur out-of-sync?
“First, we regularly run performance “Referring to our desire for asym-
screenings using databases like Morn- metric return profiles expressed
ingstar or Bloomberg. This is to find the hidden gems poten- earlier, we generally appreciate strategies which feature
tially missed by the markets. larger upside than downside betas, potentially even
“In addition to identification, we entertain long-standing negative downside betas. Ultimately, this is also to judge
relationships with dozens of asset management companies whether the manager adheres to his investing principles
around the world, which keep us up-to-date on their in stressed markets or whether he typically gets out of his
product pipeline/range. position and potentially misses the recovery rally,” states
“This can take place in the form of strategic one-on-one Romig.
meetings or specific pitch meetings in broader settings.
In this context, we are also inspired by attending industry RESPONSIBLE INVESTING
conferences, workshops or seminars.” When it comes to sustainability, social responsibility and
While every fund the team is considering runs through transparency, Assenagon acts exclusively in the interests of
a rigorous approval process, they are typically looked at in the investors. In this context, attractive returns are not the
respect of a continuously expanded watchlist. sole consideration, but risk management and liquidity are
Usually, the best place to start the process is an asymmetric also of great importance.
return profile, ie, limited downside in conjunction with It acts with a view to the future, taking into account
unlimited upside potential, explains Romig. sustainability risks and integrating environmental, social
This kind of profile can be generated in various ways, asset and governance (ESG) criteria in its investment process,
classes and geographic areas. Thus, Assenagon is generally in particular to ensure long-term investment success,
not too focused on specific segments of the markets. Romig says. ■
now, is partly named after the histor- listed stocks with greater exposure as June 2018. Both are now open due to
ical figure Fernando de Magallanes, of the end of March 2019. the volatility in market cap.”
the Portuguese explorer who The Iberian strategy returned Martín admits to having
arranged the Spanish expedition 38.7% over the last three years while embraced the volatility seen in the
to the East Indies in 1519 resulting the European equity fund achieved a market in 2018, which he took as
in the first circumnavigation of the 33.5% return over the same period. a source of opportunities that led
globe. Investors can access Magallanes’ him to increase the firm’s levels
Its name also pays tribute to the funds directly through the firm’s of investment. He believes the
prestigious Magellan Fidelity Fund, website as well as by the main firm’s portfolios are offering the
a strategy managed by the legendary banking institutions and investment highest upsides ever. In mid-April,
value investor Peter Lynch that platforms in Spain. Magallanes’ investment levels
achieved an annualised return of The firm also has Luxembourg- standed at around 97% against 85%
nearly 30% during the 13 years in domiciled Ucits-funds, which are on the first quarter of 2018.
which it was at the helm. registered for sale in Luxemburg,
Based in Madrid, 60% of the firm’s Belgium, Spain, Switzerland, INVESTMENT
clients are family offices, 15% are Germany, France, and the PRINCIPLES
retail clients, and the remaining are UK. While Magallanes is the As an independent value investor,
institutional clients. investment manager of them, their Magallanes seeks to buy cheap
The firm focuses on European administration and distribution is companies, whose market price are
equities, long-only, through three made through different banking below their intrinsic value.
different strategies: Iberian Equity institutions and Pictet. This investment approach requires
fund, European Equity fund, and remaining focused on the long-term
European Micro-caps Equity fund. DOES SIZE REALLY prospects of companies, rather than
“A big part of our success comes MATTER? on the short-term trends or market
from being loyal to our circle of When asked by the firm’s business patterns.
competence, it means we tend to find plans, Martín says their main Ideas generation comes from three
our best investment ideas within commitment is to offer always the main sources: market observation,
the European equity arena,” states best equity investment option to companies whose price is in decline
Magallanes’ CIO. clients. He continues: “We are not (which involves an agnostic market
As chief investment officer, Martín a fund supermarket nor an asset position, many times betting against
is responsible for managing and management gatherer, it is not what it), and analysis.
monitoring the funds’ portfolios, we want for our company. We prefer These ideas are then passed on
counting on the support of two to offer our clients those products we to the firm’s analysts, who are
analysts and an assistant portfolio would invest in. responsible for the companies’
manager & trader. He spends most “We think that size is enemy research. Thereafter, Martín takes the
of the time researching companies of quality when it comes to final investment decisions.
with the aim to understand their performances, which is the reason Since Magallanes is a pure
business models and to calculate behind our commitment to close our bottom-up investor, it does not seek
their fundamental value. funds when size becomes a problem to invest in any specific country,
in managing portfolios.” sector, size, or theme. Martín
CONCENTRATED The firm seeks to achieve the outlines: “Companies within our
PORTFOLIO double goal of preserving capital portfolio are there due to their own
Magallanes’ strategy in Spain is while obtaining long-term attractive merits. We have no restrictions
committed through the Iberian returns, which they consider as except those we impose following a
Equity fund “which invests in periods of more than seven years. deep analysis of companies.”
companies that trade just in As an independent boutique, it Martín describes Magallanes’
Spain and Portugal, which forms aims at growing at a pace that allows approach as highly conservative.
an investment universe of 180 it to manage its investments in a “We buy with wide margins of
companies roughly”. profitable way. In this respect, Martín safety aimed at protecting us from
The fund has a concentrated port- explains: “We believe an excessive the possibility of making mistakes.
folio of around 20-30 stocks with growth may affect performance, and We do not buy expectations nor
a low level of rotation (below 15% we prioritise quality management businesses we do not understand,”
per year) in which Spanish stocks over size. If necessary, such he concludes.
account for over 70% of the fund’s commitment could translate into Inditex and Gestamp are among
exposure. Top 10 holdings of the soft or hard close of the fund. his favourite stocks listed in Spain. At
strategy represent 40-50% of the “In this respect, we soft-closed our a European level, car makers Porsche
portfolio. Siemens Gamesa, Inditex, Iberian fund (at €500m) and our and Renault stand as his preferred
Gestamp, and Repsol are the Spanish Micro-caps strategy (at €100m) in stocks. ■
The healthcare sector has put forward the healthcare infrastructure, for
a strong case for stable and long term “WE ARE example, hospital chains, logistics and
growth independent of economic
cycles or crises. The World Health LOOKING technology companies.”
A key part in fundamental selection
Organisation and financial analysts
alike expect this trend to continue in
BEYOND THE is the analysis of classical financial
ratios such as cashflow development,
coming decades, even as the sector TRADITIONAL leverage or sales/earnings growth, the
as a whole continues to evolve into
something much bigger than it is
HEALTHCARE managers note.
“Valuation metrics such as price/
today. INDUSTRY” earnings or EV/Ebitda play a distinct
Diversification means it is much role as well, as great companies can
Kai Brüning, apoAsset
more than just ‘big pharma’, but be poor stocks if the valuation is not
includes biotech pioneers, medical exaggerated.”
supply specialists, insurance and Lofruthe continues: “Beside the
other financial services, trade and quantitative work, we deep dive
logistics, hospital chains, infrastructure into any company’s business model
companies, software providers and and competitive environment – in
disposal companies for medical waste – both good and difficult phases.
to name just a few. invests in all healthcare sectors, such as Furthermore, we seek direct contact
Even in uncertain market phases, pharma, biotechnology, medical supply with management before we come up
healthcare profits keep growing. or services, is in particular broad based with an investment decision.
Among the reasons for this include and diversified,” says Brüning. “Our high level scientific advisory
insurance-based cost coverage and “In contrast, our equity fund apo board consists of renowned medical
the high value placed on health under Digital Health sharply concentrates on professors and doctors, who are
any personal financial circumstances. digital health. It was the first mutual actively supporting us with their
Car purchases are more likely to be fund globally with this focus. Our network.”
postponed than important therapies. balanced fund apo Medical Balance Remaining selective is important.
is the first and only fund that mixes For example, Lofruthe and Brüning
INVESTMENT UNIVERSE stocks and bonds of healthcare note that the ‘digital health’ market is
According to Kai Brüning, senior companies. relatively new and complex.
portfolio manager and Hendrik “The equity fund MEDICAL Not every new healthcare app is
Lofruthe, portfolio manager BioHealth, managed by our affiliate, based on a healthy business model and
Healthcare at apoAsset: “Our Medical Strategy, focuses on not every digital startup that enters the
healthcare investment universe is not biopharma and medical technology.” healthcare sector can cope with the
constrained to any benchmark and regulatory challenges.
hence as broad and expanding as the SELECTION PROCESS
healthcare megatrend, ranging from “We are active bottom-up stock pickers INVESTMENT HORIZON
small to large caps across the globe, and independent of benchmarks,” Brüning says: “We recommend
but only including listed companies. states Lofruthe. our fund investors a long horizon
“The merger of health and IT “We try to early identify companies of at least five years, ideally 10 or
will in part create completely new that can set new therapy standards more years. This is the best way to
competitors, business models and with innovative approaches and balance short-term volatility against
markets. Therefore, we are also looking technologies. Innovations have the best long-term rewards and fully use the
beyond the traditional healthcare chances to evade the cost pressure in potential.
industry.” the healthcare system. “Innovations need time to ripen,
“The portfolio of our flagship equity “In emerging markets, however, we especially in the digital health and
fund apo Medical Opportunities that focus more on companies that improve biotechnology industry.” ■
Entries have now closed for the THE CATEGORIES am delighted to be a judge at these
Women In Investment Awards Italy. Fund Analyst of the Year Awards. It is a great opportunity to
Finalists in each category will be Fund Manager of the Year stress the value of gender-diverse
advised in mid-July but before, the Fund Selector of the Year team and encourage company to be
nominated women will be contacted Investment Analyst of the Year more gender diversified.
by InvestmentEurope and asked to Investment Woman of the Year “Many studies show what it means
complete a questionnaire, which Mentor of the Year in term of diversity of opinions and
will then be reviewed by our panel Most Inspiring Returner quality of corporate leadership.
of judges who will be deciding the Rising Star Award Gender diversity doesn’t begin and
shortlist. Role Model of the Year end in the corporate board: companies
The awards ceremony will take place Team Leader of the Year must be actively supporting women
on 2 October at the Palazzo Parigi Hotel Unsung Hero Award throughout their careers, so they can
in Milan. Young Investment Woman of the Year Award advance into senior roles.
Nominees can be involved in roles “Showing best cases can give a
including, but not limited to: fund judges, says: “For a woman, achieving new perspective to an ‘old issue’, so I
management; wealth management; acclaim in the world of finance encourage women to participate or
investment research; financial advice; entails the defiance of deep-seated nominate their peers.”
investment analysis; marketing; sales; preconceptions that can only be Matteo Cassiani, senior portfolio
human resources; compliance; and overcome by those with real character manager, Asset Allocation, Fideuram
middle-, front- or back-office roles and expertise. This requires a great Investimenti, says: “I am truly
within the investment sector. deal of dedication, determination, and honored to be invited among the
There are 12 categories, ranging above all else, passion. components of the judging panel.
from Investment Analyst of the Year “The Women In Investment These kind of events give the right
to Unsung Hero Award or Rising Star Awards represent one of those rare evidence to the importance of a
Award. This last category aims at occasions when women, who are wider women representation in our
rewarding a woman working for the often unaccustomed to celebrating industry, in particular in front-office
industry who has made a strong impact their own successes, have the chance desks, where asset allocation, security
in a short space or time and who is to enjoy the visibility they deserve selection and risk management
likely to progress further. and showcase their value and decisions are taken.
Unsung Hero Award is open to accomplishments. “From my experience, as a portfolio
women, including those in back “I am proud to be a part of this manager and educator, I strongly
office and non-consumer facing roles, team of professionals who have been believe that a greater women
who have gone above and beyond to called upon not to judge, but rather to engagement, as well as in general
contribute to their business, support identify those of our colleagues who, a larger inclusion of diversities and
a team or encourage diversity in the because of their experiences, can serve cultures, creates the landscape for a
workplace. as sources of inspiration for all women greater value creation.” ■
who wish to take on the challenges of
EMBRACING THE the world of finance.” For full details visit the Awards
INITIATIVE Sara Silano, managing editor at website at: http://events.
Capital Group’s managing director Morningstar Italy, and also a member investmenteurope.net/
Vlasta Gregis, one of the Awards’ of the judging panel, comments: “I womenininvestment/static/home.
HERVÉ SEIGNOL
Hervé Seignol is head of asset
manager selection at Fonds de
Réserve pour les Retraites. He
invests in equity and bonds
strategies across different
geographical areas.
Seignol was previously a
senior portfolio manager at
UFG Investment Manager.
He has more than 15 years’
experience in the asset
manager selection business.
Seignol has a Masters in
Management of Financial
Instruments from Cergy-
Pontoise University, France.
Looking ahead
Hervé Seignol, head of Asset Manager Selection, at Fonds
de Réserve pour les Retraites, met with InvestmentEurope to
outline his focus for 2019 and 2020. Elisabeth Reyes reports
Hervé Seignol is the head of asset the losses recorded in 2018, according “Each of these phases requires
manager selection at Fonds de to FRR. documents to be drawn up comparing
Réserve pour les Retraites (FRR), the the applications and offers received,
administrative body of the French State RESPONSIBLE which are then presented to the
that counts assets under management INVESTING manager selection committee and the
of some €35bn. Another key aspect outlined in executive board for discussions and
FRR is responsible for managing FRR’s objectives is its approach to decisions. We prefer regulated funds.”
funds it received up to the 31 assets as a responsible investor. As Of the selection process, Seignol says
December 2010, in order to build up such, it has initiated the renewal of they seek to: “(1) assess whether the
reserves that contribute over the long active management mandates of its manager has previously managed a
term to the French pension systems. portfolio by increasing its integration portfolio in line with the objectives; (2)
The FRR’s investment policy is to of ESG criteria, Seignol explains. verify that they have the character and
optimise returns on the investments it technical means to do so; (3) that they
makes, as conservatively as possible. Its display high-quality performance/
policy must be consistent with those “OUR PROCESS risks ratios; and (4) that their risk and
collective values that are designed to
promote balanced economic, social
IS REGULARLY operational management standards are
fit for purpose.
and environmental development. ADAPTED TO THE “Our selection methods are very
In 2018, the FRR achieved a open regarding manager types. This
performance of -5.16%, which it NEEDS OF EACH means we can be swayed by different
puts down to the steep fall in equity
markets in the last quarter of the year
TENDER. THUS, management styles, by small-scale
specialised structures or by larger
– particularly in December. However, THE ANALYSIS OF companies. Our process is regularly
since the setup of its ‘ALM model’ at
the end of 2010, 2018 remains the only
MANAGEMENT BIAS adapted to the needs of each tender.
Thus, the analysis of management bias
year so far that has registered negative CARRIES MORE carries more weight.”
performance.
Also to note is that this track record WEIGHT” DIVERSIFICATION
does not per se bring into question the OF RISK
robustness of the FRR’s approach to When it comes to risk control in
asset allocation, Seignol suggests. To reflect its commitment to the selection research, Seignol attaches
Since 1 January 2011, the portfolio’s ecological and energy transition, the significant importance to the
annualised performance has reached FRR has decided to exclude companies diversification of risk in a portfolio;
4.24% net of all expenses, a level whose thermal coal mining or how that risk is taken into account at
higher than the cost of the public debt coal-fired electricity, heat or steam different stages of the process and the
carried by the CADES – the Social Debt generation business exceeds 10% of use of analytical tools to keep track of
Amortization Fund – which runs at their revenue – the previous threshold these portfolio risks.
1.15 %. was 20%. “The stability of the teams and
Even after the negative performance “Our process of selecting a manager management structures is crucial.”
of 2018, the cumulative net value of the via a tender is made up of three main The FRR ‘s 2019 selection projects
FRR compared to the average cost of steps,” says Seignol. “(1) A reduction of are linked to US equities, Japanese
CADES’ debt reached €9.3bn over the the pool using quantitative criteria; (2) equities, overlay management and
past eight years. a qualitative analysis of the applicants impact investing. Regarding 2020,
It should be noted that the markets’ selected in the previous step; and (3) the research will mainly focus on the
recovery since the beginning of 2019 site visit, which is the final phase of selection of managers of Euro and US
has enabled the resorption of nearly all selection. credit. ■
Convertible bond fund managers note that uncertainty in markets can be their friend, but
there is still a quality requirement to gauge before investing. Jonathan Boyd reports
are already highly selective, but the potential is there, so the US, half again of that in Europe, half again of that in
we do not have any issue finding new ideas or gains. For Japan, and half again in Asia – roughly $250bn, $125bn,
example, Asia performed strongly in 2018, driven by the $60bn, and so on; this tends to hold trough through
Chinese property sector hungry for capital, but a lot of cycles.
these names revealed to be weak in terms of credit. We “In terms of investors, it was an asset class attracted
tend to stay away from these sorts of names. One pocket hedge funds prior to 2008. Since then it has been much
of great opportunities remains within the technological more institutional, with roughly two-thirds to three-
space, especially in the US.” quarters constituting institutional investors.
Looking forward he adds: “We expect to see some “US convertibles have outperformed European
outperformance on a relative basis versus traditional convertibles, over the year or so as growth has generally
asset classes. Uncertainty creates volatility, and outperformed value. The US has seen a significant
historically convertibles are a long play on volatility, so number of technology and in particular SaaS companies
we would expect the asset class to benefit from a higher issuing convertibles. With the Nasdaq and generally
volatility environment. growth technology stocks showing strong momentum,
“We believe that convertibles are today very relevant convertible bonds have been a favoured asset class for
to investors, because if an equity investor is uncertain companies in that sector to raise capital.
about the next 2-3 years against the macro backdrop, Asif adds: “Most of these issuers are very disruptive
convertibles offer a way to maintain exposure with in their segments, and are growing at exceptional rates,
roughly half the volatility of equity markets. Ditto, fixed with high equity valuations, with arguably soft bond
income investors can boost return without taking on floors (fixed income element).
much more risk – provided they remain very selective on “The relative lack of growth in Europe compared to the
credit quality. US and the significant number of technology companies
“The embedded convexity means an improved issuing convertibles in the US has meant the US market
efficient frontier against traditional equity and bond convertible market has outperformed Europe.
balanced portfolios.”
IMPORTANCE OF QUALITY
CHALLENGES Asif stresses that quality of the credit is paramount, as “we
Zwick say volatility is not something that would keep her have to be comfortable that the bond floor – fixed income
up at night as “convertibles are a good instrument to play element of the convertible – is real or solid, we have to be
volatile markets. The worst case scenario would be if we sure that come the maturity of the bond, the liability will
faced a serious recession with negative equity markets. be paid by the company, either through refinancing or
“But markets are still quite positive. They are looking through free cashflow generation. We gain confidence by
for a new equilibrium in respect of monetary policy and thorough bottom up credit analysis.
slower growth, but they are not negative.” “Secondly, we want to ensure there is potential upside
And Haycock mentions that there is scope for the from an equity perspective.
overall size of the convertibles market to increase in the “That can depend on a lot of different factors, for
medium to long term, partly because the market is a bit example, valuation of the company, management
smaller today than 10-15 years ago. or how able the company is to execute its plans or it
“There is a lot of interest coming through from may be a turnaround story. But first and foremost it is
investors, but we are not necessarily seeing this interest about ensuring the credit is strong to protect against
translating into buying orders. There are net inflows the downside. Our fund has had no defaults since the
at the moment, but perhaps not at the scale we feel it strategy started.” ■
should be.”
“For example, in the insurance sector, convertibles fit
well, so we are surprised there is not stronger demand
“WE HAVE NOT SEEN A HUGE
regarding solvency capital requirements.” NUMBER OF UNUSUAL
He continues: “However, were there suddenly to be
inflows greater than the market expected, and issuers STRUCTURES, BUT THEY
needed to respond, then equity neutral convertibles are
a good fit.
HAVE GENERATED LARGE
“Regarding manging supply and demand, that’s where VOLUMES OF ISSUANCE”
hedge funds come in; they can scale up or down leverage Martin Haycock, Fisch Asset Management
and involvement in the asset class depending on what
they see happening to supply/demand.”
Makeem Asif, senior Convertible Bond analyst in
the Multi-Asset team at Jupiter, working on the Jupiter
Global Convertibles fund, sees a liquid market in
convertibles, of “about $500bn, of which about half is in
Over 15,000 people from the world of finance gathered in Milan to discuss the issue of
sustainability and look at the trends that are making an impact in social and environmental
finance on the 2019 edition of Salone del Risparmio. Eugenia Jiménez reports
The artistic
approach
Artisan Partners only business is asset
management and everything is designed to create
an investment culture that allows their talent to
thrive. Ridhima Sharma reports
Founded in 1994, Artisan Partners was sourced from clients outside the “Most of the non-US assets are
has always aimed to produce US. “This represents strong growth managed in segregated accounts,
differentiated investment outcomes, since 2010, when we established our reflecting company’s Institutional-
with a focus on active, high value- first distribution office outside the US, biased client list, but it also includes
added investment strategies. They in London,” Marks says. over $3.9bn in its Ucits Fund complex
provide their investment teams with domiciled in Ireland and additional
ample resources and support, without BUSINESS SPLIT assets in Cayman vehicles. Whilst we
imposing a centralised research do not disclose Europe-specific assets,
function. the majority of our non-US success
Andrew Marks, managing director has been driven by clients based in
and head of EMEA distribution Artisan Europe.”
Institutional
Partners, says: “The name Artisan is 66%
At Artisan Partners, the only
a very deliberate choice. It is rooted business is asset management and
in the original belief of our founders everything they do is designed to create
that investing with discipline and an investment culture that allows their
Other Intermediaries
intelligence is an art. Andy and Carlene talent to thrive.
5% 29%
Ziegler, the husband and wife duo
that founded our business, thought PRODUCT DEVELOPMENT
of portfolio managers as artisans Artisan’s approach to finding new
exercising their craft. teams and launching new products for
“In spite of the many differences in As at 31 March 2019 Source Artisan Partners Team existing teams is organic and driven by
investment philosophy, process and the underlying investment talent.
personnel between our nine teams, Marks adds: “We do not acquire
they are all united in the belief that ASSET CLASSES investment teams and existing
skilled active management can deliver 35 businesses through M&A. Investment
$bn
positive outcomes for investors and staff join our firm as partners to
for society. The types of strategies we 30 build franchises from the ground up,
manage across all asset classes are at 25 hand-picking a dedicated analyst
the most active end of the spectrum, team, choosing their own office space,
with little or no regard to benchmarks. 20 and designing/launching products
The shared purpose and commitment 15 with support from our centralised
to higher value-added investing have competency teams (human capital,
allowed us to keep a single, integrated 10 legal, distribution, IT, etc.).
brand over time,” Marks continues. 5 “Furthermore, we never try to time
hiring or product launches with market
0
GROWTH Growth Global Intl Global US Credit Dev. Thematic Sust. demand cycles: when seeking to
As of 31 March 2019, Artisan Partners’ equity value value value world EM identify the best talent in a given asset
global AuM was $107.8bn. Of this, 21% As at 31 March 2019 Source Artisan Partners Team class, the creation of an artificial time
Munich
Meetings included:
• Dirk Söhnholz – managing director – Diversifikator;
•
Stuttgart
Michael Vieker and Günter
Stibbe – Portfolio Management and Customer Support
respectively – Avana Invest;
• Thomas Portig – portfolio manager – Smart-Invest; Alexandra Laue (pictured left),
• Petra Zamagna – managing director – Ambitus GmbH
Asset Consult;
Fund Selector relationship man-
ager, DACH visited Stuttgart on 5
• Stephan Hauska – director, leader Asset Management
Munich – Castell-Bank Fürstlich Castell´sche Bank;
April.
Meetings included:
• Michael Ausfelder – associate director – VZ
VermögensZentrum;
•
Michael Heckel – senior fund
manager – Tresides AM;
• Andreas Bischof – managing partner – Novafunds; and •
Carsten Riester – head of Fund of
• Thomas Wiegelmann – managing director – BLUE Funds – W&W Asset Management;
Asset Management. • Thomas Metzger – head of Asset Management –
Bankhaus Bauer; and
Amsterdam
InvestmentEurope’s events programme for 2019 can be
viewed on p36 of this issue.
Staff will be visiting the cities mentioned ahead
of these events to highlight to locally based fund Patrik Engström, head of Fund Selector Relations, Nordics,
selectors the latest information on particpating visited Amsterdam and other locations in the Netherlands
sponsor groups, speakers and topics. on Friday 5 April
A full calendar of events for 2019 is available Meetings included:
at: https://opendoormedia.turtl.co/story/
iecalendar2019.
• Rishma Moennasing – lead Funds and Sustainability –
Rabobank;
• Conrad-Jan Crol – director – Amstel Capital;
•Jan-Willem
Amro; and
Meulenkamp – fund specialist – ABN •Paulo Monteiro – director – Gestão de Activos
Bancoinvest;
•Duco Slob – senior portfolio manager Sustainable •Rui
Elisabete Pereira – product manager – Novobanco;
Investments – InsingerGilissen. •Bernardo
Castro Pacheco – head of Fund Selection – Best Bank;
•Banco Privado
Silveira Godinho – head of Capital Markets –
Lisbon
Atlântico;
•Popular Gestão de– Activos;
Paulo Gonçalves head of Financial Assets team –
Multiple insights
On the 20 March InvestmentEurope
was back at the Ritz Hotel in Paris to
host the Frabelux Forum 2019.
Consisting of four asset
management groups and two
keynote speakers, the event
addressed topics such as the
A range of investment topics and insight from France’s
millennial generation impact on local association for fund selectors were outlined at
businesses, property opportunities,
social investment, fund selector
the recent Frabelux Forum, as Elisabeth Reyes reports
behavioural biases, and the
challenges presented by an ageing
population on societies and consumption patterns from goods currently trade at a discount to
economies. to experiences. Life is more about private real estate values.
travelling than owning a house, is “Today’s 10.7% average discount
WHY DEMOGRAPHICS the mantra. on their average long-term price to
MATTER Also, according to him, millennials net asset value is the widest since
Martyn Hole, investment director are driving companies to be more the global financial crisis. This is due
at Capital Group, made the first socially aware. to fears that emerged late last year,
presentation, and dived straight Hole explained how the Capital around potential interest rates rise
into the millennial generation issue, Group New Perspective Fund is and declining earnings growth,” he
sharing valuable insight into this seeking to identify multinational noted.
influential demographic group. companies that have been driving In contrast, Hedger explained that
He put forward that millennials and benefiting from global more recently, bond market yields
want to achieve a much better work/ secular trends such as changing indicate interest rates are likely
home life balance. demographics. to remain lower for an extended
“They require a lot of period, thus underpinning real estate
encouragement and don’t stay in the OPPORTUNITIES IN THE valuations for most sectors.
same job for long,” Hole said. PROPERTY SECTOR A valuation gap this wide is an
He reminded the audience that Simon Hedger, managing director opportunity for investors to own
millenials are the first generation to and global portfolio manager of Reits at fairly inexpensive relative
grow up in a tech world. According property securities at Principal prices in current market conditions.
to his research, millennials spent on Global Investors, outlined the firm’s There are ample valuation
average 53 hours per week online. approach to property investments, opportunities within the sector, and
Some 72% use a financial focusing on valuation opportunities it has not gone unnoticed by Reits
institution’s mobile app to make a within the sector. and other major institutional real
purchase, pay a bill, or send/receive According to him, despite superior estate investors.
money: this presents fresh challenges liquidity, niche high-growth sectors, Reit mergers and acquisitions and
for financial firms. and access to public market capital, privatisation activity has increased
He also spoke about the shift in real estate investment trusts (Reits) recently: these institutions are quick
to capitalise on undervalued real Population fund aims to benefit from Their goal is to promote and
estate in the public market. this demographic shift, by investing safeguard the specialisms of this
Hedger discussed how global in European companies whose profession by informing, assisting
property markets are very localised. business models are focused on the and contributing to the training of its
He therefore believes that the theme – which he expects will grow members.
bottom-up approach is key to the faster than the overall economy in Launched in 2018, the association
security selection process. coming years. already has nearly 50 members.
Vincelot-Guiet highlighted
PERFORMANCE WITH SPOTLIGHT ON research and views into the degree to
ESG AND SOCIAL IMPACT BEHAVIOURAL BIASES which portfolio managers and fund
Guy Wagner, managing director Philippe Sarica (president) selectors are subject to bias.
of BLI – Banque de Luxembourg and Sandrine Vincelot-Guiet She talked about emotions such
Investments, and Nicolas Crochet, (vice-president) of the French as fear, stress, frustration, anger,
co-CEO of Funds For Good, entity Société Française des impatience, shame and regret
explained how their collaboration Sélectionneurs de Fonds otherwise as well as excitation, emulation,
revamped the BL Global Flexible known as SF2, discussed how competition, singulation, narcissism
fund into an ESG and social impact, their association brings together and ambition, all of which can lead
generating Ucits vehicle. professionals who evaluate the to behavioural biases and have a
They collectively highlighted the performance of fund managers and detrimental effect on a manager’s
fact that their collaboration creates fund selectors. efficiency. ■
on average 500 new jobs every year.
In particular, it helps people
that are out of work to become
Speakers
entrepreneurs.
During this session they presented
the case study of an Ecuadorian
entrepreneur who was seeking Olivier Cassé Joined Generali previously at JP Morgan Asset
micro-financing to build a chocolate Investments in 2016, managing Management.
business. two SRI funds, GIS SRI
Wagner shared his analysis of European Equity and GIS SRI Philippe Sarica is president
gold performance during periods of Ageing Population. With 18 of the French Society of Fund
market stress. years in asset management Selectors and president of
According to his research, aside he was previously at Société PHS Finance with 35 years’
from the Asia crisis in 1997 and the Générale in private banking, experience in markets
2013 surge in US Treasury yields – then Amundi Group. including as a consultant and
Taper Tantrum – gold performance teacher in emotional and
has remained well above both the Nicolas Crochet is a founder/ behavioural finance.
S&P 500 index and US Treasuries managing partner of Funds For
since the 1987 crash. Good, combining social impact Sandrine Vincelot-Guiet is vice
and financial returns. He has president of the French Society
AN AGEING worked at Banque Belgolaise, of Fund Selectors. She joined
POPULATION Prudential Securities and State VEGA Investment Managers
Generali Investments’ senior SRI Street Global Advisors. as Multimanagement director,
equity fund manager Olivier Cassé Fund Selection director and
summarised the current context of Simon Hedger is global ESG manager, following earlier
an ageing population, and outlined portfolio manager for roles at VEGA Finance.
the three step process he has applied Principal Real Estate Investors.
to the SRI Ageing Population Responsible for EMEA real Guy Wagner was appointed
strategy. estate in Reits and listed real managing director of BLI –
According to his study the world’s estate securities he has some 40 Banque de Luxembourg
population aged 60+ is expected to years’ experience as an analyst Investments in 2005. An
more than double by 2045, reaching and portfolio manager. economics graduate from
almost 2 billion. Université Libre de Bruxelles.
Cassé argued that population Martyn Hole is Equity He joined Banque de
ageing constitutes a major challenge investment director at Luxembourg in 1986 as head
for societies and economies. Capital Group. With 37 years’ of financial analysis and asset
He explained how the Generali experience, including 16 management departments.
Investments Sicav SRI Ageing years at Capital Group, he was
EVENTS
Approaching events
InvestmentEurope’s events programme spreads across
both southern and northern Europe with events in
Barcelona, Rome and Oslo in May and June
NEXT EVENTS flexible equity, systematic approaches Offering two days of boardroom
to commodities, and further insight sessions, networking, a panel
into how ESG factors can leverage discussion and wine tasting for
additional return from investment delegates, this event is targeting
themes. some 40 fund selectors based in Italy,
Presenting the keynote on the with a bias to those active in the
second day will be Javier Santiso, CEO institutional space.
& founder of Mundi Ventures. A panel Groups taking part include 1167
will consider aspects of alternative Capital, Carmignac, Edmond de
investments on the first day. Rothschild Asset Management, La
BARCELONA, 30-31 MAY To register your interest in attending, Financière de L’Echiquier, Finisterre
The Iberian Summit Barcelona 2019 please contact Angela Oroz at angela. Capital, Principal Global Investors,
takes place 30-31 May at the Hotel oroz@odmpublishing.com or RWC Partners and Sycomore AM .
SOFIA in the capital of Catalonia, and telephone +44 (0) 20 3727 9920. Collectively they will address areas
will target some 40 fund selectors such as how to weather volatility in
based in Spain, Portugal and Andorra fixed income markets globally, the
for two days of boardroom sessions, role of convertible bonds, and the
panel discussions and networking with relationship between ESG scores and
peers. performance.
Groups taking part include Overseeing the panel on the second
Artisan Partners, BMO Global Asset day of the event will be moderator
Management, EURIZON, Gesiuris Vittorio Eboli, financial journalist at
Asset Management, MIRABAUD ROME, 6-7 JUNE Sky TG24.
Asset Management, Polar Capital, To register your interest in
State Street Global Investors and InvestmentEurope will host its first attending, contact Luisa de Vita at
WisdomTree; collectively they will event in Rome on 6-7 June at the luisa.devita@odmpublishing.com or
consider asset classes including Aldrovandi Villa Borghese. telephone +44 (0) 20 3727 9932.
EVENTS
LOOKING AHEAD
OSLO, 5 JUNE
Marking a return to Norway’s capital,
the Oslo Roundtable taking place on 5
June will encompass some 20 locally
based fund selectors, with a format
that includes quickfire presentations
by participating groups as well as a
networking opportunity both with
peers and speakers present.
EVENTS
EVENTS
EVENTS CALENDAR
CALENDAR 2019
2016
30-31 May Barcelona Iberian Summit
InvestmentEurope returns to Barcelona
for an Iberian Summit attracting delegates
from Spain, Portugal and Andorra, who
will experience a programme of boardroom
sessions, panel discussions, keynote and
networking
72 Countries where
members of
SharingAlpha are located
EDITORIAL BOARD
Ideas generation
Would you
like to join
Investment-
Europe’s
Editorial Board
and share
your views as
a professional EMMANUEL FERRY THOMAS ROMIG JON BECKETT
fund buyer/
investor? Chief Investment Officer Managing Director Author of New Fund Order
For further Banque Pâris Bertrand Head of Multi Asset Portfolio London
details, contact: Geneva Management http://jbbeckett.simpl.com/get_the_
jonathan. www.parisbertrand.com Assenagon book.html
boyd@ Frankfurt
odmpublishing.
Is a market environment If you could pick one new
www.assenagon.com
com emerging this year that could technology to help with
favour value managers? Do you require any selection activities, what
The value style in the United States
funds you select to be would it be?
is experiencing its worst decade ever ‘sustainable’? New Fund Selectors need more tools
recorded. The Russell 1000 Value When selecting ‘sustainable’ funds, to monitor both Mifid II/Priips cost
index has underperformed the Rus- we believe it is important to conduct transparency of their underlying
sell 1000 Growth index by 115% over an in-depth analysis of the whole managers better, and also robust ESG
the past decade. investment process instead of just and environmental risk data for fund
This underperformance has been looking at the various seals in the and aggregate positions to satisfy
almost uninterrupted except for two glossy marketing documents of a their responsible investing frame-
brief episodes of recovery, in 2013 fund. works.
and 2016. This is advisable, because different Whilst many sources already
There is now too much compla- investment styles and approaches exist, few are aimed at the needs
cency on past trends and valuation often cannot be covered well by a of asset owners and fund selectors.
gaps are extreme. The value theme standardised rating procedure that This means there is huge variance
offers a unique mix of price/profit- results in a simple score or grade. So between fund managers making
ability/growth around three regions, a truly ‘sustainable’ fund integrates comparisons very challenging.
and which are about to be realised. environmental – but also social and Another area would be a bench-
In the US, the Fed’s dovish pivot governance – aspects directly in its mark monitoring tool to capture
is a positive catalyst for a style rota- investment process and tailors the benchmark errors/changes. This
tion. In Europe, a decrease of political used criteria to its strategy and asset would go well beyond current attri-
risk premium should favor a value class. bution and active share tools.
catchup, and lastly a macroeconomic- Lastly an automated platform to
financial context stabilisation in the allow quicker proxy voting instruc-
EM space is supporting a value tilt. tions, for asset owners, would be a
Value is a pain trade post the great step forward for ESG.
global financial crisis, but is prob-
ably the most compelling investment
approach for the next decade.
DATA
ITALY
REVIEW
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