Allianz GI Joins the One Planet Asset Managers Initiative

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Recognizing the role investors play as a catalyst to finance the transition towards a low carbon economy, Allianz Global Investors has announced that it is joining the One Planet Asset Managers (OPAM) initiative.

This project was launched in 2019 to support the members of the One Planet Sovereign Wealth Funds (OPSWF) in their implementation of the OPSWF Framework. The OPSWF Network comprises 43 of the world’s largest institutional investors with over 36 trillion dollars in assets under management and ownership.

By joining OPAM, Allianz GI commits to actively collaborate within the OPSWF Framework and to engage with other key actors, including standard setters, regulators and the broader industry to further the Framework’s objectives. The goal is to accelerate the understanding and integration of the implications of climate-related risks and opportunities within long-term investment portfolios through sharing of investment practices and expertise with the members of the OPSWF and publication of relevant research.

“Partnering with clients to tackle the most pressing sustainability issues and create a better future for all is at the heart of what we do. We are proud to be the first German investor to be joining the OPAM. We are committed to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios through the sharing of investment practices”, commented Tobias Pross, CEO.

In this sense, he pointed out that Allianz GI looks forward to contributing to the work of the One Planet Initiatives given their experience in climate finance through their “investment process, strong stewardship policy, and investment solutions that contribute positively to the alignment of an asset owner’s portfolio to a low carbon economy”.

This new commitment comes as, recognizing the urgency to tackle climate change, the firm is accelerating its sustainability drive. In fact, they announced earlier this year their commitment to supporting the climate transition via exclusions in coal production and coal-based energy production. Besides, Allianz GI is a member of the Net Zero Asset Managers initiative and supports the goal of net zero greenhouse gas emissions by 2050 or sooner. It is also an original member of the EC’s Technical Expert Group (TEG) on Sustainable Finance and co-founded the Climate Finance Leadership Initiative. 

Allfunds and Consensys Will Apply Allfunds Blockchain Technology Beyond the Fund Industry

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The Allfunds-ConsenSys partnership reaches a new milestone: ConsenSys will commercialize Quorum Subscription with Allfunds Privacy, a new commercial offering that makes it possible for enterprises to leverage the innovative privacy features developed for the Allfunds Blockchain platform.

In February 2021, both firms announced a partnership to combine ConsenSys Quorum with the power of the Allfunds Funds Industry Platform in order to radically streamline the global fund distribution industry by enabling instant, reliable, secure communication among industry actors. This new launch opens the possibility to apply the privacy enhancements beyond the original Allfunds Blockchain Fund Industry use case.

In a press release, Allfunds and Consensys have revealed that selected consulting firms, as well as technology and blockchain companies have been testing alpha versions of the solution to understand the possibilities opened up by this new privacy approach, that contributes to the continued development of the Enterprise Ethereum ecosystem.

Quorum Subscription with Allfunds Privacy is a new commercial private transaction management solution that further expands the permissioning and privacy features of the Quorum suite and provides a new privacy model. It is based on patented technology created by Allfunds Blockchain, that is from now on maintained and commercially supported by ConsenSys.

Allfunds Blockchain, the dedicated software company focused on developing solutions not only for Allfunds and its clients but for the entire fund Industry, has built a “holistic and trailblazing” blockchain platform using its patented technology to transform technologically the fund industry. The firms point out that Quorum Subscription with Allfunds Privacy solves “major concerns” about data governance in blockchain ecosystems. Allfunds Blockchain is already collaborating with main industry players around the world to be fully prepared for a non-paper-driven industry.

“We are very proud about this new milestone. The most important thing in a blockchain initiative is clearly the technology, and having a leading firm as ConsenSys commercializing our technology beyond the Fund Industry is the best example to demonstrate how robust is our value proposition. Helping to solve the main data governance challenges in blockchain networks with this new privacy approach, contributes without doubt to the continued development of the Enterprise Ethereum ecosystem”, said Rubén Nieto, Managing Director of Allfunds Blockchain.

Lastly, Madeline Murray, Product Lead at Consensys Quorum, stated that their partnership with Allfunds will further facilitate global blockchain adoption for the fund’s industry and “enrich the ecosystem” with technical innovations suitable for advanced privacy use cases. “Privacy is a core element of the ConsenSys Quorum stack and collaborating with industry stakeholders will help produce the most sophisticated blockchain architecture for our partners”, she added.

Impact Investing Market Accelerates its Expansion

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The 715 billion dollar impact-investing market is poised for rapid expansion driven by surging investor demand, government green-growth initiatives and supportive regulation, according to a recent analysis by NN Investment Partners (NN IP).

While impact investing is still a niche compared with the broader 35.3 trillion dollar sustainable-investment market, momentum has built since the adoption of the UN SDGs and the signing of the Paris Climate Agreement in 2015. However, the asset manager points out that investors need to be wary of ‘impact washing’ as the sector grows.

“From a fundamental point of view, looking at the type the companies our impact funds invest in, the outlook has never been better. There can always be cyclical headwinds, but structurally there’s tremendous growth”, says Ivo Luiten, Lead Portfolio Manager Impact Equity at NN IP, who believes there are three sectors to watch: healthcare, technology and ‘green’ industrials. 

Healthcare

The US spends about 18% of gross domestic product (nearly 4 trillion dollars a year) on healthcare. Companies that can help reduce that bill are in demand: for example, innovative high-tech medical devices can improve patient outcomes and cut treatment costs; the life-sciences segment (firms that develop and manufacture pharmaceuticals, biotechnology-based medicines and a range of other products) is also growing fast because of the increasing focus on the prevention of disease. 

The firm admits that picking winners in the drug-development space can be tough, but it highlights that many suppliers to this market, such as clinical research organisations and life-science equipment manufacturers, offer “interesting investment opportunities”.

Technology

Another sector turbo-charged by the pandemic in NN IP’s view is information technology, with digitalization accelerating around the world: “Software producers have high operating leverage and rapid revenue growth, alongside strong competitive advantages such as pricing power and a loyal customer base. They tend to have a high percentage of subscription revenues”.

Companies that service physical infrastructure also present “substantial opportunities” as governments roll out plans to spend as much as 10 trillion dollars to upgrade or replace decaying and obsolete facilities and systems, and green development plans bring long-term spending on new types of infrastructure.

The analysis points out that the cybersecurity sector is also expanding rapidly, as companies race to protect themselves against the sort of high-profile breaches that have accelerated in recent years. The shift to remote working and transition to the cloud are changing the way companies protect their digital assets, with an ongoing transition to a multi-location approach capable of covering employees who work from home. NN IP believes that this challenge requires new solutions such as the zero-trust or perimeterless security model predicated on the concept that devices shouldn’t be trusted by default, even within a corporate network

“The skyrocketing popularity of digital payment apps and decentralized finance will also create plenty of investment opportunities. Agile, disruptive payment processors are on course to create so-called closed-loop payment and loan networks (payment ecosystems that circumvent the traditional banking system and enable users to get loans that wouldn’t be possible through standard channels)”, they add.

‘Green’ industrials

The urgency behind efforts to tackle climate change is intensifying in the run-up to 2030, the target date for the UN’s 17 Sustainable Development Goals. Companies building solutions to reduce emissions and speed the transition to sustainable energy are “particularly well placed” to benefit from ongoing global policy and regulatory changes, such as China’s drive to decrease pollution and the EU’s waste and recycling initiatives. “The industrials sector is a good place to look for firms that are helping companies and consumers to shrink their carbon footprint”, the asset manager says.

In its opinion, innovative companies are also contributing to the drive for a more circular economy, which involves extending the lifecycle of products, reducing waste and reusing materials wherever possible to create further value. 

“Companies tackling the proliferation of plastics are a key area of opportunity, with new technologies such as chemical recycling being developed to complement traditional mechanical methods. Firms that are helping lower emissions and develop recycling solutions in heavy-emitting industries such as steel and cement are also making strides”, Luiten comments. In this sense, hydrogen power and carbon capture and storage are in their early stages, “but remain sectors to watch”.

Aware of impact washing

NN IP notes that impact washing (misleading marketing claims about a company’s actions or a financial product’s real-world impact) is something “to be aware of”. The related issue of how to measure impact also looms large, and more robust key performance indicators, as well as a standardized reporting framework, will be essential to addressing this issue.

According to Luiten, while these challenges remain, they also create opportunities for asset managers and banks to boost transparency on how they measure the real-world impact of their investments. “True impact funds that seize this opportunity will set themselves apart as the market develops over the next five years”, he concludes.

AXA IM Partners with XP To Launch Clean Economy Strategy in Brazil

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Brazilians have increasingly started to invest internationally. In this context, AXA Investment Managers and XP Investments have partnered to bring strategies focusing on technological disruption and sustainable investments. Their collaboration started in 2020 to launch feeder funds in Brazil and today it has grown to exceed 1 billion reals in assets.

“The strategy is at the forefront of where technological innovation and the need for a more sustainable world meet, and it will provide investors in Brazil access to a vast and diverse set of innovative business opportunities that aim to help reduce greenhouse gas emissions from the most polluting and harmful industries”, pointed out AXA IM in a press release.

In this sense, it has identified four key areas that represent the most attractive investment opportunities within the Clean Economy strategy: Low Carbon Transport, Smart Energy, Agriculture & Food and Natural Resources Preservation. “These sectors have the potential for long-term profitability and growth, while making a positive impact on the environment”, they said.

The asset manager believes that its focus on technological disruption was key to bring to Brazil a strategy focusing on companies that allowed our lives to continue during the lockdowns, including companies in fintech, the cloud, remote working, streaming, video games, artificial intelligence, etc. “Investors in Brazil have also become captivated by sustainable and socially responsible investing. We believe we are in front of a multi-decade growth opportunity in areas such as low-carbon transportation, renewable energy, and smart grids. Electric and Hydrogen fuel-cell battery technologies are very exciting. Other areas include Agri-tech, and the development of healthier and organic foods, recycling, and water preservation”, AXA IM commented.

The firm has currently more than $1 trillion in assets under management. Founded in 1997 in Paris, it has grown into a global powerhouse in asset management, with a presence in more than 20 countries and major investment centers in the US, UK, France, and Hong Kong.

Colchester Global Investors’ Funds Now Available to BNY Mellon Pershing

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Colchester has announced in a press release that its three flagship Irish UCITS funds (Colchester Global Bond Fund, Colchester Global Real Return Bond Fund and Colchester Local Markets Bond Fund) are now being offered to BNY Mellon Pershing’s clients.

The funds will be available to their introducing broker-dealers and registered investment advisors using BNY Mellon Pershing’s NetX360® platform upon the execution of an agreement with Colchester Global Investors’ Fund.

“We’re very pleased with bringing our core strategies to the Latin American and US offshore markets where we have had immense support to make this listing possible. The simplicity of our investment process and the exclusive focus on global sovereign bonds and currencies have resonated with investors in a heavily fixed income biased region”, said Global Head of Marketing and Client Services, Paul Allen.

In his view, their global sovereign bond strategies have experienced strong interest from advisers who are seeking both value and a defensive fixed income alternative for their client portfolios. “With our long track record of displaying negative correlation to risk assets including credit, we are sought out as the anchor in portfolios,” Allen explained.

He revealed that investors have also welcomed their expertise in local currency emerging markets to complement their “aggressive fixed income exposure” through the Colchester Local Markets Bond Fund USD Unhedged Accumulation Class – I Share class (ISIN IE00BQZJ1775), which has received a 5-Star Morningstar RatingTM as of 31/8/20211.

“Nuestro punto de diferencia es que solo invertimos en bonos soberanos físicos en nuestros fondos principales, lo que garantiza la liquidez en todos los mercados y una simplicidad que los clientes pueden comprender. En Colchester, nos enorgullecemos de nuestra alineación con nuestros clientes como inversores a largo plazo en lugar de realizar apuestas a corto plazo “, concluyó Allen.

Los fondos estarán disponibles de inmediato a través de varios acuerdos existentes con corredores de bolsa orientados a la gestión de patrimonios, asesores de inversión registrados (RIA) e instituciones.

Euromoney Recognizes Santander as the World’s Best Bank for Financial Inclusion

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Euromoney has recognized Santander as the world’s best bank for financial inclusion in its “Global Awards for Excellence 2021”, highlighting the group’s efforts to make financial services more accessible.

The magazine has distinguished the company’s efforts to financially empower individuals and entrepreneurs through a range of programs in Latin America, Europe and the US, as well as the work Santander has done more broadly to help people, especially the elderly, adopting digital channels through the pandemic.

“In the last three years we have financially empowered 6 million people, with the goal to empower 10 million by 2025. The impact can be life changing: from supporting entrepreneurs in setting up new businesses through our micro finance programs, to helping individuals who want to build confidence in using digital banking. This is critical to creating inclusive, sustainable growth, and I am delighted that Euromoney has recognized the efforts and innovations of our teams across the world”, said Ana Botín, Santander Group executive chairman.

Different initiatives 

In a press release, the bank has informed that its initiative Santander Finance for All seeks to support financial inclusion to help people get access to the financial system, offer them finance to set up and grow micro-businesses, and enhance their resilience through financial education. The strategy “targets the unbanked and underserved”; individuals and SMEs who face difficulties obtaining credit; have limited financial understanding; or are in financial distress. 

One of those initiatives is Superdigital, Santander’s flagship 100% digital platform for making payments in Brazil, Mexico, and Chile. It leverages the rapid growth in smartphone adoption and improved network coverage in Latin America to increase financial inclusion in the region. The platform is expanding its services to reach five million active customers by 2023 across seven markets in Latin America.

Besides, Santander has specific microfinance programs to provide financing for micro entrepreneurs. Although named differently (Tuiio in México, Prospera in Brazil, Uruguay and Colombia, and Surgir in Perú), all have same goal: to support microentrepreneurs set up and grow microbusinesses with credit and other products such as microinsurance Thanks to these initiatives, Santander has supported 1.2 million micro-entrepreneurs in Latin America, out of which 70% were women.

The magazine has also recognized that, during the pandemic, the bank has been especially vigilant in supporting elderly or vulnerable customers and ensuring they can access financial services, contacting them proactively to help build confidence in using digital banking services. It also produced simple step-by-step videos and guides for online and mobile banking.

In August, Santander was also recognised as the most innovative bank for its financial inclusion initiatives by The Banker, a Financial Times magazine.

Financial Innovation of the Year

Santander has also won the Financial Innovation of the Year award for its role as joint lead manager advising European Investment Bank in the first-ever digital bond on a public blockchain multi-leader led. It was a 100 million euros and 2-year maturity bond, placed with key market institutional investors.

The transaction used Ethereum, a public blockchain protocol, and it was a milestone for Santander’s CIB Digital Solutions Group (DSG). Santander CIB created the unit at the beginning of 2021 to partner with global coverage and product teams to provide comprehensive support in the digital acceleration of customer’s business. It also produces added-value digital products and financing structures to help Santander’s clients in the digital acceleration of their business.

Euromoney magazine has been a leading publication in international finance for 50 years. Its Awards for Excellence were established in 1992 and are the global benchmark for the banking industry.

Finance Remains One of the Most Attractive Career Choices among Youngsters

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CFA Institute, the global association of investment professionals, has recently released the results from a survey it conducted on the career outlook of more than 15,000 current university students and recent graduates aged 18-25 from 15 markets. Globally, 58% of respondents still feel confident about their future career prospects in the wake of the COVID-19 pandemic.

“Traditionally stable fields, such as finance, remain attractive for graduates navigating these uncertain times”, the report points out. In fact, respondents across all 15 markets ranked this sector as one of the top five most valuable majors for finding a career. Overall, graduates felt that medicine/science was most stable and attractive, followed by healthcare and then education.

“Students and recent graduates are more flexible and confident about their prospects than ever. The pandemic forced many grads to reassess their expected career paths, and they have displayed remarkable resilience despite the circumstances. It is now incumbent on companies to adapt to the new realities, such as hybrid workplaces, in order to attract and retain the young talent we need to help lead us out of the pandemic”, said Margaret Franklin, CFA, President and CEO at CFA Institute.

She finds “encouraging” to see that many graduates still view finance as a stable and attractive career path; however, they currently don’t see the industry as making a positive social impact. “This issue is only going to increase in importance, and industry leaders need to make sure we are on the front foot in educating students about the positive impact an investment career can have for people and our planet,” Franklin concluded.

The survey shows that a majority of graduates believe their future career will be as good or better than their parents’ generation, despite the pandemic. Findings showed that those studying accounting and finance were particularly confident, with 80% believing their prospects are as good or better than their parents’ generation, compared to three quarters (75%) of respondents overall.

Skills and insecurities

Another primary concern for students is developing work-related skills during degree programs and after graduating. Those surveyed shared personal insecurities about this, with a quarter of respondents saying they feel underqualified for the job they want, and 22% saying they do not feel ready for the working world.

When approaching the current complex job market, students and graduates see value in further education. Nearly nine in 10 respondents feel that upskilling and post-graduate qualifications are important in the current job market, and 57% believe postgraduate qualifications/professional certification will give them an edge when looking for a job.

Working in an industry that makes a positive societal and environmental contribution ranks very important to recent graduates, with nearly nine in 10 respondents saying it’s an important part of their career choice. For CFA Institute, of concern is that only 8% of respondents consider a career in investment management as one in which they could make a positive environmental and societal impact. This finding shows that, to retain talent, the sector must do more to educate students around the positive impact they could have in an investment industry career. 

“Graduates may be unaware of the remarkable global trend towards environmental, social and governance (ESG) investing and the career opportunities a specialism in sustainability and ESG could offer them in the investment industry. We need to show them that investment careers can be rewarding well beyond the traditional attraction of higher salaries,” commented Peter Watkins, who leads the University Affiliation Program at CFA Institute in Europe, Middle East and Africa.

Aegon AM Expands Its Responsible Investment Team with Three New Specialists

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Aegon Asset Management has announced that Andy Woods, Curtis Zappala and Jamie McAloon will be joining its Responsible Investment team, bringing the number of specialists in this division to 17.

Based in the UK, Andy Woods arrives as a responsible investment manager, supporting the Equities and Multi-Asset investment platforms. His primary responsibility will be the voting activities and related engagements with companies within Aegon AM’s portfolios. Previously, he headed up the Institutional Voting Information Service of the Association of British Insurers.

The firm has also appointed Curtis Zappala as a responsible investment associate. Based in the United States, his focus will be on ESG integration and engagement, supporting the fixed income investment platform. Prior to his new role, Zappala was a member of the sustainability team at United Parcel Service (UPS). He has also held various sustainable-related positions at SunShare and Growth International Volunteer Excursions. 

Finally, Jamie McAloon joins as a responsible investment associate, supporting the Equities and Multi-Asset investment platforms. Also based in UK, McAloon will be primarily responsible for supporting the sustainable range of products with analysis of existing and potential holdings, according to Aegon AM’s sustainability research framework. He joins the business from Abrdn, where he was a Private Equity Finance Analyst.

“We have built a comprehensive responsible investment approach, with a 30-year history of investing in this area. The three new appointments allow us to continue our work, broadening our expertise, knowledge and skills base. I’d like to welcome Curtis, Andy and Jamie to the team and look forward to the fresh perspective and enthusiasm they will bring”, commented, Brunno Maradei, head of responsible investment at Aegon AM.

AllianceBernstein Underlines EMEA Ambition with Hires of Honor Solomon and Mike Thompson

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AllianceBernstein (AB) has strengthened its EMEA product and client leadership with the appointment of two high-profile industry figures in London. In a press release, the firm revealed that Honor Solomon will join the firm as Head of Retail EMEA and Mike Thompson will lead AB’s global Fixed Income business development strategy.

In her role, Solomon will oversee strategy, management and distribution for AB’s fast-growing EMEA retail business, and will be charged with building on the considerable growth of the retail offering across the region in the last two years. In this sense, the firm has seen the AUM in its EMEA retail business increase by 47% since the start of 2019 – including strong momentum and inflows into its UK-based OEIC range since its launch in March of last year. She will join the firm in Q1 2022, and will report to Onur Erzan, Head of Global Client Group.

Solomon joins from Legal & General Investment Management (LGIM), where she spent seven years as Head of Retail Distribution, helping to build the firm’s retail offering into one of the UK’s largest. Prior to this, she led BlackRock’s London Discretionary Team, with responsibility for the firm’s relationships with banks and intermediaries. She began her career with Merrill Lynch, where she spent four years in its investment banking division across Paris, New York and London

Meanwhile, Thompson will assume the role of Global Head of Fixed Income Business Development & Strategy, and will be responsible for driving growth and brand-building efforts for AB’s high-performing fixed income range worldwide. He joins from ICG, a leading UK-based alternative asset manager, where he was global head of the Financial Institutions Group and European Head of Marketing and Client Relations.

Prior to ICG, Thompson had a 15-year career at PIMCO, where he was head of Asia ex-Japan and previously head of third-party distribution in Europe. His prior experience also includes large fixed-income managers Western Asset Management and Franklin Templeton. Thompson will join AB in December.

“Bringing Honor and Mike aboard is a clear signal of the ambitions we have for both our EMEA business and our global fixed income franchise, and our intent to capitalize on the growth we have seen in both over the last few years”, said Onur Erzan.

In his view, to be able to attract talent “of their calibre” is confirmation of AB’s status as a brand of choice for both clients and leading industry talent. “We are delighted to welcome them both to the firm, and we are confident that they will help to lift our retail and fixed income franchises to new levels”, he concluded.

First Signs of Moderation in Global Economic Growth

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The first signs of a moderation in global economic growth are on the horizon. According to the latest market report by BLI – Banque de Luxembourg Investments, the moderation in activity seems to be more the result of the ongoing disruptions in supply chains than any major weakening of demand.

“Although most activity indicators are holding up, they appear to be starting to drop back from the very high levels of previous months. In the United States, for example, the manufacturing activity index fell for the second consecutive month after 15 months in a row of almost uninterrupted growth”, points out Guy Wagner, Chief Investment Officer and managing director of the asset management company. Besides, in services, the activity index was also down slightly due to the rise in coronavirus infections, although, in his view, “this should prove temporary.”

The “Highlights” report shows that trends appear similar in Europe, with activity remaining robust but possibly at a turning point.

Moderation in China continues

In China, the pace of growth has continued to moderate in recent months. According to BLI, this is due to the simultaneous effect of strict restrictions to curb the epidemic, tighter regulatory measures in almost all economic sectors, a shortage of electricity, and the financial difficulties of China Evergrande, the country’s second biggest property developer. In Japan, exports continue to be the most dynamic segment, as yet showing no signs of weakening.

Upcoming reduction in asset purchases

The FOMC (the Federal Reserve’s monetary policy committee) left its monetary policy unchanged at its September meeting. Nevertheless, Fed Chair Jerome Powell signaled that it would start tapering asset purchases, from the next meeting in November through to mid-2022. The report reminds that when it comes to the future level of interest rates, Powell reiterated that the end of asset purchases did not mean a simultaneous rise. “Opinion in the FOMC seems to be divided on this subject since half its members are expecting a first interest rate hike in 2022″, it adds.

In Europe, in view of the economic improvement and the surge in prices, the ECB announced a slight readjustment of asset purchases under the pandemic emergency purchase program to a level slightly below that of the previous two quarters. At the December meeting, the monetary authorities expect to give more details on the monetary policy outlook for 2022.

More volatility in equity markets 

Lastly, BLI highlights that having risen almost every month since the beginning of the year, equity markets were more volatile in September. “Uncertainty surrounding the financial difficulties of property developer China Evergrande and the rise in long-term interest rates weighed on share prices. In consequence, the major indexes in the United States, Europe, and the MSCI Emerging Markets recorded losses“, says Wagner.

Meanwhile, the Topix in Japan was alone in rising, partially making up for the accumulated lag of previous months. “In terms of sectors, energy stocks stood out with a sharp increase in their share price on the back of rising oil and gas prices”, concludes the Luxembourgish economist.