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Excellence in Equity We speak to Hrefna Ă–. SigfinnsdĂłttir, Managing Director of Markets at Landsbankinn about the full range of financial services it offers in its domestic market of Iceland.

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The Trump Effect We take a look at what effects the new president elect might have, from markets around the world to curencies and bonds.

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Editor's Letter Welcome to the November edition of Investor Review, which continues to feature a remarkable variety of insightful and must-read sections, including financial planning, alternative investments and exchange traded funds. In recent comment, the introduction of compulsory flexible working hours would open the floodgates to more women working in the UK financial services industry, according to Sturgeon Ventures, the leading regulatory ‘incubator’ or ‘umbrella’ firm that submitted its four pledges to HM Treasury’s Women in Finance Charter in the release by the Government. In this edition, we also learn that adding leverage to an alternative investment fund does not necessarily increase the risk, according to a new study by the Alternative Investment Management Association (AIMA) and the CAIA Association. In other noteworthy news, WisdomTree, the exchange-traded fund (ETF) and exchange traded product sponsor on 8th November announced the listing of a GBP hedged accumulating share class for the WisdomTree US Equity Income UCITS ETF on the London Stock Exchange. This new share class combines the benefits of WisdomTree’s unique dividend weighting methodology applied to high yielding US equities and the management of currency risk through a monthly currency hedge. I hope you enjoy reading this month’s edition, which yet again incorporates a diverse range of global news and insightful comment from across the institutional investment industry.

Jonathan Miles, Editor Jonathan.Miles@ai-globalmedia.com

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Contents News Pages 4-9. Asset Management A Full Range of Financial Services Page 10. Change in the World Order Page 11. Alternative Investment Addressing the Challenge Page 12. Adding Leverage to a Fund Does Not Always Increase Risk Page 13. Individual Savings Account Abundance Launches UK’s First Green Energy ISA Page 14. FCA Publishes Rules for the Sale of the Lifetime ISA Page 15. Financial Planning Current Pensioners Have Managed to Secure Unprecedented Leisure Time but Fail to Enjoy the Fruits of Their Labour Page 16. Planning Ahead for Bereavement Page 19. Bonds Is It All over for Bonds? Page 20. Trump Effect on Currencies & Bonds Page 21. Exchange Traded Funds Where Is Earnings Growth in the Eurozone? Page 22. WisdomTree Launches GBP Hedged Share Class of Its US Equity Income UCITS ETF Page 24. Award Winners Allied Wallet - Fund Elite Awards 2016 Page 26. Runestone Capital - Asset Manager Awards 2016 Page 28. Standish Mellon Asset Management - Asset Manager Awards 2016 Page 29. Sancus Capital Management - Institutional Investor Awards Page 30. Martin Place Securities - Institutional Investor Awards Page 31. Aviva Investors - Institutional Investor Awards Page 32. Cambridge Systems Associates Limited - Institutional Investor Awards Page 34. Winners List Page 35

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investorReview News

Investors Can 'Seriously Build Wealth' in This Wave of AntiGlobalisation Investors should not “obsess about the wave of anti-globalisation” projected by many politicians across the western world, affirms the boss of one of the world’s largest independent financial advisory organisations. The bold, somewhat contrarian, message from Nigel Green, the founder and chief executive of deVere Group, comes after the surprise results in both the U.S. presidential elections and the UK’s referendum to leave the EU.

considerable ground. Could she win the presidential election on 7 May next year? She could be up against Nicolas Sarkozy. With Sarkozy often perceived as a controversial Establishment figure with a lot of baggage, this would draw inevitable parallels with the Trump vs Clinton battle.”

Mr. Green comments, “populism is an increasingly important force in global politics. Understandably, people are worrying about their jobs, their wages, and stagnating economic growth. As a result, they are seeking alternatives on the more radical left and the more radical right of the political spectrum. This phenomenon is evidenced by two high profiles populists – Boris Johnson who successfully led the Brexit campaign and Donald Trump, the new U.S. president-elect - having won the two key popular votes in the western world of 2016.

He continues, “despite the increasing abundance of anti-globalisation rhetoric, the tough policy talk from the politicians may fail to materialise to the extent that many observers are expecting and/or fearing. Their more extreme approaches are likely give way, to some extent at least, to pragmatism and geopolitical and economic realities. After all, the world is becoming ever smaller, we’re all more interdependent, and globalisation is happening whether we like it or not.

“Elsewhere, in Europe, Marine Le Pen, leader of the far-right National Front party, is gaining

He adds, “however, that said, there is indeed a ground swell of anger within huge swathes of the electorate in many countries and sentiments are changing. This is being reflected in what

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we’re seeing now across politics in the West – and, of course, politicians will jump on this with their policies. As such, there will be winners and losers in this new shaken-up era. “For instance in America, should Trump hold true to his election pledges, the banking sector is likely to do well due to the lifting of regulations, mining and oil will get a boost the repeal of some environmental laws, and pharma stocks will rally should Obama's Affordable Healthcare Act be scrapped or modified.” Mr. Green goes on to say, “therefore, investors should not obsess about the wave of antiglobalisation. They need good fund managers who select investments that aim at the winning sectors, taking care to be diversified in their overall structures. The deVere CEO concludes, “the changing sentiment will take time to play out, but investors who are prepared, ahead of the curve and vigilant are likely to be able to seriously build and maximise their wealth.”


investorReview News

FCA Finds Weak Price Competition in Some Areas of the Asset Management Sector The Financial Conduct Authority (FCA) on 18th November published the interim findings of its asset management market study, which suggests that there is weak price competition in a number of areas of the asset management industry. The FCA launched the market study in November 2015 to assess whether competition is working effectively. It looked at whether institutional and retail investors get good value for money when purchasing asset management services.

The UK’s asset management industry is the second largest in the world, managing almost £7 trillion of assets. Over three quarters of UK households with occupation or personal pensions use the services asset managers offer.

• Andrew Bailey, Chief Executive at the FCA said, “asset managers are responsible for the savings of millions of people in the UK, making decisions which affect their financial well-being both now and in the future. In today's world of persistently low interest rates, it is vital that we do everything possible to enable people to accumulate and earn a return on their savings which can meet their lifetime needs. To achieve this, we need to ensure that competition in asset management works effectively to minimise the cost of investment. “We want to see greater transparency so that investors can be clear about what they are paying and the impact charges have on their returns. We want asset managers to ensure investors receive value for money through pursuing energetically their duty to act in their customers’ best interests. The remedies that we are proposing aim to achieve these outcomes. Low interest rates are necessary for the economy, but we have to do everything else we can to ease the burden on savers. This is one thing we can do." The FCA found that: • there is limited price competition for actively managed funds, meaning that investors often pay high charges. On average, these costs are not justified by higher returns;

there is stronger competition on price for passively managed funds, though the FCA did find some examples of poor value for money in this segment; fund objectives are not always clear, and performance is not always reported against an appropriate benchmark; despite a large number of firms operating in the market the asset management sector as a whole has enjoyed sustained, high profits over a number of years with significant price clustering; investment consultants undertake valuable due diligence for pension funds but are not effective at identifying outperforming fund managers. There are also conflicts of interest in the investment consulting business model which require further scrutiny.

The FCA has proposed a significant package of remedies that seek to make competition work better in this market, and protect those least able to engage actively with their asset manager. These include: • a strengthened duty on asset managers to act in the best interests of investors, including reforms to hold asset managers to account for how they deliver value for money; • introducing an all-in fee so that investors in funds can easily see what is being taken from the fund; • a number of measures aimed at helping retail investors identify which fund is right for them, such as requiring asset managers to be clear about the objectives of the fund, clarifying and strengthening the use of benchmarks and providing tools for investors to identify persistent 55investorReview investorReviewNovember October 2016 2016

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underperformance; making it easier for retail investors to move into better value share classes; requiring clearer communication of fund charges and their impact at the point of sale and in ongoing communication to retail investors; requiring increased transparency and standardisation of costs and charges information for institutional investors; exploring the potential benefits of greater pooling of pension scheme assets; and requiring greater and clearer disclosure of fiduciary management fees and performance.

The FCA is also consulting on whether to make a market investigation reference to the Competition and Markets Authority (CMA) on the investment consultancy market and has recommended that HM Treasury considers bringing the provision of institutional investment advice within the FCA’s regulatory perimeter. In addition, the FCA will undertake further competition work on the retail distribution of funds, particularly in relation to the impact financial advisers and platforms have on value for money. The FCA is now seeking views about its interim findings and welcomes views from all stakeholders on the emerging thinking on potential remedies.


investorReview News

Seedrs Sees Record Levels of Investment and Fundraising Activity • October was Seedrs biggest ever month with almost £20 million invested into campaigns on the platform; • Seedrs Alumnus FreeAgent announced float on AIM, becoming the first-ever business to IPO after raising money through equity crowdfunding; • New tennis world number one Andy Murray has completed 18 investments into British businesses on Seedrs following investments into Perkbox and WeSwap; • Brexit fails to halt Seedrs’s European expansion with new Berlin and Amsterdam offices and; • Seedrs remains the UK’s most active investor in private companies with more funded deals than any other investors (including any other equity crowdfunding platform) this year.

On 16th November Seedrs alumnus, FreeAgent floated on London Stock Exchange’s AIM marking the first time an equity crowdfunded company has gone on to IPO and giving shares owned by Seedrs investors liquidity on the stock exchange.

WeSwap, set a record for the most investors in a single campaign on Seedrs, with more than 3,000 investors backing the £1 million raise which overfunded to £2.4 million. This round boasted the largest number of investors, also including Andy Murray, for any independent business fundraising on a UK equity crowdfunding platform.

This announcement comes directly after Beauhurst announced that Seedrs has retained its title as the UK’s most active investor in private companies across 2016, having completed 122 deals by the end of Q3. This is more than any other investor during the period according to a report released by the independent research firm.

Jeff Lynn, CEO and co-founder of Seedrs said, "we are breaking records this year and by the end of Q3 we had exceeded the amount invested on the platform across the whole of 2015, while opening new offices in Berlin and Amsterdam as we push forward our European expansion.

More than £160 million has now been invested into campaigns on Seedrs since July 2012 when the company launched and October became a record-breaking month with almost £20 million invested into campaigns. Perkbox, the UK's top employee and customer engagement provider smashed its £1 million target, overfunding to £4.35 million and becoming Seedrs biggest fundraise to date. With more than 300 investors, including world number one Andy Murray and prominent venture capital firm, Draper Esprit investing on the same terms as the crowd, the campaign highlighted a growing trend of VC firms leading or supporting crowdfunding rounds on Seedrs. The UK fintech company also saw the world's first peer-to-peer money transfer platform, 6 investorReview November 2016

“We congratulate FreeAgent following the float on AIM and for becoming the first equity crowdfunded IPO. As the early stage investment space matures in the coming years, we look forward to seeing many more Seedrs companies floating or exiting. We strongly believe that this asset class will be very fruitful for investors with diverse investment portfolios, and FreeAgent's listing is an early example of that. “Despite Brexit, the UK is still attractive and safe for inward investment and will continue to be one of the number one destinations for entrepreneurs to set up a business with its favourable tax reliefs, streamlined business incorporation and simple transport abroad.”


investorReview News

Convertr Media Secures £3M Funding Injection to Aid Global Expansion Convertr Media, the customer acquisition management company, in early November announced that it has raised £3M ‘Series A’ funding from the UK venture capital investor, Albion Ventures. The investment will support Farringdon based Convertr as it expands its client base and scales the business globally.

Convertr is an award-winning enterprise technology platform, launched in 2011 by entrepreneurs Emma Bowkett, CEO and Clive Brett, CTO, which helps advertisers enhance their digital marketing through real-time efficiencies in customer acquisition and data partnerships. As part of the deal, Robert Whitby-Smith, partner at Albion Ventures will also join the board of Convertr. Albion has a substantial track record of working with companies in the digital marketing sector. These include Black Swan (predictive analytics), Elateral (content adaptation), Grapeshot (keywords for programmatic), Relayware (channel partner marketing software) and Sift (digital marketing services). Emma Bowkett, chief executive of Convertr Media, said, “we are delighted to be working with Albion, at such an exciting time. We are looking forward to the next phase of our company’s development, particularly with Robert’s expertise: he brings immense experience in investing in and working with the technology sector. We have already proven success at simplifying the marketing journey by integrating our technology, with clients such as Fiat and DWA, and this funding will enable us to build on and expand our offering to a wider international market.” Robert Whitby-Smith, investment director and partner at Albion Ventures added, “we look forward to working with Emma and the Convertr team. This is an exciting company, with an outstanding team and high profile customers in a high growth market. Convertr’s emergence as a next generation digital hub that delivers tangible ROI comes at a time when the marketing sector is actively seeking efficient and transparent technologies”. Convertr Media works with media agencies, advertisers and publishers including Mediacom, Maxus, iProspect, Fiat Chrysler Automobiles, Dropbox, Incisive Media and Dennis Publishing. 77investorReview investorReviewNovember October 2016 2016


investorReview News

ENRA Group Continues Its Growth Strategy with Acquisition by Exponent Livingstone has advised the shareholders of ENRA Group, including Livingbridge, on its sale to Exponent Private Equity. ENRA Group is a specialist provider of mortgage finance. This is the fourth transaction the Livingstone team have advised ENRA on, previously introducing exiting Chairman, David Campbell, on his investment in 2013, raising growth capital from Livingbridge in 2014 and their subsequent acquisition of West One Loans, also in 2014.

ENRA lends and brokes shortterm bridge mortgages as well as distributing specialist second charge and buy-to-let products. The business has enjoyed strong growth on the back of its bespoke manual underwriting process that allows it to offer a superior customer centric approach. ENRA is unique in both lending from its own balance sheet and placing loans with external investors via its West One platform, in addition to operating a leading master broker under the Enterprise brand.

for significant growth, and they did an excellent job building competitive excitement around the opportunity. We were thrilled when we won the deal. They subsequently worked on the West One acquisition, and when it came to the exit, they were a trusted and obvious choice to advise all the shareholders. They did a first-class job in what was a complex and technically difficult deal, and we are very pleased with the outcome.” James Lever, partner at Livingstone commented, “we are delighted to have advised ENRA and Livingbridge on another

With the backing of Exponent, ENRA has plans to expand into the specialist buy-to-let and second charge mortgage market, continuing to focus on products that meet the needs of underserved customers in a sector that is experiencing significant change. David Stewart, former CEO of Coventry Building Society, will join the board as Chairman, and brings a wealth of experience in long-term secured lending. The transaction however is subject to FCA approval. Danny Waters, CEO of ENRA said, “this is the fourth deal that James Lever and the team at Livingstone have advised me on since I first met them in 2012. They have played a key role in helping us execute our strategy, financing the growth of the business and have provided invaluable support to the management team. This process and transaction has been highly complex but they have helped us reach an outcome that all stakeholders are extremely happy with.” Shani Zindel, partner at Livingbridge added, “Livingstone introduced us to ENRA in late 2013 as part of a formal fundraising process. They had previously worked with David Campbell who invested as Chairman earlier in the year. This initial deal was key to being able to present a rounded team and business poised 8 investorReview November 2016

successful transaction. Danny, David and the management team have led the business on an impressive strategic journey and it has been a pleasure to assist them along the way. The specialist lending market is now undergoing considerable change and we strongly believe that ENRA is uniquely positioned to capitalise on this through their multiple routes to market and flexible funding model.”


investorReview News

IW Capital Launches Debt Arm to Support Growing Investor Demand IW Capital’s new debt arm cements the company’s position as the primary debt and equity provider to facilitate SME investment in the UK; • An independent nationally representative survey of 2,000 UK adults found that 30% of Brits are looking to alternative finance in the coming 12 months amid record low interest rates; • Almost two fifths (38%) of respondents aged 18-34 are factoring alternative finance into their plans for the year ahead, showing a strong demand among the next generation of investors for SME investment opportunities; • IW Capital has launched a new debt-based investment offering to complement its existing private equity investments, giving Britain’s investors the chance to capitalise on the rapidlygrowing alternative finance market and support the nation’s high-growth businesses and; • Two expert credit analysts have joined the IW Capital team to help source and facilitate debt investment into tier 1 credit-rated SMEs.

To complement its delivery of equity investment into British SMEs and meet future investor demand, private equity firm IW Capital has launched a new service facilitating private debt-based investment into scale-up companies across the UK. Renowned for raising over £100 million in growth capital to support the transformation of companies such as WeSwap, BorrowMyDoggy, Square Pie and Brewhouse & Kitchen into market leading brands, IW Capital expansion into the debt arena will generate a new wave of exciting investment opportunities into British SMEs.

its team with experienced credit analysts to source the best debt-investment opportunities in established and profitable businesses. This latest arm of IW Capital ensures SME investors are able to develop a tailored investment strategy spanning across debt and equity. Luke Davis, CEO of IW Capital said, “over the past year, investors are clearly starting to act on their positive sentiment towards British businesses by turning to alternative investment schemes. That’s part of the reason why we have seen an explosion in exciting, young and dynamic companies with immense growth potential across the UK. Equity

Amid record low interest rates and Britain’s forthcoming withdrawal from the European Union, research by IW Capital has revealed that 30% of UK investors are looking to alternative finance schemes that support British SMEs in the coming 12 months. With the alternative finance industry expanding by 84% last year – reaching £3.2 billion of activity – investor appetite for business investment is clearly growing. British investor sentiment towards the nation’s bustling community of SMEs has been resoundingly positive, particularly in the months following the Brexit announcement – a previous IW Capital survey of 2,000 adults found that 52% would consider supporting the UK’s SMEs through private investment despite uncertainty in the wake of the Brexit announcement. As part of this launch, IW Capital has bolstered 9 investorReview November 2016

investment has always been tailored towards specific companies, and with investor sentiment growing, it seemed natural for us to expand our services into the debt space and offer investors access to new opportunities. “But this isn’t all about investors; it’s about providing as much financial support for our inspiring business community so that they can overcome financial barriers inhibiting their growth. We have some fantastic opportunities lined up, and I look forward to revealing them shortly.”


investorReview E-Commerce Asset Management

A Full Range of Financial Services As a leading financial institution, Landsbankinn offers a full range of financial services in its domestic market. Landsbankinn is a market leader and operates the largest branch network in Iceland. Asset Management offers universal asset management services to individuals and corporates alike with the aim to build sound portfolios that maximise returns for each customer. Landsbankinn is the largest custodian of Icelandic securities owned by both domestic and foreign investors in Iceland.

sset Management specialises in asset allocation that balances diverse portfolios to achieve maximum reward for customers. As the largest commercial bank in Iceland, Landsbankinn gathers extensive specialist knowledge through its various units. The Bank emphasises collating such knowledge and utilising it through in-depth and comprehensive analysis. The Bank also diligently monitors indicators, on a continuous basis, for the benefit of its own operations and customer interests. Asset Management is thus well placed to assist and advise foreign investors on investment opportunities in Iceland.

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Capital controls have been in place in Iceland since 2008, as a safeguard after the financial crisis of 2008. Recent amendments made to the country’s Foreign Exchange Act in October 2016 aim to lift these capital controls on households and businesses. Asset Management has in place products and services to meet the needs of international investment activity yet aims to develop these aspects of its operations further to meet the upsurge in demand once the restrictions imposed by capital controls are fully abolished. Asset Management sees tremendous investment opportunities in Icelandic securities as a result of this. Market analysts and the International Monetary Fund agree that Iceland can look forward to powerful economic growth in coming years, driven by private consumption, investment and exports. Interest is much higher here than in other developed countries and the interest rate differential is likely to decrease over the next couple of years. Both household and corporate indebtedness is at an historical low. Internal and external factors alike point to significant growth opportunities in the Icelandic economy and Asset Management is well placed to take advantage of such opportunities on behalf of its customers.

In order to facilitate this service, Asset Management builds on close relationships with its customers. It tailors its investment advice to each customer’s needs and customises investment strategies to reflect a volatile environment. The department liaises with other units within the Bank to analyse the business environment of corporate customers with the aim of offering comprehensive, current advice and identifying future business opportunities.

Company: Landsbankinn Name: Hrefna Ö. Sigfinssdóttir Email: landsbankinn@landsbankinn.is Web Address: www.landsbankinn.is Address: Austuraeti 11, Reykjavik 155, Iceland Telephone: +354 410 4000

“We are proactive and leverage the wealth of knowledge generated by the Bank’s analysts in various fields,” says Hrefna Ö. Sigfinnsdóttir, Managing Director of Markets at Landsbankinn. “Our approach is comprehensive and inclusive of external factors, i.e. changes and opportunities in our customers’ environments. Our aim is to serve as our customers’ financial partner, creating mutual benefit based on long-term relationships, Our customers are both individuals and legal entities, such as pension funds, companies and charities, both domestic and foreign. All Asset Management customers have dedicated account managers who handle communication. Accounts are both advisory and discretionary.” Landsbankinn also promotes a performanceoriented corporate culture. The Bank has had incredibly positive success in building on a strategy that emphasises individual responsibility, effective and continuous improvement and creating a strong team that puts the customer first. Landsbankinn’s employees are central to both the shaping and implementation of its strategy and thus integral to its success. Going forward, Asset Management intends to remain focused on success through flexibility, promoting a deep awareness of changes in the external environment both in Iceland and abroad, and continued focus on providing the best possible service to our customers.

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Excellence in Equity


investorReview E-Commerce Asset Management

Change in the World Order Comment from Colin McLean, Managing Director, SVM Asset Management says that “Trump is an immediate negative for markets around the world, as seen already in Asia. Immediate winners are gold, Treasuries and the Yen; but losers include the US Dollar, Mexican Peso, oil, climate change and equities” in this comment piece.

ince 1948, the Dow has typically fallen under a Republican. But if Trump's presidency echoes Reagan's leadership, markets may come to respect the new leader and his policies. What they fear is a Berlusconi. As Brexit showed, fear of the unknown can be overdone by markets.

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The corporate earnings background is favourable, with an earnings season that is beating expectations. Indeed, S&P 500 EPS growth should accelerate next year. But with the election over, US investors should look more at individual company results. This would see the market favour sectors such as banks and technology that have been beating earnings expectations. Trump's presidency will break from the traditional Republican commitment to free trade, imposing a set of protectionist policies to close America's economic borders. Despite Trump's slogan, much of his comment on change he plans for military commitments represents a sea change in America's global role. This is less supportive for global trade and emerging economies. In campaigning he has said he will immediately announce his intention to "renegotiate" the North American Free Trade agreement with Canada and Mexico. He would also cancel participation in the TranPacific Partnership. That may ease some of the competitive forces that have restricted real wage growth per capita. One sector that feared Clinton and should now rally is healthcare. The major UK pharmaceuticals are exposed to the US market which was threatened by Clinton’s proposed pricing reforms. This year the sector has de-rated, losing its premium rating of 20-30%. But Trump has said he will repeal Obamacare, and the sector may be helped by his new plans. Clinton would also have brought the prospect of either a higher marginal tax rate or higher taxes on capital gains, or both a risk that has been removed.

Both candidates favoured increased infrastructure spending, promising to inject hundreds of billions of dollars in fiscal stimulus. This could raise US economic growth over the longer term, but the benefit may depend on how the work is financed. Trump has indicated that the cost will be met from reduced climate change spending. There are London-listed businesses that could benefit from US infrastructure and construction, such as CRH, Ashtead and Wolseley. Trump stood between an accelerating US economy and Fed intervention. It seems unlikely even so that the Fed will delay beyond December. At the start of 2016, four ¼ percentage point hikes were expected, but to date none of those increases has taken place. The Fed saw a risk that a Trump presidency might have cooled the economy and inflation trend. Headline PCE increased 1.2% in September YoY, with non-core PCE - often a leading trend - running at 1.7%.

Average hourly earnings for private-sector employees were up 2.8% YoY in October, the fastest pace since in seven years. 10 year Treasuries are also pointing to sharply rising inflation expectations, with the yield curve steepening. Next year US output is forecast by the Atlanta Fed to grow 3.1%, the fastest pace in more than two years. Unemployment is low, at 4.9%. But the elephant in the room is that, since 2008, the US has added significantly to its national debt, an extra US$ 15 trillion. Trump is seen as being comfortable with borrowing money. After the US, investors may focus on the Italian Referendum, where polls currently point to a NO vote. Trump looks like part of an ongoing change in politics. In Europe, it is clear that the social and political consensus that has prevailed in the West for 60 years is under attack. Markets may take a few months to assess winners and losers in the new world order, but the US and world economy start from a position of growth. For more details, please visit: www.svmonline.co.uk.

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investorReview E-Commerce Alternative Investment

Addressing the Challenge Equinoxe Alternative Investment Services is an independent service provider to the alternative investment space. Established in 2007 in Bermuda, it provides a range of services to multiple client types and strategies, including fund administration, as well as middle and back office services to hedge fund and private equity vehicles. Equinoxe also offers a unique front to back co-sourcing product based on the latest capital markets technology platform in collaboration with our partner Calypso Technology. ince the company’s foundation, Equinoxe has opened seven offices globally: Ireland (Dublin and Sligo), Bermuda, Atlanta, Mauritius, Singapore and Malta, in direct response to the stated requests of clients for Equinoxe to make their first-class services more available as a local support in many of the international locations where they conduct business.

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The core of Equinoxe’s business is focused on Fund Administration for the hedge fund and private equity industries, as Alan McKenna describes in detail. “We have significant depth of experience and capabilities in these spaces where we invested heavily in our technology and people to create as much straight through processing as is available in the market today. “At Equinoxe, we are very aware of the need for, and are thereby resolved to provide, an increasingly higher level of value-added services to our clients. As such, we have our Equinoxe Calypso product which we offer out in a cloud based infrastructure, providing all of our clients with the ability to leverage a Tier One technology platform for everything from order management, portfolio management and risk, compliance to middle office settlement and P&L generation, all provided in an integrated, transparent environment.” Equinoxe’s client base is wide and diverse, with a broad range of structures and strategies covered. In fact, as Alan observes, the one thing that all of these clients have in common is a requirement for a high-touch service offering, with experienced staff on hand that can provide added value. “Most of our clients originate from recommendations by other clients, with the majority transitioning from other fund administrators, due to a range of issues causing dissatisfaction that Equinoxe can easily rectify. Alan takes the opportunity to stress the key to the success of the business is in the people that perform the work – according to him, they are the business.

“Every employee of Equinoxe has bought into the customer centric culture that we established at the outset when we first set up the business.” Equinoxe’s major selling points boil down to three fundamental elements; its people, its technology and its service model. “We have continually invested in both our people and technology,” Alan comments, “to make sure that we have the most experienced team and market leading technology in the industry. We then combine these with a laser focus on the client to make sure our clients receive the highest service possible.” With all three elements working in harmony to their highest possible level, Alan is more able to create a leading company that he is expressively proud to be a part of. “Like everyone else in the industry,” he reflects, “we are acutely aware of the challenges facing hedge funds in general. There has been a raft of regulations brought in which is making it much

Ones to Watch in European Investment

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more difficult for our clients to operate. When combined with the downwards fee pressure our clients face, they need their service provider to maximise the value we need to add more value. “We also need to be innovative and supportive and, above all, we must provide a quality product in order for managers to concentrate on delivering performance for the end investor. This is the point at which one has perfect alignment and goal congruency amongst all participants in the market. So the challenges for Equinoxe are to innovate, move forward and evolve to be the valuable business partner our clients really need.” Company: Equinoxe Alternative Investment Services Name: Alan Mc Kenna Email: amckenna@equinoxeais.com Web Address: www.equinoxeais.com Address: Equinoxe House, Marina Village, Malahide, Co Dublin, Rep. Ireland Telephone: 001 441-278-8233


investorReview E-Commerce Alternative Investment

Adding Leverage to a Fund Does Not Always Increase Risk Adding leverage to an alternative investment fund does not necessarily increase the risk, according to a new study by the Alternative Investment Management Association (AIMA), the global representative for alternative asset managers, and the CAIA Association, the global leader in alternative investment education.

he AIMA/CAIA study suggests that there is no direct relationship between hedge fund leverage and the volatility and downside risk of fund performance. For example, funds that typically have the highest leverage ratios of all hedge funds – those using relative value or arbitrage strategies – have lower volatility on average and have suffered smaller losses during crises and other periods of market stress over the last 20 years.

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Equally, funds that typically employ lower leverage, such as long/short equity funds, have experienced marginally higher volatility and drawdowns since 1996. The authors said this suggested that a fund’s risk profile is influenced more by the nature of the underlying investments than the use of leverage alone.

use a modest amount of leverage – but as our study shows, even those with higher leverage levels are not inherently more risky than, say, investing directly in equities, commodities or other traditional asset classes.” “It is important for investors to understand the wide variety of strategies, risks, and returns of various hedge fund strategies,” said Keith Black, managing director of curriculum and exams at the CAIA Association. “One of the keys to this understanding is a knowledge of the forms that leverage can take, which can range from borrowing-based leverage used to increase risks to short selling and derivatives-based leverage that can be used to reduce risks.”

The report, entitled ‘Made to Measure: Understanding the use of leverage in alternative investment funds’, also highlighted the different impacts of the three forms of leverage - financial leverage, derivatives leverage and portfolio leverage. In many cases, adding particular types of leverage minimises or controls portfolio risk, the study found. The title of the report refers to the fact that fund managers are increasingly tailoring the use of the different forms of leverage to meet individual investors’ risk and return objectives. AIMA CEO Jack Inglis said, “understanding the impact that leverage can have on a portfolio is essential for pension funds and other investors. Leverage and risk are not the same thing. Most hedge funds

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‘Made to Measure’ is the third in a series of educational papers about hedge funds for pension fund trustees and other fiduciaries by AIMA and the CAIA Association. The previous studies focused on allocator issues (The Way Ahead) and hedge fund strategies (Portfolio Transformers). The next paper, due to be published in 2017, will focus on liquidity. www.aima.org


investorReview E-Commerce Individual Savings Account

Abundance Launches UK’s First Green Energy ISA The UK’s first green energy ISA was launched on 3rd November by Abundance Investment as the UK’s first Innovative Finance ISA (IFISA) to allow ordinary people to invest directly in renewable energy projects, tax-free.

bundance’s second Swindon solar bond can be held in Abundance’s tax-free IFISA wrapper and will fund a new solar farm on a Council-owned former landfill site at Chapel Farm in Blunsdon, Swindon. The bond will have an average annual rate of return of 6% over the 20-year term paid in twice yearly instalments with a minimum investment of just £5. As with all investments via Abundance, holdings in this ISA can be traded at any time to others via the Abundance website at no extra cost.

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This first project to be offered in the Abundance ISA follows the very successful launch earlier this year of the UK’s first council solar bond in partnership with Swindon Borough council, which sold out a month early. As with that first project, much of its popularity for investors will be the majority co-investment from Swindon Borough Council that reduces risk substantially. Bruce Davis, cofounder and joint managing director of Abundance said, “we want to turn investing in ISAs from something gathering dust in the forgotten corner of a bank or riding the roller coaster of global stock markets into something that makes a difference in the real world. Investors’ money will be working harder than it would in the bank, boosting the UK’s green economy and sustainable infrastructure, and returns will be tax-free. “Our second Swindon solar bond is just the start – we’ve got other exciting ISA investments on the way which can help ordinary people match their financial aspirations with their environmental values.” The new Innovative Finance ISA (IFISA) has been made possible following a government announcement that from 1st November, the IFISA can include peer-to-peer investments such as debentures, allowing individuals to invest directly into businesses and projects to secure stable and attractive returns - tax free - over longer terms, but with the freedom to cash in early by trading to others.

Sajid Javid, Secretary of State for Communities and Local Government said, “this is an excellent example of a local council working with the private sector to provide local people with a means of investing in their local community and its infrastructure. I wish it every success.” Swindon resident Michael Szymanski, who has opened an Abundance ISA, commented, “energy diversity and energy independence is the way forward for the UK. Keeping the lights on through independent, local, renewable energy production is a must as part of the UK's future energy production. Being able to invest my money towards this, where I know it will make a positive difference and get a good return, tax free, is just the kind of sensible alignment we need more of in the UK.” The new solar farm is expected to make a contribution from profits towards community initiatives and will help Swindon move even closer to its goal to install 200MW of renewable capacity by 2020, enough to meet the equivalent electricity requirements of every home in the Borough. Completion of Chapel Farm, which would have a capacity of 5 megawatts (MW), would take the total to 167MW – over 80% of the target. It will be managed by a new limited company, wholly owned by Swindon Borough Council, and will start to generate energy by Spring next year. It will cost £5.4m to construct, with £3m coming from the council’s investment, and the remaining £2.4m from investors in the local community and across Britain, via Abundance. Swindon Borough Council has already been approached by other local authorities looking to replicate its innovative solar bond model for funding green infrastructure. Revenues will be raised from selling the electricity generated, as well as support from the Renewable Obligation scheme (RO). Councillor Dale Heenan, Swindon Borough Council Cabinet Member for Transport and Sustainability remarked, "I am proud that Swindon is the home of the UK's first green energy ISA, following

14 investorReview November 2016

our very successful solar bond earlier this year. With interest rates still at rock bottom levels, the Abundance Innovative Finance ISA is a great way for people to invest in renewable energy tax-free. This project marries the economic benefits of renewables with finding an innovative way for local residents to receive a healthy return on investing, it delivers a tangible financial benefit to local public services, and Swindon Council is even using part of its profits to build a much-needed sound barrier along the A419 dual carriageway! This is a hugely positive scheme.” Abundance Investment has successfully raised over £20m for 20 different projects in the past four years. Abundance Investment is authorised and regulated by the Financial Conduct Authority. To invest in the Swindon Green ISA please visit: www. abundanceinvestment.com/swindon. Innovative Finance ISA The IF ISA is a new type of ISA that you can hold alongside your cash and stocks & shares ISAs. It has been launched by UK government to reflect the growing popularity of alternative finance platforms as a new place to save and invest for decent returns. The new IF ISA allows you to subscribe up to £15,240 in the 2016/17 tax year and protects the return on those investments from tax. You can choose to split your ISA allowance across cash, stocks & shares, and IF ISAs as you please. However, you can only invest in one IF ISA in each tax year.


investorReview E-Commerce Individual Savings Account

FCA Publishes Rules for the Sale of the Lifetime ISA The Financial Conduct Authority (FCA) on 16th November outlined its proposed approach to regulating the promotion and distribution of the Lifetime ISA (LISA).

he introduction of the Lifetime ISA was announced in the UK’s 2016 budget and the government intends for it to be available from April 2017. The LISA is designed to allow people under the age of 40 to save or invest flexibly to either provide a deposit for a first home or save for retirement.

Firms will be required to give specific risk warnings at the point of sale which include reminding consumers of the importance of ensuring an appropriate mix of assets is held in the LISA. Firms will also have to remind consumers of the early withdrawal charge and any other charges. The FCA has proposed that providers will have to offer a 30day cancellation period after selling the LISA.

The FCA is proposing to regulate the LISA in the same way as other ISA products, with some additional protections designed to reflect the dual purpose of a LISA and the restrictions on accessing funds. The LISA will play a role in helping individuals save for either their first home or retirement. However, like any other product there can be risks to consumers. These new rules will help to make sure that consumers are protected.

On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this - it has three operational objectives:

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15 investorReview November 2016

1. 2. 3.

to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system and; to promote effective competition in the interests of consumers.

4. www.fca.org.uk


investorReview E-Commerce Financial Planning

Current Pensioners Have Managed to Secure Unprecedented Leisure Time but Fail to Enjoy the Fruits of Their Labour Current pensioners have come close to achieving Keynes’ 80-year old vision of economic bliss – where people are able to capitalise on extended periods of leisure time [1]. However, many have fallen short of his ideal because they are unable to remain active and spend their accumulated wealth. Meanwhile, future generations may be forced to work longer hours and experience a sustained reduction in leisure time ased on analysis of OECD and Bank of England datasets [2], the findings were presented by ILC-UK Head of Economics, Ben Franklin, at the ILC-UK’s Second Annual Future of Ageing Conference on 8th November. Those reaching retirement today have benefitted from falling working hours, earlier exits from the labour force and longer life expectancy. New analysis from the ILC-UK shows how this has translated into far fewer working hours over the expected lifetimes of adults retiring today:

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• •

An average of 23 hours per week for those retiring in the UK today versus 30 hours in 1970. An average of 19 hours per week in France for those retiring today versus 34 hours in 1970. An average of 21 hours per week in Norway for those retiring today versus 30 hours in 1970 [3].

Mr Franklin argued that despite the success in substantially reducing lifetime working hours and increasing leisure time, those in retirement are not necessarily “enjoying the abundance when it comes” [4]. He highlighted ILC-UK research which finds that, on average, older people are “underspending” [5], that poor health prevents older people from doing what they want in retirement, and that most leisure time is taken up watching TV and later on, living at home alone. Yet just as we get accustomed to shorter working weeks, the trend has started to reverse. New analysis of 300 years’ worth of data suggests that the postWorld War II period was an economic anomaly characterised by high wage growth, substantial increases in the productivity of labour and in the successful diffusion of productive invention (see chart). Since the year 2000, growth in each of these areas has stalled meaning people have had to work for longer to keep the economy ticking over.

Speaking at the conference, Ben Franklin said, “over eighty years ago, Keynes had a vision that people would work substantially fewer hours and have much more leisure time to use in meaningful ways – to “enjoy the abundance when it comes”. Yet while we reduced the number of working hours across the lifetimes of those retiring today and created extensive periods of adult life outside of the workforce, most leisure time in retirement is spent watching television and, later on, living at home alone. Poor health and disability remain significant barriers to economic bliss in retirement. Meanwhile, weak economic fundamentals may mean that Keynes’ vision of bliss will slip further from the fingers of those in the workforce today, with slower productivity growth leading to longer hours in work. If, as the data suggests, it turns out that the period 1950-2000 was an economic anomaly rather than the new normal, this will have profound implications for the future leisure opportunities of today’s workers.” David Sinclair, ILC-UK director, also speaking at the conference, set out a positive vision for the Future of Ageing. He argued that we are at a tipping point where staff shortages, the increasing economic cost of ageing and poor economic fundamentals will force action by policymakers. Speaking at the conference David Sinclair commented, “over the past decade public policy has started to respond to the challenge of ageing. Auto enrolment into pensions has got millions more people saving. We have seen falls in serious illness among older people over the past decade as well as, for example, falls in excess winter deaths. We have seen a growth in age friendly communities as our society slowly adapts to ageing.

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investorReview E-Commerce Financial Planning We have begun responding to ageing but we are miles from where we need to be. Health and social care funding is inadequate to meet demand, too few people are saving an adequate amount for their retirement and most of us aren’t living as healthily as we should. But while ageing may seem an impossible challenge for politicians, with political will and action we can ensure the future of ageing is a success rather than a threat to our economy”

Speaking at the conference, Sinclair highlighted 6 “silver bullets” for policy makers to focus effort on, pointing out that achieving change in all these areas is possible with leadership and political will.

On Friday 12th February 2016, the ILC-UK published a report based on the information presented at the 2015 Future of Ageing conference, guest blogs written for our Future of Ageing series, and research and analysis from ILC-UK. The report is available on the ILC-UK website at www. ilcuk.org.uk.

The 6 ILC-UK silver bullets. • Maximising the economic contribution of older people; • Getting us healthy; • Maximising the potential of technology and big data;

• •

Stop patronising old age. Treat adults as adults; Start talking about end of life and; Let’s make ageing fun.

The ILC-UK Future of Ageing conference (www.futureofageing.org.uk) brought together representatives from the UK government, business, academia and civil society.

[1] John Maynard Keynes, The economic possibilities for our grandchildren (1930) [2] The Bank of England's Three Centuries

17 investorReview November 2016

Macroeconomic Dataset Version 2.3 - 30 June 2016 [3] We used OECD data to estimate likely hours in work as a proportion of total expected adult life. This is total estimated working hours over a lifetime divided by the number of adult years. Adult years is calculated as current life expectancy at the point of retirement minus age of entry in the labour force (we use age 18 for year of entry since time series data on entry is not available for all countries). [4] John Maynard Keynes, The economic possibilities for our grandchildren (1930) [5] http://www.ilcuk.org.uk/index.php/ publications/publication_details/ understanding_retirement_journeys_ expectations_vs_reality


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Long term financial planning? Time to take a different look

See how the Premium Portfolio Builder could work for you – plus get a 10% top up on your initial investment. The waters have been choppy for capital markets and traditional investments recently. But there is an alternative investment you may have over-looked, which could help you build and protect your investment pot. It’s the market for rare coins and stamps, tangible asset classes uncorrelated with mainstream financial markets. They could provide portfolio protection and diversification in a way that traditional investments cannot. Historically they have proven largely immune to market volatility, although past performance is no guarantee for the future, of course. The Premium Portfolio Builder is equivalent to a regular savings plan, with an initial investment of just £10,000 and quarterly payments of £1,500 or more. Plus, a 10% top up on your initial deposit means a guaranteed minimum of a £1,000 - to give your portfolio a headstart. If you wish to consider an investment alternative that could potentially protect and grow the wealth and lifestyle that is already yours, why not find out more? Plus, get a 10% bonus if you invest before 31st March 2016.

To find out more call: 0845 026 7170 Visit: sginvest.co.uk/PPBInvest *10% offer valid on minimum £10,000 investment with ongoing minimum quarterly payments of £1,500 ends 31st March 2016. The value of your investment can go down as well as up and you may not get back what you put in. Stamps and certain other collectibles are not designated investments for the purposes of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and as such are not subject to regulation by the Financial Conduct Authority (FCA) or otherwise. Past performance or experience does not necessarily give a guide for the future. Minimum investment £10,000. Stanley Gibbons Investment does not provide valuations; please visit www.stanleygibbons.com for information on valuations, and investment. stanleygibbons.com for full terms and conditions. Please note: Past performance does not necessarily give a guide for the future.


investorReview E-Commerce Financial Planning

Planning Ahead for Bereavement Thinking about what happens to us when we are no longer around is something most of us try to avoid. But there are some simple steps we can take to make life easier for the loved ones we leave behind. Philip De Ste Croix, head of future planning at Damsons, says we should not be afraid of discussing these issues, and offers some advice on how to make a difficult period more manageable. clear will: Make sure your possessions are distributed how you want A will is one of the most important documents you will ever write. Having a will in place ensures your possessions go to specific friends or family members that you have chosen. It also helps avoid confusion about the administration of your estate and/or who will care for your children and dependents when you are gone. Whilst you are free to write your own will for your family to access at a later date, having a professional on hand to help will guarantee everything in this document is accurate and unambiguous.

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Failing to write a clear and legally correct will could mean the law decides what happens to your money, property and possessions after your death. Often, the rules of intestacy dictate that any property or estate of the deceased goes to the closest relatives – a spouse, children, parents, siblings, etc. Not only does this deny you the right to distribute your estate your way, it could also lead to lengthy legal processes and unwanted family rifts – the last thing you would want for your family at an already difficult time. It is vital you store your will in a safe place, and somewhere it can be easily found. You may have

taken the time to make your wishes clear, but if your will cannot be found, or is damaged, it is worthless. You could consider storing your will with a solicitor or a professional will writer, or you could even lodge your will with the Probate Service. If you do opt to keep hold of your will and store it yourself, be sure to tell the executor of your estate where to find it. Also, keep in mind that the will you write today may not reflect your estate or your desires later on. Between the time you first write your will and the time you pass away, certain aspects of your life might have changed. Ideally, your will should be reviewed and updated once a year, taking into account any major life changes such as a marriage or birth of a child. It may even be worth considering writing a new will if a number of major changes occur. Many divorcees, for example, start a will from scratch. Probate and Estate management One of the key points you need to think about is who you want to take on the role of executor when you pass – the person in charge of handling and distributing your estate. You may want to make a family member or friend the executor of your will, but it is also worth considering using a professional administrator.

The executor of your will is responsible for managing your estate, including paying any inheritance tax, and handling an estate’s assets. Typical duties of an executor also include collecting money from the sale of property, paying off any unpaid bills and dealing with any life insurance policies. An executor is also responsible for making sure property, money and possessions go to the people they are supposed to. Before someone can deal with your estate they may need the legal right to do so by applying for the ‘grant of representation’, also known as probate. Your executor can apply to do this themselves or could ask a professional support service. Another route is to set up a trust, which gives you control over how your belongings are distributed. Seeking professional advice about setting up a trust will allow you to understand how a trust can protect assets from debt collection, give you complete control over how assets are distributed, and provide regular income for loved ones after you are gone (removing inheritance tax liabilities in the process). Future planning – personal care and preparing for a funeral It’s not fundamental to have an exact plan for your funeral written down, but there are things you can do now to make the process easier for your family and friends when the time comes. As the average cost of a funeral continues to rise, being financially prepared has never been so important. Like saving for a pension, paying regularly into a funeral plan will ensure your loved ones are not left with a financial burden when you are gone. A funeral plan also lets you outline what type of service you would like, be it traditional or something a bit more personal and reflective of you. Preparation is key: whether that be financially or logistically. While we should be busy living and enjoying our lives, simple steps can be taken now to prepare for our future and protect our loved ones in the months after we pass. Company: Damsons Future Planning Name: Philip De Ste Croix Email: info@damsonsfutureplanning.co.uk Web Address: damsonsfutureplanning.co.uk Address: Damsons Future Planning, PO BOX 522, Manchester M16 6EP Telephone: 0800 088 4670

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investorReview E-Commerce Bonds

Is It All over for Bonds? • Good quality credit risk from bond markets more attractive than interest rate risk • Bond yields higher on rising economic growth and political risk ; • Stronger growth, higher inflation and market expectations of Trump’s presidency, point to upwards pressure on interest rates.

nthony Rayner, manager of Miton’s multi-asset fund range comments, “our view has been that for much of this year, the economic environment has been improving. Economic growth data have shown a recovery across the major economies and inflation has shown something of a pick-up.

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“At the same time, political risk has been rising. There have been a number of key events, like the EU Referendum and the surprise US election result, which have illustrated this risk only too well. However, the trend was already well-established, with polarisation on the rise, and populist, antiestablishment and anti-trade movements growing for some time now. “These economic and political dynamics have combined to push bond yields higher. Stronger growth and higher inflation had taken bond yields off their summer lows and, more recently, the Trump win has added to that momentum, with markets assuming a big infrastructure programme, tax cuts, less regulation, increased protectionism and potentially an early replacement for Fed chair Janet Yellen. Individually, these all point to upward pressure on interest rates. “In short, the policy mix has changed, or at least expectations have changed, to tighter monetary policy and looser fiscal policy. This is clearly putting bond markets under pressure, with yields in the US and the UK, for example, sharply higher. That said, they’re still below May 2016 levels and close to multi-year lows. Rather, it is the pace at which they have risen which is of more concern.

“Those parts of the market that have benefited from the grind lower in bond yields over many years are starting to struggle, for example equity bond-proxies, such as utilities and consumer staples, and property. At the same time, markets continue to rotate into the more growth/inflation-friendly sectors, such as banks and resources, as well as infrastructure spending beneficiaries; a trend that was in place ahead of the Trump win. “Markets are always emotional but they seem particularly so currently, swinging quickly from hope to fear, as they try to digest the implications of a Trump win. The market’s current conclusion seems to be to give the ‘Trump effect’ the benefit of the doubt, focusing on the positives. “What to do at an asset allocation level? If we look at the economic data we can come to some broad investment conclusions. The improving environment feels consistent with the rotation towards growth/

“How high are yields going to go? The simple answer is, who knows? What we do know is that the broad trend is upwards, and for good reason. However, we also know that the authorities will be reluctant to see yields continue to rise at this pace, as it will prove too disruptive for economies and markets.

20 investorReview November 2016

inflation-friendly equity sectors. In bond markets, taking some good quality credit risk seems more sensible than taking interest rate risk, as bond yields could push higher over coming months, leading to negative overall returns, especially in the longer dated bonds. “It’s more difficult to draw conclusions from the political environment at this stage. We use a structured approach which is focused on policy detail as it comes through and, ahead of that, who Trump is appointing to which roles (as he has no political experience he might lean on this function more than presidents normally do). “In short, the economic data looks fairly clear cut, while the political environment is anything but. As ever, there will be opportunities as well as risks but we will look to manage them in a controlled manner.” www.mitongroup.com


investorReview E-Commerce Bonds

Trump Effect on Currencies & Bonds Speaking in relation to Trump’s effect on currencies and bonds, Mihir Kapadia, CEO and Founder of Sun Global Investments, has said that “since the Trump victory, bond markets across the world have fallen sharply, as have most currencies against the newly rejuvenated US dollar.”

his reflects the very large switch of fund flows into the US dollar and towards risky assets and away from assets in non-US geographies or currencies with emerging markets, particularly Latin America, and Asia being hit. One of the key factors behind the pressure on emerging markets is the fear of protectionist trade policies from the Presidentelect Trump” he continued.

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“While the Indian rupee has come under pressure along with most emerging market currencies, unlike almost all other bond markets, Indian rupee bonds have rallied. This of course is due to the fact that the economy is experiencing very high unprecedented net cash inflows into banks as a result of the demonetisation program initiated by the government. This flood of money has put pressure on interest rates and bond yields, and helped rupee sovereign bonds make a lone escape from the global market rout triggered by Trump” he went on to say.

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Sun Global Investments Ltd. is an international financial services firm based in London, providing a full scope of services to institutional investors, corporate companies, family offices and high net worth individuals. For more details, please visit: www.sunglobal.co.uk.


investorReview E-Commerce Exchange Traded Funds Where Is Earnings Growth in the Eurozone? There are several reasons to be optimistic about the prospects for Eurozone equity markets: market multiples are low, bond yields are low (and even negative out to 10-year maturities in Germany) and earnings trends are looking more positive.

hat last item is especially important. Simply looking at the earnings for broad market indices like the MSCI EMU Index may give a distorted view of what is happening across a number of sectors in Europe. Looking at the earnings figures for the MSCI EMU Index, one can see earnings declining over the last five years at a rate of -2.1% per year.

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But half the sectors in the market (typically the export-oriented sectors) are delivering earnings growth that ranges from 2.6% per year to 4.5% per year and on average is 3.7% per year. These export-oriented sectors are consumer discretionary, industrials, health care, information technology, and consumer staples. These sectors constitute roughly 57% of the weight of the MSCI EMU Index. On the other hand, there are sectors (the other 43% of the MSCI EMU Index) in which earnings have collapsed: financials, energy, materials, utilities and telecommunications. The financial sector was the biggest of these from a weighting perspective. Earnings Growth Sectors versus Earnings Contracting Sectors - shown on the right. Tilting

22 investorReview November 2016


investorReview E-Commerce Exchange Traded Funds Focusing on Eurozone Earnings Growth The WisdomTree Europe Hedged Equity Index (Eurozone Exporters), which is composed of multinationals within the Eurozone, is achieving earnings growth largely because it is under-weight these predominantly domestic sectors. These sectors are exposed to a more challenged earnings environment whilst the index is tilted towards sectors where. earnings have been growing in the Eurozone. Compared to the 57% of the MSCI EMU Index allocated to those sectors with positive earnings growth, the WisdomTree Europe Hedged Equity Index currently has 72% allocated to these sectors. Notably, the index is underweight in Energy and Financials and this has helped introduce a quality bias to the portfolio.

Toward Positive Earnings Growth Sectors - shown below.

For those who believe valuations are low in the Eurozone, the large capitalisation multinationals with an export tilt represent one segment of the market with a better earnings growth environment. This strategy is currently represented by the WisdomTree Europe Hedged Equity Index. The sector tilt of the Eurozone exporters, with its focus on positive earnings growth and above average sales growth is apparent on both a one year and three-year time horizon. Compared to MSCI EMU, the WisdomTree strategy is usefully positioned to focus on a higher quality sector mix and stronger fundamentals. For those investors sharing this sentiment: WisdomTree Europe Equity UCITS ETF – EUR Acc (HEDF/HEDG) WisdomTree Europe Equity UCITS ETF – USD Hedged (HEDJ) WisdomTree Europe Equity UCITS ETF – GBP Hedged (HEDP) WisdomTree Europe Equity UCITS ETF – CHF Hedged Acc (HEDD) You can view the full disclaimer and the firm’s Conflicts of Interest Policy and Inventory at www. wisdomtree.eu/cofi.

Sales Growth: 1 Year

Earnings Per Share Growth: 1 Year

Sales Growth: 3 Year

Earnings Per Share Growth: 3 Year

MSCI EMU

5.6%

13.4%

1.9%

10.0%

Eurozone Exporters

10.1%

14.8%

4.7%

10.3%

Source: Bloomberg as of 28/9/16. Past performance is not indicative results. You cannot invest directly in an index.

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investorReview E-Commerce Exchange Traded Funds

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investorReview E-Commerce Exchange Traded Funds WisdomTree Launches GBP Hedged Share Class of Its US Equity Income UCITS ETF WisdomTree, the exchange-traded fund (ETF) and exchangetraded product sponsor on 8th November announced the listing of a GBP hedged accumulating share class for the WisdomTree US Equity Income UCITS ETF on the London Stock Exchange. This new share class combines the benefits of WisdomTree’s unique dividend weighting methodology applied to high yielding US equities and the management of currency risk through a monthly currency hedge. ecause the US makes up a large allocation of global benchmarks, European investors end up with a large exposure to US equities. Whilst plain beta exposures have been popular, there has been an increasing trend to focus on more sophisticated fundamentally weighted investment strategies. WisdomTree’s US Equity Income UCITS ETF has delivered higher risk adjusted returns relative to the S&P 500 over the past year. The index, which is uniquely positioned for an alternatively dividend weighted strategy, has a live track record of over 10 years and has delivered above average returns and lower risk compared to the S&P 500.

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Recent macro events, ranging from Brexit, Quantitative Easing and the expected tightening of interest rates in the US, have reminded investors of the need to be able to efficiently hedge out currency risk. This share class provides investors with an effective solution and adds to the broad range of currency hedged share classes that WisdomTree provides investors in Europe.

Fund

WisdomTree US Equity

Ticker

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“WisdomTree is well known for providing differentiated strategies and currency hedging and this new share class is a perfect example of WisdomTree’s ability to deliver client focused solutions,” said Nizam Hamid, ETFS strategist. “In addition to providing a hedge against currency risk, this accumulating share class allows investors to benefit from the compounded returns in dividendbased strategies.” “Managing currency risk – as witnessed through recent moves in Sterling as well as delivering operational benefits means that this is an effective solution for the investment and macro challenges faced by our clients,” said Morgan Lee, head of European distribution. “This additional share class is also a reflection of the positive feedback we have had from clients wanting to benefit from the efficiency of the share class structure we can offer.”

ISIN

IE00BD6RZZ53

Listing Base Currency Currency GBx

GBP

Income UCITS ETF – GBP Hedged Acc

WisdomTree Europe Ltd is an appointed representative of Mirabella Advisers LLP, which is authorised and regulated by the Financial Conduct Authority. View our Conflicts of Interest Policy and Inventory at www.wisdomtree.eu/cofi. 25 investorReview November 2016


investorReview E-Commerce Award winners Fund Elite Awards

Most Trusted Payment Service Provider 2016 - North America Allied Wallet, the global ecommerce giant, has recently launched an exciting new platform which is paving the way for change in the global e-commerce market. We interviewed tech billionaire and CEO/Founder Dr. Andy Khawaja to gain an insight into how he put together such a superior service, building himself a net worth of $19 billion. he latest innovation from Allied Wallet, the world leader in online payment solutions, is its new next generation API platform, which integrates every payment processing platform on the internet, including websites, shopping carts and other payment pathways, ensuring that merchants are able to connect to hundreds of new solutions in just a few short hours, as opposed to the multiple weeks or even months that it would have previously taken.

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“This new platform is designed to make life easier for everyone,” Andy states proudly as he describes how the software will change his client’s businesses for the better. “Through this innovative new solution, merchants will be able to add new services, take more payments and generally increase their service offering easily and efficiently. Fintech and B2B businesses will find this new platform a revolution, and despite have only recently been released we have already seen a 300% increase in business thanks to this pioneering new technology.”

By making Allied Wallet payment services accessible around the world and integrating many local payment methods Andy ensures that his merchants can take payments from a wider range of customers, including those who do not use the larger brands of payment providers such as Visa or MasterCard. Through his commitment to global accessibility Andy has built an ecommerce empire which is relied upon by millions of businesses across the entire corporate landscape. Within the wider ecommerce market, the two key areas of growth, according to Andy, are mobile payments and the Chinese market, and as such these are the two key markets which Allied Wallet will be focusing on as it continues to build upon its current success and cement its reputation as the leader in global payment solutions. “At Allied Wallet our next innovation will be our revolutionary new phone payment device, which

The immense popularity of this new solution is a testimony to the hard work and dedication that Andy and his team at Allied Wallet have put in to ensure that the software is simple and easy to use, as Andy explains. “Ease of use is of paramount importance, and as such we created this new API platform with simplicity in mind. The integration is done step by step, making it easy for merchants to add the new APIs to their existing website and easily gain the many benefits that working with our new software will bring. For those who do struggle, we offer a dedicated client support service, by telephone and email, and in the wake of the new launch we have added a number of new support staff to our workforce who are able to talk clients through the integration if required.” Alongside making life easier for his merchants, Andy’s new platform is designed to offer complete, state of the art security, as fundamentally this is of vital importance and is his biggest priority, together with his goal, which he defines as “to see my merchants growing. I was to support them in expanding their businesses, both in service offering and geography, and as such I am constantly adding new services and integrating new shopping carts and local payment solutions to Allied Wallet’s platform.” 26 investorReview November 2016

will clip to clients’ mobile phones and act as a chip and PIN machine, ensuring safer mobile payments for small businesses such as delivery services and sole traders. Powered through the Allied Wallet mobile app, clients can rest assured that the new device will be safe, easy to use and convenient. “In the longer term the key area of growth for Allied Wallet will be the Chinese market, as we have seen the extraordinary growth in the region’s ecommerce market over the past few years. There is greater online spending as customers obtain more disposable income and have greater access to WIFI, and as such I am keen to move into China in a big way over the coming years.” Company: Allied Wallet LTD Website: www.alliedwallet.com


investorReview E-Commerce Award winners

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investorReview E-Commerce Award winners Asset Manager Awards

Best Quantitative Long/ Short Absolute Return Fund: Runestone Capital Fund Runestone Capital was founded by Rune Madsen and Rasmus Andersen who wished to freely express their investments views, without the restrictions of a large organization. After building a successful active wealth management franchise over the past 15 years, they wanted to create an independent firm to express their own investment methodology. Due to their strong conviction in their own proprietary models, they funded the firm with their entire net worth; Rune and Rasmus firmly believe Runestone Capital is the biggest opportunity in their investment careers thus far. unestone Capital exclusively trade US equity index volatility related products, and their current investor base is a mixture of institutional and private capital, as well as internal funds. Rune and Rasmus believe that the key to their success has been through the development and refinement of their models over a number of years. Throughout this period, these have been implemented, as well as further improved, which has been instrumental in the success of Runestone Capital so far.

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“We implement quantitative driven models and are constantly researching the existing framework, as well as analysing ways to improve our performance. Our focus is on short term strategies that are adaptable to a wide range of scenarios, and as such, we are optimally placed to perform well over the cycle. We are convinced that by employing a systematic approach we are removing the ego and emotions from the process, which should improve the risk/return characteristic of our business over time. “Our investment approach operates freely without pre-set biases for our investments. The models all operate in real-time and we rebalance our portfolio daily. This systematic discipline, combined with occasional discretionary risk reductions, has enabled us to produce positive returns in a wide array of market conditions. We believe the combination of our investment approach and the fact that we operate in a less crowded strategy space places us in an attractive position that has allowed us to generate attractive returns for our clients.” On aggregate, Runestone Capital has noted that hedge fund performance has been sub-par in recent years, which is unfortunate for the entire industry. Rune and Rasmus acknowledge that this has made capital raising more challenging for most funds, including themselves. However, this has not meant a loss for Runestone Capital,

who instead are looking to expand their team and continue growing their business. “We look to add full-time staff in parallel with the growth of the fund, and we are hoping to see improvements in hedge fund performance in the coming years. We are expecting the research, implementation and portfolio management areas of our business to remain our primary focus, but we are looking to add capacity in our marketing and operations departments as we grow. Particularly focusing on marketing, we will be interested in candidates that have excellent communication and networking skills, who will be able to attract clients that share our vision. “Technologically speaking, our development in this area is mainly focused on research and strategy implementation. Our clients receive monthly performance updates as well as weekly intra-month performance estimates, but our door is always open for meetings and conversations with clients, should they require us.” 28 investorReview November 2016

Runestone Capital is open to both institutional and private investments, and Rune and Rasmus are looking for clients who believe in their proprietary, systematic approach, and believe that their strategy is a good supplement to their portfolios, as they look to the future. “Our main focus going forward is the continuation of our planned strategy as we grow assets. We are receiving increasing levels of interest, particularly from the US, and as such we expect to launch a US focused share class in the near future.” Company: Runestone Capital Names: Rune Madsen & Rasmus Andersen Email: info@runestonecap.com Web Address: www.runestonecap.com Address: 239 Kensington High Street, London W8 6SN, UK Telephone: + 44 207 316 3084


investorReview E-Commerce Award winners Asset Manager Awards

Best Fixed-Income Portfolio Manager - USA & Most Innovative Woman TaxSensitive Strategies Standish is a dedicated fixed income manager providing expert investment counsel to defined benefit plans, insurance companies, central banks, and investors who need sophisticated fixed income solutions. We profile the firm and explore how it came to achieve its current market leading success. eadquartered in Boston, MA USA, Standish is a dedicated fixed income manager with over US$151.8 billion in assets under management (preliminary as of September 30, 2016). The firm traces its roots back to 1933, when its predecessor firm, Standish, Ayer & Wood, Inc., began managing fixed income portfolios for US financial institutions, banks and insurance companies. Standish currently offers a wide range of credit-based and specialty bond strategies for pension funds, sovereign wealth funds, central banks, endowments, foundations, insurance companies and high net worth individuals and families.

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As a wholly-owned subsidiary of The Bank of New York Mellon Corporation, Standish enjoys the support and backing of a well-capitalized parent company with a strong balance sheet. Standish emphasizes fundamental research and quantitative models in an attempt to outperform agreed-upon client benchmarks. This combination permits highly customized client solutions and requires both strong risk controls and a high level of dedicated client service.

Looking ahead, Standish is currently in deep conversations with investors in Europe and Asia to deliver a US Infrastructure Strategy. This will leverage the firm’s research expertise, centralized trading platform and tenured team to build high income, low volatility, high quality infrastructure investment portfolios through the US municipal bond market. There is also the potential to enhance risk adjusted returns for an insurance comany or pension plan’s total investment portfolio due to the asset class’ low correlation to equity, bond and other investments. Municipal infrastructure is treated favourably under Solvency II, so it is an efficient strategy for insurance companies in Europe, and looks set to bring the firm even greater success in the months and years to come. Additionally, in Europe the company has seen tremendous growth in sustainable investing from insurance companies, defined benefit plans, and sovereign wealth funds. Standish became a

Offering investment strategies that span the wide range of fixed income disciplines, Standish’s solutions are complemented by a demonstrated ability to design innovative, effective solutions to satisfy clients' needs. One of the firm’s core strategies is its Tax Sensitive Crossover strategy,a dynamaic allocation between taxable and tax exempt bond ectors. Investment opportunities are evaluated based on our expectation of after-tax total return, including income and capital gain impact of investing. This after tax total return strategy can include rotation among – and security selection within – high yield, investment grade credit, emerging markets, mortgages, and non-US bonds. These portfolios tend to have higher core allocations to municipal bonds, given the tax advantaged status. 29 investorReview November 2016

signatory to the United Nations Principles for Responsible Investing in 2012 because we believe the Principles are consistent with our long-term approach in allocating capital. Not only are the firm committed to incorporating ESG factors into its research process but are also exploring the launch of dedicated product into to meet the ever changing needs of its clients. Ultimately, in a world where change seems to be the only constant, Standish continues to uphold the guiding principles set forth by the firm’s founders over 80 years ago: professionalism, integrity, leadership and above all, a commitment to their clients. Company: Standish Mellon Asset Management Company LLC Name: Christine Todd Email: ctodd@standish.com Web Address: www.standish.com Address: Boston, MA


investorReview E-Commerce Award winners Institutional Investor Awards

Best Hedge Fund Manager New York & Best Long/Short Credit Trading Fund: Sancus Capital Hedge Fund Sancus Capital Management LP is an SEC-registered Investment Adviser. We profile the firm and its flagship fund, exploring the secrets behind its success.

ancus was launched in August 2009 by Olga Chernova, whose track record trading credit derivatives dating back to 1999 includes double digit returns every year during the financial crisis. Focusing on three core strategies: long/short, relative value and capital structure, Sancus combines fundamental, macro and technical analysis to generate positive returns with low correlation to overall markets.

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Prior to Sancus, Founder Olga was a Managing Director at JPMorgan, serving as Head of North American Credit and Structured Credit for the Proprietary Positioning Business, where she was responsible for building and managing a 12person credit trading team. She also served as a member of the Proprietary Positioning Business Risk Committee. From August 2006 to July 2007, Olga was a Managing Director and Head of Correlation and Index Trading at Dillon Read Capital Management LLC. From 1999 to 2006, she worked at Goldman Sachs where she held a number of senior trading roles. The team as a whole is primarily comprised of seasoned, ex-Goldman Sachs colleagues, and each member of the investment team has over 15 years of credit trading experience. In addition, there is a strong alignment of interest, with significant internal capital invested in each of the firm’s investment offerings. Drawing on this vast wealth of experience Sancus Capital’s strategy provides solutions for investors in today’s environment of low yields. Focusing on isolating credit premium and provides largely floating rate exposure to credit markets as well as floating rate credit, which provides low correlation with other classic long/short credit managers, mutual funds, and ETFs the firm utilizes structured products such as CLOs and synthetic tranches to take advantage of complexity premiums embedded in such instruments and to benefit from structural subordination.

Another of the company’s core focuses is asymmetric return profiles. Traditional credit instruments are negatively convex (receiving small coupon payments while running default exposure on principal investment). In contrast, Sancus combines several credit instruments together which in option like payoffs thereby limiting downside exposure. This approach brings positive convexity to the credit asset class. The firm’s flagship fund applies a flexible, multi-strategy framework to identify attractive arbitrage opportunities. The Fund invests in event-driven and floating rate credit opportunities using a wide array of credit products, including CDS and CLOs. While some competitors might shy from such complex products, such as CLOs and synthetic credit baskets, Sancus feels there is often a complexity premium embedded in these instruments which offers attractive compensation. This approach stems from its founder Olga’s unique experience, as she started by trading fundamental high yield and then moved to more macro credit products such as synthetic indices and tranches. Risk Management is a key component of portfolio construction, and therefore the firm aims to identify trading opportunities with limited or asymmetric downside potential. Each trade is assessed independently and via its contribution to Internal Stress Tests, and approximately 30% of the portfolio could be liquidated within one week based on the current portfolio and volumes traded, with the remainder liquidated within two months. This approach ensures that investors’ money is safeguarded and that the portfolio is not exposed to unnecessary market volatility. Overall the fund has achieved extraordinary success so far for during 2016. As of September 2016 the Fund year to date is positive +41.56% and inception to date is positive +63.89%. This compares with HFRX Global Hedge Fund Index YTD return of +1.33% and HFRX Fixed Income- Credit Index YTD Return of 30 investorReview November 2016

+2.866%. In addition, Fund’s returns compare very favourably to the static credit benchmarks: The Barclays Aggregate Credit Total Return Index is +8.862% and the Barclays US Corporate HY Index is +15.111. Out of the 735 credit hedge funds listed in BarclayHedge under any of the 11 Fixed Income strategies, Sancus Capital Select Master Fund Ltd. comes up as second best. Similarly, in the Preqin database Sancus Capital Select Master Fund Ltd. is ranked 3rd in year to date performance out of 202 Credit Strategy Funds. Recently Sancus Capital Management has been awarded Best Multi-Strategy Credit Fund Manager in the fifth annual Hedge Fund Awards, sponsored by BarclayHedge. In addition, HFMweek has recognized Sancus Capital Select Master Fund, Ltd. as Highly Commended during 2016. Fundamentally, Sancus believes that an opportunistic, multi-strategy approach to credit markets can provide attractive risk adjusted returns while minimizing correlation with market cycles, and as such this approach will remain its focus going forward as it seeks to continue to offer investors the best, safest returns possible. Company: Sancus Capital Management Address: 1325 Ave. of the Americas, 28th Floor, NY, NY 10019 Phone: (212) 277-8255 Fax: (646) 217-3710 Email: info@sancuscap.com Website: www.sancuscap.com


investorReview E-Commerce Award winners Institutional Investor Awards

Best Securities Advisory Firm 2016 - Australia Martin Place Securities’ primary operations are in capital raising, mostly in equities, with a record of over A$1,000m in over 30 IPOs, rights issues and hundreds of smaller private placements. Their corporate clients are usually those with smaller developments, but with longer term strategic or regional potential to make them bigger players within their respective industries. Funding clients are institutional or experienced investors, who have individual, segregated, longer term portfolios that emphasis liquidity and patience to achieve above-average returns. Barry Dawes gives us an insight into the mission of this company, and into the Australian market currently. artin Place Securities’ mission is to be the premier provider of capital raising and investment advice in the sector, and they already have a strong 16-year history in providing this advice. The resources sector has experienced unprecedented volatility in the past eight years, so Barry knows the value of experienced advice in meeting the requirements of clients.

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The past year has been outstanding in many ways for MPS. Their clients have achieved excellent returns with surprisingly little risk, and MPS’ research efforts have identified very rewarding opportunities and have anticipated the market with great accuracy. “The past three years have laid the groundwork for the excellent returns of the past years, and will allow an opportune expansion of operations and staffing.”

“The business is strongly research focussed with an emphasis on recognising early opportunities, accompanied by expert due diligence. Our track record of being the initial choice of corporate clients and delivering outstanding returns for investor clients provides a strong platform, and our use of thorough, innovative and insightful research that engages social media ad broadcast media has given us global exposure.” Barry notes that the Australian capital markets are suffering from a severe loss of leadership, and that its structural impediments prevent the correct flow of investable capital. “An overly pessimistic sentiment level, combined with bureaucratic interference has reduced access to capital at a time of massive surpluses of capital and generational low interest rates. Redeploying bank deposits that exceed national GDP, and restructuring overly large pensions fund levels is a major challenge that requires national leadership and reduced bureaucratic interference. “MPS is a leader in opinion forming through thorough research into global trends and issues, and in understanding aggregate corporate actions and strategies. We believe in thinking macro, acting micro. Internet research and reliance on a few select data sources allows MPS to ‘heed the markets, not the commentators’, in drawing investment outlooks and strategies. The social media we utilise also provides access to the thoughts of key opinion formers in real time.”

31 investorReview November 2016

Company: Martin Place Securities Name: Barry Dawes Email: bdawes@mpsecurities.com.au Web Address: www.mpsecurities.com.au Address: Suite 7, 123 Clarence Street, Sydney Telephone: +61 2 9222 9111


investorReview E-Commerce Award winners Institutional Investor Awards

Best Real Estate MultiManager Team 2016 - Europe Aviva Investors is the asset management arm of the Aviva PLC group, managing about £340 billion of AUM. John Gellatly heads up the European element of the global indirect real estate team, whose clients invest in indirect property on a global basis across the private and public markets and into debt and equity opportunities. They invest through private equity real estate investment vehicles and funds, joint ventures and co-investments, but also through listed securities and are moving to add public debt (CMBS and real estate corporate bonds) into their portfolios.

ohn believes that the team at Aviva Investors is one of the top three-four players in their industry, investing roughly nine billion dollars of AUM on behalf of over 40 clients and representing a range of different mandate sizes and different risk return strategies; these go from large corporate pension fund clients to smaller pooled funds, targeting specific strategies with global co-investments or emerging market real estate.

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John is especially proud of the thoroughness of the underwriting and due diligence the team demonstrates when they are looking to invest in a new opportunity. “We have a very extensive and thorough due diligence process. On many occasions, we are directing capital into vehicles which are illiquid, as real estate is a long duration asset; we can be locked into this investment for five to ten years, so on the way in we have to make sure that all of the risks involved have been accounted for. We have to make sure that we have assessed multiple factors before entering into an investment, such as the market opportunity, the governance, the legal and tax structure of the investment, and the financing, and present these to investment committees through thorough investment proposals.” “Once an investment is made, the due diligence does not stop. We are active investors, and closely monitor our assets; we vote on everything and remain engaged, never being afraid to sell early if that is the right thing to do at the time. Assessing risk remains a continuum for us throughout the lifetime of the investment.” John notes that global real estate, and real assets in general are currently very much in vogue, owing to the view that interest rates likely to remain lower for even longer than originally anticipated. “This is leading to the nominal return environment falling, and institutions globally are struggling to get any form of yield or

positive net cash flow out of their investments. Therefore, relatively high yielding real estate assets are very attractive. We are continuing to see increased allocations into the asset class, meaning the amount of capital available to invest from numerous forms of investor is very high, and with credit being generally readily available and cheap, there is a lot of capital looking to be deployed.” “In the UK and Europe we have seen high volumes of investment activity over the last few years, with strong returns, although we anticipate that this will begin to dissipate as yields can only be pushed down to a certain level. Brexit has put a pause on the UK property market, but we do not believe that returns are going to dive or that there will be a sharp reversal in values. However, the uncertainty and risk around the economy is going to delay investment decisions, which will subsequently feed through into occupational leasing decisions, so we believe that values will subside somewhat over the next six or so months.” With this in mind, we asked John about his approach to making sure that his clients have the best experience when dealing with his team. “We have to be incredibly thoughtful about what we are doing, as we are dealing with other people’s money. This means that we have to be at the forefront of thought leadership, and have to make sure that our radars sweep widely across economic and market issues; as such, we spend a lot of time on research and a lot of time out on the road talking to people and keeping ourselves involved in industry organisations, so as to be able to advise our clients on the best possible course of action.” “Alongside this, we are always trying to learn new processes, and improve our internal systems. We make a point of completing self-evaluations regarding our investment processes, our performance, and marking the lessons we have learned on every transaction. We try to make

32 investorReview November 2016

sure that we are as operationally efficient as possible, and one of the biggest things for us at the moment is the migration of the platforms that we use in the middle and back offices, onto Aladdin. This is a traditional trading platform for equity and fixed income, and we have been working with Blackrock Solutions to take our entire book of business onto Aladdin.” “It is an enormous system, which is ready for me when I enter the office in the morning. I have a personalised dashboard, which allows me to look at my portfolios and how they are positioned based on overnight prices, meaning that I know, to the decimal point, about where the money is invested, in what sector, and the geographies involved. It allows me to know exactly where I am on investment constraints and mandate monitoring. One of the most positive elements of this system is that it will further enhance our compliance processes, as we can do our pre and post trade compliance for trading straight through the system. For us, it is a huge thing to be able to sit, as a private equity real estate investor, and have the level of technical prowess that Aladdin affords us at our fingertips.” As well as committing to the provision of technical quality, John makes a point of hiring staff that understand the team ethos. “For me, when it comes to hiring staff, one of my key focuses is on chemistry. We have quite a large team - 23 investment professionals globally, with 16 in Europe - and we all get on extremely well. Morale is good and we have fun, which makes working together much easier; it is critical that everybody works well together to allow for the team overall to be successful. The people I hire need to be intellectually interested in macroeconomics and their asset class. They also need to have the ability to think laterally, as they will have to look at the real estate, the quality of the manager, assess the individuals involved, the legal structure, the tax structure, the financing structure; a whole series of areas which they need to assess, any of which can fall


investorReview E-Commerce Award winners over and ruin a deal. We cannot hire people who are experts in all areas, but we do look for people with the intellectual capability to address all of these issues, to utilise the advisers they have access to and the effect of that investment on their overall portfolio.” Looking to the future, John explains that the firm will be looking to build and expand its AUM. They would like to diversify their growth fund offering, and are very strong in the alternative income solutions sector. “For my team specifically, we have three broad target areas which we would like to address in the future. The first of these is that we are offering higher alpha strategies. We have a global co-investment program where we are opportunistic in terms of the nature of the opportunity, and look to deal on individual property’s where we will achieve mid to high teen returns, and x1.6-1.7 EM on investments.

It’s relatively high risk and high return, and a very specific type of real estate investing. On the other end of the spectrum, we are looking to expand our pooled product offering which targets core/core plus returns on a globally diversified basis, using the four quadrants across the real estate asset class - public, private, debt and equity. The third area we want to focus on is “Outsourced CIO”, whereby large institutions will mandate us to manage their entire book of real estate investments so allowing us to move efficiently across geographies and markets to optimise returns, thus taking on the role of a real estate CIO. We are happy to be gaining traction in all of these areas, and hope to continue providing these distinct strategies for our clients.” Company: Aviva Investors Name: John Gellatly Web Address: uk.avivainvestors.com

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investorReview E-Commerce Award winners Institutional Investor Awards

Best Financial Services Consultants 2016 - UK Cambridge Systems Associates (CSA) is an innovative financial consultancy and software developer. We profile the firm, alongside its Co-Founder Michael Dempster, to find out more. stablished in 1996, CSA's technology leverages more than 20 years of dedicated research in probability, optimization and quantitative finance. Founded by Professor Michael Dempster and Dr. Elena Medova of the Centre for Financial Research at Cambridge University's Judge Business School, the company maintains strong links with the international academic community. CSA's principals have researched and taught at major universities and research institutions in Europe, North America and Asia.

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For two decades they have been consultants to leading financial institutions, corporations and governments and they frequently speak to and organize executive education in quantitative finance globally. CSA's senior staff and associates hold doctorates in mathematics, computing and engineering, and draw on this experience to produce innovative technology. Utilising its strong links to both the academic and corporate finance markets, CSA is able to offer solutions that meet the needs of its clients. Since the bursting of the dot.com equity bubble and the global recognition of the pension crisis, both asset managers and investment banks have been developing long-term guaranteed products allowing the sharing of risk between fund managers and investors. Their aim is to provide inflation indexed capital protection while still exposing the client through dynamic asset allocation to higher-risk markets and thus higher returns. Similar dynamic portfolio allocation problems are faced by hedge funds and funds of funds, where as a result of the crisis tight risk control has recently been added to alpha return generation as an absolute operational priority. CSA specializes in the construction of dynamic fund and strategy management solutions employing Stochastics™ technology in which risk is carefully monitored and controlled between portfolio rebalances. This unique solution is CSA’s generic modular software with years of research embedded in its design and international patents granted and pending. It is a modelling environment in which scenario-based problems under uncertainty can be formulated, solved and easily operationally modified on PCs, servers or the cloud.

The Stochastics™ suite of risk modules provides value-added decision support and analytics for strategic, tactical and operational management as well as for research. In particular, advanced valuation software has been developed for complex multicurrency structured derivative products which has been used this year to value a 400 M EUR dynamic option portfolio and to design the hedging derivatives for a 500 M USD commodity asset backed bond issue. By strategically partnering with some of the leading firms from across the financial and technological markets, including IBM, MySQL, Numerical Algorithms Group and Risk Business, CSA is able to continue to develop its innovative products and remain at the forefront of the markets. Clients who have benefited from this revolutionary suite of solutions include industry giants such as HSBC, Fujitsu, Goldman Sachs, Citigroup, Deloitte Consulting and PwC, although the firm supports clients of all shapes and sizes from across the financial market. Having developed this exemplary suite of solutions CSA is keen to support the wider market, providing both clients and industry peers with an insight into the firm’s expertise and knowledge through a range of papers and presentations provided by its Founders. As part of this, CSA has been a participant, along with a number of leading companies and EU 34 investorReview November 2016

universities, in a 4-year International Training Network to advance high performance computing in finance which ended earlier this year and was funded by the EU "Marie-Curie" initiative. Professor Dempster was the first chairman of the Supervisory Board of the project and CSA, together with Aberdeen Asset Management, organized in the City of London the highly successful mid-term review conference of the ITN project, New Thinking in Finance. Along with other project principals, Professor Dempster is an editor of a forthcoming monograph which is the first comprehensive overview to be published of high performance computing for financial applications. Ultimately it is this dedication to remaining at the forefront of industry developments, alongside its academic credentials, which sets CSA apart, and as such the company moving forward will continue to offer the most ontrend technology which helps clients adapt to emerging market changes. Company: Cambridge Systems Associates Limited Address: 5-7 Portugal Place, Cambridge, United Kingdom, CB5 8AF Phone: +44 1223 557640 Fax: +44 1223 557641 Email: admin@cambridge-systems.com Website: www.cambridge-systems.com


investorReview Winners List Financial Advisors of the Year Company: Saunderson House Name: Alice Chamberlain Email: shl@saundersonhouse.co.uk Web Address: saundersonhouse.co.uk Address: 1 Long Lane, London, EC1A 9HF Telephone: 020 7315 6500

Financial Advisors of the Year Company: DPE Deutsche Private Equity GmbH Name: Mr. Volker Hichert Email: info@dpe.de Web Address: www.dpe.de Address: Ludwigstrasse 7, 80539 Munich, Germany Telephone: +49 (0) 89 20 00 38-0

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