REVIEW www.assettv.com • October 2016
Felling Giants
How Mercury iFunds is Disrupting the Big Banks in Alternative Investments TM
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PLUS INSIDE
Why Weight for Commodities? S&P DJI 10th Annual Commodities Seminar
HOT SEAT
Prudential Retirement Borrow to Fund
REVIEW
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Contents
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Neil Jeffery, EVP – Head of Americas neil.jeffery@asset.tv Having worked with Asset TV in the UK since the company’s inception in 2003, in 2012 he crossed The Pond to establish Asset TV Inc. in NY.
Deb Wetherbee, Senior Vice President Sales
Felling Giants
4-5
Election Proof Your Portfolio
6-7
Mercury iFunds Disrupts Alternatives
deb.wetherbee@asset.tv Deb is a seasoned member of the industry bringing her expertise from kasina FRC, Nuveen, and Nvest (now Natixis) to Asset TV Inc. Deb is currently spending most of her free time watching little league games from the sidelines.
MainStay Discusses U.S. Election Impact
HOT SEAT: Borrow to Fund
Jason Brandt, Vice President Sales
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Rohit Mathur, Prudential
jason.brandt@asset.tv A graduate from Binghamton University, BA, and Pace University, MBA, Jason was one of the first to join Asset TV Inc. He is also the current office champion of ping pong and bowling.
Gillian Kemmerer, Head of Programming
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gillian.kemmerer@asset.tv Most recently a hedge fund journalist for Absolute Return, Gillian holds an MSc from the London School of Economics and a BA from Columbia University. She is a competitive archer and sports fanatic.
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Why Weight for Commodities? 22-23 ASSET TV REVIEW IS PUBLISHED FOR INVESTMENT PROFESSIONALS.
S&P 10th Annual Commodities Seminar
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SPECIAL FEATURE
FELLINGTMGIANTS: HOW MERCURY iFUNDS IS DISRUPTING THE BIG BANKS IN ALTERNATIVE INVESTMENTS Digital Access for RIAs to Leading Edge Alternative Investments Mercury Capital Advisors is among the world’s elite capital raising enterprises. Specializing in the placement of alternative investments with sovereign wealth funds, endowments, pension funds, family offices, and foundations, Mercury is taking the road less traveled - the road of providing institutional pricing and expanded access to leadingedge alternative investments to the RIA community. Introducing Mercury iFunds™ - an integrated, intuitive, mobile-responsive fintech platform of curated institutionalquality offerings. Leveraging its successful capital raising history, Mercury’s strategic decision to level the playing field in favor of RIAs against their counterparts at the big banks is consistent with insight from the likes of McKinsey & Company, Cambridge Associates, and others who are witnessing firsthand the shift to inclusion of alternatives in
RIA portfolios. In its whitepaper, The $64 Trillion Convergence, McKinsey emphasizes that “the retail segment will be a primary driver of alternatives growth, particularly in the United States. High net worth individuals and the mass affluent are increasingly looking to hedge outside risks, protect principal, manage volatility, and generate income.” Moreover, Cambridge’s report, The 15% Frontier, underscores the benefits of having 15% or more of assets in private investments. Based on extensive client performance data amassed by Cambridge going back to the 1970s, they concluded “with confidence that higher allocations to private investments resulted in higher returns over the longer term, and [that] this benefit was achieved with remarkable consistency year after year.” This is precisely the strategy embraced for decades by
THOMSON REUTERS 2015 TOTAL PRIVATE EQUITY PLACEMENTS Bookrunner
Rank
MERCURY CAPITAL ADVISORS
1
JP Morgan
2
Bank of America Merrill Lynch
3
Morgan Stanley
4
RBC Capital Markets
5
Wells Fargo & Co
6
Goldman Sachs & Co
7
Credit Suisse
8
HSBC Holdings
9
Jefferies
10
Source: Thomson Reuters Equity and Equity-related 2015 U.S. Private Placement League Table
FOR FURTHER INFO AND FREE ACCESS GO TO: www.mercuryifunds.com NewYork London Boston Dubai San Francisco Singapore Tokyo Washington, D.C.
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REVIEW SPECIAL FEATURE FROM MERCURY iFUNDS Coming soon to Asset TV Macro Themes with Professor Bruce C. Greenwald Private Equity, Real Estate, Hedge Funds, Infrastructure, Credit, Special Situations, Directs/ Pre-IPOs, Emerging Markets, Liquid Alts / ’40 Act Funds, Tax-Efficient Alternatives, Fund of One, Long Only, Secondaries, Venture Capital, Managed Futures, Distressed, IRA Eligible
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1
PEI Ranking in North America for 2015
institutional investors - that portfolio composition in search of alpha generation must include a percentage of “buy and hold” allocation to less liquid products. Efficient frontier analysis further reinforces this by suggesting that in concert with traditional equity and debt, the addition of even a slice of alternative investments creates a stronger, less volatile, more reliable return stream with no substantive impact on liquidity, which is the end-game for RIA clients. An investment through the Mercury iFunds™ platform gives investors exposure to private funds with a minimum subscription of $100,000, far less than that typically required by the underlying managers. In addition, fees and expenses are both minimal and transparent. RIAs subscribing on behalf of their clients to Mercury
iFunds™ may invest with as many managers as they select from the offering menu using a single, simple subscription document. The Mercury iFunds™ platform comprises 17 different product verticals complementing traditional RIA portfolios through uncorrelated returns, diversification, and downside protection, as well as tax-efficient investment
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THE MERCURY iFUNDSTM CHANNEL ON ASSETTV.COM Mercury Capital Advisors is a FINRA registered broker-dealer and operates the Mercury iFundsTM Platform
options and the ability to manage insurance-dedicated separate accounts. Mercury iFunds™ offers a comprehensive end-to-end, paperless solution whereby RIAs may access online research, product tutorials, roadshow videos, institutional due diligence, interactive manager webinars, and automated subscription documents. It is an intuitive and elegant onboarding experience. Moreover, all transactions are integrated in month-end statements generated by major custodians including Schwab, Fidelity, TD Ameritrade, and Pershing. The Mercury iFunds™ fintech platform represents both an evolutionary and revolutionary business model. Mercury Capital Advisors is transforming the
investment landscape, truly felling big banks in alternative investments by providing institutional pricing with significantly reduced investment minimums to qualified purchasers through their registered investment advisers.
Bruce Greenwald, Director of the Heilbrunn Center for Graham and Dodd Investing at Columbia Business School, explains the key differences between the current market situation as compared to the bubble leading up to the 2007 recession.
Insights into US Real Estate with Michael D. Fascitelli
As foreign capital continues to flood into the U.S. real estate markets, Michael D. Fascitelli, Managing Partner and Co-Founder of the Imperial Companies explains the reasons behind the trend and discusses the impact it has had on gateway cities.
Understanding Private Placement Variable Annuities (PPVA) with Henry Bregstein
Henry Bregstein, Global Co-Chair of Financial Services at Katten Muchin Rosenman LLP, shares his insight on tax-efficient strategies not typically associated with traditional alternative investments. www.assettv.com October 2016 5
SPECIAL FEATURE
ELECTION PROOF YOUR PORTFOLIO With Kim Wallace from Renaissance Macro Research, David Dowden from MacKay Shields, and Jon Swaney from New York Life Investment. Moderated by Charlie Reinhardt from New York Life MainStay Investments. With the National Conventions behind us, and both party nominations determined, we are faced with one of the most unprecedented presidential election races of all time. As the race heats up between the two contenders, speculation continues to grow around the security of our economy, the markets, and our nation as a whole.
What are the most likely scenarios that we’re likely to see come November 8th? Kim Wallace: My base case hasn’t changed in over a year, and that probably means there’s something wrong with it, but I’m sticking with the base case. It would appear because of the Electoral College advantage she has, Secretary Clinton is likely to be the President-elect. I’ve said for a long time now that the center majority leader would be the President of the party, largely because of turnouts in key states. I think that’s probably still the case, although the margin might be zero, one, or two votes. In the case of a 50-50 tie of course, the Vice President serves as the President of the Senate and so the majority would go to Democrats. It’s highly
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October 2016 www.assettv.com
unlikely, bordering on impossible because about 70 congressional districts in the Mountain West and in the South, the Republicans would lose the House. Obviously margins are likely to tighten a bit from the current 30-vote margin that Speaker [Paul] Ryan has. Very, very likely Republicans remain in control of the House.
The yield curve doesn’t stand still for long, and this year it has flattened quite a bit. Has that changed where you find value on curve? David Dowden: Yes, it does. Traditionally in the municipal bond market, we find that managers like to place themselves at a point along the curve and take residence there. Our view is that, as relative value
managers, we think you should be looking across the entire yield curve, and seeking out the position that makes the most sense for the forward market. What we’ve seen over the last year, if we look at the difference in spread and the curve slope between 30-year bonds and 1-year municipal bonds, is that it’s tightened by about 80 basis points. It has flattened basically over that time period. That has been largely a function of yield-hungry, starved really, investors, incrementally making their way out of the yield curve, comfortable enough to take on the incremental maturity and duration risk of owning longer bonds to pick up that yield. The net result has been, in part, that the curve has flattened. As it has, our view is that the sweet spot in the market has shifted as well.
Whereas two years ago we would have said that the long end of the market, between 20 and 30 years, was very attractive for investors to be positioned. At this point in time it’s more 10 to 25 years.
What is the importance of being at least mostly fully invested over long periods of time, in order to achieve whatever it is your aim is out of a portfolio? Jon Swaney: By all means. It’s very important. It’s critical. Nothing is certain in this business. No one knows the future and what’s going to happen. I can relate, I can empathize with those who responded in this fashion. There are an inordinate number of potential risks on the horizon. It’s a daunting array of events that are
REVIEW
Charles Reinhard
Kim Wallace
David Dowden
Jon Swaney
He is Head of Portfolio Strategy at New York Life MainStay Investments and a long-time Wall
He is currently the Head of Washington Policy Research at Renaissance Macro Research.
He is a Managing Director and Senior Portfolio Manager with MacKay Shields, and is a member
He is a Managing Director and Senior Portfolio Manager for New York Life Investment
in the pipeline. That gives rise to caution. At the same time, it has always been thus. We as investors need to accept that taking risks is part of participating in financial markets. Over time, stocks climb that proverbial wall of worry. This is what we get rewarded for doing; to put our capital at risk. When we avoid doing so, when we stick to the sidelines, we miss out on the opportunity to generate the returns that we’re going to need over time. A basic tenet of investing for us is that because nothing in this business is certain, we avoid taking large bets, and we encourage our clients to do the same. Know what your long-term objectives are. Design a strategic allocation that’s suitable to those objectives, and do not stray, especially widely, from it. It’s okay to incorporate views, but do so with a margin. Maintain discipline.
How do you think today’s challenges for the investor compare to those in the past?
all clear what the implications will be, as central banks gradually extricate themselves from the unconventional policy they’ve engaged in today.
against that. I think that this has potentially led a lot of investors to make risk decisions that in more normal market conditions they wouldn’t have made. I think that whether you’re looking at a school endowment or an individual, there’s the risk that a lot of investors have put themselves at a greater level of risk than they really should. We’ll see how that unfolds.
Street veteran.
Prior to that, he served as Treasury Assistant Secretary for Legislative Affairs under President Obama.
Jon Swaney: Well then, where to begin. I think for me, what I find most daunting is the impact that monetary policy makers have had on capital markets.
Their influence is everywhere. A lot of the conventional rules of thumb that we could apply to the investment process, arguably, are not as relevant today. We’re in uncharted territory. It’s not at
of the MacKay Municipal Managers Team, responsible for managing the municipal bond funds for MainStay Investments.
David Dowden: From my perspective, I think the fact that we’ve been in a prolonged low
rate environment; that whether you’re a retiree, an insurance company, a pension fund, you face a long-dated liability stream and you’ve been challenged to find an asset that can match off
Management’s Strategic Asset Allocation and Solutions Group.
Kim Wallace: I think both of my colleagues today raised points in terms of global investing. You look at the macro policies, [very large macro provincial] policies for risk management at the large banks, globally, obviously macroeconomic policy and the fiscal and monetary side, and you’ll understand there are still significant decisions to be made globally in many of the countries that have been alluded to. You have to pay attention to the policy impact.
www.assettv.com October 2016 7
Aim higher than low yields. PIMCO INVESTMENT GRADE CORPORATE BOND FUND
PIGIX
Overall Morningstar Rating™ among 171 corporate bond funds based on risk-adjusted returns as of 9/30/2016.
PIMCO HIGH YIELD SPECTRUM FUND
PHSIX
Overall Morningstar Rating™ among 659 high yield bond funds based on risk-adjusted returns as of 9/30/2016.
Generating yield in a low return environment means balancing risk-adjusted returns with the need for capital preservation. PIMCO’s global credit research capabilities help identify the most attractive credit opportunities across the world. See how you can put credit to work at pimco.com/case-for-credit
Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information is contained in the fund’s prospectus and summary prospectus, if available, which may be obtained by contacting your investment professional or PIMCO representative or by visiting pimco.com. Please read them carefully before you invest or send money. Morningstar Rating for the Institutional Class Shares; other classes may have different performance characteristics. Fund ratings are out of 5 Stars: PIGIX: Overall 5 Stars (171 funds rated); 3 Yrs. 4 Stars (171 funds rated); 5 Yrs. 5 Stars (146 funds rated); 10 Yrs. 5 Stars (93 funds rated). PHSIX: Overall 5 Stars (659 funds rated); 3 Yrs. 4 Stars (659 funds rated); 5 Yrs. 5 Stars (524 funds rated). For funds with at least a 3-yr history, Morningstar calculates a Morningstar Rating based on a risk-adjusted return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads and redemption fees) with an emphasis on downward variations and consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating is a weighted average of the performance figures for its 3-, 5- and 10-yr (if applicable) Morningstar Rating metrics. Morningstar, Inc.® 2016. All rights reserved. The information contained herein; (1) is proprietary to Morningstar and/or its affiliates; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. A word about risk: All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Investors should consult their investment professional prior to making an investment decision. The minimum initial investment for the Institutional class shares is $1 million; however, it may be modified for certain financial intermediaries who submit trades on behalf of eligible investors. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. PIMCO Investments LLC, distributor. ©2016 PIMCO.
REVIEW Watch more HOT SEAT RETIREMENT INCOME SOLUTIONS FOR DEFINED CONTRIBUTION PLANS Expert: Roberta Rafaloff, MetLife
HOT SEAT - BORROW TO FUND EXPERT: ROHIT MATHUR, PRUDENTIAL EXPERT PROFILE
Rohit Mathur is a Senior Vice President and Head of Global Product and Market Solutions segment of Prudential’s Pension Risk Transfer business. In this role, Rohit is charged with assessing the corporate finance implications of pension risk management to cultivate a consistent recognition of pension de-risking solutions.
Why would a company ever want to pay anything more than the minimum contribution into their pension plan in the U.S.? Companies have multiple uses of their cash. And if I could even broaden this question, they have multiple uses of their borrowing capacity and cash. So think of it this way, a company needs to evaluate whether it should invest their cash in growth opportunities, whether it should buy back their shares or contribute money to their pension plans. All of these need to be evaluated relative to the riskiness of each of these alternatives. So for example, if we were looking at a growth investment, on the face of it it’s true that any growth project will give you significant returns, much greater than perhaps if you just looked at what returns you can generate by putting money into a pension plan. But remember, growth initiatives
come with risk. So what you need to look at is growth relative to the risk. In other words you need to control for the high hurdle rates that come with any growth project. If on a risk-adjusted basis the opportunity looks compelling, then that might be a good user for cash. What is your response to those that believe borrowing to fund a pension derisking strategy is crystallizing an unfunded pension liability at an inopportune interest rate level, despite the low cost of debt? If you look at the recent evidence, it’s exactly the opposite. Pension is hardly a soft form of debt. There have been a number of recent bankruptcies that one can look at ranging from perhaps Kodak to some of the airlines where pensioners faired very well relative to other creditors. So, it’s not a soft form of debt. In fact,
it’s a form of debt that increases when interest rates fall. The debt becomes larger and it crowds out other bondholders as well as its senior to equity holders. And I think by transacting and converting this volatile form of debt that increases in value and cannot be cut even in times of stress, you’re essentially substituting an unknown debt with a known form of debt, a contractual debt, and known interest payments. So we think it’s a positive transaction to do. And also the other thing, the fact pattern to look at is despite where we are with interest rates, the U.S. continues to be an economy where interest rates are higher than some of the other parts of the world. So it’s possible that rates could go up from here, but it’s also possible that rates go down from here.
Roberta Rafaloff, Vice President, Institutional Income Annuities, MetLife, sits down in Asset TV’s Hot Seat to answer questions from top financial experts in the field about income annuities for defined contribution plan participants.
CURRENCY HEDGED ETFS Expert: Salvatore J.Bruno, IndexIQ
Salvatore J. Bruno, Chief Investment Officer and EVP of IndexIQ takes to Asset TV’s Hot Seat to answer viewer questions on currency hedged ETFs from top financial professionals in the industry.
MUNICIPAL BONDS Expert: Bob DiMella, MainStay Investments
Bob DiMella, Executive Managing Director and Portfolio Manager of MacKay Municipal Managers, addresses some of the top questions on municipal bonds in Asset TV’s Hot Seat.
www.assettv.com October 2016 9
SPECIAL FEATURE
THE LEADERBOARD
The top 10 most watched people in 2016
The power of Asset TV to deliver video research to a network of over 230,000 investment professionals in the U.S. allows them to make better informed investments. Viewers from all major wire-house and broker dealer firms watch for their investment due-diligence and to benefit from an accredited source of continuing education. The Leaderboard represents the most popular industry experts as watched by investment professionals in 2016.
BOB DOLL 01 Nuveen
DAVID LAFFERTY 02 Natixis Global Asset Management
Bob Doll is a Senior Portfolio Manager and Chief Equity Strategist at Nuveen Asset Management.
David Lafferty is a Senior Vice President and Chief Market Strategist at Natixis Global Asset Management.
LATEST VIDEO: LARGE CAP EQUITY SERIES: MEET THE PEOPLE BEHIND THE PERFORMANCE
LATEST VIDEO: MASTERCLASS: NATIXIS MIDYEAR OUTLOOK 2016
DANIEL IVASCYN 03 PIMCO
SHAUN WURZBACH 04 S&P Dow Jones Indices
Daniel Ivascyn is Group Chief Investment Officer and Portfolio Manager at PIMCO.
Shaun Wurzbach is Global Head of Financial Advisor Channel Management at S&P Dow Jones Indices.
LATEST VIDEO: VIEW FROM PIMCO’S INVESTMENT COMMITTEE
LATEST VIDEO: INTEREST RATES AND MUNICIPAL BONDS
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October 2016 www.assettv.com
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MICHAEL CEMBALEST 05 J.P. Morgan Asset Management
JOHN MILLER 06 Nuveen
Michael Cembalest is Chairman of Market and Investment Strategy at J.P. Morgan Asset Management.
John Miller is a Managing Director and Co-Head of Fixed income at Nuveen Asset Management’s.
LATEST VIDEO: EYE ON THE MARKET 2016 OUTLOOK - KEY TOPICS
LATEST VIDEO: MUNICIPALS SHOULD CONTINUE THEIR STRONG PERFORMANCE
CHARLES REINHARD 07 New York Life MainStay Investments
COLIN MOORE 08 Columbia Threadneedle
Charles Reinhard is Head of Portfolio Strategy at New York Life MainStay Investments.
Colin Moore is Global Chief Investment Officer for Columbia Threadneedle Investments.
LATEST VIDEO: ELECTION PROOF YOUR PORTFOLIO
LATEST VIDEO: THE ESG FACTOR
JODIE GUNZBERG 09 S&P Dow Jones Indices
DIRK HOFSCHIRE 10 Fidelity
Jodie Gunzberg is Global Head of Commodities and Real Assets at S&P Dow Jones Indices.
Dirk Hofschire is a Senior Vice President of Asset Allocation Research at Fidelity Investments.
LATEST VIDEO: WHY WEIGHT FOR COMMODITIES? 10TH ANNUAL COMMODITIES SEMINAR
LATEST VIDEO: FIDELITY’S Q3 2016 MARKET UPDATE: POST-BREXIT STRESSORS YOUR CLIENTS SHOULD BE AWARE OF
www.assettv.com October 2016 11
SPECIAL FEATURE
NUVEEN Latest videos now available on the Nuveen Channel
Large Cap Equity Series: Meet the People Behind the Performance
Predictable Income with Lower Volatility: Infrastructure and Real Assets
Bob Doll - Senior Portfolio Manager and Chief Equity Strategist at Nuveen Asset Management
Jay Rosenberg - Head of Real Asset Investments at Nuveen Asset Management
“You know you’re not just managing money. You’re managing money for people and what’s behind the investments are people who have needs and desires and to be able to contribute and fulfill those has been a real privilege.”
“Infrastructure has experienced lower volatility than the broader market. If you add infrastructure to a portfolio – a blended portfolio of stocks and bonds – over time it is lowered volatility and increased returns.”
Capturing Opportunities in Small Cap Equities
Positioning Fixed Income Portfolios in a Low Return Environment
Karen Bowie - Portfolio Manager for Nuveen Asset Management’s Small Cap Value Strategy
Tony Rodriguez - Co-Head of Fixed Income at Nuveen Asset Management
“It is a challenging environment right now – fairly slow growth. However, as we start to look at opportunities we see that slow growth at some point picking up, but we think that there will be some volatility in here and it is something that we take into consideration as we build our portfolio.”
“I think that what the ECB’s trying to do is expand the set of securities that they’re able to buy. And they’re doing that through some internal processes, which is gonna frustrate the market by being slow. But I do think that between now and the end of the year, they will come back and announce an expansion of the quantitative easing beyond March of next year.”
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October 2016 www.assettv.com
REVIEW
NuShares Enhanced Yield U.S. Aggregate Bond ETF (NUAG)
The Fed Inches Closer to Raising Rates
Jordan Farris - Head of Product Development - Exchange Traded Funds at Nuveen Asset Management
Bob Doll - Senior Portfolio Manager and Chief Equity Strategist at Nuveen Asset Management
“Over the past decade the Barclays aggregate bond index, which is a proxy for investment grade fix income exposure, has seen its yield drop by more than 50%. This is going to be a troubling scenario for retirees who are looking to retire comfortable or simply retire at all. “
“The Bank of Japan announced a change in their policy to target a zero percent 10 year sovereign bond in Japan, erasing the earlier policy moves that produce negative interest rates, which I think they deemed inappropriate after trying for some time without much success.”
Bond Investing: Stay Flexible, Stay Diversified
Market View: Leveraged Credit Landscape - Symphony Asset Management
Tim Palmer - Portfolio Manager for Nuveen Asset Management’s Strategic Income Strategy “A key thought right now for us is how to manage volatility ... Headlines come out, concerns about central banks, concerns about the Fed, thoughts on China…The key is that investors need to invest to their appropriate horizons, and we as managers need to make sure that we are looking through some of the near term volatility in order to drive good value for investors over the long term.”
Larry Holzenthaler - Investment Strategist at Symphony Asset Management “The most compelling argument for high yield has been the relative value of high yield. A lot of people are worried about a recession, fluctuation and interest rates. One of the things you have been able to say, whether it was the bottom of the market in February or even valuations today, is that the relative value between high yield, and in particular equities and investment grade bonds, is very strong. “
VISIT OUR CHANNEL ON ASSETTV.COM WWW.ASSETTV.COM/CHANNEL/NUVEEN www.assettv.com October 2016 13
Trending on assettv.com Fixed Income
Real Estate
5 Myths on U.S. Government Debt
Real Estate: The 11th Sector
Samantha Azzarello – Global Market Strategist at J.P. Morgan Asset Management
Sam Wald – Portfolio Manager at Fidelity Investments
“The U.S. debt is not out of control. That being said, it’s at elevated levels and it’s expected to increase. It’s important, however, to put debt in the context of GDP, because while debt burdens may be growing, if the economy is growing in tandem, it’s not as much of an issue.”
“The announcement came out in November 2014 that real estate will become its own sector in recognition of the growth of the listed real estate market…When you look at the overall S&P sector weights, real estate will represent roughly 3% of the market and will be of similar size, or larger, than the telecom, materials, and utilities sectors.“
Income Opportunities within Fixed Income Strategies
The Basics of Listed Real Estate Investing: A Liquid Alternative That Can Diversify a Portfolio
“There’s a fear in the market associated with the Federal Reserve and the potential for rate hikes. We actually think that their ratehiking cycle is going to be really long and drawn out and result in a federal funds rate that is probably lower than what’s actually priced into the market today.”
“While REITs have been an established asset class in the United States for decades, the REIT market has rapidly expanded globally over the past 20 years, with REITs now available in more than 37 countries. The largest and most mature non-U.S. REIT markets include Continental Europe, the United Kingdom, Japan, Hong Kong, Singapore, and Australia.”
Michael Collins – CFA, Managing Director and Senior Investment Officer for Prudential Fixed Income
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Tyler Wilton - Investment Specialist at Deutsche Asset Management
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Muni Bonds
Emerging Markets
MainStay Update: 2016 Election - How Will Munis Fare?
Introduction to Investment Grade Emerging Markets Bonds
Bob DiMella – Executive Managing Director at MacKay Municipal Managers
Fran Rodilosso – Portfolio Manager at VanEck
“I do believe a municipal portfolio does help you insulate the client from the uncertainty of the general election going into November. A lot of people aren’t sure exactly what equities are going to do and its impact on that, but the municipal marketplace is an attractive income stream today that probably won’t have a severe dislocation, regardless of which candidate actually does ultimately get elected.”
“As a result of some of the declining fundamentals over the previous several years, the emerging market dollar bond universe, that had been as much as almost 70% investment grade on the sovereign side, was suddenly closer to 50% investment grade, and that is what lead to some of the thinking around IGEM.”
ITMS and ITML: Targeted Slices of the Muni Yield Curve
How to look at emerging markets
Jim Colby – Portfolio Manager at VanEck “The municipal yield curve in the intermediate part is changeable depending on market conditions and offering investors opportunity to actually gain some total return benefits. It might occur in the short part of the market, it might occur in the long part of the intermediate yield curve, but these two slices are tactical opportunities for investors to create a more dynamic portfolio.”
Jeff Knight – Global Head of Investment Solutions at Columbia Threadneedle Investments “We find that in establishing a view on the category, it makes sense to approach that analytical process from the bottom up; to aggregate the various views of the individual regions and countries that make up the emerging markets. Often, the vehicles that we or other investors utilize to get exposure to emerging markets are packaged across the whole set.”
www.assettv.com October 2016 15
Stable Value
PIMCO Money Market Report
Karen Chong-Wulff - Managing Vice President, Fixed Income at ICMA-RC
Jerome Schneider - Head of Short-Term Portfolio Management at PIMCO
“One of the things with stable value is it is in contrast to fixed income bonds. What happens with stable value is because of its design, it is going to rise with interest rates as well; not as fast as money market funds, but it is going to go up.”
“We have to continually reassess not only market conditions, but market opportunities. And so, investors should be thinking about the same construct. There’s going to be positive attributes that come out of money market reform.”
Fixed Income
Small Cap
Fran Rodilosso - Portfolio Manager at VanEck
Bill Hench - Portfolio Manager, Principal at The Royce Funds
“Demand for oil has continued to grow actually at a fairly healthy pace throughout the last 5 years. What you’re seeing in oil, in metals, some metals more than others are now the supply side of the equation getting more constrained.”
“Most companies will trade off paying more for money if it means they’re going to do more business. You should be making a bigger spread on your margin versus what you’re paying to borrow money.”
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October 2016 www.assettv.com
REVIEW
Impact Investing
Exchange Traded Funds
Mary Jane McQuillen - Head of Environment, Social and Governance Investment at ClearBridge Investments
Ed Coyne - Executive Vice President, National Sales at Sprott Asset management
“Investors are getting more educated and aware, as the evidence is increasing and building out and being dispersed amongst people who have interest and appetite, as the professional investment community are asked to understand what the differences are between the different approaches.”
“When you look at gold’s ability to drive returns…it’s really a diversification tool. And when you think about what the market has done in the last decade or so with all these different alternative strategies that are out there, I like to always say that gold is really the original alternative investment.”
Retirement Income
Liquid Alternatives
“People should be saving probably more like 10 or 12% of their income throughout their entire working career to provide the right level of income replacement. At 1.4% where the 10-year treasury yield is now…it’s very difficult for people to get the level of stability [and] the level of income that they require.”
“Multi asset liquid alt strategies have a lot of flexibility in how they can allocate. They can be net short a particular asset class; they could be for example, 100% in equities, 100% in bonds, and they could be 100% in cash if they’re being very risk averse.”
Steve Deschenes - Head of Client Analytics at Capital Group (American Funds)
Sinead Colton - Head of Investment Strategy at Mellon Capital
www.assettv.com October 2016 17
FINTECH
CHANNEL
Videos available on the FINTECH Channel
Leveraging Data and Technology to Empower Advice
Women, Progress and FinTech Innovation
Estee Jimerson - Managing Director and Head of Asset Manager Distribution at Envestnet
Jennifer Openshaw - Partner at Mercer
“We believe that advice is essential and advisors are essential. Consumers need advice today more than ever. The issue is that it is becoming more and more important for advisors to have efficient practices… We are empowering those advisors through technology and data.”
“The important role that we are seeing is the role of innovation. Companies like UBS are recognizing that they need to have women in these roles where they are creating the next generation product for their customers. Their customers aren’t men; in fact, they are women.“
The WEF Views Blockchain as the Future of Finance
Credit Trading, Disrupted
Jesse McWaters - Financial Innovation Lead at World Economic Forum
Kevin McPartland - Head of Market Structure & Technology Research at Greenwich Associates
“I think it’s important to think about the transformative opportunities for the role of the regulator. We envision in the [blockchain] report a world in which regulators might be able to significantly reduce the costs of compliance by effectively automating reporting through this new infrastructure.”
“10 years ago, only about a third of investors were using electronic trading to do any of their corporate bond trades; today that is about 80%. So now we have seen an almost complete saturation of the bayside with electronic trading tools, and it only seems to continue to grow.”
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October 2016 www.assettv.com
REVIEW
PRESENTED BY
Artivest CEO James Waldinger on Alternatives James Waldinger - Founder and CEO at Artivest “Among financial advisors, digital technology happens to be an area of under-investment. According to Capgemini, 56% of advisor’s net-income is at risk due to client attrition, because of lack of digital integration”.
Secure Collaboration Solutions for Asset Management Richard Harrison - Sales Director at Diligent Corporation “In the last couple of years the SEC, with compliance updates, really highlighted that cyber security is of growing importance. They advised asset management firms to beef up security and make sure data is encrypted, and make sure only authorized users have access to that data. That’s exactly what this software does.” www.assettv.com October 2016 19
ETF
CHANNEL
Videos available on the ETF Channel
Core and Satellite: Allocating to ETFs
ETFs in Fixed Income on the Rise
Kathy Boyle - President of Chapin Hill Advisors
Craig Dehner - Vice President of BlackRock
“We are looking to protect our downside performance. We really want to keep that tight. If you lose 10% you only need 12 to get even, if you lose 20 you need 25, and it goes bigger and bigger. So protecting the downside is it, and that’s where ETFs are great.”
“I think that’s the big concern right now. If the Fed raises my interest rates, what’s going to happen to my bond portfolio?”
Fixed Income and Emerging Markets ETFs
Examining the Trends of Global ETFs
Brett F. Ewing - Chief Market Strategist & Financial Advisor at First Franklin Financial Services
Deborah Fuhr - Co-Founder and Managing Partner at ETFGI
“Especially in our income-generating portfolios for retirees, they’re looking for yield right now. So we feel like the multimanager and the active manager on the high-yield corporate bond is giving us a little bit of added advantage than just buying a broader index ETF.”
“What we are seeing here is that hedge funds have underperformed the S&P on average in each of the past 5 year, plus Q1 and 2 this year. We are also seeing that the political and economic trends that are happening in the market such as Brexit, which is causing significant net inflows into fixedincomes this year.”
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October 2016 www.assettv.com
REVIEW
Managing Risk in ETFs
Managing the Impact of the DOL
Roger Scheffel - Chief Investment Officer at WST Capital Management
William Donahue - Managing Director at PwC
“Let’s look at commodities like we know how to look at stock sectors…and we began to break it down. Specifically gold from that standpoint. If you really think about it, it truly is an alternative currency. And if we are buying treasuries, we are buying dollars, and then we are buying this alternative currency.”
“It’s going to be critically important particularly for the ETF industry that they develop solutions in order to handle ETFs which they currently cannot do. Because of the fractional share issue. Firms who are able to innovate and address that issue will be well position going forward as well.“
PRESENTED BY
An ETF Tailor-Made for Financial Advisers and Portfolio Managers Alike
Jim Copell - Chief Executive Officer at Master Shares
“The name of the ETF is the Master Income ETF. The symbol is HIPS. It trades on the NYSE. It’s our first in a series of ETFs that specialize in these types of securities. We have been blending these asset classes longer than anyone we know of.”
www.assettv.com October 2016 21
SPECIAL FEATURE
WHY WEIGHT FOR COMMODITIES? S&P Dow Jones Indices 10th Annual Commodities Seminar
To Commodities and Beyond: Exploring the Universe of Risk-Based Strategies
Keynote Address: Where in Commodities is the Smart Money Flowing?
“It’s very important. One of the key features of these strategies is that you can allocate reasonable volumes without having market impact, and also if you need to take your money out or increase your allocation you can do that easily.”
“One thing to flag up here is that we may well now see growth in the industrialized world becoming a bit more commodity intensive. It certainly seems to be the case that there is a broad recognition of the limits to monetary policy. People are looking at unconventional monetary policy.”
Best Sector Picks from the Pros
Fundamentals Anchoring Commodity Prices in Volatile Times
Arun Assumall - Global Head of Commodity Investor Products at Macquarie
Fiona Boal - Director Of Commodity Research at Fulcrum Asset Management “Corn, copper, and coffee have very little to do with each other, and that’s one of the reasons you should really like commodities as an asset class. Because you get these intracommodity diversifications, not just diversification with other asset classes.”
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October 2016 www.assettv.com
Kevin Norrish - Head of Commodities Research at Barclays
Michal Meidan - Lead Analyst, Asian Energy Policies & Geopolitics at Energy Aspects
“China hasn’t been the driver of global demand growth for a good 2 years. It’s still in sentiment and perceptions, it still has the ability to drive markets, but in reality Chinese oil demand growth has halved from what it was up until 2014.”
REVIEW
Economic Uncertainty: A Triple Threat to Commodities?
A Closer Look at Oil Price Fundamentals
Blu Putnam - Chief Economist and Managing Director at CME Group
Blu Putnam - Chief Economist and Managing Director at CME Group
“In the transportation sector, oil is 75% transportation when you get to its refined product. We really are getting more efficient. In the United States, for this chart, we had the peak use of transportation fuel in 2006, and we are continuing to make strides around the world with electric vehicles and, eventually down the road, hydrogen fuel cells.”
“The key factor is that these producers are getting more efficient every year. We have technological advances in how we extract the oil and they’re just getting better and better at it, so the marginal production costs are going down.”
What’s Driving Gold Prices Today?
The Weather’s Impact on European Agricultural Markets
Blu Putnam - Chief Economist and Managing Director at CME Group “Interest rates and quantitative easing have replaced the dollar as a more dominant factor, at least for now. Quantitative easing, all these asset purchases by central banks, particularly European central bank and bank of Japan. Their 10 year government bonds are down to zero yield.”
Nick Kennedy - Head of Business Development at Euronext
“Wheat is going to be the big story this year, particularly in Europe. EU is the biggest producer of wheat and also exporter of wheat globally, so what we saw again about the weather and weather patterns. This year saw severe flooding and rain episodes in May and June.”
VISIT OUR CHANNEL ON ASSETTV.COM WWW.ASSETTV.COM/CHANNEL/SP-DOW-JONES-INDICES www.assettv.com October 2016 23
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See what our multi-affiliate model can do for you. Visit us at ngam.natixis.com
1 A division of NGAM Advisors, L.P. 2 Caspian Private Equity is a joint venture between Natixis Global Asset Management, L.P., and Caspian Management Holdings, LLC. 3 Operated in the U.S. through Natixis Asset Management U.S., LLC. *Natixis Global Asset Management, Global Survey of Individual Investors conducted by CoreData Research, February-March 2016. Survey included 7,100 investors from 22 countries, 750 of whom are U.S. investors. Copyright © 2016 NGAM Distribution, L.P. – All rights reserved
4L
REVIEW
CHANNEL
RETIREMENT Videos available on the Retirement Channel
Focusing on Target-Date Funds
College Savings Savvy: How can 529s help me build my practice?
Matt Smith - Managing Director at BMO Global Asset Management
Thomas Rowley - Director of Retirement and Education Strategies at Invesco
“The most important thing in considering a target date fund is who’s the team behind that target date fund? And do they have the open-mindedness; do they have the source of information? Do they have the skill set and the experience to navigate going forward?”
“A 529 plan is a great low-cost and paperless benefit the company can offer to its employees. Also, clients of yours who are employees at firms that don’t offer a 529 benefit are ideally suited to introduce you to their Human Resources department, where you may find opportunities to serve as the advisor for a new 529 employee benefit.”
Interview with Keith Brainard & Alex Brown
Personal Responsibility. Public Trust. 2016 Natixis Global Retirement Index
Keith Brainard - Research Director at National Association of State Retirement Administrators
Ed Farrington - Executive Vice President of Retirement at Natixis Global Asset Management
“The rollercoaster ride is likely to continue chiefly because of the very low interest rate environment we are operating in, and as a result public pension plans continuously are looking to lower their investment return assumption, which creates a really strong headwind with regard to funding a pension plan.”
“One of the things we see that is troubling is when asked what people will do to make up for income shortfall, two thirds of investors say they will continue to work. This poses even greater public policy challenges if we are not addressing the saving issue today.”
www.assettv.com October 2016 25
SPECIAL FEATURE
OVER THE HEDGE by Gillian Kemmerer
Against a backdrop of macroeconomic volatility, the hedge fund industry has faced some serious risks this quarter— with headline risk being among the most prominent. Muted performance, several high-profile insider trading cases and public pension pull-outs have left the industry reeling, despite a respectable bounceback for several strategies. As hedge funds attempt to take advantage of shifting tides both at home and abroad, we bring you a wealth of perspectives that span capital raising to the trading floor. Optimizing performance is an inside job, whether you’re running an equities book or taking swing on the PGA tour. Psychologist and performance coach Dr. Gio Valiante has helped champions optimize their psychological performance in both settings, most recently joining the team at Steve Cohen’s family office, Point72 Asset Management. He
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October 2016 www.assettv.com
stopped into our studio to share more on his groundbreaking work, and to discuss the role psychology plays in why women struggle to get ahead in asset management. I particularly enjoyed his anecdotes about daily check-ins with portfolio managers, and what he’s learned from Cohen along the way. You may be surprised that in an industry where hubris is the name of the game, humility can play a large role in long-term investment success. Just as hedge fund managers are seeking new ways to up their performance in a yield-starved world, allocators are also employing new strategies to improve their portfolios. CALSTRs CIO Chris Ailman is a top Asset TV viewer, and took the time to chat with me on a recent jaunt to New York. Imagine deploying your quarterback as a lineman on the football field, and you may come close
to understanding Ailman’s approach to hedge funds. The pension chief has upped his allocation to macro and CTA strategies to protect on the downside, rather than seeking offensive points from his hedge fund managers. From the psychology of trading to the allocation strategy of one of the world’s largest pensions, check out some of Asset TV’s favorite interviews this year on our hedge fund channel.
REVIEW
Launching a Hedge Fund in Today’s Market
Bermuda’s Rich History of Hedge Funds
Ted Seides - Managing Partner at Hidden Brook Investments
Ross Webber - Chief Executive Officer at Bermuda Business Development Agency
“We are seeing the beginning of what’s looking like early stage managers have the opportunity to look at where they think hedge fund pricing might be 10 years from now… That is something much harder for an established fund to do because they have a pricing structure in place. Even if two managers agree that fees will be a lot less 10 years from now, it’s easier for an emerging manager to start that way and build and try to capture the assets that may come from more of the establishes once as shakeout occurs.”
“Bermuda is absolutely going through a resurgence in the asset management investment funds market place. Bermuda was a market leading for mutual funds and hedge funds for several decades. And then went off the boil for a while… The last 3 years however, we have seen a very deliberate and very coordinated national effort to get ourselves back on the map.”
J.P. Morgan, WEF Release Family Office Survey Results
Steve Cohen Brings on Golf Psychologist to Up Traders’ Mental Game
Maha Eltobgy - Private Investors Industry Head at World Economic Forum
Dr. Gio Valiante - Head Performance Coach at Point72 Asset Management
“There are about 3,000 family offices around the world, and they control over $2 trillion in dollars in assets...given their unconstrained ability to invest, they can really have a very significant impact on the world and on improving the state of the world.”
“[Steve Cohen] is always talking about open mindedness. You have to be open-minded, and willing to adapt, and willing to pivot. You have to be willing to see the world as it is and work within how it’s functioning, and so there’s humility there.”
www.assettv.com October 2016 27
REVIEW
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