Source: Federal Reserve Board and Goldman Sachs Global Investment Research
ING Private Portfolio Management is the wealth management arm of ING Private Banking in Belgium. They are global investors and their investment approach is long-term oriented. They use various instruments and model portfolios according to the client’s risk appetite as well as tailor-made portfolios. Assets under management amount to $40 billion (ING Private Banking as a group), of which approximately $11-12 billion is managed in Belgium.
Moudy El Khodr is Head of Portfolio Management, South Region at ING Private Bank. Until 2018 he was at ING Investment Management (now NN Investment Partners) managing one of Europe’s largest US Equity Income funds. He re-joined ING Investment in 2014 after three years at Petercam where he had managed a similar strategy. From 2001 to 2011 he worked at ING Investment Management in Brussels and The Hague. He also worked at BGL (Banque Générale du Luxembourg) in asset management (1998-2001). Moudy started his career at Euronext Brussels in 1998. He graduated “cum laude” from Université Catholique de Louvain (UCL) with a Master in Economics, holds a CEFA certification and a Certificate in Risk Management from ICHEC in Brussels.
Where does ING Private Banking fit within the investment management sector in Belgium?
Founded in 1993, Brown Advisory, with AUM of $81 billion, is an independent investment management firm with offices in the US, London and Singapore. The firm manages assets for both private and institutional clients. The London office opened in 2008 and is where the portfolio managers of the Global Leaders strategy ($955 million) and the Global Leaders Sustainable UCITS Fund which was launched in November 2019, are based.
Bertie Thomson and Mick Dillon are the co-portfolio managers of the Global Leaders strategy.
Prior to joining Brown Advisory in October 2015, Bertie spent 13 years at Aberdeen Asset Management where he became a Senior Investment Manager in the Pan European equity team. Bertie graduated with a MA in Architectural History from the University of Edinburgh and is a CFA charterholder.
Mick joined Brown Advisory in 2014 from HSBC Global Asset Management in Hong Kong where he was the co-head of Asian equities. Previously, he managed a global equity long/short fund for HSBC in London and before that, was a global technology equity analyst at Arete Research. He graduated from the University of Melbourne, where he was awarded a Bachelor of Engineer (First Class Honours), a Bachelor of Commerce and a Bachelor of Science. He is also a CFA charterholder.
How does the London office collaborate with the US office?
March 13, 2020 – Investor conferences are experiencing significant falls in attendance according to a survey of European Institutional Investors conducted by Phoenix-IR, a specialist Corporate Access provider. As many as 76% of investors are no longer attending conferences.
However, although more and more people are working from home or locked down in their offices, it’s interesting to note that at least half the investment community is still engaged in physically meeting with corporate management teams.
60% of investors are still hosting one-on-one meetings in their offices. But only 49% are venturing outside to attend group breakfast / lunch presentations. Almost three quarters said they are no longer participating in reverse roadshows, with 54% of firms suspending international travel.
In terms of how investors wished to communicate with companies, investors remain quite “low tech” when it comes to their preferred method of talking to companies when direct contact is curtailed. Two thirds prefer telephone conf calls and only one third like video conf calls, partly due to the perceived technical and logistical barriers to setting these up.
In response to travel / face-to-face meeting restrictions, Phoenix-IR is hosting virtual roadshows for its clients. In spite of the furore caused by COVID-19, investors still need to hear from corporates.
80 European-based investors managing approximately $2.5 trillion AuM responded to the survey, which was carried out over two days March 11 and 12. They represent investors in the UK, Switzerland, Netherlands, Germany, France, Denmark, Austria, Spain, Ireland, Portugal and Poland.
Focusing on climate change, BlackRock’s CEO Larry Fink, in his annual letter to CEOs published January 12, 2020, urges companies to focus more on sustainability. He states that “Companies, investors, and governments must prepare for a significant reallocation of capital.”
Many of his comments are highly relevant for IROs.
BlackRock will not only double the number of sustainability ETS it manages but significantly, it will divest from its active portfolios those companies generating a quarter or more of their profits from thermal coal. Mindful of the economic, scientific, social and political realities of the energy transition BlackRock will not pursue an across-the-board sale of energy companies that produce fossil fuels.
BlackRock aims to increase its actively managed sustainability assets 10X from $90 billion today to $1 trillion in the next 10 years.
Earlier in January, BlackRock joined Climate Action 100+, a group of more than 370 investment managers with a combined $41 trillion in assets. Together the campaign’s members are pressuring the world’s biggest emitters of greenhouse gases to reduce their environmental impact and improve disclosure. BlackRock has placed environmental and climate risk among its top priorities for meetings with the public companies it owns.
“In the discussions BlackRock has with clients around the world, more and more of them are looking to reallocate their capital into sustainable strategies. If ten percent of global investors do so – or even five percent – we will witness massive capital shifts.“
“BlackRock announced a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.”
“We believe that all investors, along with regulators, insurers, and the public, need a clearer picture of how companies are managing sustainability-related questions. This data should extend beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce, the sustainability of its supply chain, or how well it protects its customers’ data. Each company’s prospects for growth are inextricable from its ability to operate sustainably and serve its full set of stakeholders.”
“While no framework is perfect, BlackRock believes that the Sustainability Accounting Standards Board (SASB) provides a clear set of standards for reporting sustainability information across a wide range of issues, from labor practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the TCFD provides a valuable framework.”
“BlackRock has been engaging with companies for several years on their progress towards TCFD- and SASB-aligned reporting. This year, we are asking the companies that we invest in on behalf of our clients to: (1) publish a disclosure in line with industry-specific SASB guidelines by year-end, if you have not already done so, or disclose a similar set of data in a way that is relevant to your particular business; and (2) disclose climate-related risks in line with the TCFD’s recommendations, if you have not already done so. This should include your plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized, as expressed by the TCFD guidelines.”
“We believe that when a company is not effectively addressing a material issue, its directors should be held accountable. Last year BlackRock voted against or withheld votes from 4,800 directors at 2,700 different companies. Where we feel companies and boards are not producing effective sustainability disclosures or implementing frameworks for managing these issues, we will hold board members accountable. Given the groundwork we have already laid engaging on disclosure, and the growing investment risks surrounding sustainability, we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”
“The EFAMA Asset Management in Europe report aims at providing facts and figures to gain a better understanding of the role of the European asset management industry. It takes a different approach from that of the other EFAMA research reports, on two grounds. Firstly, this report does not focus exclusively on investment funds, but it also analyses the assets that are managed by asset managers under the form of discretionary mandates. Secondly, the report focuses on the countries where the investment fund assets are managed rather than on the countries in which the funds are domiciled.
Andy Nigg joined Bank J. Safra Sarasin in 2018 as head US & Global Sustainable Equities and is responsible for Sustainable US portfolios. Prior to this he was at Vontobel for 20 years in a variety of roles. He was senior portfolio manager and head of the Equity and Commodity Strategy within the Multi Asset Class department. Before that, he was responsible for the Global Equities Team. He managed Global and North American equity portfolios and funds. Prior to joining Vontobel, Andy worked as portfolio manager at UBS (’94 – ‘98) managing US and Canadian equity funds and portfolios. He started his career at the Retail Banking division of Hong Kong Bank of Canada in Calgary. Andy is a CFA Charterholder, holds a Swiss Banking School (now Swiss Finance Institute) degree and earned a Bachelor of Commerce from the University of Calgary, Canada. Today, -his main focus is on US equities.
Safra Sarasin Group – Sustainable Swiss Private Banking since 1841
As an international group committed to sustainability, J. Safra Sarasin is well established through its banks in more than 25 locations in Europe, Asia, the Middle East, Latin America and the Caribbean. A global symbol of private banking and wealth management tradition, the group emphasizes security and well-managed conservative growth for its clients. At the end of December 2018, it managed total client assets of CHF 165 billion ($165 bilion) and employed about 2,200 staff, with stockholders equity of CHF 5.1 billion. Continue reading
C WorldWide Asset Management (previously Carnegie Asset Management) was created in 1986 as part of the Carnegie Group. The firm was spun out of Carnegie Investment Bank in 2009 and the name changed in 2017. C WorldWide is 80% owned by private equity Altor Fund III and 20% by employees. Today it manages <$20 billion in global equities for institutional clients in the Nordic region, the UK, Canada and Australia. Main portfolios are highly concentrated with just 30 stocks held. The investment approach is bottom up stock-picking and they focus on stocks above $10 billion market cap and the average market cap is nearer $100 billion. The focus is on companies generating free cash flow and earnings growth. In addition to the concentrated global equity strategy, the firm has an ethical and long/short version of the same strategy plus a number of more specialised strategies, including Global Healthcare.
Bo Knudsen is Managing Director and Global Portfolio Manager at C WorldWide Asset Management in Copenhagen. He holds a M.Sc. (Economics and Business Administration) degree from Aarhus School of Business and San Francisco State University. Bo has worked with portfolio management of global equities since 1989. Prior to joining C WorldWide Asset Management in 1994 he worked for five years as a global portfolio manager with Danske Capital in Copenhagen and ultimately held the position as Head of International Equity Investments. From 1998 Bo joined Nordea Investment Management as Executive Director and Head of Equities. He re-joined C WorldWide Asset Management in 2001 as global portfolio manager.
Aviva is the largest insurer and a leading life and pensions provider in the UK and Aviva Investors is its asset management business. The Edinburgh office was set up in 2018 with nine senior staff from Aberdeen Standard Investments. Aviva Investors manages around $444 billion. $50 billion in active equities. It has offices in 19 financial centers including Edinburgh, London, Paris, the US (Chicago) and Canada staffed by over 40 equity investment professionals. Global equity strategies include: Income ($776 million – income and capital growth), Endurance (c.$1 billion – defensive capital growth) and launched in 2019, Unconstrained (opportunistic capital growth). AUM in global equities are currently $2.5 billion and this figure is expected to grow.
Mikhail Zverev joined Aviva Investors in October 2018 as Head of Global Equities. He was formerly Head of Global Equities at Standard Life Investments (SLI) and also portfolio manager on a number of funds. He joined SLI in 2007. After graduating from St Petersburg State Technical University with a BSc Physics, Mikhail started his career in 1998 with Trigon Capital, an Eastern European investment banking firm. He gained his MSc Accounting and Finance from London School of Economics and joined the investment banking division of Schroder Salomon Smith Barney in London in 2001, before moving to First State Investments as an Analyst, UK Equities in 2002.
An interesting recent report from Goldman Sachs shows that share buybacks have been the largest source of U.S. equity demand during the last five years. Apparently, since 2010, net corporate buybacks averaged $420 billion annually, compared to only $10 billion each from households, mutual funds, pension funds and foreign investors.
According to a Bloomberg report, Goldman studied stock performance during earnings blackout periods, when discretionary buybacks are restricted beginning about five weeks before a company releases earnings, and then for two days afterwards. During the past 25 years, return dispersion and volatility during blackout windows have been higher compared with non-blackout periods: 16 percentage points versus 14 percentage points, and 16.4 points versus 15.8 points, respectively. Meanwhile, since buybacks have bolstered earnings per share by reducing the total stock outstanding, blocking repurchases would hurt growth in EPS. Over the past 15 years, the gap between EPS growth and earnings growth for the median S&P 500 company averaged 260 basis points. According to Goldman Sachs “In a world without buybacks, forward EPS growth could be trimmed by 250 bp,” a reduction that has historically corresponded to a 1 point decline in forward price-earnings multiples.